Philco Corp. v. Sunstein

241 A.2d 108, 429 Pa. 606, 1968 Pa. LEXIS 843, 1968 Trade Cas. (CCH) 72,470

• Court: Supreme Court of Pennsylvania
• Decided: April 24, 1968
• Docket: Appeal, 161
• Status: Published

Opinions

Opinion by

Mr. Justice Cohen,

This is an appeal from an order staying proceedings in the court below on appellant’s cause of action until the completion of proceedings in a separate action pending before the United States District Court for the Eastern District of Pennsylvania, or until further order of the court below.

On December 9, 1959, appellant instituted this action in equity seeking, to establish, inter alia, ownership rights in certain inventions allegedly devised by appellee, Sunstein, while in the course of his employment with appellant. The complaint also seeks a mandatory injunction against appellee, General Atronics Corporation, to restrain it from making further use of inventions devised and rightfully owned by Philco. After extensive discovery by all parties concerned, and. after settlement negotiations collapsed, Sunstein commenced an antitrust action in the federal courts alleging that “Philco and RCA individually and with others” unlawfully conspired to prevent him from exploiting inventions to which he asserts ownership.

In May, 1967, after appellant filed its praecipe to list the case for trial, Sunstein filed a petition to stay all proceedings pending the determination of the federal court action. After argument on the petition, the court below ordered a stay of the proceedings and this appeal followed.

Appellees initially argue that the appeal should be quashed. We disagree. While it is true that we indicated in Reynolds Metals Company v. Berger, 423 Pa. 360, 223 A. 2d 855 (1966), that orders staying proceedings to await the termination of related proceedings in another court are generally interlocutory in nature, our decision in Reynolds should not be viewed as a blanket rule without exception to be applied in all cases involving stay orders.¹ Whether or not a stay order should be considered final for appeal purposes depends to a large extent upon the practical effect and impact the stay order might have on the relief requested by the litigants. If the effect of the stay order is tantamount to a dismissal of the cause of action or amounts to a permanent denial of relief requested, the party aggrieved should undoubtedly be afforded the opportunity to appeal on the basis that such stay order is a final disposition of some, if not all, of the rights involved.²

Therefore, a consideration of the practical effects of the stay order on appellant’s canse of action is an essential prerequisite in determining whether the order appealed from is interlocutory. Here the practical effect of staying the proceedings in the court below pending the future disposition of another related case in the federal courts is to work a severe hardship on appellant. Since the life of the patents to which appellant claims ownership will expire after seventeen years from the date of their grant, valuable rights are being constantly diminished each and every day this case continues without a final adjudication. See 35 U.S.C. §154 (1952), as amended, 35 U.S.C. §154 (Supp. 1965). To the extent valuable rights are being denied as a result of the order staying the proceedings in the court below, the order appealed from must be considered final.

Turning to the merits of the case, appellant argues that the court below abused its discretion by staying the proceedings pending the outcome of the federal court action. We agree. It is inconceivable that litigation which has been pending in the Commonwealth courts for a period in excess of eight years can be brushed aside merely because one of the parties decides eight years hence to commence an antitrust action in the federal courts, which action may or may not finally dispose of all of the issues raised in the Commonwealth action. If we were to permit the stay order to remain under these facts and circumstances, it would serve only to create another vehicle by which parties could easily delay the adjudication of a case indefinitely. Since appellant’s action in the court below is now after eight years ripe for adjudication, and since further delay would substantially impair the value of the rights sought to be determined, we cannot sanction the issuance of the stay order by the court below.

Order reversed and the case remanded to the court below for further action consistent with this opinion.

1 In Reynolds we were not confronted with a situation wherein the nature of the relief sought to be obtained would be substantially diminished in value as a result of the issuance of the stay order. No rights were being lost because of the delay in adjudicating the rights and liabilities of the parties. Likewise, there was an extremely short period of time between the filing of the cause of action in the federal court and the filing of the cause of action in the common pleas court. Moreover, Reynolds had filed a compulsory counterclaim in the federal court action which embodied the same cause of action pleaded in the Commonwealth court, virtually guaranteeing that all of the issues involved in the litigation could and would be resolved in the federal court proceedings ivithout any apparent prejudice to the parties.

2 A classic example of a stay order which could in no way be considered interlocutory is in the restrictive employment contract area. The following hypothetical situation will serve to illustrate that under certain facts and circumstances a stay order would be sufficiently final for appeal purposes: Assume an employer and employee enter into a contractual arrangement wherein the employee covenants that in the event his employment is terminated, he will refrain from competing with his employer for a period of one year. The employee breaches the contract by competing within the time period proscribed and the employer in an effort to compel compliance commences an action in equity seeking to enjoin the employee from competing. The employee then files a claim in the federal court alleging an antitrust violation by the employer and thereafter requests the Commonwealth court to stay its proceedings pending the outcome of the federal court action. The Commonwealth court grants the stay and the employer appeals. Is the stay order sufficiently final for appeal purposes? The answer to this question must be in the affirmative, since the issuance of the stay order obviously would deprive the employer the injunctive relief he seeks in the Commonwealth court action. The issuance of a stay order under such circumstances would be tantamount to a dismissal of at least part of the employer’s cause of action, and to that extent the stay order would be final. While the case at bar differs from the restrictive employment hypothetical, it nevertheless presents an analogous situation in that here appellant is also being deprived of substantial valuable rights as a result of the issuance of the stay order. This deprivation in our view renders the stay order final insofar as appellant’s right of appeal is concerned.