Accenture, et al. v. Spreng

11-222
Accenture, et al. v. Spreng
UNITED STATES COURT OF APPEALS 1
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FOR THE SECOND CIRCUIT 3
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6
August Term 2010 7
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(Argued: May 5, 2011 Decided: May 27, 2011) 9
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Docket No. 11-222 11
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A CCENTURE LLP and L ESLIE A LAN B AILEY , 15
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Plaintiffs-Appellants, 17
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-v.- 19
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J IM L. S PRENG , 21
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Defendant-Appellee. 23
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Before: 27
F EINBERG , M INER , and W ESLEY , Circuit Judges. 28
29
Appeal from an order of the United States District 30
Court for the Southern District of New York (Marrero, J.) 31
denying Plaintiffs-Appellants’ motion for a preliminary 32
injunction and temporary restraining order after they failed 33
to demonstrate irreparable harm. 34
35
Plaintiffs-Appellants moved the district court to 36
enjoin an arbitration, and the court denied relief. We 37
conclude that the Federal Arbitration Act, 9 U.S.C. 38
§ 16(b)(4), precludes our review of the district court’s 39
order refusing to enjoin the arbitration. Notwithstanding 40
the statute, Plaintiffs-Appellants claim that we have 41
appellate jurisdiction because the district court’s order 42

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2
was a “final decision with respect to an arbitration.” 9 1
U.S.C. § 16(a)(3). We conclude, however, that a “final 2
decision with respect to an arbitration” requires an 3
official dismissal of all claims. Thus, where the district 4
court stays proceedings in lieu of dismissal, the decision 5
is not final. Plaintiffs-Appellants also claim that we have 6
jurisdiction to enforce an interim arbitration award 7
pursuant to 9 U.S.C. § 16(a)(1)(D). We conclude, however, 8
that an arbitration award is a final adjudication of a claim 9
on the merits, and a procedural ruling that denies leave to 10
amend is not an “award,” since the decision has no effect on 11
the merits of the proposed claims. As a result, we dismiss 12
the appeal for lack of jurisdiction. 13
14
D ISMISSED . 15
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B RIAN D. M URPHY (Peter A. Walker, on the brief), Seyfarth 19
Shaw LLP, New York, NY, for Plaintiffs-Appellants. 20
21
T HEODORE R. S NYDER , Krebsbach & Snyder, P.C., New York, NY 22
(Anthony J. LaCerva, Collins & Scanlon LLP, 23
Cleveland, OH, on the brief), for Defendant- 24
Appellee. 25
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27
28
W ESLEY , Circuit Judge: 29
Plaintiff-Appellant Accenture LLP (“Accenture”) 30
provides global management and technology consulting 31
services. Accenture employed Defendant-Appellee Jim L. 32
Spreng (“Spreng”) from August 2006 to March 31, 2009. 33
Before Spreng joined Accenture, he owned two companies: 34
Advantium and XPAN. Advantium prevented clients from 35

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3
overpaying vendors by using software applications, while 1
XPAN recouped clients’ overpayments through an audit 2
recovery process. Plaintiff-Appellant Leslie Alan Bailey 3
(“Bailey”) co-owned Meridian, a business that cooperated 4
with XPAN. 5
In July 2006, Spreng and Bailey sold their companies to 6
Accenture. In exchange, Accenture paid Spreng a lump sum 7
and a retention bonus, offered Spreng employment with 8
Accenture, and provided Spreng an opportunity to earn a 9
performance bonus. Accenture and Spreng memorialized their 10
specific agreements in an Asset Purchase and Framework 11
Agreement and an Employment Agreement. Each agreement 12
included an arbitration clause. 13
Spreng would earn the performance bonus if his 14
companies met certain revenue targets. Accenture agreed to 15
make “commercially reasonable efforts” to include Spreng’s 16
products as service offerings within its invoice-to-pay 17
offerings, but Accenture reserved discretion to operate its 18
business in the manner that it saw fit, notwithstanding a 19
negative impact on Spreng’s prospective income. By November 20
2008, Spreng’s companies had fallen short of the revenue 21
threshold necessary to trigger any performance bonus for 22

