Petitioner, a hospital located in North Carolina, entered into a
contract with respondent contractor, an Alabama corporation, for
construction of additions to the hospital building. Contract
disputes were to be initially referred to the architect who was
hired to design and oversee the construction project. Disputes
decided by the architect or not decided within a specified time
could be submitted to binding arbitration under an arbitration
clause in the contract. Subsequently, during construction,
respondent submitted claims to the architect for extended overhead
or increase in construction costs due to petitioner's delay or
inaction. But the claims were not resolved, and petitioner refused
to pay them. Petitioner then filed an action in a North Carolina
state court against respondent and the architect, seeking a
declaratory judgment that there was no right to arbitration, that
petitioner was not liable to respondent, and that, if it was liable
it would be entitled to indemnity from the architect. A few days
later, petitioner obtained an ex parte
injunction from the
state court forbidding respondent to take any steps toward
arbitration, but when respondent objected, the stay was dissolved.
Respondent then filed a diversity of citizenship action in Federal
District Court, seeking an order compelling arbitration under § 4
of the United States Arbitration Act. The District Court stayed the
action pending resolution of the state court suit because the two
suits involved the identical issue of the arbitrability of
respondent's claims. The Court of Appeals, holding that it had
jurisdiction under 28 U.S.C. § 1291, reversed the
Page 460 U. S. 2
District Court's stay order, and remanded the case with
instructions to enter an order to arbitrate.
1. The District Court's stay order was appealable as a "final
decision" to the Court of Appeals under 28 U.S.C. § 1291. Since the
order was based on the conclusion that the federal and state
actions involved the identical issue of arbitrability, and this
issue was the only substantive issue present in the federal action,
a stay of the federal action pending resolution of the state action
meant that there would be no further litigation in the federal
court. Thus, respondent was "effectively out of court," so that the
stay order amounted to a dismissal of the federal action. Moreover,
even if the stay order was not final for appealability purposes, it
was nevertheless appealable within the finality rule exception that
applies where an order conclusively determines the disputed
question, resolves an important issue completely separate from the
merits, and is effectively unreviewable on appeal from a final
judgment. Cohen v. Beneficial Loan Corp., 337 U.
. Pp. 460 U. S.
2. The District Court abused its discretion in granting the
stay. Pp. 460 U. S.
(a) A federal district court may decline to exercise its
jurisdiction because of parallel state court litigation only in
exceptional circumstances; only the clearest of justifications will
warrant dismissal. Colorado River Water Conservation District
v. United States, 424 U. S. 800
424 U. S.
-819. The decision whether to stay or dismiss a
federal action on grounds of wise judicial administration does not
rest on a mechanical checklist, but on a careful balancing of the
important factors (which court first assumed jurisdiction over
property involved in the litigation, inconvenience of the federal
forum, avoidance of piecemeal litigation, and the order in which
the concurrent forums obtained jurisdiction) relevant to the
decision as they apply in a given case, with the balance heavily
weighted in favor of the exercise of jurisdiction. Ibid.
Pp. 460 U. S.
(b) The exceptional circumstances test set forth in Colorado
was not undermined by Will v. Calvert Fire
Insurance Co., 437 U. S. 655
460 U. S.
(c) There was no showing of the requisite exceptional
circumstances to justify the District Court's stay order.
Concededly, there was no assumption by either court of jurisdiction
over any res
or property, or any contention that the
federal court was any less convenient to the parties than the state
court. The other factors -- avoidance of piecemeal litigation and
the order in which the current forums obtained jurisdiction --
rather than supporting the stay, counsel against it. The fact that,
if respondent obtains an arbitration order, petitioner will be
forced to resolve
Page 460 U. S. 3
the dispute with respondent and the related dispute with the
architect in different forums is not the result of any choice
between federal and state courts, but occurs because the relevant
federal law, the Arbitration Act, requires piecemeal resolution
when necessary to give effect to an arbitration agreement. Hence, a
decision to allow the issue of arbitrability to be decided in
federal, rather than state, court does not cause piecemeal
resolution of the parties' underlying disputes. And the fact that
the state court suit was filed before the federal suit is not
sufficient reason to justify the stay order where, because
petitioner's refusal to arbitrate did not occur until less than a
day before it filed its state suit, respondent had no reasonable
opportunity to file its federal suit first. Moreover, priority
should not be measured exclusively by which complaint was filed
first, but rather in terms of how much progress has been made in
the two actions. Here, no substantial proceedings had taken place
in the state suit at the time of the District Court's stay order,
whereas, in the federal suit, the parties had taken most of the
steps necessary to a resolution of the arbitrability issue. The
stay order thus frustrated the Arbitration Act's policy of rapid
and unobstructed enforcement of arbitration agreements. Pp.
460 U. S.
(d) The fact that federal law in the terms of the Arbitration
Act governs the issue of the arbitrability of the dispute between
petitioner and respondent in either the state or the federal court
is another factor militating against the District Court's stay
order. See Calvert, supra.
Pp. 460 U. S.
(e) Finally, an important reason against allowing a stay is the
probable inadequacy of the state suit to protect respondent's
rights, since it is doubtful that respondent could obtain from the
state court an order compelling petitioner to arbitrate. Pp.
460 U. S.
(f) The fact that the District Court stayed the federal action,
rather than dismissing it outright, does not render the
exceptional circumstances test
inapplicable. Pp. 460 U. S.
3. The Court of Appeals acted within its authority in deciding
that the contractual dispute was arbitrable under the Arbitration
Act and the contract, where the court had briefs and evidentiary
submissions from both parties on the merits of arbitrability. P.
460 U. S. 29
656 F.2d 933, affirmed.
BRENNAN, J., delivered the opinion of the Court, in which WHITE,
MARSHALL, BLACKMUN, POWELL, and STEVENS, JJ., joined. REHNQUIST,
J., filed a dissenting opinion, in which BURGER, C.J., and
O'CONNOR, J., joined, post,
p. 460 U. S. 30
Page 460 U. S. 4
JUSTICE BRENNAN delivered the opinion of the Court.
This case, commenced as a petition for an order to compel
arbitration under § 4 of the United States Arbitration Act of 1925
(Arbitration Act or Act), 9 U.S.C. § 4, presents the question
whether, in light of the policies of the Act and of our decisions
in Colorado River Water Conservation District v. United
States, 424 U. S. 800
(1976), and Will v. Calvert Fire Insurance Co.,
437 U. S. 655
(1978), the District Court for the Middle District of North
Carolina properly stayed this diversity action pending resolution
of a concurrent state court suit. The Court of Appeals for the
Fourth Circuit reversed the stay. 656 F.2d 933, rehearing
664 F.2d 936 (1981). We granted certiorari. 455 U.S.
937 (1982). We affirm.
Petitioner Moses H. Cone Memorial Hospital (Hospital) is located
in Greensboro, N.C. Respondent Mercury Construction Corp.
(Mercury), a construction contractor, has its principal place of
business in Alabama. In July, 1975, Mercury and the Hospital
entered into a contract for the construction of additions to the
Hospital building. The contract, drafted by representatives of the
Hospital, included provisions for resolving disputes arising out of
the contract or its breach. All disputes involving interpretation
of the contract or performance of the construction work were to be
referred in the first instance to J. N. Pease Associates
(Architect), an independent architectural firm hired by the
Hospital to design and oversee the construction project. With
Page 460 U. S. 5
stated exceptions, [Footnote
] any dispute decided by the Architect (or not decided by it
within a stated time) could be submitted by either party to binding
arbitration under a broad arbitration clause in the contract:
"All claims, disputes and other matters in question arising out
of, or relating to, this Contract or the breach thereof, . . .
shall be decided by arbitration in accordance with the Construction
Industry Arbitration Rules of the American Arbitration Association
then obtaining unless the parties mutually agree otherwise. This
agreement to arbitrate shall be specifically enforceable under the
prevailing arbitration law. The award rendered by the arbitrators
shall be final, and judgment may be entered upon it in accordance
with applicable law in any court having jurisdiction thereof."
App. 29-30. The contract also specified the time limits for
arbitration demands. [Footnote
Construction on the project began in July, 1975. Performance was
to be completed by October, 1979. [Footnote 3
] In fact, construction was substantially
completed in February, 1979, and final inspections were made that
Page 460 U. S. 6
At a meeting in October, 1977 (during construction), attended by
representatives of Mercury, the Hospital, and the Architect,
Mercury agreed, at the Architect's request, to withhold its claims
for delay and impact costs (i.e.,
claims for extended
overhead or increase in construction costs due to delay or inaction
by the Hospital) until the work was substantially completed. On
this record, the Hospital does not contest the existence of this
agreement, although it asserts that the Architect lacked authority
to agree to a delay in presentation of claims or to entertain
claims after the contract work was completed.
