Moses H. Cone Memorial Hospital v. Mercury Construction Corp.

*30 Justice Rehnquist,

with whom The Chief Justice and Justice O’Connor join, dissenting.

In its zeal to provide arbitration for a party it thinks deserving, the Court has made an exception to established rules of procedure. The Court’s attempt to cast the District Court’s decision as a final judgment fails to do justice to the meaning of the word “final,” to the Act of Congress that limits the jurisdiction of the courts of appeals, or to the district judges who administer the laws in the first instance.

If the District Court had not stayed the proceeding, but had set a trial date two months away, there would be no doubt that its order was interlocutory, subject to review only by mandamus or pursuant to 28 U. S. C. § 1292(b). This would be true even though § 4 of the Arbitration Act provides that “the court shall proceed summarily” to trial, because an order setting a trial date only guides the course of litigation, and does not, of its own force, dispose of it on the merits. Such an order is tentative; that is, it is subject to change at any time on the motion of a party or by the court, sua sponte.

The order the District Court actually entered is no more final. It delayed further proceedings until the completion of pending litigation in the state courts. This order was also tentative; it was subject to change on a showing that the state proceedings were being delayed, either by the Hospital or by the court, or that the state courts were not applying the federal Act, or that some other reason for a change had arisen. This order did not dispose of the case on the merits. If the state court had found that there was no agreement to arbitrate within the meaning of the United States Arbitration Act, the District Court would have been bound by that finding. But res judicata or collateral estoppel would apply if the state court reached a decision before the District Court in the absence of a stay. The likelihood that a state court of competent jurisdiction may enter a judgment that may determine some issue in a case does not render final a federal district court’s decision to take a two-day recess, or to order ad *31 ditional briefing by the parties in five days or five months, or to take a case under advisement rather than render an immediate decision from the bench. Such a possibility did not magically change that character of the order the District Judge entered in this case.

Section 1291 of the Judicial Code is a congressional command to the federal courts of appeals not to interfere with the district courts’ management of ongoing proceedings. Unless the high standards for a writ of mandamus can be met, or the district court certifies an interlocutory appeal pursuant to § 1292(b), Congress has directed that the district courts be permitted to conduct their cases as they see fit. The reason for this rule is simple:

“Since the fight to a judgment from more than one court is a matter of grace and not a necessary ingredient of justice, Congress from the very beginning has, by forbidding piecemeal disposition on appeal of what for practical purposes is a single controversy, set itself against enfeebling judicial administration. Thereby is avoided the obstruction to just claims that would come from permitting the harassment and cost of a succession of separate appeals from the various rulings to which a litigation may give rise, from its initiation to entry of judgment. To be effective, judicial administration must not be leaden-footed. Its momentum would be arrested by permitting separate reviews of the component elements in a unified cause.” Cobbledick v. United States, 309 U. S. 323, 325 (1940) (Frankfurter, J., for a unanimous Court).

The Court’s decision places an unwarranted limitation upon the power of district courts to control their own cases. The Court’s opinion does not establish a broad exception to § 1291, see ante, at 10-11, n. 11, but it does create uncertainty about when a district court order in a pending case can be appealed. This uncertainty gives litigants opportunities to disrupt or delay proceedings by taking colorable appeals from interlocu *32 tory orders, not only in cases nearly identical to this but also in cases which the ingenuity of counsel disappointed by a district court’s ruling can analogize to this one. Section 1291 established a policy that district judges should conduct their own cases from beginning to end. The occasional injustice to a litigant that results from an erroneous district court decision is far outweighed by the far greater systemic disruption created by encouraging parties to attempt interlocutory appeals. The former attracts the Court’s attention because the legal error it perceives is apparent on the surface of the case. The latter receives inadequate attention because it does not appear in published decisions or in petitions for certiorari. It is, rather, obscured by the “merits” of cases and hidden among statistics on the cost and seeming interminable nature of litigation. Both respect for district judges and concern for the course of litigation generally should make the Court hesitate before creating another exception, however narrow, to § 1291.

The Court has acknowledged the importance of the rule of finality as recently as Coopers & Lybrand v. Livesay, 437 U. S. 463 (1978), which rejected the so called “death knell” exception to § 1291. In Coopers, a putative representative plaintiff whose motion for class certification had been denied by the District Court sought to appeal under § 1291. We accepted his argument that this order effectively put him out of court, id., at 470, but held that this circumstance did not justify an exception to the statute. “[Allowing appeals of right from nonfinal orders that turn on the facts of a particular case thrusts appellate courts indiscriminately into the trial process and thus defeats one vital purpose of the final-judgment rule — ‘that of maintaining the appropriate relationship between the respective courts. . . . This goal, in the absence of most compelling reasons to the contrary, is very much worth preserving.’ ” Id., at 476 (quoting Parkinson v. April Industries, Inc., 520 F. 2d 650, 654 (CA2 1975) (concurring opinion)).

*33 The Court has not given any sound, principled justification for permitting the Court of Appeals to thrust itself into the trial process in this case. It begins by citing Idlewild Liquor Corp. v. Epstein, 370 U. S. 713 (1962). There the District Court had stayed an action challenging the constitutionality of a state statute “to give the state courts an opportunity to pass upon the constitutional issues presented, although there was no relevant litigation then pending in the state courts.” Id., at 714. This Court held that the order was appealable because the plaintiff “was effectively out of court.” Id., at 715, n. 2. Idlewild does not control this case.

First, Mercury is less “effectively out of court” than was Idlewild. There was no pending state proceeding that might have resolved the issues in the case, and Idlewild might well have been obliged to take the risk of violating the statute and challenging it in an enforcement proceeding in state court.

