FILED: May 29, 2001 UNPUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 01-1677
VULCAN CHEMICAL TECHNOLOGIES, INCORPORATED; VULCAN MATERIALS COMPANY, Plaintiffs-Appellees,
versus
PHILLIP J. BARKER, d/b/a Sabra Asia, Defendant-Appellant.
O P I N I O N
This day came Vulcan Chemical Technologies, Inc. and Vulcan
Materials Company, the plaintiffs, and Phillip J. Barker, the
defendant, for hearing upon a motion to stay pending appeal an
order of the district court filed May 24, 2001 which enjoined
Barker from “pursuing this matter in any other court in any
jurisdiction until this [district] court rules on the petitioner’s
[Vulcan’s] petition to vacate the arbitration award.”
The arbitration award grew out of a distribution agreement
dated March 1, 1995 between Rio Linda Chemical Company, Inc. and
Phillip J. Barker, granting Barker an exclusive distributorship for
Rio Linda for certain of Rio Linda’s chemical products in the nations of Japan, South Korea, the People’s Republic of China, and
Taiwan. Rio Linda was purchased by Vulcan Materials Company, Inc.,
which renamed it Vulcan Chemicals Technologies, Inc., and for our
purposes, Vulcan Chemicals is a wholly-owned subsidiary of Vulcan
Materials.
On April 14, 1999, Barker sued Rio Linda, Vulcan Chemicals,
and Vulcan Materials in the Superior Court for the County of
Sacramento, California, claiming breach of contract against Vulcan
Chemicals and that Vulcan Materials, as the alter-ego of Vulcan
Chemicals, was also responsible. Barker was and is a citizen and
resident of California, and at that time Vulcan Chemicals’
principal place of business was California.
On July 29, 1999, the Vulcan defendants moved the California
Superior Court for a stay of the action or its dismissal and for an
order compelling arbitration pursuant to the California Arbitration
Act. Cal. Code Civ. Pro. § 1280, et seq.
On December 3, 1999, the Superior Court for the County of
Sacramento entered its order compelling arbitration of the case and
staying the action pending completion of arbitration. This order
recited that Barker opposed the participation of Vulcan Materials
on the ground that it was not a party to the contract, but was a
party to the action only on an alter-ego theory. The order
recites, “[S]ince defendant Vulcan Materials agrees to participate
2 in the arbitration and to be bound by the arbitrator’s decision,
this is a moot point.”
Pursuant to that order, extensive arbitration hearings were
held, all in California, and I note that the contract between
Barker and Rio Linda provides that the arbitration be in
Sacramento, California or another mutually acceptable California
location and will be final and binding. Arbitration followed, the
arbitrator being a retired California Superior Court judge, and I
am told by the attorneys there were 26 days of hearings, 22
witnesses, and over 1,000 exhibits, the record of the arbitration
having almost 29,000 pages.
On December 22, 2000, an interim award was issued by the
arbitrator, and on March 21, 2001, the final award was mailed to
the parties by the arbitrator. On April 5, 2001, Barker filed a
petition in the Superior Court for the County of Sacramento to
confirm the award. Section 1228.4 of the California Code Civil
Procedure provides that a period of 10 days must elapse from the
service of the award to the filing of the petition, and service of
process rules add an additional five days to the waiting period.
So April 5, 2001 was the first day that Barker could file his
petition to confirm with the California Superior Court. As noted,
Barker’s petition to confirm the award was filed on April 5, 2001.
In the meantime, on March 23, 2001, the Vulcan defendants filed a
petition to vacate in the United States District Court for the
3 Western District of Virginia at Big Stone Gap. This petition
claimed diversity jurisdiction under 28 U.S.C. § 1332 (1993) and a
cause of action under the Federal Arbitration Act, 9 U.S.C. § 10
(1998), to vacate an award.
Also in the meantime, on April 16, 2001, the Vulcan defendants
had removed to the United States District Court for the Eastern
District of California the petition of Barker to confirm his award.
The California district court remanded that matter to the state
court by order entered May 10, 2001, and on that same day the
Vulcan defendants filed their petition in the Sacramento County
Superior Court to vacate the award, a hearing on which, I am told,
was set for June 11, 2001, but has since been changed.
I am further told by the attorneys that the California
Superior Court, at Vulcan’s instance, has continued a hearing on an
application of Vulcan to stay the action in the Sacramento Superior
Court and has set that matter for 9:00 a.m. Pacific time today, May
29, 2001 (E.D.T.). Hearing on the merits, apparently on the motion
to confirm the award and to vacate the award, has been set for
tomorrow, May 30, 2001, at 2:00 p.m. Pacific time. At the time of
this writing, the parties find themselves in the peculiar position
that Barker has been forbidden to attend the California hearings,
but the Vulcan defendants are free to attend those hearings, and
doubtless they will attend. I am told, and believe, that one
reason for this anomaly is the current motion to stay the
4 injunction issued by the district court in the Western District of
Virginia.
