Jurisdiction Issues

Concluding that the action before it “lacks adverseness” and did not present a case or controversy fit for judicial resolution, the Fourth Circuit Court of Appeals held that it did not have jurisdiction over the National Labor Relations Board’s petition to enforce a settlement and order to which the employer had consented, and dismissed the petition.

Respondent Constellium Rolled Products employs members of a local United Steelworkers union. After a labor dispute, the union filed four charges with the NLRB alleging that Constellium committed unfair labor practices. The union requested information from Constellium that it believed would be relevant to collective bargaining. The union alleged that Constellium refused to provide the requested information, and “[b]elieving the allegations had merit,” the NLRB issued an agency complaint against Constellium. Rather than proceed through agency adjudication, the union and Constellium entered into a formal settlement stipulation, which provided that the stipulation was not effective until the NLRB had approved it and that upon entry of an NLRB order, Constellium would immediately comply with the terms of the order. Constellium also agreed in the stipulation that when the NLRB sought a judgment in federal court to enforce the order, “Constellium would waive all defenses and consent to the entry of that judgment.”

The NLRB approved the stipulation, issued an order reflecting the terms, and then petitioned the court under 29 U.S.C. §160(e) to enter a consent judgment against Constellium reflecting the terms of the order. The Fourth Circuit dismissed the petition holding that “[b]ecause this suit lacks adverseness, we lack jurisdiction.” In considering the jurisdictional issue, the Fourth Circuit noted the Supreme Court’s decision in United States v. Windsor, 570 U.S. 744 (2013), which reaffirmed that Article III requires “sufficient adverseness” to confer an adequate basis for jurisdiction. The court further noted that “[a]dverse interests — that minimum adverseness threshold required by Windsor — exist only when judicial action would have ‘real-world consequences’ and ‘real meaning’ for the parties.” The court noted that the NLRB “agrees that Constellium has complied with the order and continues to do so” and found that while there was adverseness between the NLRB and Constellium at some point when the matter was before the board, “that adverseness was extinguished before the case got to federal court” and dismissed the petition.

National Labor Relations Board v. Constellium Rolled Products Ravenswood, LLC, No. 20-2140 (4th Cir. Aug. 5, 2022).

The Second Circuit Court of Appeals recently partially refused to enforce a foreign arbitration award on the ground that it was required to give comity to a foreign court decision concerning that award.

Esso Exploration and Production Nigeria Ltd. entered into a contractual agreement with the Nigerian government to develop Nigerian oil fields. The agreement provided that the Nigerian National Petroleum Corp. (NNPC) was entitled to obtain (“lift”) portions of the extracted oil. The agreement also included an arbitration clause requiring arbitration in Nigeria.

A dispute arose regarding whether NNPC was “lifting” more than it was allowed. Esso and NNPC arbitrated that issue in Nigeria and the arbitration panel awarded Esso approximately $1.8 billion plus interest. NNPC challenged that award in Nigerian courts. A Nigerian court set aside part of the award. Esso meanwhile petitioned the U.S. District Court for the Southern District of New York to confirm its arbitration award in full. The district court denied Esso’s petition in full, concluding that it was required to give comity to the Nigerian court decision.

The Second Circuit affirmed in part. It agreed that the district court was required to give comity to the Nigerian court’s decision but noted that the Nigerian court had only set aside the arbitration award in part. There was therefore nothing preventing U.S. courts from enforcing the aspect of the award that Nigerian courts had not vacated.

Esso Exploration & Production Nigeria Ltd. v. Nigerian National Petroleum Corp., No. 19-3159 (2d Cir. July 8, 2022)

The underlying dispute related to a property manager’s limitation of the appellant, Jane Doe, to one pet in her apartment. Doe sued the manager for declaratory relief, injunctive relief, monetary damages, and punitive damages under the Fair Housing Act and the Louisiana Equal Housing Opportunity Act. Doe moved for a preliminary injunction, and the property manager moved to compel arbitration and stay the case pursuant to the lease’s arbitration clause. Doe responded, in relevant part, by arguing that the court should sever the arbitration clause’s cost-splitting provision and require the property manager to pay Doe’s share of the arbitration costs.

The district court granted the motion to compel arbitration, holding that Doe was bound by the arbitration clause. It also declined to rule on Doe’s motion for a preliminary injunction and denied Doe’s request to sever the cost-splitting provision of the arbitration clause and her request that the property manager pay her share of the arbitration costs. The court stayed the case and retained jurisdiction to reopen the case on appropriate written motion. The parties subsequently could not agree on the costs of arbitration, and Doe filed a motion to reopen the case and, again, to sever the cost-splitting provision of the arbitration clause. The district court denied Doe’s motion, holding that, pursuant to the agreement’s delegation clause, disputes regarding the parties’ respective responsibilities for arbitration costs should be addressed by the arbitrator.