In January, 1980, Mercury submitted to the Architect its claims
for delay and impact costs. Mercury and the Architect discussed the
claims over several months, substantially reducing the amount of
the claims. According to the Hospital, it first learned of the
existence of Mercury's claims in April, 1980; its lawyers assumed
active participation in the claim procedure in May. The parties
differ in their characterizations of the events of the next few
months -- whether there were "ongoing negotiations," or merely an
"investigation" by the Hospital. In any event, it appears from the
record that lawyers for the Hospital requested additional
information concerning Mercury's claims. As a result, on August 12,
1980, Mercury gave a detailed presentation of its claims at a
meeting attended by Mercury's representatives and lawyers, the
Hospital's representatives and lawyers, and representatives of the
Architect. Mercury agreed to send copies of its files to an expert
hired by the Hospital, and the parties agreed to meet again on
On October 6, Mercury's counsel telephoned the Hospital's
counsel to confirm that the scheduled meeting would go forward. The
Hospital's counsel said he would call back the next day. When he
did, he informed Mercury's counsel that the Hospital would pay
nothing on Mercury's claim. He also said that the Hospital intended
to file a declaratory judgment action in North Carolina state
Page 460 U. S. 7
True to its word, the Hospital filed an action on the morning of
October 8 in the Superior Court of Guilford County, N.C., naming
Mercury and the Architect as defendants. The complaint alleged that
Mercury's claim was without factual or legal basis, and that it was
barred by the statute of limitations. It alleged that Mercury had
lost any right to arbitration under the contract due to waiver,
laches, estoppel, and failure to make a timely demand for
arbitration. The complaint also alleged various delinquencies on
the part of the Architect. As relief, the Hospital sought a
declaration that there was no right to arbitration; a stay of
arbitration; a declaration that the Hospital bore no liability to
Mercury; and a declaration that, if the Hospital should be found
liable in any respect to Mercury, it would be entitled to indemnity
from the Architect. The complaint was served on Mercury on October
9. On that same day, Mercury's counsel mailed a demand for
On October 15, without notice to Mercury, the Hospital obtained
an ex parte
injunction from the state court forbidding
Mercury to take any steps directed toward arbitration. Mercury
objected, and the stay was dissolved on October 27. As soon as the
stay was lifted, Mercury filed the present action in the District
Court, seeking an order compelling arbitration under § 4 of the
Arbitration Act, 9 U.S.C. § 4. [Footnote 4
] Jurisdiction was based on diversity of
citizenship. On the Hospital's motion, the District Court stayed
Mercury's federal court suit pending resolution of the state court
suit because the two suits involved the identical issue of the
arbitrability of Mercury's claims. App. to Pet. for Cert. A-38.
Page 460 U. S. 8
Mercury sought review of the District Court's stay by both a
notice of appeal and a petition for mandamus. A panel of the Court
of Appeals for the Fourth Circuit heard argument in the case, but
before the panel issued any decision, the court informed the
parties that it would consider the case en banc. After reargument,
the en banc court held that it had appellate jurisdiction over the
case under 28 U.S.C. § 1291. It reversed the District Court's stay
order and remanded the case to the District Court with instructions
for entry of an order to arbitrate.
Before we address the propriety of the District Judge's stay
order, we must first decide whether that order was appealable to
the Court of Appeals under 28 U.S.C. § 1291. [Footnote 5
Mercury sought appellate review through two alternative routes
-- a notice of appeal under § 1291 and a petition for mandamus
under the All Writs Act, 28 U.S.C. § 1651. [Footnote 6
] Mercury expressly stated that its appeal
was based only on § 1291, and not on 28 U.S.C. § 1292 (relating to
interlocutory appeals). The Hospital contends that the order
appealed from was not a "final decisio[n]" within § 1291. We
Page 460 U. S. 9
disagree, and hold that the stay order was final for purposes of
Idlewild Liquor Corp. v. Epstein, 370 U.
(1962), is instructive in this regard. There the
plaintiff brought a federal suit challenging the constitutionality
of a state statute. The District Judge declined to convene a
three-judge court and stayed the federal suit under the
abstention doctrine. [Footnote 7
] We held that the District Court's action was
final, and therefore reviewable by the Court of Appeals,
"The Court of Appeals properly rejected the argument that the
order of the District Court 'was not final, and hence unappealable
under 28 U.S.C. §§ 1291, 1292,' pointing out that '[a]ppellant was
effectively out of court.'"
370 U.S. at 370 U. S. 715
n. 2. [Footnote 8
Page 460 U. S. 10
Here, the argument for finality of the District Court's order is
even clearer. A district court stay pursuant to Pullman
abstention is entered with the expectation that the federal
litigation will resume in the event that the plaintiff does not
obtain relief in state court on state law grounds. [Footnote 9
] Here, by contrast, the District
Court predicated its stay order on its conclusion that the federal
and state actions involved "the identical issue of arbitrability of
the claims of Mercury Construction Corp. against the Moses H. Cone
Memorial Hospital." App. to Pet. for Cert. A-38. That issue of
arbitrability was the only substantive issue present in the federal
suit. Hence, a stay of the federal suit pending resolution of the
state suit meant that there would be no further litigation in the
federal forum; the state court's judgment on the issue would be
] Thus, here, even more surely than in Idlewild,
Mercury was "effectively out of court." Hence, as the Court of
Appeals held, this stay order amounts to a dismissal of the suit.
Page 460 U. S. 11
In any event, if the District Court order were not final for
appealability purposes, it would nevertheless be appealable within
the exception to the finality rule under Cohen v. Beneficial
Loan Corp., 337 U. S. 541
(1949). The factors required to show finality under this exception
have been summarized as follows:
"To come within the 'small class' of decisions excepted from the
final judgment rule by Cohen
, the order must conclusively
determine the disputed question, resolve an important issue
completely separate from the merits of the action, and be
effectively unreviewable on appeal
Page 460 U. S. 12
from a final judgment."
Coopers & Lybrand v. Livesay, 437 U.
, 437 U. S. 468
(1978) (footnote omitted). [Footnote 12
There can be no dispute that this order meets the second and
third of these criteria. An order that amounts to a refusal to
adjudicate the merits plainly presents an important issue separate
from the merits. [Footnote
] For the same reason, this order would be entirely
unreviewable if not appealed now. Once the state court decided the
issue of arbitrability, the federal court would be bound to honor
that determination as res judicata.
The Hospital contends nevertheless that the District Court's
stay order did not meet the first of the criteria, namely that it
"conclusively determine the disputed question." But this is true
only in the technical sense that every order short of a final
decree is subject to reopening at the discretion of the district
judge. [Footnote 14
] In this
case, however, there is
Page 460 U. S. 13
no basis to suppose that the District Judge contemplated any
reconsideration of his decision to defer to the parallel state
court suit. He surely would not have made that decision in the
first instance unless he had expected the state court to resolve
all relevant issues adequately. See
___ Part IV-E,
It is not clear why the judge chose to stay the
case, rather than to dismiss it outright; for all that the record
shows, there was no reason other than the form of the Hospital's
motion. Whatever the reason, however, the practical effect of his
order was entirely the same for present purposes, and the order was
We turn now to the principal issue to be addressed, namely, the
propriety of the District Court's decision to stay this federal
suit out of deference to the parallel litigation brought in state
court. Colorado River Water Conservation District v. United
States, 424 U. S. 800
(1976), provides persuasive guidance in deciding this question.
involved the effect of the McCarran
Amendment, 66 Stat. 560, 43 U.S.C. § 666, on the existence and
exercise of federal court jurisdiction to adjudicate federal water
rights, 28 U.S.C. § 1345. The Amendment waives the Government's
sovereign immunity to permit the joinder of the United States in
some state court suits for the adjudication of water rights. In
however, the Government proceeded in
Federal District Court, bringing suit against some 1,000 nonfederal
water users, seeking a declaration of the water rights of certain
federal entities and Indian tribes. Shortly thereafter, a defendant
in that suit
Page 460 U. S. 14
sought to join the United States in a state court proceeding for
the comprehensive adjudication and administration of all water
rights within the river system that was the subject of the federal
court suit. The District Court dismissed the federal suit, holding
that the abstention doctrine required deference to the state court
proceedings. The Court of Appeals for the Tenth Circuit reversed,
holding that the suit of the United States was within the District
Court's jurisdiction under 28 U.S.C. § 1345, and that abstention
was inappropriate. We reversed the judgment of the Court of Appeals
and affirmed the judgment of the District Court dismissing the
We began our analysis by examining the abstention doctrine in
its various forms. We noted:
"Abstention from the exercise of federal jurisdiction is the
exception, not the rule."