28 U.S.C. § 2283 provides that a federal court “may not grant
an injunction to stay proceedings in a State court except as
expressly authorized by act of Congress, or where necessary in aid
of its jurisdiction, or to protect or effectuate its judgments.”
Thus, the order of the district court complained of should not have
been issued pursuant to § 2283 unless, with an exception recognized
by that statute, this being an action in personam rather than in
rem.
I am of opinion that the very best case the Vulcan defendants
can make on appeal is doubtful, for the following reasons:
A number of the cases apply § 2283 under a first-filed rule so
that a proceeding which has been commenced in a state court at the
time of the federal injunction more nearly receives the protection
of the statute than does a state proceeding filed after the federal
action. In the case at hand, Barker sued the Vulcan defendants on
April 9, 1999. It is in that same case that the order to
arbitrate, at the instance of the Vulcan defendants, was entered.
And it is in that same case that the current proceedings in the
California courts are being adjudicated. Section 1292.6 of the
California Code of Civil Procedure Code provides that after a
petition has been filed involving arbitration, the court in which
such petition was filed retains jurisdiction to determine any
5 subsequent petition involving the same controversy and that any
subsequent petition must be filed in the same proceeding. Section
Free access — add to your briefcase to read the full text and ask questions with AI
FILED: May 29, 2001 UNPUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 01-1677
VULCAN CHEMICAL TECHNOLOGIES, INCORPORATED; VULCAN MATERIALS COMPANY, Plaintiffs-Appellees,
versus
PHILLIP J. BARKER, d/b/a Sabra Asia, Defendant-Appellant.
O P I N I O N
This day came Vulcan Chemical Technologies, Inc. and Vulcan
Materials Company, the plaintiffs, and Phillip J. Barker, the
defendant, for hearing upon a motion to stay pending appeal an
order of the district court filed May 24, 2001 which enjoined
Barker from “pursuing this matter in any other court in any
jurisdiction until this [district] court rules on the petitioner’s
[Vulcan’s] petition to vacate the arbitration award.”
The arbitration award grew out of a distribution agreement
dated March 1, 1995 between Rio Linda Chemical Company, Inc. and
Phillip J. Barker, granting Barker an exclusive distributorship for
Rio Linda for certain of Rio Linda’s chemical products in the nations of Japan, South Korea, the People’s Republic of China, and
Taiwan. Rio Linda was purchased by Vulcan Materials Company, Inc.,
which renamed it Vulcan Chemicals Technologies, Inc., and for our
purposes, Vulcan Chemicals is a wholly-owned subsidiary of Vulcan
Materials.
On April 14, 1999, Barker sued Rio Linda, Vulcan Chemicals,
and Vulcan Materials in the Superior Court for the County of
Sacramento, California, claiming breach of contract against Vulcan
Chemicals and that Vulcan Materials, as the alter-ego of Vulcan
Chemicals, was also responsible. Barker was and is a citizen and
resident of California, and at that time Vulcan Chemicals’
principal place of business was California.
On July 29, 1999, the Vulcan defendants moved the California
Superior Court for a stay of the action or its dismissal and for an
order compelling arbitration pursuant to the California Arbitration
Act. Cal. Code Civ. Pro. § 1280, et seq.
On December 3, 1999, the Superior Court for the County of
Sacramento entered its order compelling arbitration of the case and
staying the action pending completion of arbitration. This order
recited that Barker opposed the participation of Vulcan Materials
on the ground that it was not a party to the contract, but was a
party to the action only on an alter-ego theory. The order
recites, “[S]ince defendant Vulcan Materials agrees to participate
2 in the arbitration and to be bound by the arbitrator’s decision,
this is a moot point.”
Pursuant to that order, extensive arbitration hearings were
held, all in California, and I note that the contract between
Barker and Rio Linda provides that the arbitration be in
Sacramento, California or another mutually acceptable California
location and will be final and binding. Arbitration followed, the
arbitrator being a retired California Superior Court judge, and I
am told by the attorneys there were 26 days of hearings, 22
witnesses, and over 1,000 exhibits, the record of the arbitration
having almost 29,000 pages.
On December 22, 2000, an interim award was issued by the
arbitrator, and on March 21, 2001, the final award was mailed to
the parties by the arbitrator. On April 5, 2001, Barker filed a
petition in the Superior Court for the County of Sacramento to
confirm the award. Section 1228.4 of the California Code Civil
Procedure provides that a period of 10 days must elapse from the
service of the award to the filing of the petition, and service of
process rules add an additional five days to the waiting period.
So April 5, 2001 was the first day that Barker could file his
petition to confirm with the California Superior Court. As noted,
Barker’s petition to confirm the award was filed on April 5, 2001.
In the meantime, on March 23, 2001, the Vulcan defendants filed a
petition to vacate in the United States District Court for the
3 Western District of Virginia at Big Stone Gap. This petition
claimed diversity jurisdiction under 28 U.S.C. § 1332 (1993) and a
cause of action under the Federal Arbitration Act, 9 U.S.C. § 10
(1998), to vacate an award.
