Traxys North America LLC v. Evraz Claymont Steel Inc. et al

Filing 113

MEMORANDUM re 103 MOTION to Stay Proceedings Pending Appeal. Signed by Judge Harvey Bartle, III on 5/16/2011. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
TRAXYS NORTH AMERICA LLC

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:
:
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v.
EVRAZ CLAYMONT STEEL, INC.,
et al.

CIVIL ACTION

NO. 09-684

MEMORANDUM
Bartle, C.J.

May 16, 2011

Plaintiff Traxys North America LLC ("Traxys") brings
this diversity action for damages for breach of contract against
defendants Evraz Claymont Steel, Inc. and Evraz Inc., NA.

Before

the court is the May 12, 2011 motion of defendants, pursuant to
Rule 8(a) of the Federal Rules of Appellate Procedure, to stay
the proceedings pending appeal of our interlocutory order denying
their motion to limit the scope of trial.
The trial before a jury has been scheduled since
April 12, 2011 to begin on Thursday, May 19, 2011.

On May 5,

2011, two weeks before trial, the defendants filed a motion to
limit the scope of trial to the issue of whether a contract
existed between the parties.

The motion also referenced

arbitration if a contract is found to exist.

On May 10, 2011, we

denied the motion and explained that we will allow the jury to
determine if a contract exists and, if so, what damages if any to
award.

To the extent that defendants were seeking to have

arbitrated all questions other than the existence of a contract,
we found that the defendants had waived any right to arbitration.
See Nino v. Jewelry Exchange, Inc., 609 F.3d 191, 208-09 (3d Cir.
2010); Hoxworth v. Blinder, Robinson & Co., Inc., 980 F.2d 912,
926-27 (3d Cir. 1992).

On May 12, 2011, defendants filed a

Notice of Appeal of our May 10 Order and as noted above also
filed the motion pending before the court for a stay pending
appeal under Rule 8(a) of the Federal Rules of Appellate
Procedure.
After the Notice of Appeal was filed, the Court of
Appeals entered the following order:
Appellant seeks review of the District
Court's order entered May 10, 2011. The
order on appeal is not final within the
meaning of 9 U.S.C. § 16 and is not otherwise
immediately appealable. It is noted that
Appellant asserts that the motion to limit
the scope of trial is, in effect, a motion to
compel arbitration. As all gateway issues of
arbitrability must be resolved by the court,
see AT&T Technologies, Inc. v. Communications
Workers, 475 U.S. 643 (1986), is it premature
to characterize the motion to limit the scope
of trial as a motion to compel arbitrability?
All parties must file written responses
addressing this issue, with a certificate of
service attached, within fourteen (14) days
from the date of this order.
Traxys N. Am. LLC v. Evraz Claymont Steel, Inc., No. 11-2287 (3d
Cir. May 13, 2011).
We acknowledge that any order which constitutes a
denial of a motion to compel arbitration is amenable to

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interlocutory appeal under the Federal Arbitration Act ("FAA"), 9
U.S.C. § 16.

See, e.g., Ballay v. Legg Mason Wood Walker, Inc.,

878 F.2d 729, 732 (3d Cir. 1989).

However, the Court of Appeals

has stated our May 10 Order is not a denial of arbitration
immediately appealable under the FAA although it has directed
further briefing from the parties.
In the meantime, we still have before us the motion of
defendants to stay pending appeal a trial set to begin in three
days.

Under Rule 8 of the Federal Rules of Appellate Procedure,

"[a] party must ordinarily move first in the district court for
... a stay of the judgment or order of a district court pending
appeal."

Fed. R. App. P. 8(a)(1)(A).

When the order being

appealed involves the denial of a motion to compel arbitration, a
district court must order a stay unless the appeal is frivolous
or forfeited.

Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207,

215 n.6 (3d Cir. 2007).
As set forth in detail in our Memorandum accompanying
our May 10, 2011 Order, defendants clearly waived any arbitration
defense under directly applicable precedents of the United States
Court of Appeals for the Third Circuit.

See Traxys N. Am. LLC v.

Evraz Claymont Steel, Inc., et al., No. 09-684, 2011 WL 1775965,
at *1-2 (D. Del. May 10, 2011) (citing Nino, 609 F.3d at 208-09;
Hoxworth, 980 F.2d at 926-27).

The parties have engaged in this

highly contested lawsuit for over nineteen months before

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defendants first mentioned the issue of arbitration and then only
on the eve of trial.

Significantly, they did not give earlier

notice pursuant to Rule 8(c) of the Federal Rules of Civil
Procedure which requires defendants to state arbitration as an
affirmative defense in their answer.

Even if arbitration were

inconsistent with other defenses, Rule 8(d)(3) provides that "a
party may state as many claims or defenses as it has regardless
of consistency."
Sandvick AB v. Advent International Corporation, 220
F.3d 99 (3d Cir. 2000), on which defendants rely, is inapposite.
There, waiver was not an issue.

The motion to compel arbitration

was filed promptly after the case was removed to federal court.
Id. at 102 & n.2.
Even if our May 10, 2011 Order were immediately
appealable under the FAA, the request of defendants for a stay,
in our view, is frivolous and is simply designed to delay
plaintiff's day in court.

Accordingly, we will deny the motion

of defendants for a stay under Rule 8(a) of the Federal Rules of
Appellate Procedure.

The trial will begin as scheduled on

Thursday, May 19, 2011 unless, of course, the Court of Appeals
directs otherwise.

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