"The doctrine of abstention, under which a District Court may
decline to exercise or postpone the exercise of its jurisdiction,
is an extraordinary and narrow exception to the duty of a District
Court to adjudicate a controversy properly before it. Abdication of
the obligation to decide cases can be justified under this doctrine
only in the exceptional circumstances where the order to the
parties to repair to the State court would clearly serve an
important countervailing interest. [Footnote 15
After canvassing the three categories of abstention, we
concluded that none of them applied to the case at hand. 424 U.S.
at 424 U. S.
Nevertheless, we held that the District Court's dismissal was
proper on another ground -- one resting not on considerations of
state-federal comity or on avoidance of constitutional
Page 460 U. S. 15
decisions, as does abstention, but on "considerations of
[w]ise judicial administration, giving regard to conservation
of judicial resources and comprehensive disposition of
litigation.'" [Footnote 17]
We noted that "`the pendency of an action in the state court is no
bar to proceedings concerning the same matter in the Federal court
having jurisdiction,'" and that the federal courts have a
"virtually unflagging obligation . . . to exercise the jurisdiction
given them." [Footnote 18]
"Given this obligation, and the absence of weightier
considerations of constitutional adjudication and state-federal
relations, the circumstances permitting the dismissal of a federal
suit due to the presence of a concurrent state proceeding for
reasons of wise judicial administration are considerably more
limited than the circumstances appropriate for abstention. The
former circumstances, though exceptional, do nevertheless
at 424 U. S. 818
We declined to prescribe a hard-and-fast rule for dismissals of
this type, but instead described some of the factors relevant to
"It has been held, for example, that the court first assuming
jurisdiction over property may exercise that jurisdiction to the
exclusion of other courts. . . . In assessing the appropriateness
of dismissal in the event of an exercise of concurrent
jurisdiction, a federal court may also consider such factors as the
inconvenience of the federal forum; the desirability of avoiding
piecemeal litigation; and the order in which jurisdiction was
obtained by the concurrent forums. No one factor is necessarily
determinative; a carefully considered judgment taking into account
both the obligation to exercise jurisdiction
Page 460 U. S. 16
and the combination of factors counseling against that exercise
is required. Only the clearest of justifications will warrant
at 424 U. S.
-819 (emphasis added; citations omitted).
As this passage makes clear, the decision whether to dismiss a
federal action because of parallel state court litigation does not
rest on a mechanical checklist, but on a careful balancing of the
important factors as they apply in a given case, with the balance
heavily weighted in favor of the exercise of jurisdiction. The
weight to be given to any one factor may vary greatly from case to
case, depending on the particular setting of the case. Colorado
itself illustrates this principle in operation. B y far
the most important factor in our decision to approve the dismissal
there was the "clear federal policy . . . [of] avoidance of
piecemeal adjudication of water rights in a river system,"
at 424 U. S. 819
as evinced in the McCarran Amendment. We recognized that the
Amendment represents Congress' judgment that the field of water
rights is one peculiarly appropriate for comprehensive treatment in
the forums having the greatest experience and expertise, assisted
by state administrative officers acting under the state courts.
at 424 U. S.
-820. In addition, we noted that other factors in the
case tended to support dismissal -- the absence of any substantial
progress in the federal court litigation; the presence in the suit
of extensive rights governed by state law; the geographical
inconvenience of the federal forum; and the Government's previous
willingness to litigate similar suits in state court. Id.
at 424 U. S.
Before discussing the application of Colorado River
exceptional circumstances test, we must address the Hospital's
argument that that test was undermined by our subsequent decision
in Will v. Calvert Fire Insurance Co., 437 U.
(1978). We find no merit in this argument for at
least two reasons.
Page 460 U. S. 17
The Hospital relies on the opinion of JUSTICE REHNQUIST,
announcing the judgment of the Court. The Hospital argues that
JUSTICE REHNQUIST's opinion, if not expressly overruling
at least modifies its holding
substantially. But it is clear that a majority of the Court
reaffirmed the Colorado River
test in Calvert.
JUSTICE REHNQUIST's opinion commanded only four votes. It was
opposed by the dissenting opinion, in which four Justices concluded
that the Calvert
District Court's stay was impermissible
under Colorado River.
437 U.S. at 437 U. S.
-669, 437 U. S.
-674 (BRENNAN, J., joined by BURGER, C.J., and
MARSHALL and POWELL, JJ., dissenting). JUSTICE BLACKMUN, although
concurring in the judgment, agreed with the dissent that
exceptional circumstances test was
controlling; he voted to remand to permit the District Court to
apply the Colorado River
factors in the first instance.
]. 437 U.S. at
437 U. S.
-668. On remand, the Court of Appeals correctly
recognized that the four dissenting Justices and JUSTICE BLACKMUN
formed a majority to require application of the Colorado
test. Calvert Fire Insurance Co. v. Will,
F.2d 12 (CA7 1978). [Footnote
Page 460 U. S. 18
Even on the basis of JUSTICE REHNQUIST's opinion, however, there
is an obvious distinction between Calvert and this case. The key to
was the standard for issuance of a writ of
mandamus under 28 U.S.C. § 1651. [Footnote 21
] As JUSTICE REHNQUIST stressed, such
extraordinary writs are used in aid of appellate jurisdiction only
to confine an inferior court to a lawful exercise of its prescribed
authority, or to compel it to exercise its authority when it is its
duty to do so. The movant must show that his right to the writ is
clear and indisputable. 437 U.S. at 437 U. S.
-662, 437 U. S. 664
437 U. S.
-666 (opinion of REHNQUIST, J.). JUSTICE REHNQUIST
concluded that the movant in Calvert
had failed to meet
this burden. At the same time, he noted that the movant might have
succeeded on a proper appeal. Id.
at 437 U. S. 665
In this case, we have held that the Court of Appeals did have
appellate jurisdiction; it properly exercised that jurisdiction to
find that the District Court's stay was impermissible under
The Hospital further contends that Calvert
reversal here because the opinions of JUSTICE REHNQUIST and
Page 460 U. S. 19
JUSTICE BLACKMUN require greater deference to the discretion of
the District Court than was given by the Court of Appeals in this
case. Under both Calvert
and Colorado River,
course, the decision whether to defer to the state courts is
necessarily left to the discretion of the district court in the
first instance. Yet to say that the district court has discretion
is not to say that its decision is unreviewable; such discretion
must be exercised under the relevant standard prescribed by this
Court. In this case, the relevant standard is Colorado
exceptional circumstances test, as elucidated by the
factors discussed in that case. As we shall now explain, we agree
with the Court of Appeals that the District Court in this case
abused its discretion in granting the stay.
Applying the Colorado River
factors to this case, it is
clear that there was no showing of the requisite exceptional
circumstances to justify the District Court's stay.
The Hospital concedes that the first two factors mentioned in
are not present here. There was no
assumption by either court of jurisdiction over any res
property, nor is there any contention that the federal forum was
any less convenient to the parties than the state forum. The
remaining factors -- avoidance of piecemeal litigation, and the
order in which jurisdiction was obtained by the concurrent forums
-- far from supporting the stay, actually counsel against it.