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4
Spreng, so Accenture notified him that it would terminate 1
his employment as of March 31, 2009. 2
A. Arbitration Proceedings 3
On June 10, 2009, Spreng filed an arbitration demand. 4
He alleged claims for wrongful termination and breach of 5
contract based on Accenture’s failure to pay a performance 6
bonus. Accenture attended a full-day mediation and engaged 7
in nearly seven months of settlement negotiations before 8
Accenture determined that the dispute would require an 9
actual arbitration hearing. Accenture and Spreng agreed on 10
an arbitrator and commenced discovery. 11
On September 16, 2010, after the arbitrator compelled 12
Accenture to produce various documents, Spreng discovered 13
several emails between senior Accenture executives that 14
allegedly suggested that Accenture had padded estimated 15
revenues for Spreng’s companies by $17 million. On October 16
12, 2010, Spreng moved for leave to amend his statement of 17
claims in order to allege fraudulent inducement. On October 18
13, 2010, the arbitrator denied the motion to amend (the 19
“October Order”), thus foreclosing Spreng’s ability to 20
present his fraudulent inducement claim at the October 19, 21
2010 hearing. 22

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5
On October 14, 2010, Spreng filed a new demand for 1
arbitration that included his original claims, plus claims 2
of fraud and breach of contract. Later that day, Spreng 3
withdrew his first demand for arbitration, styling the 4
withdrawal as “without prejudice.” Accenture disputed this 5
characterization and asked the arbitrator to deem Spreng’s 6
withdrawal as “with prejudice.” The arbitrator denied the 7
motion, finding that the American Arbitration Association 8
(“AAA”) had accepted Spreng’s withdrawal and, as a result, 9
that he was “without jurisdiction or authority” to address 10
Accenture’s request. Thereafter, Accenture repeatedly 11
requested that the AAA reject Spreng’s new arbitration 12
demand. The AAA, however, responded that it was without 13
power to stay the second arbitration absent the parties’ 14
agreement or a court order. 15
B. District Court Proceedings 16
Two months after Spreng withdrew his first arbitration 17
request, Accenture brought the underlying action. In that 18
action, Accenture moved to enjoin the second arbitration 19
pending the district court’s determination of Accenture’s 20
claims that: (1) Spreng’s withdrawal from the first 21
arbitration waived his right to a second arbitration; 22

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(2) the October Order was an enforceable arbitration award; 1
(3) Spreng had breached his contractual obligation to 2
arbitrate; and (4) the dispute should be remanded to the 3
first arbitrator. 4
Following oral argument, the district court denied 5
Accenture’s motions. The court found that “Accenture’s 6
requests can be appropriately addressed within the context 7
of the arbitration and should be directed to the arbitrator 8
administering the Second Arbitration.” Accenture LLP, et 9
al. v. Spreng, No. 10-cv-9393, 2010 WL 5538384, at *2 10
(S.D.N.Y. Dec. 23, 2010). The court concluded that 11
Accenture faced no irreparable harm because it alleged a 12
financial loss and could recover damages. Thus, it denied 13
Accenture’s motion for a preliminary injunction and 14
temporary restraining order. 15
The district court inquired as to whether Accenture 16
contemplated any further proceedings. Accenture responded 17
that it intended to pursue its claims for a permanent 18
injunction, enforcement of the October Order, and breach of 19
contract. Accenture requested permission to file a motion 20
for a stay pending appeal, which the court denied. 21
Nevertheless, on February 14, 2011, with Accenture’s 22

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consent, the court stayed all proceedings pending appeal. 1
Before this Court, Accenture moved for an injunction 2
pending appeal and requested an expedited briefing schedule. 3
We denied an injunction, but granted an expedited appeal. 4
On appeal, Accenture argues: (1) that the district court 5
erred by not granting its motion for a preliminary 6
injunction and temporary restraining order; (2) that 7
Spreng’s withdrawal from the first arbitration waived his 8
right to a second arbitration; and (3) that the first 9
arbitration’s October Order (denying Spreng leave to amend) 10
was an enforceable arbitration award. 11
II. DISCUSSION 12
Congress enacted the Federal Arbitration Act (“FAA”) 13
“to reverse the longstanding judicial hostility to 14
arbitration agreements that had existed at English common 15
law and had been adopted by American courts.” Gilmer v. 16
Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). The 17
FAA’s provisions “manifest a ‘liberal federal policy 18
favoring arbitration agreements.’” Id. at 25 (quoting Moses 19
H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 20
(1983)). Section 16 of the FAA “furthers [the FAA’s] aim of 21
eliminating barriers to arbitration by promoting appeals 22

