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Hunt v. Moore Brothers, Inc.

United States Court of Appeals, Seventh Circuit

June 29, 2017

James Hunt, Plaintiff,
Moore Brothers, Inc., et al., Defendants-Appellees. Appeal of: Jana Yocum Rine

          Argued January 18, 2017

         Appeal from the United States District Court for the Southern District of Illinois. No. 3:15-cv-00433-MJR-SCW - Michael J. Reagan, Chief Judge.

          Before Wood, Chief Judge, and Posner and Hamilton, Circuit Judges.

          WOOD, Chief Judge.

         James Hunt worked as a truck driver in Nebraska. On July 1, 2010, he signed an Independent Contractor Operating Agreement with Moore Brothers, a small company located in Norfolk, Nebraska. Three years later, Hunt and Moore renewed the Agreement. Before the second term expired, however, relations between the parties soured. Hunt hired Attorney Jana Yocum Rine to sue Moore on his behalf. She did so in federal court, raising a wide variety of claims, but paying little heed to the fact that the Agreements contained arbitration clauses. Rine resisted arbitration, primarily on the theory that the clause was unenforceable as a matter of Nebraska law. Tired of what it regarded as a flood of frivolous arguments and motions, the district court granted Moore's motion for sanctions under 28 U.S.C. § 1927 and ordered Rine to pay Moore about $7, 500. The court later dismissed the entire action without prejudice.


         Rine has appealed from that order. We begin with a word about our appellate jurisdiction. The district court's order of dismissal represented its decision that this dispute belongs in the arbitral forum selected by the parties, not the court. Such a dismissal is analogous to one based on forum non conveniens. Like a dismissal for lack of subject-matter jurisdiction, it is final and appealable even though it is said to be without prejudice. Manez v. Bridgestone Firestone N. Am. Tire, LLC, 533 F.3d 578, 583-84 (7th Cir. 2008); Chang v. Baxter Healthcare Corp., 599 F.3d 728, 732 (7th Cir. 2010). Manez explains why. There we allowed a lawyer to appeal a sanctions order after the underlying case had been dismissed "without prejudice" on forum non conveniens grounds. The critical point was that the U.S. court was finished with the case; as we said, "the phrase 'without prejudice' means that although the dismissal is 'final' in the sense that plaintiffs are finished before the U.S. courts, they still are free to refile the case in another, appropriate forum ... ." Manez, 533 F.3d at 583-84. The same is true here. The merits of this dispute will be resolved by the arbitrators, and any remaining role for the court will concern only the question whether the award should be recognized and enforced. Because the judgment is thus final for purposes of appeal, we have no need to consider whether the sanctions order also qualifies as an appealable collateral order under such cases as Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100 (2009), and Microsoft Corp. v. Baker, 137 S.Ct. 1702 (2017). With our jurisdiction secure, we may proceed to the merits.


         The relevant part of the arbitration clauses in the Agreements reads as follows:

This Agreement and any properly adopted Addendum shall constitute the entire Agreement and understanding between us and it shall be interpreted under the laws of the State of Nebraska. ... To the extent any disputes arise under this Agreement or its interpretation, we both agree to submit such disputes to final and binding arbitration before any arbitrator mutually agreed upon by both parties.

         When Rine decided to take formal action on Hunt's part, she ignored that language and filed a multi-count complaint in federal court. The complaint was notable only for its breadth: it accused Moore of holding Hunt in peonage in violation of 18 U.S.C. § 1581 (a criminal statute), and of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962; the federal antitrust laws, 15 U.S.C. §§ 1, 4, 14; the Illinois Employee Classification Act, 820 ILCS 185/1 et seq.; and for good measure, the Illinois tort of false representation.

          Relying on the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., Moore responded with a motion to compel arbitration and to stay the litigation; it also sought the appointment of an arbitrator pursuant to section 5 of the FAA, 9 U.S.C. § 5. Rine objected on several grounds. First, she asserted that Hunt had no obligation to comply with the arbitration clause because Moore had materially breached the Agreements. Second, she asserted that the Agreements fell outside the scope of the FAA because Hunt was a transportation worker. See 9 U.S.C. § 1; Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001) ("Section 1 exempts from the FAA only contracts of employment of transportation workers."). Third, Rine resisted Moore's request for a court-appointed arbitrator, noting that the clause provided for a person "mutually agreed on by the parties."

         The district court made short shrift of Rine's arguments. It rejected the assertion that an alleged breach of the underlying contract relieves a party from an arbitration agreement; by that reasoning no one would ever arbitrate a contract dispute, because the arbitration agreement would go up in smoke as soon as the dispute arose. Rine's effort to bring Hunt under the transportation-worker exception also failed, the court said, because the complaint conceded that he was an "independent truck owner operator, " not an employee. Rine prevailed only on her procedural argument against a court-appointed arbitrator: the judge found this step premature, and directed the parties to try to do this themselves. They took some steps in that direction, but they never agreed on anyone.

         This was the backdrop to Rine's ill-fated return to the district court. Less than two months after the judge told the parties to agree on an arbitrator, Rine filed a motion reporting that their efforts had failed. This revealed, she said, that the arbitration clause was nothing more than an "agreement to agree/' unenforceable under Nebraska law. The district court rejected this reasoning. It noted that Rine should have raised this argument earlier and that in any event it was wholly without merit. The FAA preempts conflicting state law, and a delay in the selection of an arbitrator does not affect the enforceability of an arbitration clause. Green ...

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