There is no force here to the consideration that was paramount
in Colorado River
itself -- the danger of piecemeal
The Hospital points out that it has two substantive disputes
here -- one with Mercury, concerning Mercury's claim for delay and
impact costs, and the other with the Architect, concerning the
hospital's claim for indemnity for any liability it may have to
Mercury. The latter dispute cannot be sent
Page 460 U. S. 20
to arbitration without the Architect's consent, since there is
no arbitration agreement between the Hospital and the Architect. It
is true, therefore, that, if Mercury obtains an arbitration order
for its dispute, the Hospital will be forced to resolve these
related disputes in different forums. That misfortune, however, is
not the result of any choice between the federal and state courts;
it occurs because the relevant federal law requires
piecemeal resolution when necessary to give effect to an
arbitration agreement. [Footnote
] Under the Arbitration Act, an arbitration agreement must be
enforced notwithstanding the presence of other persons who are
parties to the underlying dispute but not to the arbitration
agreement. [Footnote 23
the dispute between Mercury and the Hospital is
under the Act, then the Hospital's two disputes will be resolved
separately -- one in arbitration, and the other (if at all) in
state court litigation. Conversely, if the dispute between Mercury
and the Hospital is not
arbitrable, then both disputes
will be resolved in state court. But neither of those two outcomes
depends at all on which court
decides the question of
arbitrability. Hence, a decision to allow that issue to be decided
in federal, rather than state, court does not cause piecemeal
resolution of the parties' underlying disputes. Although
Page 460 U. S. 21
the Hospital will have to litigate the arbitrability issue in
federal, rather than state, court, that dispute is easily severable
from the merits of the underlying disputes.
The order in which the concurrent tribunals obtained and
exercised jurisdiction cuts against, not for, the District Court's
stay in this case. The Hospital argues that the stay was proper
because the state court suit was filed some 19 days before the
federal suit. In the first place, this argument disregards the
obvious reason for the Hospital's priority in filing. An
indispensable element of Mercury's cause of action under § 4 for an
arbitration order is the Hospital's refusal to arbitrate.
That refusal did not occur until less than a day
before the Hospital filed its state suit. Hence, Mercury simply had
no reasonable opportunity to file its § 4 petition first. Moreover,
the Hospital succeeded in obtaining an ex parte
from the state court forbidding Mercury to take any steps to secure
arbitration. [Footnote 24
Mercury filed its § 4 petition the same day that the injunction was
dissolved. [Footnote 25
That aside, the Hospital's priority argument gives too
mechanical a reading to the "priority" element of the Colorado
balance. This factor, as with the other Colorado
factors, is to be applied in a pragmatic, flexible
manner with a view to the realities of the case at hand. Thus,
priority should not be measured exclusively by which complaint was
filed first, but rather in terms of how much progress has been made
in the two actions. Colorado River
Page 460 U. S. 22
this point well. There, the federal suit was actually filed
first. Nevertheless, we pointed out as a factor favoring dismissal
"the apparent absence of any proceedings in the District Court,
other than the filing of the complaint, prior to the motion to
dismiss." 424 U.S. at 424 U. S. 820
Here, the opposite was true. It was the state court suit in which
no substantial proceedings (excepting only the abortive temporary
injunction) had taken place at the time of the decision to stay. In
the federal suit, by contrast, the parties had taken most of the
steps necessary to a resolution of the arbitrability issue.
] In realistic
terms, the federal suit was running well ahead of the state suit at
the very time that the District Court decided to refuse to
adjudicate the case.
This refusal to proceed was plainly erroneous in view of
Congress' clear intent, in the Arbitration Act, to move the parties
to an arbitrable dispute out of court and into arbitration as
quickly and easily as possible. The Act provides two parallel
devices for enforcing an arbitration agreement: a stay of
litigation in any case raising a dispute referable to arbitration,
9 U.S.C. § 3, and an affirmative order to engage in arbitration, §
4. Both of these sections call for an expeditious and summary
hearing, with only restricted inquiry into factual issues.
] Assuming that
the state court would
Page 460 U. S. 23
have granted prompt relief to Mercury under the Act, [Footnote 28
] there still would have
been an inevitable delay as a result of the District Court's stay.
The stay thus frustrated the statutory policy of rapid and
unobstructed enforcement of arbitration agreements.
Besides the four factors expressly discussed in Colorado
there is another that emerges from Calvert
the fact that federal law provides the rule of decision on the
merits. The state-versus-federal law factor was of ambiguous
relevance in Colorado River.
] In Calvert,
however, both the
four-vote dissenting opinion and JUSTICE BLACKMUN's opinion
concurring in the judgment pointed out that the case involved
issues of federal law. 437 U.S. at 437 U. S. 667
(BLACKMUN, J., concurring in judgment); id.
437 U. S.
-677 (BRENNAN, J.,
Page 460 U. S. 24
dissenting). See also Colorado River,
424 U.S. at
424 U. S. 815
n. 21. It is equally apparent that this case involves federal
The basic issue presented in Mercury's federal suit was the
arbitrability of the dispute between Mercury and the Hospital.
Federal law in the terms of the Arbitration Act governs that issue
in either state or federal court. Section 2 is the primary
substantive provision of the Act, declaring that a written
agreement to arbitrate
"in any maritime transaction or a contract evidencing a
transaction involving commerce . . . shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract."
9 U.S.C. § 2. [Footnote
] Section 2 is a congressional declaration of a liberal
federal policy favoring arbitration agreements, notwithstanding any
state substantive or procedural policies to the contrary. The
effect of the section is to create a body of federal substantive
law of arbitrability, applicable to any arbitration agreement
within the coverage of the Act. In Prima Paint Corp. v. Flood
& Conklin Mfg. Corp., 388 U. S. 395
(1967), for example, the parties had signed a contract containing
an arbitration clause, but one party alleged that there had been
fraud in the inducement of the entire contract (although the
alleged fraud did not go to the arbitration clause in particular).
The issue before us was whether the issue of fraud in the
inducement was itself an arbitrable controversy. We held that the
language and policies of the Act required the conclusion that the
fraud issue was arbitrable. Id.
at 388 U. S.
-404. Although our holding in Prima Paint
extended only to the specific issue presented, the Courts of
Appeals have since consistently concluded that questions of
arbitrability must be addressed with a healthy regard for the
federal policy favoring arbitration. We agree. The Arbitration Act
establishes that, as a matter of federal law, any doubts concerning
the scope of arbitrable issues
Page 460 U. S. 25
should be resolved in favor of arbitration, whether the problem
at hand is the construction of the contract language itself or an
allegation of waiver, delay, or a like defense to arbitrability.
To be sure, the source-of-law factor has less significance here
than in Calvert,
since the federal courts' jurisdiction to
enforce the Arbitration Act is concurrent with that of the state
courts. [Footnote 32
] But we
emphasize that our task in cases such as this is not to find some
substantial reason for the exercise of federal jurisdiction by the
district court; rather, the task is to ascertain whether there
exist "exceptional" circumstances, the "clearest of
justifications," that can suffice under Colorado
Page 460 U. S. 26
to justify the surrender
jurisdiction. Although in some rare circumstances the presence of
state law issues may weigh in favor of that surrender, see
presence of federal law issues must always be a major consideration
weighing against surrender. [Footnote 33
Finally, in this case, an important reason against allowing a
stay is the probable inadequacy of the state court proceeding to
protect Mercury's rights. We are not to be understood to impeach
the competence or procedures of the North Carolina courts.
Moreover, state courts, as much as federal courts, are obliged to
grant stays of litigation under § 3 of the Arbitration Act.
] It is less
clear, however, whether the same is true of an order to compel
arbitration under § 4 of the Act. [Footnote 35
] We need not resolve that question here; it
suffices to say that there was, at a minimum, substantial room for
doubt that Mercury could obtain from the state court an order
Page 460 U. S. 27
the Hospital to arbitrate. [Footnote 36
] In many cases, no doubt, a § 3 stay is quite
adequate to protect the right to arbitration. But in a case such as
this, where the party opposing arbitration is the one from whom
payment or performance is sought, a stay of litigation alone is not
enough. It leaves the recalcitrant party free to sit and do nothing
-- neither to litigate nor to arbitrate. If the state court stayed
litigation pending arbitration but declined to compel the Hospital
to arbitrate, Mercury would have no sure way to proceed with its
claims except to return to federal court to obtain a § 4 order -- a
pointless and wasteful burden on the supposedly summary and speedy
procedures prescribed by the Arbitration Act.
The Hospital argues that the Colorado River
somehow inapplicable because, in this case, the District Court
merely stayed the federal litigation, rather than dismissing the
suit outright, as in Colorado River.
It contends that
Mercury remains free to seek to reopen the federal suit on a
showing that the state suit has failed to adjudicate its rights,
and that a stay is less onerous than a dismissal. We have already
rejected this distinction, for purposes of this case, in discussing
appellate jurisdiction. Supra
at 460 U. S. 12
We reject it in this context for the same reasons.
Page 460 U. S. 28
We have no occasion in this case to decide whether a dismissal
or a stay should ordinarily be the preferred course of action when
a district court properly finds that Colorado River
counsels in favor of deferring to a parallel state court suit.