Also in the meantime, on April 16, 2001, the Vulcan defendants
had removed to the United States District Court for the Eastern
District of California the petition of Barker to confirm his award.
The California district court remanded that matter to the state
court by order entered May 10, 2001, and on that same day the
Vulcan defendants filed their petition in the Sacramento County
Superior Court to vacate the award, a hearing on which, I am told,
was set for June 11, 2001, but has since been changed.
I am further told by the attorneys that the California
Superior Court, at Vulcan’s instance, has continued a hearing on an
application of Vulcan to stay the action in the Sacramento Superior
Court and has set that matter for 9:00 a.m. Pacific time today, May
29, 2001 (E.D.T.). Hearing on the merits, apparently on the motion
to confirm the award and to vacate the award, has been set for
tomorrow, May 30, 2001, at 2:00 p.m. Pacific time. At the time of
this writing, the parties find themselves in the peculiar position
that Barker has been forbidden to attend the California hearings,
but the Vulcan defendants are free to attend those hearings, and
doubtless they will attend. I am told, and believe, that one
reason for this anomaly is the current motion to stay the
4 injunction issued by the district court in the Western District of
Virginia.
28 U.S.C. § 2283 provides that a federal court “may not grant
an injunction to stay proceedings in a State court except as
expressly authorized by act of Congress, or where necessary in aid
of its jurisdiction, or to protect or effectuate its judgments.”
Thus, the order of the district court complained of should not have
been issued pursuant to § 2283 unless, with an exception recognized
by that statute, this being an action in personam rather than in
rem.
I am of opinion that the very best case the Vulcan defendants
can make on appeal is doubtful, for the following reasons:
A number of the cases apply § 2283 under a first-filed rule so
that a proceeding which has been commenced in a state court at the
time of the federal injunction more nearly receives the protection
of the statute than does a state proceeding filed after the federal
action. In the case at hand, Barker sued the Vulcan defendants on
April 9, 1999. It is in that same case that the order to
arbitrate, at the instance of the Vulcan defendants, was entered.
And it is in that same case that the current proceedings in the
California courts are being adjudicated. Section 1292.6 of the
California Code of Civil Procedure Code provides that after a
petition has been filed involving arbitration, the court in which
such petition was filed retains jurisdiction to determine any
5 subsequent petition involving the same controversy and that any
subsequent petition must be filed in the same proceeding. Section
1293 of that same Code provides that an agreement made in the State
providing for arbitration within the State “shall be deemed a
consent of the parties thereto to the jurisdiction of the courts of
this State to enforce such agreement.” Barker was and is a citizen
of California, and at the time the contract was made, Vulcan
Chemicals was also a citizen of California. That is shown by the
order of the district court referred to, remanding Vulcan’s removal
of the petition to confirm to the California State courts, so there
is no reason to believe that both § 1292.6 and § 1293 should not
apply in this proceeding.
Along the same line is the case of Towers v. Roscoe-Ajax, 258
F. Supp. 1005 (S.D. Cal. 1966), holding that the confirmation of an
arbitration award is not a separate proceeding under the California
Arbitration Act, which is the statute involved here. The case of
Brock v. Kaiser Foundation, 13 Cal. Rptr. 2d, 678 (Ct. App. 1992)
also holds the jurisdiction of an arbitration court to be
continuing.
So far as any first-filed rule or any derivation of it is a
ground of decision in this case, I am of opinion that Barker is the
beneficiary of that rule. He filed first, and his case yet
continues in full force and virtue in the courts of California. In
that respect, I note, especially, that the Vulcan defendants, on
6 May 10, 2001, filed a motion, pending at the time of the district
court’s injunction, and which is yet pending, in the Superior Court
of Sacramento County, to vacate the award, the same motion which is
pending here.
Our research discloses only one case in a court of appeals on
the same facts. It is the case of Diniaco v. Colvin, No. 88-3802
(6th Cir. 1988), which is referred to in 865 F.2d 1269 as an
unpublished opinion. That case affirmed the holding of a district
court which, on the same facts present here, had dismissed
Diniaco’s request for an injunction to prevent a State court from
reducing an arbitration award to judgment. I think that § 2283
applies and the case of Atlantic Coastline Railway Co. v.
Brotherhood of Locomotive Engineers, 398 U.S. 281, 297 (1970),
should control this case. Although on different facts, that case
recited the rule that “Any doubts as to the propriety of a federal
injunction against State court proceedings should be resolved in
favor of permitting the State courts to proceed in an orderly
fashion to finally determine the controversy. The explicit wording
of § 2283 itself implies as much and the fundamental system of a
dual system of courts reads inevitably to that conclusion.” 398
U.S. at 297.
Despite the fact that the federal district court in the
Western District of Virginia may have jurisdiction to vacate the
award, as did the Superior Court of Sacramento County, California,
7 it should not have issued its injunction because of 28 U.S.C. § 2283.
I have entered an order today staying the order of the
district court appealed from.
/s/ H. E. Widener, Jr. United States Circuit Judge