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1 Section 16(b) still allows us to review, in our sole
discretion, decisions that a district court certifies pursuant to
28 U.S.C. § 1292(b). The district court did not certify its
decision for our immediate review.
8
from orders barring arbitration and limiting appeals from 1
orders directing arbitration.” Ermenegildo Zegna Corp. v. 2
Zegna, 133 F.3d 177, 180 (2d Cir. 1998) (internal quotation 3
marks and brackets omitted). 4
A. FAA § 16(b)(4) Restricts Appellate Jurisdiction Over 5
District Court Orders that Refuse to Enjoin 6
Arbitration. 7
We lack jurisdiction over this appeal because Accenture 8
seeks review of a district court’s order “refusing to enjoin 9
an arbitration.” 9 U.S.C. § 16(b)(4). While 28 U.S.C. 10
§ 1292(a)(1) grants us broad appellate jurisdiction over 11
district courts’ interlocutory orders refusing injunctions, 12
FAA § 16(b)(4) limits our review of interlocutory orders 13
refusing to enjoin arbitration. 1 Our sister circuits agree. 14
In ConArt, Inc. v. Hellmuth, for example, the Eleventh 15
Circuit held that § 16(b)(4) limits § 1292(a)(1)’s broad 16
grant of appellate jurisdiction. 504 F.3d 1208, 1210 (11th 17
Cir. 2007). There, a general contractor assigned its rights 18
against a subcontractor to an architectural firm supervising 19
construction. The contract between the general contractor 20

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2 See also ON Equity Sales Co. v. Pals, 528 F.3d 564, 567-
68 (8th Cir. 2008) (holding that while the court had general
jurisdiction over interlocutory orders denying motions for
injunctive relief, FAA § 16(b)(4) foreclosed its review of non-
final arbitration orders); Hardie v. United States, 367 F.3d
1288, 1290 (Fed. Cir. 2004) (dismissing appeal for lack of
jurisdiction pursuant to FAA § 16(b)(4)); see also Televisa S.A.
De C.V. v. DTVLA WC Inc., 374 F.3d 1384 (9th Cir. 2004)
(withdrawing opinion after recognizing that FAA § 16(b)(4)
stripped the court of appellate jurisdiction).
9
and the architectural firm included an arbitration 1
provision, and after the subcontractor sued the 2
architectural firm in federal court, the firm asserted its 3
assigned counterclaims in a demand for arbitration. In 4
response, the subcontractor moved to enjoin the arbitration, 5
but the district court denied relief. Id. at 1209-10. 6
On appeal, the Eleventh Circuit rejected the 7
subcontractor’s claim that § 1292(a)(1) superceded 8
§ 16(b)(4): 9
That argument has too much throw weight. 10
Accepting it would write out FAA § 16(b)(4)’s clear 11
command, because all orders “refusing to enjoin an 12
arbitration” are orders “refusing...injunctions.” 13
We don’t have the authority to excise specific 14
statutory provisions in favor of more general ones. 15
16
504 F.3d at 1210 (citations omitted). 2 The court applied 17
two canons of statutory interpretation to conclude that 18
§ 16(b)(4) limited 28 U.S.C. § 1292(a)(1)’s broad grant of 19
appellate jurisdiction. First, the court found that because 20

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10
§ 16(b)(4) was narrow and specific, while § 1292(a)(1) was 1
broad and general, the “specific [w]as an exception to the 2
general.” 504 F.3d at 1210. Second, the court found that 3
because Congress enacted § 1292(a)(1) before § 16(b)(4), 4
§ 1292(a)(1) must yield to § 16(b)(4) “to the extent 5
necessary to prevent the conflict.” Id. 6
Accenture challenges an interlocutory order refusing to 7
enjoin an arbitration. As such, Accenture’s appeal clearly 8
falls within § 16(b)(4)’s reach. Recognizing this 9
jurisdictional bar respects the ongoing arbitration and is 10
in accord with our well established view favoring 11
arbitration. See Salim Oleochemicals v. M/V Shropshire, 278 12
F.3d 90, 93 (2d Cir. 2002); Ermenegildo, 133 F.3d at 180. 13
B. This Court Also Lacks Jurisdiction Under FAA § 16(a)(3) 14
Because the District Court’s Order is Not Final. 15
Notwithstanding § 16(b)(4), Accenture claims that we 16
have appellate jurisdiction because it appeals from “a final 17
decision with respect to an arbitration.” See 9 U.S.C. 18
§ 16(a)(3). Accenture claims that while the district court 19
did not dismiss the underlying proceedings, the “practical 20
effect” of the order denying relief rendered it final. Our 21
cases, however, leave no doubt that the decision was not 22
final. 23