] We can say,
however, that a stay is as much a refusal to exercise federal
jurisdiction as a dismissal. When a district court decides to
dismiss or stay under Colorado River,
concludes that the parallel state court litigation will be an
adequate vehicle for the complete and prompt resolution of the
issues between the parties. If there is any substantial doubt as to
this, it would be a serious abuse of discretion to grant the stay
or dismissal at all. See 460 U. S.
supra; McNeese v. Board of Education, 373 U.
, 373 U. S.
-676 (1963). Thus, the decision to invoke
necessarily contemplates that the federal
court will have nothing further to do in resolving any substantive
part of the case, whether it stays or dismisses. See
Wright, A. Miller, & E. Cooper, Federal Practice and Procedure
§ 4247, pp. 517-519 (1978).
Moreover, assuming that, for some unexpected reason, the state
forum does turn out to be inadequate in some respect, the
Hospital's argument fails to make out any genuine difference
between a stay and a dismissal. It is true that Mercury could seek
to return to federal court if it proved necessary; but that would
be equally true if the District Court had dismissed the case. It is
highly questionable whether this Court would have approved a
dismissal of a federal suit in Colorado River
(or in any
of the abstention cases, see supra
at 460 U. S. 14
the federal courts did not remain open to a dismissed plaintiff who
later demonstrated the inadequacy of the state forum.
Page 460 U. S. 29
In addition to reversing the District Court's stay, the Court of
Appeals decided that the underlying contractual dispute between
Mercury and the Hospital is arbitrable under the Arbitration Act
and the terms of the parties' arbitration agreement. It reversed
the District Court's judgment and remanded the case "with
directions to proceed in conformity herewith." 656 F.2d at 946. In
effect, the Court of Appeals directed the District Court to enter a
§ 4 order to arbitrate.
In this Court, the Hospital does not contest the substantive
correctness of the Court of Appeals' holding on arbitrability. It
does raise several objections to the procedures the Court of
Appeals used in considering and deciding this case. In particular,
it points out that the only issue formally appealed to the Court of
Appeals was the propriety of the District Court's stay order.
Ordinarily, we would not expect the Court of Appeals to pass on
issues not decided in the District Court. In the present case,
however, we are not disposed to disturb the court's discretion in
its handling of the case in view of the special interests at stake
and the apparent lack of any prejudice to the parties. Title 28
U.S.C. § 2106 gives a court of appeals some latitude in entering an
order to achieve justice in the circumstances. The Arbitration Act
calls for a summary and speedy disposition of motions or petitions
to enforce arbitration clauses. The Court of Appeals had in the
record full briefs and evidentiary submissions from both parties on
the merits of arbitrability, and held that there were no disputed
issues of fact requiring a jury trial before a § 4 order could
issue. Under these circumstances, the court acted within its
authority in deciding the legal issues presented in order to
facilitate the prompt arbitration that Congress envisaged.
Page 460 U. S. 30
The Architect was given final say on "matters relating to
artistic effect." App. 28-29. The contract also excluded
arbitration on any claim waived by the making or acceptance of
final payment. Id.
at 29. Neither of these exceptions is
asserted to apply in this case.
The contract provided that no demand for arbitration could be
made later than 30 days after the Architect's written final
decision. In the case of arbitrable disputes not subject to
submission to the Architect, the demand was required to be made
"within a reasonable time after the claim . . . has arisen," and in
no event after the applicable statute of limitations had run.
The contract also set a starting time limit for arbitration
demands. No demand could be made earlier than 10 days after
presentation of evidence to the Architect, unless the Architect
rendered a written decision before that time. Id.
The completion date, originally set as November 14, 1978, was
extended to October, 1979 by agreement of the parties.
Simultaneously, Mercury filed a petition for removal of the
Hospital's state court action. The District Court remanded the
removed case on the ground that, because the Hospital and the
Architect are both North Carolina corporations, there was no
complete diversity. The propriety of the removal or remand is not
before this Court.
Section 1291 provides in relevant part
"The courts of appeals shall have jurisdiction of appeals from
all final decisions of the district courts of the United States, .
. . except where a direct review may be had in the Supreme
The Hospital argues that, because Mercury's filing in the Court
of Appeals was styled a petition for mandamus first and a notice of
appeal only "in the alternative," the Hospital was somehow entitled
to have the Court of Appeals apply the stricter standards of review
that obtain under the mandamus procedure before considering any
appeal. Brief for Petitioner 30-31. We do not understand why this
order of proceeding would be of any benefit to the Hospital; but in
any event, the contention is frivolous. In the first place, Mercury
also filed a proper notice of appeal in the District Court,
Fed.Rule App.Proc. 3(a). More fundamentally, a court
of appeals has no occasion to engage in extraordinary review by
mandamus "in aid of [its] jurisdictio[n]," 28 U.S.C. § 1651, when
it can exercise the same review by a contemporaneous ordinary
appeal. See, e.g., Hines v. D'Artois,
531 F.2d 726, 732,
and n. 10 (CA5 1976).
Railroad Comm'n v. Pullman Co., 312 U.
The plaintiff in Idlewild
had requested injunctive
relief against enforcement of the state statute. Nevertheless, it
is clear that neither the Court of Appeals nor this Court based the
holding of appealability on the argument that the District Court
had effectively denied injunctive relief. See generally
U.S.C. § 1292(a)(1); Carson v. American Brands, Inc.,
450 U. S. 79
(1981). Section 1292, in terms, applies only to
orders, and therefore could hardly have been
the basis for a holding that the orders were "final."
There is no basis for the dissent's attempt, post
460 U. S. 33
on the basis that, in that case,
there was no pending state court action when the District Court's
stay issued. Neither the Court of Appeals nor this Court suggested
that the state court's doors were anything but
wide open to the plaintiff. "[E]ffectively out of court" means
effectively out of federal
court -- in keeping with the
fact that the decision under appeal is the refusal to exercise
Moreover, the dissent's resolution of the appealability issue
would yield the odd result that Pullman
would be immediately appealable in Texas, but not in the other 49
States. Compare American Trial Lawyers Assn. v. New Jersey
Supreme Court, 409 U. S. 467
(1973) (stays appropriate in Pullman
Harris County Commissioners Court v. Moore, 420 U. S.
, 420 U. S. 88
and n. 14 (1975) (dismissal permissible to accommodate Texas
jurisdictional requirements). This oddity illustrates the
artificiality of resting appealability on an otherwise
substanceless distinction between stays and dismissals in the
present context. See
Part IV-E, infra.
See England v. Louisiana Bd. of Medical Examiners,
375 U. S. 411
See, e.g., Ultracashmere House, Ltd. v. Meyer,
1176 1183-1184 (CA11 1981); Merrill Lynch, Pierce, Fenner &
Smith, Inc. v. Haydu,
637 F.2d 391, 397-398 (CA5 1981).
656 F.2d 933, 937-938, and n. 6 (CA4 1981), citing
as dispositive Amdur v. Lizars,
372 F.2d 103, 105-106 (CA4
1967). See also Federman v. Empire Fire & Marine Insurance
597 F.2d 798, 808, and n. 15 (CA2 1979); Baltimore
Bank for Cooperatives v. Farmers Cheese Cooperative,
104, 108-109 (CA3 1978); Sun Oil Co. v. FEA,
572 F.2d 867
(Temp.Emerg.Ct. App.1978); Rancho Palos Verdes Corp. v. Laguna
547 F.2d 1092, 1093, n. 1 (CA9 1976); Hines v.
at 730-732; Drexler v. Southwest Dubois
504 F.2d 836, 838 (CA7 1974) (en banc);
Druker v. Sullivan,
458 F.2d 1272, 1274, n. 3 (CA1 1972).
But see Acton Corp. v. Borden, Inc.,
670 F.2d 377, 380-382
(CA1 1982); State Farm Mutual Automobile Insurance Co. v.
