U-Haul Co. of California v. Williams

Filing 10

ORDER entered by Judge Sara Darrow on April 15, 2014. Plaintiff U-Haul Co. of California's 9 Emergency Motion for Temporary Restraining Order and Preliminary Injunction to Enjoin Prosecution of, and to Stay, Pennsylvania and Illinois State Court Proceedings is DENIED. Plaintiff's request for a hearing on this motion is also DENIED. (JD, ilcd)

E-FILED

Tuesday, 15 April, 2014 03:36:06 PM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
ROCK ISLAND DIVISION
U-HAUL CO. OF CALIFORNIA,
Plaintiff,
v.
GARY WILLIAMS,
Defendant.

)
)
)
)
)
)
)
)
)

No. 4:14-cv-04022-SLD-JEH

ORDER
After Defendant Gary Williams (“Williams”) was involved in an accident while driving a
trailer owned by Plaintiff U-Haul Co. of California (“U-Haul”) across Illinois, U-Haul filed the
instant suit and moved to compel arbitration pursuant to the parties’ contractual agreement.
Williams, however, then filed suits including claims against U-Haul in both Pennsylvania and
Illinois state courts. Before the Court is U-Haul’s request for an order enjoining prosecution of
and staying the state court proceedings until the Court resolves the motion to compel arbitration.
For the following reasons, U-Haul’s Emergency Motion for Temporary Restraining Order and
Preliminary Injunction to Enjoin Prosecution of, and to Stay, Pennsylvania and Illinois State
Court Proceedings, ECF No. 9, is DENIED. U-Haul’s request for a hearing on this motion, id. at
1, is also DENIED.
BACKGROUND1
On February 28, 2012, Williams contracted with U-Haul to rent a trailer for 10 days. The
contract authorized Williams to tow the trailer from California to Pennsylvania. According to U1

Unless otherwise noted, these facts are drawn from U-Haul’s Complaint, ECF No. 1.

1

Haul, Williams agreed in the written rental contract to submit all claims against U-Haul to
arbitration before the American Arbitration Association. On March 2, 2012, while Williams was
towing the trailer on Interstate 80 in Illinois, he was involved in a two-vehicle accident, as a
result of which Williams claims he suffered bodily injury including significant cognitive
impairment and/or brain damage. U-Haul claims that on February 12, 2014, it formally requested
that Williams agree to submit his claims to arbitration, and Williams refused. On Febrary 17,
2014, U-Haul filed the instant action, asking the Court to compel arbitration pursuant to the
Federal Arbitration Act, 9 U.S.C. § 1 et seq., and to issue a declaration pursuant to the
Declaratory Judgment Act, 28 U.S.C. § 2201 et seq., that the parties’ contract requires arbitration
of Williams’s claims.
On February 26, 2014, Williams initiated an action in the Court of Common Pleas for
Philadelphia County, Pennsylvania. In that case, Williams v. Amerco, et al., No. 140202768, he
seeks recovery from U-Haul, among other defendants, for his injuries on a theory of negligence.
Pl.’s Mot. TRO, Ex. 1, ECF No. 9-1. Two days later, Williams filed a complaint in the Circuit
Court of Cook County, Illinois. U-Haul is named as a “Respondent in Discovery” in that case,
Williams v. K&B Transport, Inc., et al., No. 2014L002150; Williams therein requests that the
court compel U-Haul to participate in discovery regarding “the determination of who should
properly be named as additional defendants in this action.” Pl.’s Mot. TRO, Ex. 2 at 10, ECF
No. 9-2. On April 10, 2014, U-Haul moved for the Court to stay—and enjoin Williams from
continuing to prosecute—both state court actions “as to U-Haul and other U-Haul related
defendants” until the Court rules on its petition to compel arbitration. Pl.’s Mot. TRO 1.

2

DISCUSSION
I. Legal Framework
A. Anti-Injunction Act
The Anti-Injunction Act (“AIA”) provides: “A court of the United States 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.”
28 U.S.C. § 2283. The AIA recognizes the “fundamental constitutional independence of the
States and their courts,” and aims to avoid “needless friction” between state and federal courts.
Zurich Am. Ins. Co. v. Superior Ct. for State of Cal., 326 F.3d 816, 824 (7th Cir. 2003) (quoting
Atl. Coast Line R.R. Co. v. Broth. of Locomotive Eng’rs., 398 U.S. 281, 286–87 (1970)).
Because of this constitutional foundation, courts must apply the AIA’s exceptions narrowly,
resolving any doubts regarding the propriety of a federal injunction in favor of permitting state
courts to proceed. Id. (citations omitted). Even where an AIA exception applies, the Court
“must still determine whether an injunction is an appropriate exercise of its authority.” Id. (citing
Winkler v. Eli Lilly & Co., 101 F.3d 1196, 1203–04 (7th Cir. 1996)).
The “necessary in aid of its jurisdiction” exception allows that “federal injunctive relief
may be necessary to prevent a state court from so interfering with a federal court’s consideration
or disposition of a case as to seriously impair the federal court’s flexibility and authority to
decide that case.” Id. at 825 (quoting Atl. Coast Line R.R. Co., 398 U.S. at 295). Traditionally,
this exception applied only to in rem proceedings, with parallel in personam proceedings
generally allowed to continue concurrently. Id. (citations omitted). “[T]he possibility that a
parallel state proceeding might ‘interfere with a protected federal right’ or erroneously apply
3