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11
A final decision is one that “‘ends the litigation on 1
the merits and leaves nothing more for the court to do but 2
execute the judgment.’” Cap Gemini Ernst & Young v. Nackel, 3
346 F.3d 360, 362 (2d Cir. 2003) (per curiam) (quoting Green 4
Tree Fin. Corp. v. Randolph, 531 U.S. 79, 86 (2000)). To 5
date, our decisions defining a “final decision with respect 6
to an arbitration” have arisen in the context of § 16(b)(3) 7
(orders to compel arbitration). Nevertheless, our prior 8
analysis is equally applicable to § 16(b)(4) (orders 9
“refusing to enjoin an arbitration”). 10
In Cap Gemini, after compelling arbitration, the 11
district court transferred the case to its suspension 12
docket. The district court had indicated that it intended 13
that its decision would be final and that the only reason it 14
had retained the case was to allow the parties to enforce an 15
award, if any, without filing another lawsuit. We exercised 16
appellate jurisdiction because of the unique circumstances 17
in the case, but declared: “[H]enceforth, we will abide by 18
both the letter and spirit of Green Tree and require an 19
official dismissal of all claims before reviewing an order 20
to compel arbitration.” Cap Gemini, 346 F.3d at 363 21
(emphasis added). 22

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3 Our sister circuits now generally agree that finality
requires a dismissal. Sanford v. MemberWorks, Inc., 483 F.3d
956, 958-61 (9th Cir. 2007); CitiFinancial Corp. v. Harrison, 453
F.3d 245, 251-52 (5th Cir. 2006); Comanche Indian Tribe of Okla.
v. 49, L.L.C., 391 F.3d 1129, 1132 (10th Cir. 2004); McCaskill v.
SCI Mgmt. Corp., 298 F.3d 677, 679 (7th Cir. 2002); Blair v.
12
We apply Cap Gemini and extend its holding to FAA 1
§ 16(b)(4). As early as 2002, we cautioned in 2
Oleochemicals: 3
We urge district courts in these circumstances 4
to be as clear as possible about whether they truly 5
intend to dismiss an action or mean to grant a stay 6
pursuant to 9 U.S.C. § 3, which supplies that power, 7
or whether they mean to do something else entirely. 8
Courts should be aware that a dismissal renders an 9
order appealable under § 16(a)(3), while the 10
granting of a stay is an unappealable interlocutory 11
order under § 16(b). 12
Oleochemicals, 278 F.3d at 93. Oleochemicals’ instruction 13
is equally applicable to § 16(b)(4). 14
Accenture argues that CPR v. Spray, 187 F.3d 245 (2d 15
Cir. 1999), supports its argument that the district court’s 16
order was final and appealable. Spray, however, relied on 17
our outdated precedent that determined finality based on 18
whether the order was entered in an “embedded” or 19
“independent” proceeding. 187 F.3d at 253-54. The Supreme 20
Court rejected that analysis in Green Tree. See Green Tree, 21
531 U.S. at 88-89; Oleochemicals, 278 F.3d at 92 22
(recognizing abrogation). Therefore, Spray is inapposite. 3
23