601 F.2d 1151, 1153-1154 (CA10 1979); Frederick
L. v. Thomas,
578 F.2d 513, 515-516 (CA3 1978) (dictum).
Of course, as these cases recognize, Idlewild
disturb the usual rule that a stay is not ordinarily a final
decision for purposes of § 1291, since most stays do not put the
plaintiff "effectively out of court." See, e.g., Amdur,
at 105-106. Idlewild's
reasoning is limited to
cases where (under Colorado River,
abstention, or a
closely similar doctrine) the object of the stay is to require all
or an essential part of the federal suit to be litigated in a state
This answers the dissent's argument, post
460 U. S. 33
was overruled by that part of Coopers
& Lybrand v. Livesay, 437 U. S. 463
437 U. S.
-477 (1978), which rejected the "death knell"
doctrine of appealability. The "death knell" doctrine rested on the
argument that, in some situations, an interlocutory decision (such
as a refusal to certify a class) might terminate a suit as a
practical matter because the named plaintiff would lack an economic
incentive to pursue his individual claim. In a "death knell" case,
however, the order sought to be appealed had no legal
effect on the named plaintiff's ability to proceed with his
individual claim in federal court. There is an obvious difference
between a case in which the plaintiff himself may choose
not to proceed, and a case in which the district court refuses
the plaintiff to litigate his claim in federal court.
Appeal from a stay on abstention or Colorado River
grounds, therefore, presents no prospect of "appeals of right from
nonfinal orders that turn on the facts of a particular case," as in
Coopers & Lybrand, supra,
at 437 U. S. 476
We foresee no great difficulty in determining when a district court
has surrendered jurisdiction over a federal lawsuit.
For much the same reason, the dissent errs in likening the stay
in this case to an ordinary delay in the interest of docket
at 460 U. S. 30
We do not hold that an order becomes final merely because it may
have the practical effect of allowing a state court to be the first
to rule on a common issue. We hold only that a stay order is final
when the sole purpose and effect of the stay are precisely to
surrender jurisdiction of a federal suit to a state court.
Accord, Firestone Tire & Rubber Co. v. Risjord,
449 U. S. 368
449 U. S. 375
(1981); United States v. MacDonald, 435 U.
, 435 U. S.
-855 (1978); Abney v. United States,
431 U. S. 651
431 U. S.
The "completely separate from the merits" requirement is a
distillation of the principle that there should not be piecemeal
review of "steps towards final judgment in which they will merge."
Cohen v. Beneficial Loan Corp., 337 U.
, 337 U. S. 546
(1949). In this case, of course, there is no step towards final
judgment, but a refusal to proceed at all.
Fed.Rule Civ.Proc. 54(b); 18 C. Wright, A. Miller,
& E. Cooper Federal Practice and Procedure § 4478, pp. 788-792
Coopers & Lybrand
held that the Cohen
did not apply to a class decertification order because, among other
reasons, such an order is "inherently tentative" under Federal Rule
of Civil Procedure 23(c)(1), which provides that such an order may
be "altered or amended before the decision on the merits." 437 U.S.
at 437 U. S. 469
and n. 11. Of course, as Rule 54(b) provides, virtually all
interlocutory orders may be altered or amended before final
judgment if sufficient cause is shown; yet that does not make all
pretrial orders "inherently tentative" in the sense of that phrase
in Coopers & Lybrand.
The rationale behind Rule
23(c)(1) is that a certification decision should be made "[a]s soon
as practicable," even though later events or discoveries may
mandate a different result. Many other orders, by contrast, are
made with the expectation that they will be the final word on the
subject addressed. Certainly that was true of the order at issue in
this case. The reasoning of Coopers & Lybrand
reach all pretrial orders that are formally subject to revision,
but only those as to which some revision might reasonably be
expected in the ordinary course of litigation.
424 U.S. at 424 U. S. 813
quoting County of Allegheny v. Frank Mashuda Co.,
360 U. S. 185
360 U. S.
There is no contention here that any of the categories of the
abstention doctrine apply to this case.
424 U.S. at 424 U. S. 817
quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co.,
342 U. S. 180
342 U. S. 183
424 U.S. at 424 U. S. 817
quoting McClellan v. Carland, 217 U.
, 217 U. S. 282
Our decision in Colorado River
came down after the
District Court's stay order in Calvert,
but before the
Court of Appeals issued its mandamus in that case.
On remand from our decision in Calvert,
Court and Court of Appeals concluded that the stay should be
continued, but rested that decision on a ground not addressed in
the prior Court of Appeals decision (Calvert Fire Insurance Co.
560 F.2d 792 (CA7 1977)) or in any of this Court's
opinions in the case. They concluded that the filing of the federal
suit was a "defensive tactical maneuver" based on a contrived
federal claim; hence, a stay was called for as "a means to deter
vexatious use of the federal courts." The courts also noted that,
in the interim, the basis for the plaintiff's assertion of
exclusive federal jurisdiction had vanished. Calvert Fire
Insurance Co. v. American Mutual Reinsurance Co.,
1228, 1234-1236 (CA7 1979), aff'g 459 F.
(ND Ill.1978). The case did not come before this
Court for review a second time.
The Court of Appeals in this case relied on similar reasoning.
It concluded that, despite chronological priority of filing, the
Hospital's state court suit was a contrived, defensive reaction to
Mercury's expected claim for relief and for arbitration. 656 F.2d
The reasoning of the Courts of Appeals in this case and in
-- that the vexatious or reactive nature of either
the federal or the state litigation may influence the decision
whether to defer to a parallel state litigation under Colorado
-- has considerable merit. We need not rely on such
reasoning here, however, for we conclude infra
if the Hospital acted in complete good faith, there were no
exceptional circumstances warranting the District Court's stay.
The Court of Appeals in Calvert
had held that it lacked
jurisdiction to entertain an ordinary appeal, apparently because a
portion of the federal litigation was the subject of exclusive
federal jurisdiction, and would therefore remain to be disposed of
in federal court after the conclusion of state court proceedings.
Calvert Fire Insurance Co. v. Will,
560 F.2d at 794,
citing Cotler v. Inter-County Orthopaedic Assn.,
537, 540 (CA3 1975). Cf. Drexler v. Southwest Dubois School
504 F.2d at 838 (stay of litigation pending exhaustion
of state remedies is final under Idlewild). The issue of appellate
jurisdiction was not presented to this Court in
This provides a sharp contrast with the key statute at issue in
-- the McCarran Amendment. There, as we
stressed, the primary policy of the statute was the
of piecemeal litigation. 424 U.S. at
424 U. S.
E.g., C. Itoh & Co. v. Jordan International Co.,
552 F.2d 1228, 1231-1232 (CA7 1977); Acevedo Maldonado v. PPG
514 F.2d 614, 617 (CA1 1975); Hamilton
Life Insurance Co. v. Republic National Life Insurance Co.,
408 F.2d 606, 609 (CA2 1969).
In some cases, of course, it may be advisable to stay litigation
among the nonarbitrating parties pending the outcome of the
arbitration. That decision is one left to the district court (or to
the state trial court under applicable state procedural rules) as a
matter of its discretion to control its docket. See generally
Landis v. North American Co., 299 U.
, 299 U. S.
Of course, we do not mean to say that the state court's
injunction could properly have been applied to prevent Mercury from
filing or prosecuting a federal lawsuit. See General Atomic Co.
v. Felter, 434 U. S. 12
(1977); Donovan v. City of Dallas, 377 U.
(1964). Mercury was not obliged, however, to put
itself in danger of contempt sanctions merely in order to cut short
the period of the Hospital's priority of filing.
See also n
Under § 6 of the Arbitration Act, 9 U.S.C. § 6, Mercury's
application for a § 4 order was properly treated procedurally as a
motion. Mercury submitted affidavits, legal briefs, and documentary
evidence in support of the order sought. The Hospital responded
with full briefing and extensive evidentiary submissions on the
arbitrability issue, and it requested oral argument and a jury
trial. At the same time, it made its successful motion for a stay.
It is readily apparent that, if the District Court had denied the
stay, it doubtless could and should have gone on to decide the
arbitrability point in very short order.
Section 3 provides that, if a suit is brought on the merits of a
dispute covered by an arbitration agreement,
"the court in which such suit is pending, upon being satisfied
that the issue involved in such suit or proceeding is referable to
arbitration under such an agreement, shall on application of one of
the parties stay the trial of the action until such arbitration has
been had in accordance with the terms of the agreement, providing
the applicant for the stay is not in default in proceeding with
9 U.S.C. § 3.
Section 4 provides that a district court must enter an order to
arbitrate "upon being satisfied that the making of the agreement
for arbitration or the failure to comply therewith is not in
issue." If either of these points is in issue, § 4 provides that
"the court shall proceed summarily" to a trial on that point.
Section 6 further provides that a request for relief under either §
3 or § 4 is to be treated procedurally as a motion.
Moreover, the policy of the Arbitration Act requires a liberal
reading of arbitration agreements, see infra
460 U. S. 24
As a result, some issues that might be thought relevant to
arbitrability are themselves arbitrable -- further speeding the
procedure under §§ 3 and 4. See, e.g., Prima Paint Corp. v.