On appeal to the Fifth Circuit, the court agreed with the property manager’s arguments that the court lacked jurisdiction. The court held that the district court’s order compelling arbitration and staying and administratively closing the case pending arbitration was interlocutory and unappealable within the meaning of section 16 of the FAA. The court held that Doe’s motion to reopen the case and sever was, in effect, nothing more than a motion to reconsider the merits of part of the district court’s order compelling arbitration. A denial of a motion to reconsider an order compelling arbitration does not possess any more finality than the order compelling arbitration itself. The Fifth Circuit also ruled that the collateral order doctrine did not apply given section 16 of the FAA’s “specific framework for determining whether and when an appeal is proper” and that exercising mandamus jurisdiction, a drastic remedy reserved only for truly extraordinary situations, would be inappropriate.

Doe v. Tonti Management Co., No. 21-30295 (5th Cir. Feb. 1, 2022).

The Second Circuit Court of Appeals recently dismissed a plaintiff’s appeal of the trial court’s order compelling arbitration on the grounds that the order was a non-appealable interlocutory order under 9 U.S.C. § 16(b). In dismissing the appeal, the court also extended the reach of its earlier decision in Cheeks v. Freeport Pancake House Inc., 796 F.3d 199 (2d Cir. 2015), with respect to voluntary dismissals in disputes governed by the Fair Labor Standards Act (FLSA).

The relevant facts of Samake v. Thunder Lube Inc. are procedural in nature. In Samake, plaintiff Sekouba Samake filed suit in federal court against his former employer alleging violations of the FLSA and other laws. The employer moved to compel arbitration, and Samake promptly filed a notice of unilateral voluntary dismissal without prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). The district court entered an order retaining jurisdiction over the case pursuant to Cheeks, in which the Second Circuit held that any FLSA settlement must be reviewed by the district court before the parties may dismiss a case by joint stipulation pursuant to Rule 41(a)(1)(A)(ii). Samake then filed a letter with the trial court indicating that the parties had not settled, and sought to withdraw his notice of voluntary dismissal. The court entered an order effecting Samake’s withdrawal of his notice of voluntary dismissal. Thereafter, the parties briefed the employer’s motion to compel arbitration, and the court ultimately granted the motion. Samake timely filed an appeal of the order compelling arbitration.

On appeal, Samake argued primarily that the trial court did not have jurisdiction to continue the proceedings — and enter an order compelling arbitration — because its jurisdiction was automatically revoked as a result of Samake’s notice of voluntary dismissal pursuant to Rule 41(a)(1)(A)(i). By implication, Samake took the position that the Second Circuit’s holding in Cheeks should be restricted to its facts, such that a trial court retains jurisdiction to review FLSA settlements after the parties filed a joint stipulation of dismissal pursuant to Rule 41(a)(1)(A)(ii) (as the Cheeks court held), but loses jurisdiction if the plaintiff files a unilateral notice of dismissal under Rule 41(a)(1)(A)(i).

In rejecting Samake’s argument, the Second Circuit held that Rule 41(a)(1)(A)(i) and (ii) both provide that voluntary dismissal is automatic “subject to any applicable federal statute,” including the FLSA:

We hold that the same result is warranted when the dismissal is effected unilaterally under Rule 41(a)(1)(A)(i) as when dismissal is effected by stipulation of all parties under (A)(ii). As a matter of grammar and structure, the exception to automatic dismissal for “any applicable federal statute” in subsection (A) applies equally to both subsections (A)(i) and (A)(ii); and Cheeks held that the FLSA is such an “applicable federal statute.” The plain text (set out in the margin) thus extends Cheeks to all dismissals under Rule 41(a)(1)(A).

Thus, the court concluded that the trial court below properly retained jurisdiction over the action under Cheeks, notwithstanding Samake’s prior voluntary dismissal. Based on this, the court further concluded that the trial court had jurisdiction to both effectuate Samake’s withdrawal of his voluntary dismissal and to consider the employer’s motion to compel arbitration. As the resulting order compelling arbitration was itself non-appealable under 9 U.S.C. § 16(b), the court dismissed Samake’s appeal of that order for lack of appellate jurisdiction.

Samake v. Thunder Lube, Inc., No. 21-102 (2d Cir. Jan. 27, 2022).