More importantly, however, the decision in Idlewild cannot be good law after Coopers, supra. The Court describes Coopers as holding only that the collateral-order doctrine of Cohen v. Beneficial Loan Corp., 337 U. S. 541 (1949), does not apply to a class decertification order under Federal Rule of Civil Procedure 23(c)(1). Ante, at 12-13, n. 14. We did hold that “the collateral-order doctrine is not applicable to” a decertification order. 437 U. S., at 468-469. We then went on to reject the argument that the decertification order was final under the so-called “death knell” doctrine, holding that an order does not become final simply because the plaintiff will be unable to pursue his claim if the order stands. Id., at 469-477. We declined to attach any importance to the fact that the plaintiff in Coopers was just as “effectively out of court” as Idlewild or Mercury. We noted that “if the ‘death knell’ doctrine has merit, it would apply equally to the many interlocutory orders in ordinary litigation . . . that may have such tactical economic significance that a defeat is tantamount to a ‘death knell’ for the entire case.” Id., at 470. We also noted that 28 U. S. C. § 1292(b) provides for review *34 of certain nonfinal orders, and that the “death knell” doctrine circumvents its restrictions. 437 U. S., at 474-475. By ignoring this discussion and holding from Coopers, the Court has created an unjustified exception to § 1291.

The Court also states that the stay order in this case is ap-pealable under Cohen, supra. It quotes the formulation of the Cohen collateral-order doctrine from Coopers:

“[T]he order must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment.” 437 U. S., at 468, quoted, ante, at 11-12.

The District Court’s order did not “conclusively determine the disputed question” for the reasons stated above. The Court’s assertion to the contrary, ante, at 12-13, is nothing short of sheer speculation about the state of mind of the District Judge. Such speculation is hardly the “practical rather than . . . technical construction”* of § 1291 contemplated by Cohen, supra, at 546. In Cohen itself, the District Court denied the defendant’s motion to require the plaintiff to post a bond on the ground that the statute requiring the bond did not apply. That order “conclusively determined” the question whether a bond was required because no conceivable change of circumstances could affect the basis of the District Court’s decision. In this case, any number of plausible events might have convinced the District Court that a necessary basis of its decision — that the state court would proceed promptly and fairly to adjudicate the issue of the existence of an agreement to arbitrate — no longer applied.

*35 Furthermore, I am not as certain as is the.Court that by staying this case the District Court resolved “an important issue.” An issue should not be deemed “important” for these purposes simply because the court of appeals or this Court thinks the appellant should prevail. The issue here was whether the factual question whether there was an agreement to arbitrate should be adjudicated in a state or federal court. Unless there is some reason to believe that the state court will resolve this factual question wrongly, which the Court quite rightly disclaims, ante, at 26, I do not see how this issue is more important than any other interlocutory order that may place a litigant at a procedural disadvantage.

For these reasons, I do not believe the District Court’s order was appealable. Interlocutory orders are committed by statute to the judgment of the district courts, and this Court ill-serves the judges of those courts and the overwhelming majority of litigants by devising exceptions to the statute when it believes a particular litigant has been wronged.

Given my view of appealability, I do not find it necessary to decide whether the District Court’s order was proper in this case. I am disturbed, however, that the Court has sanctioned an extraordinary departure from the usual and accepted course of judicial proceedings by affirming the Court of Appeals decision on an issue that was not decided in the District Court.

The Court of Appeals ordered the District Court to enter an order compelling arbitration, even though that issue was not considered by the District Court. This Court has maintained the difference between appellate jurisdiction and original jurisdiction at least since Marbury v. Madison, 1 Cranch 137, 174-176 (1803) (“It is the essential criterion of appellate jurisdiction, that it revises and corrects the proceedings in a case already instituted”). I do not understand how the Court can say that the Court of Appeals had discretion to perform a nonappellate act.

*36 The Court relies on 28 U. S. C. § 2106, which provides that a court of appeals

“may affirm, modify, vacate, set aside or reverse any judgment, decree, or order of a court lawfully brought before it for review, and may remand the cause and direct the entry of such appropriate judgment, decree, or order, or require such further proceedings to be had as may be just under the circumstances.”

This statute does not grant the courts of appeals authority to constitute themselves as trial courts. Section 4 of the Arbitration Act gives the Hospital a right to a jury trial. See ante, at 23, n. 27. By deciding that there were no disputed issues of fact, the Court of Appeals seems to have decided a motion for summary judgment that was not before it. This is the kind of issue that district judges decide every day in the ordinary course of business. It is not the kind of issue that courts of appeals determine. The Court of Appeals did have before it the memoranda filed in the District Court but, contrary to the Court’s intimation, ante, at 29, this issue was not argued in the Court of Appeals: See 656 F. 2d 933, 948, n. 1 (1981) (Hall, J., dissenting) (“No one argued that this court should decide that issue”).

There was no reason to believe that the District Court would not have acted promptly to resolve the dispute on the merits after being reversed on the stay. That judges of a court of appeals believe they know how a case should be decided is no reason for them to substitute their own judgment for that of a district judge without regard to the normal course of appellate procedure.

The judgment below should be vacated and the case remanded to the Court of Appeals with directions to dismiss the appeal for want of jurisdiction. Failing that, even if the Court is correct that the stay order was an error, the judgment should be reversed insofar as it decides the question of arbitrability, and the case should be remanded to the District Court for further proceedings under the Arbitration Act.

As a practical matter, it is not at all clear to me that the Court of Appeals’ course would have provided arbitration more quickly than that of the District Court, even if this Court had not granted certiorari. If the Court of Appeals was correct that this dispute is plainly arbitrable, there is no reason to expect that the state courts would not have resolved that issue in the 11 months during which the case was before the Court of Appeals.