Flood & Conklin Mfg. Co., 388 U.
infra; but cf.
nn. 35 36
Although the dissenting Justices in Colorado River
relied on this point, see
424 U.S. at 424 U. S.
-826, the majority concluded that the federal/state
law point was not controlling for two reasons. First, there was an
affirmative policy in federal law expressly approving litigation of
federal water rights in state court -- the McCarran Amendment.
Second, although the water rights of the United States and the
Indian tribes were governed in part by federal law, the bulk of the
litigation would necessarily revolve around the state law water
rights of the thousand nonfederal parties in the case -- a factor
on which we expressly relied in approving the District Court's
at 424 U. S.
"Maritime transactions" and "commerce" are defined in § 1 of the
Arbitration Act, 9 U.S.C. § 1.
E.g., Dickinson v. Heinold Securities, Inc.,
638, 643 (CA7 1981); Wick v. Atlantic Marine, Inc.,
F.2d 166, 168 (CA5 1979); Becker Autoradio U.S.A. Inc. v.
Becker Autoradiowerk GmbH,
585 F.2d 39, 43-45 (CA3 1978);
Hanes Corp. v. Millard,
174 U.S.App.D.C. 253, 266, 531
F.2d 585, 598 (1976); Acevedo Maldonado v. PPG Industries,
514 F.2d at 616-617; Germany v. River Terminal R.
477 F.2d 546, 547 (CA6 1973); Coenen v. R. W.
Pressprich & Co.,
453 F.2d 1209, 1211-1212 (CA2 1972);
Hart v. Orion Insurance Co.,
453 F.2d 1358, 1360-1361
The Arbitration Act is something of an anomaly in the field of
federal court jurisdiction. It creates a body of federal
substantive law establishing and regulating the duty to honor an
agreement to arbitrate, yet it does not create any independent
federal question jurisdiction under 28 U.S.C. § 1331 (1976 ed.,
Supp. V) or otherwise. Section 4 provides for an order compelling
arbitration only when the federal district court would have
jurisdiction over a suit on the underlying dispute; hence, there
must be diversity of citizenship or some other independent basis
for federal jurisdiction before the order can issue. E.g.,
Commercial Metals Co. v. Balfour, Guthrie, & Co.,
264, 268-269 (CA5 1978), and cases cited. Section 3 likewise limits
the federal courts to the extent that a federal court cannot stay a
suit pending before it unless there is such a suit in existence.
Nevertheless, although enforcement of the Act is left in large part
to the state courts, it nevertheless represents federal policy to
be vindicated by the federal courts where otherwise
We need not address whether a federal court might stay a state
court suit pending arbitration under 28 U.S.C. § 2283.
Although § 3 refers ambiguously to a suit "in any of the courts
of the United States," the state courts have almost unanimously
recognized that the stay provision of § 3 applies to suits in
state, as well as federal, courts, requiring them to issue the same
speedy relief when a dispute is referable to arbitration. (The
North Carolina Supreme Court has so held, although not until after
the District Court ordered this stay. Burke County Public
Schools Board of Education v. Shaver Partnership,
408, 279 S.E.2d
(1981).) This is necessary to carry out Congress' intent to
mandate enforcement of all covered arbitration agreements; Congress
can hardly have meant that an agreement to arbitrate can be
enforced against a party who attempts to litigate an arbitrable
dispute in federal court, but not against one who sues on the same
dispute in state court. See also Prima Paint,
388 U.S. at
388 U. S.
Section 4, unlike § 3, speaks only of a petition to "any United
States district court." Nonetheless, at least one state court has
held that § 4 does require state courts to issue § 4 orders to
arbitrate where the section's conditions are met. Main v.
Merrill Lynch, Pierce, Fenner & Smith Inc., 67 Cal. App. 3d
, 24-25, 136 Cal. Rptr. 378, 380-381 (1977).
As a historical matter, there was considerable doubt at the time
of the District Court's stay that the North Carolina court would
have granted even a § 3 stay of litigation. The then-controlling
precedent in North Carolina was to the effect that a contract such
as that between Mercury and the Hospital was not subject to the
Arbitration Act at all, on the reasoning that a construction
project is not "commerce" within the meaning of §§ 1 and 2 of the
Act. Burke County Public Schools Board of Education v. Shaver
46 N.C. App. 573, 265
(1980); Bryant-Durham Electric Co. v. Durham
County Hospital Corp.,
42 N.C. App. 351, 256
(1979). The North Carolina Supreme Court has,
however, since repudiated those decisions. Burke County Public
Schools Board of Education v. Shaver Partnership,
408, 279 S.E.2d
This reservation, of course, applies only to cases under
Colorado River. Cf., e.g., American Trial Lawyers
Assn. v. New Jersey Supreme Court, 409 U.
(1973) (stay, rather than dismissal, in
JUSTICE REHNQUIST, with whom THE CHIEF JUSTICE and JUSTICE
O'CONNOR join, dissenting.
In its zeal to provide arbitration for a party it thinks
deserving, the Court has made an exception to established rules of
procedure. The Court's attempt to cast the District Court's
decision as a final judgment fails to do justice to the meaning of
the word "final," to the Act of Congress that limits the
jurisdiction of the courts of appeals, or to the district judges
who administer the laws in the first instance.
If the District Court had not stayed the proceeding, but had set
a trial date two months away, there would be no doubt that its
order was interlocutory, subject to review only by mandamus or
pursuant to 28 U.S.C. § 1292(b). This would be true even though § 4
of the Arbitration Act provides that "the court shall proceed
summarily" to trial, because an order setting a trial date only
guides the course of litigation, and does not, of its own force,
dispose of it on the merits. Such an order is tentative; that is,
it is subject to change at any time on the motion of a party or by
the court, sua sponte.
The order the District Court actually entered is no more final.
It delayed further proceedings until the completion of pending
litigation in the state courts. This order was also tentative; it
was subject to change on a showing that the state proceedings were
being delayed, either by the Hospital or by the court, or that the
state courts were not applying the federal Act, or that some other
reason for a change had arisen. This order did not dispose of the
case on the merits. If the state court had found that there was no
agreement to arbitrate within the meaning of the United States
Arbitration Act, the District Court would have been bound by that
finding. But res judicata
or collateral estoppel would
apply if the state court reached a decision before the District
Court in the absence of a stay. The likelihood that a state court
of competent jurisdiction may enter a judgment that may determine
some issue in a case does not render final a federal district
court's decision to take a two-day recess, or to order
Page 460 U. S. 31
briefing by the parties in five days or five months, or to take
a case under advisement, rather than render an immediate decision
from the bench. Such a possibility did not magically change that
character of the order the District Judge entered in this case.
Section 1291 of the Judicial Code is a congressional command to
the federal courts of appeals not to interfere with the district
courts' management of ongoing proceedings. Unless the high
standards for a writ of mandamus can be met, or the district court
certifies an interlocutory appeal pursuant to § 1292(b), Congress
has directed that the district courts be permitted to conduct their
cases as they see fit. The reason for this rule is simple:
"Since the right to a judgment from more than one court is a
matter of grace, and not a necessary ingredient of justice,
Congress, from the very beginning, has, by forbidding piecemeal
disposition on appeal of what for practical purposes is a single
controversy, set itself against enfeebling judicial administration.
Thereby is avoided the obstruction to just claims that would come
from permitting the harassment and cost of a succession of separate
appeals from the various rulings to which a litigation may give
rise, from its initiation to entry of judgment. To be effective,
judicial administration must not be leaden-footed. Its momentum
would be arrested by permitting separate reviews of the component
elements in a unified cause."
Cobbledick v. United States, 309 U.
, 309 U. S. 325
(1940) (Frankfurter, J., for a unanimous Court).
The Court's decision places an unwarranted limitation upon the
power of district courts to control their own cases. The Court's
opinion does not establish a broad exception to § 1291, see
at 460 U. S. 10
n. 11, but it does create uncertainty about when a district court
order in a pending case can be appealed. This uncertainty gives
litigants opportunities to disrupt or delay proceedings by taking
colorable appeals from interlocutory
Page 460 U. S. 32
orders, not only in cases nearly identical to this, but also in
cases which the ingenuity of counsel disappointed by a district
court's ruling can analogize to this one. Section 1291 established
a policy that district judges should conduct their own cases from
beginning to end. The occasional injustice to a litigant that
results from an erroneous district court decision is far outweighed
by the far greater systemic disruption created by encouraging
parties to attempt interlocutory appeals. The former attracts the
Court's attention, because the legal error it perceives is apparent
on the surface of the case. The latter receives inadequate
attention because it does not appear in published decisions or in
petitions for certiorari. It is, rather, obscured by the "merits"
of cases, and hidden among statistics on the cost and seeming
interminable nature of litigation. Both respect for district judges
and concern for the course of litigation generally should make the
Court hesitate before creating another exception, however narrow,
to § 1291.
