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Champ v. Siegel Trading Co. Inc.

May 18, 1995

ALVIN CHAMP AND ESTHER PERERA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,

PLAINTIFFS-APPELLEES,

MAL YERASI AND STEPHEN B. GEER,

INTERVENORS-APPELLEES, CROSS-INTERVENORS/APPELLANTS,

v.

THE SIEGEL TRADING COMPANY, INC., HOWARD SIEGEL AND FRANK MAZZA,

DEFENDANTS-APPELLANTS, CROSS-APPELLEES.



Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 89 C 7148--William T. Hart, Judge.

Before RIPPLE, MANION, and ROVNER, Circuit Judges.

MANION, Circuit Judge.

ARGUED JANUARY 19, 1995

DECIDED MAY 18, 1995

The first time we encountered this case we concluded that at that stage it was an unappealable interlocutory decision under the Federal Arbitration Act ("FAA"), 9 U.S.C. secs. 1-16. After further proceedings in the district court, we now have before us the question of whether a district court has authority to certify an individual plaintiff as a class representative of other similarly aggrieved parties whose claims are subject to arbitration. We conclude that absent a provision in the parties' arbitration agreement providing for class treatment of disputes, a district court has no authority to certify class arbitration. We also conclude that we do not have jurisdiction to review a challenge by the original defendants to the district court's order in their favor.

I.

The more detailed facts leading to the resolution of these appeals have been set out previously in Perera v. Siegel Trading Co., Inc., 951 F.2d 780 (7th Cir. 1992), familiarity with which is presumed. Thus we set out only those facts necessary for today's resolution. The plaintiff, Esther Perera, brought a class action complaint against the defendants, Siegel Trading Company, Inc., Frank Mazza, and Howard Siegel, claiming violations of the Commodity Exchange Act, RICO and various state laws. Perera filed a motion for class certification. But the district court never ruled on the motion because it ordered her to proceed to arbitration pursuant to the arbitration agreement between her and the defendants. Perera next filed a motion requesting that the court certify her as a class representative in the arbitration proceedings; the court granted this motion. The defendants moved for reconsideration, and the court revoked its prior order and held that it lacked authority to certify a class arbitration where the parties had not agreed to such a procedure in their arbitration agreement. In order to allow Perera to appeal this ruling, the court directed the clerk of the court to enter judgment on its order compelling arbitration pursuant to Rule 54(b). Recognizing that a Rule 54(b) judgment might be inappropriate, the district court also certified this ruling as an appealable interlocutory order under 28 U.S.C. 1292(b). The court's Rule 54(b) judgment was entered on November 7, 1990. In addition, a minute order was entered on December 7, 1990, directing that the entire case be dismissed with prejudice; however, no final judgment setting forth the court's disposition was entered on the docket.

On appeal, Perera asserted as a basis for jurisdiction that since the district court's order compelling arbitration was final, the court's other procedural decisions, such as its order refusing to certify class arbitration, were also final and hence reviewable. This court disagreed and held that the order compelling Perera to arbitrate was not a final appealable decision. We also held that the district court's decision to enter a Rule 54 judgment did not transform an interlocutory decision into a final decision. Perera, 951 F.2d at 786. Because of this determination, we concluded that we were without jurisdiction to review the district court's order denying class arbitration and accordingly ordered Perera's appeal dismissed.

Shortly after the dismissal of her appeal, Perera settled her individual claim with the defendants. However, since the parties at that time did not request that it do so, the court did not formally enter a final judgment on Perera's claim pursuant to Rule 58. Later, on April 7, 1993, the parties appeared before the court on their agreed motion for entry of final judgment. The court was hesitant to grant the parties' motion. The court was under the belief that its order of December 27, 1990 had already disposed of the case. That being the case, the court expressed concern that an entry of final judgment might prejudice the rights of any putative class members who still had a possible claim. The court finally decided that it would allow the parties to file the agreed motion to "show apparently that you reached agreement among yourselves, so theoretically you have a contract." But the court declined to enter a final judgment.

On May 4, 1993, Perera renewed her motion for entry of final judgment. That same day, Mal Yerasi and Stephen Geer, who alleged to be members of the putative class of arbitration claimants, filed a motion seeking to intervene following the entry of final judgment so that they could appeal the court's previous order denying certification of a class for arbitration. Defendant Howard Siegel filed a motion opposing the entry of final judgment and the petition to intervene. Siegel apparently believed that the entire case had been finally resolved on or about November 18, 1992, by which time Perera had settled her claims which were the subject of arbitration. If that were so, then this rendered the intervenors' petition untimely, Siegel said. Alternatively, Siegel requested the district court to enter an order of dismissal with prejudice nunc pro tunc to November 18, 1992.

On February 25, 1994, the court denied Siegel's motions, granted Perera's motion for entry of final judgment in favor of defendants and against Perera dismissing her claims with prejudice, and granted Yerasi's and Geer's petition to intervene for purposes of appealing the court's denial of class certification. The court also entered a Rule 58 judgment indicating its disposition. On February 28, 1994, the clerk of the court entered the court's judgment on the docket.

Howard Siegel, Siegel Trading Co. and Mazza filed notices of appeal from the court's February 25, 1994 order. Howard Siegel's appeal was docketed as No. 94-1619; Siegel Trading Co.'s and Mazza's appeal was docketed as No. 94-1631. Intervenors Yerasi and Geer filed a notice of appeal which was docketed as No. 94-1795. On April 6, 1994, this court issued an order requiring defendants to show cause why, as prevailing parties, their appeals should not be dismissed for lack of appellate jurisdiction. Following briefing, this court issued an order requiring that defendants' jurisdictional issues be briefed and heard along with the merits of the intervenors' appeal.

II.

A. Jurisdictional ...


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