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Scott Specialty Gases, 283 F.3d 595, 602 (3d Cir. 2002). But see
Brown v. Pac. Life Ins. Co., 462 F.3d 384, 392-93 (5th Cir. 2006)
(finding order to be final, even though the district court had
stayed proceedings, because the district court had stayed state
proceedings such that the stay was not pursuant to 9 U.S.C. § 3).
13
It matters not how Accenture characterizes the district 1
court’s order; it is clear that it was not a “final decision 2
with respect to an arbitration.” See 9 U.S.C. § 16(a)(3). 3
The district court did not dismiss the proceedings, and 4
Accenture admits that it contemplates further proceedings 5
before the district court. In a letter to the district 6
court, Accenture “respectfully request[ed] that the 7
[district court] retain jurisdiction as [Accenture] does 8
contemplate further proceedings.” Endorsed Letter at 1, 9
Accenture LLP, et al. v. Spreng, No. 1:10-cv-9393 (S.D.N.Y. 10
Dec. 30, 2010), ECF No. 11. Accenture also indicated that 11
it “intend[ed] to still advance its claims for a permanent 12
injunction, enforcement of [the October Order], and breach 13
of the employment agreement.” Id. Accenture requested a 14
pre-motion conference before moving for “a stay of any 15
further proceedings in [the district court] pending appeal.” 16
Id. at 2. 17
At oral argument before this Court, Accenture claimed 18
that it had asked the district court to clarify whether its 19

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decision was final for purposes of § 16(a)(3). In 1
Accenture’s request for reconsideration, however, it neither 2
asked for such relief nor mentioned § 16(a)(3) or 3
§ 16(b)(4). See Endorsed Letter, No. 1:10-cv-9393 (S.D.N.Y. 4
Dec. 30, 2010), ECF No. 11. Moreover, Accenture consented 5
to a stay. Endorsed Letter at 2, No. 1:10-cv-9393 (S.D.N.Y. 6
Feb. 14, 2011), ECF No. 16 (“Accenture has no objection to a 7
stay of District Court proceedings pending appeal.”). It is 8
clear that the dispute below remains open, albeit stayed. 9
As a result, the district court’s decision was not final; we 10
lack jurisdiction over the appeal. 11
C. This Court Otherwise Lacks Jurisdiction Over 12
Accenture’s “Merits-Based” Claims. 13
Accenture also claims that this Court has jurisdiction over 14
two merits-based claims: (1) that Spreng’s withdrawal from 15
the first arbitration waived his right to a second 16
arbitration; and (2) that the October Order (denying Spreng 17
leave to amend) was an enforceable arbitration award. But 18
Accenture presents us with no final order for review. Thus, 19
Accenture’s merits-based claims are beyond our reach unless 20
the claims themselves provide a jurisdictional hook. 21
22
23

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4 While Accenture claims that we have pendent appellate
jurisdiction over its merits-based claims, we cannot exercise
pendent jurisdiction without a central, appealable claim in the
first place. See Myers v. Hertz Corp., 624 F.3d 537, 552 (2d
Cir. 2010).
15
Of the two, only the second presents a conceivable 1
jurisdictional premise. 4
2
Accenture correctly argues that we may review an order 3
“confirming or denying confirmation of an award or partial 4
award.” 9 U.S.C. § 16(a)(1)(D). The October Order, 5
however, was not an “award.” An arbitration award is a 6
final adjudication of a claim on the merits. See Lynne 7
Carol Fashions, Inc. v. Cranston Print Works Co., 453 F.2d 8
1177, 1184 (3d Cir. 1972). While an arbitrator may grant 9
interim relief as an “interim award,” the interim award must 10
“finally and definitely dispose[] of a separate independent 11
claim.” Metallgesellschaft A.G. v. M/V Capitan Constante, 12
790 F.2d 280, 283 (2d Cir. 1986). 13
The October Order does not qualify as an “arbitration 14
award” because it does not “finally and definitely” dispose 15
of Spreng’s fraud claim. In the October Order, the 16
arbitrator explained that “[i]t is one thing to add 17
alternative theories of relief arguably arising from the 18
same set of facts; it is quite another to try to add a 19

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5 The second arbitrator remains free to determine the
preclusive effect, if any, of the October Order.
16
mutually exclusive theory of relief on a ‘new’ set of facts 1
on the eve of the hearing.” The arbitrator did not rule on 2
the substance of Spreng’s proposed amended claims. Rather, 3
he made a procedural ruling that denied Spreng leave to 4
amend. For purposes of our review, the October Order was an 5
interim procedural ruling, not an arbitration award. 5 Thus, 6
FAA § 16(a)(1)(D) does not grant us jurisdiction to review 7
the arbitrator’s ruling. 8
III. CONCLUSION 9
We must DISMISS Appellants’ claims because we lack 10
appellate jurisdiction. 11

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