The Court has acknowledged the importance of the rule of
finality as recently as Coopers & Lybrand v. Livesay,
437 U. S. 463
(1978), which rejected the so-called "death knell" exception to §
1291. In Coopers,
a putative representative plaintiff
whose motion for class certification had been denied by the
District Court sought to appeal under § 1291. We accepted his
argument that this order effectively put him out of court,
at 437 U. S. 470
but held that this circumstance did not justify an exception to the
"[A]llowing appeals of right from nonfinal orders that turn on
the facts of a particular case thrusts appellate courts
indiscriminately into the trial process, and thus defeats one vital
purpose of the final judgment rule -- 'that of maintaining the
appropriate relationship between the respective courts. . . . This
goal, in the absence of most compelling reasons to the contrary, is
very much worth preserving.'"
at 476 (quoting Parkinson v. April Industries,
520 F.2d 650, 654 (CA2 1975) (concurring opinion)).
Page 460 U. S. 33
The Court has not given any sound, principled justification for
permitting the Court of Appeals to thrust itself into the trial
process in this case. It begins by citing Idlewild Liquor Corp.
v. Epstein, 370 U. S. 713
(1962). There the District Court had stayed an action challenging
the constitutionality of a state statute
"to give the state courts an opportunity to pass upon the
constitutional issues presented, although there was no relevant
litigation then pending in the state courts."
at 370 U. S. 714
This Court held that the order was appealable because the plaintiff
"was effectively out of court." Id.
at 370 U. S. 715
n. 2. Idlewild
does not control this case.
First, Mercury is less "effectively out of court" than was
Idlewild. There was no pending state proceeding that might have
resolved the issues in the case, and Idlewild might well have been
obliged to take the risk of violating the statute and challenging
it in an enforcement proceeding in state court.
More importantly, however, the decision in Idlewild
cannot be good law after Coopers, supra.
as holding only that the collateral
order doctrine of Cohen v. Beneficial Loan Corp.,
337 U. S. 541
(1949), does not apply to a class decertification order under
Federal Rule of Civil Procedure 23(c)(1). Ante
460 U. S. 12
n. 14. We did hold that "the collateral order doctrine is not
applicable to" a decertification order. 437 U.S. at 437 U. S.
-469. We then went on to reject the argument that the
decertification order was final under the so-called "death knell"
doctrine, holding that an order does not become final simply
because the plaintiff will be unable to pursue his claim if the
order stands. Id.
at 437 U. S.
-477. We declined to attach any importance to the
fact that the plaintiff in Coopers
was just as
"effectively out of court" as Idlewild or Mercury. We noted
"if the 'death knell' doctrine has merit, it would apply equally
to the many interlocutory orders in ordinary litigation . . . that
may have such tactical economic significance that a defeat is
tantamount to a 'death knell' for the entire case."
at 437 U. S. 470
We also noted that 28 U.S.C. § 1292(b) provides for review
Page 460 U. S. 34
of certain nonfinal orders, and that the "death knell" doctrine
circumvents its restrictions. 437 U.S. at 437 U. S.
-475. By ignoring this discussion and holding from
the Court has created an unjustified exception to
The Court also states that the stay order in this case is
appealable under Cohen, supra.
I t quotes the formulation
of the Cohen
collateral order doctrine from
"[T]he order must conclusively determine the disputed question,
resolve an important issue completely separate from the merits of
the action, and be effectively unreviewable on appeal from a final
437 U.S. at 437 U. S. 468
at 460 U. S. 11
The District Court's order did not "conclusively determine the
disputed question" for the reasons stated above. The Court's
assertion to the contrary, ante
at 460 U. S. 12
is nothing short of sheer speculation about the state of mind of
the District Judge. Such speculation is hardly the "practical,
rather than . . . technical, construction" *
of § 1291
contemplated by Cohen, supra,
at 460 U. S. 546
itself, the District Court denied the defendant's
motion to require the plaintiff to post a bond on the ground that
the statute requiring the bond did not apply. That order
"conclusively determined" the question whether a bond was required,
because no conceivable change of circumstances could affect the
basis of the District Court's decision. In this case, any number of
plausible events might have convinced the District Court that a
necessary basis of its decision -- that the state court would
proceed promptly and fairly to adjudicate the issue of the
existence of an agreement to arbitrate -- no longer applied.
Page 460 U. S. 35
Furthermore, I am not as certain as is the Court that, by
staying this case, the District Court resolved "an important
issue." An issue should not be deemed "important" for these
purposes simply because the court of appeals or this Court thinks
the appellant should prevail. The issue here was whether the
factual question whether there was an agreement to arbitrate should
be adjudicated in a state or federal court. Unless there is some
reason to believe that the state court will resolve this factual
question wrongly, which the Court quite rightly disclaims,
at 460 U. S. 26
do not see how this issue is more important than any other
interlocutory order that may place a litigant at a procedural
For these reasons, I do not believe the District Court's order
was appealable. Interlocutory orders are committed by statute to
the judgment of the district courts, and this Court ill-serves the
judges of those courts and the overwhelming majority of litigants
by devising exceptions to the statute when it believes a particular
litigant has been wronged.
Given my view of appealability, I do not find it necessary to
decide whether the District Court's order was proper in this case.
I am disturbed, however, that the Court has sanctioned an
extraordinary departure from the usual and accepted course of
judicial proceedings by affirming the Court of Appeals decision on
an issue that was not decided in the District Court.
The Court of Appeals ordered the District Court to enter an
order compelling arbitration, even though that issue was not
considered by the District Court. This Court has maintained the
difference between appellate jurisdiction and original jurisdiction
at least since Marbury v.
1 Cranch 137, 5 U. S. 174
(1803) ("It is the essential criterion of appellate jurisdiction
that it revises and corrects the proceedings in a case already
instituted"). I do not understand how the Court can say that the
Court of Appeals had discretion to perform a nonappellate act.
Page 460 U. S. 36
The Court relies on 28 U.S.C. § 2106, which provides that a
court of appeals
"may affirm, modify, vacate, set aside or reverse any judgment,
decree, or order of a court lawfully brought before it for review,
and may remand the cause and direct the entry of such appropriate
judgment, decree, or order, or require such further proceedings to
be had as may be just under the circumstances."
This statute does not grant the courts of appeals authority to
constitute themselves as trial courts. Section 4 of the Arbitration
Act gives the Hospital a right to a jury trial. See ante
at 460 U. S. 23
27. By deciding that there were no disputed issues of fact, the
Court of Appeals seems to have decided a motion for summary
judgment that was not before it. This is the kind of issue that
district judges decide every day in the ordinary course of
business. It is not the kind of issue that courts of appeals
determine. The Court of Appeals did have before it the memoranda
filed in the District Court, but, contrary to the Court's
at 460 U. S. 29
this issue was not argued in the Court of Appeals. See
F.2d 933, 948, n. 1 (1981) (Hall, J., dissenting) ("No one argued
that this court should decide that issue").
There was no reason to believe that the District Court would not
have acted promptly to resolve the dispute on the merits after
being reversed on the stay. That judges of a court of appeals
believe they know how a case should be decided is no reason for
them to substitute their own judgment for that of a district judge
without regard to the normal course of appellate procedure.
The judgment below should be vacated, and the case remanded to
the Court of Appeals with directions to dismiss the appeal for want
of jurisdiction. Failing that, even if the Court is correct that
the stay order was an error, the judgment should be reversed
insofar as it decides the question of arbitrability, and the case
should be remanded to the District Court for further proceedings
under the Arbitration Act.
* As a practical matter, it is not at all clear to me that the
Court of Appeals' course would have provided arbitration more
quickly than that of the District Court, even if this Court had not
granted certiorari. If the Court of Appeals was correct that this
dispute is plainly arbitrable, there is no reason to expect that
the state courts would not have resolved that issue in the 11
months during which the case was before the Court of Appeals.