federal law does not make an injunction ‘necessary” to aid the court’s jurisdiction.” Id. (quoting
Atl. Coast Line R.R. Co., 398 U.S. at 294). In those circumstances, the proper recourse is appeal
through the state court system and then potentially the U.S. Supreme Court. See Atl. Coast Line
R.R. Co., 398 U.S. at 296.
The judgment-protection, or “relitigation,”AIA exception “was designed to permit a
federal court to prevent state litigation of an issue that previously was presented to and decided
by the federal court.” Zurich Am. Ins. Co., 326 F.3d at 825 n.6 (quoting Chick Kam Choo v.
Exxon Corp., 486 U.S. 140, 147 (1988)). The “essential prerequisite” for this exception is that
the claims or issues the injunction would remove from state adjudication “actually have been
decided by a federal court.” Chick Kam Choo, 486 U.S. at 147. In the FAA context, this
exception does not apply where a district court has yet to rule on a petition to compel arbitration.
See Zurich Am. Ins. Co., 326 F.3d at 825 n.6.
B. Federal Arbitration Act
The FAA grants concurrent jurisdiction to states to enforce arbitration agreements.
Zurich Am. Ins. Co., 326 F.3d at 826 (citing 9 U.S.C. § 4). “Although the FAA represents
federal policy to be vindicated by the federal courts where otherwise appropriate, it does not
suggest that state courts are less competent to give effect to its provisions.” Id. (internal citations
and quotation marks omitted); see also CIGNA Healthcare of St. Louis, Inc. v. Kaiser, 294 F.3d
849, 854 (7th Cir. 2002) (“[The FAA] requires both federal and state courts to apply a federal
common law of arbitrability to the arbitration of disputes arising under contracts in commerce, a
common law applicable equally in federal and state courts.” (citations omitted)). “Without, at the
very least, some evidence that the state court was indifferent to or hostile to the parties’ rights
4

under the FAA,” even an erroneous application of the FAA by a state court does not justify an
injunction under the AIA. Zurich Am. Ins. Co., 326 F.3d at 826 (citations omitted).
II. Analysis
U-Haul argues that protection of its FAA right to arbitration justifies enjoining Williams
from prosecuting the Pennsylvania and Illinois state proceedings under an exception to the AIA.2
U-Haul does not maintain that an Act of Congress authorizes the injunction it seeks, but claims
the injunction is necessary either “in aid of the court’s jurisdiction” or “to protect or effectuate its
judgments,” see 28 U.S.C. § 2283. Pl.’s Mem. in Supp. Mot. TRO 7, ECF No. 9.
The Court has not yet ruled on U-Haul’s claimed right to arbitrate this dispute with
Williams. Therefore, the “relitigation” exception does not apply here. See Zurich Am. Ins. Co.,
326 F.3d at 825 n.6. Further, U-Haul presents no evidence that the Pennsylvania and Illinois
courts will be “indifferent to or hostile to” its claimed right to arbitrate under the FAA, should UHaul assert that claim in those proceedings. See id. at 826. Enjoining the state proceedings is
therefore not necessary to aid the Court’s jurisdiction, and would only serve to thwart the state
courts’ concurrent jurisdiction to enforce arbitration agreements.
U-Haul argues that the Seventh Circuit “has concluded that district courts have the
authority to enjoin state court litigation where that litigation interferes with a federal petitioner’s
right to arbitration under the FAA.” Pl.’s Mem. in Supp. Mot. TRO 7–8 (citing Commonwealth
Edison Co. v. Gulf Oil Corp., 541 F.2d 1263, 1274 (7th Cir. 1976)). But Commonwealth Edison

2

The fact that U-Haul seeks to enjoin W illiams from prosecuting the state actions, and not enjoin the courts
themselves, is irrelevant to whether the AIA applies. See Atl. Coast Line R.R. Co., 398 U.S. at 287 (“It is settled that
the prohibition of § 2283 cannot be evaded by addressing the order to the parties or prohibiting utilization of the
results of a completed state proceeding.”).

5

upheld the district court’s refusal to enjoin state proceedings under the AIA. Id. at 1274.
Moreover, the Seventh Circuit did not review the merits of the AIA exception, but upheld its
application under an abuse of discretion standard. See id. By contrast, the rationale of Zurich
American Insurance rejects the argument that the putative existence of an FAA right to
arbitration—without evidence that the state courts would be indifferent to this right—justifies an
injunction under the AIA’s jurisdiction-protecting exception. See Zurich Am. Ins. Co., 326 F.3d
at 826. Accordingly, 28 U.S.C. § 2283 bars the Court from enjoining prosecution of and staying
proceedings in the Pennsylvania and Illinois courts as requested by U-Haul.
CONCLUSION
Plaintiff U-Haul’s Emergency Motion for Temporary Restraining Order and Preliminary
Injunction to Enjoin Prosecution of, and to Stay, Pennsylvania and Illinois State Court
Proceedings, ECF No. 9, is DENIED. U-Haul’s request for a hearing on this motion is also
DENIED.
Entered this 15th day of April, 2014.
s/ Sara Darrow
SARA DARROW
UNITED STATES DISTRICT JUDGE

6