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Unison Co., Ltd. v. Juhl Energy Development, Inc.

United States District Court, D. Minnesota

June 6, 2014

Unison Co., Ltd., Plaintiff,
Juhl Energy Development, Inc., Juhl Energy, Inc., Winona Wind Holdings, LLC, Winona County Wind, LLC, Daniel Juhl, John Mitola, John Brand, Bartly J. Loethen, Audrey Loethen, and Jeff Bendel, Defendants.

Boyoon Choi, Esq., and Vanessa M. Ish, Esq., Choi Capital Law PLLC, Seattle, WA; Paul R. Dieseth, Esq., and Katherine N. Arnold, Esq., Dorsey & Whitney LLP, Minneapolis, MN, on behalf of Plaintiff.

J. Matthew Berner, Esq., and Tim L. Droel, Esq., Droel PLLC, Bloomington, MN, on behalf of Defendants.


ANN D. MONTGOMERY, District Judge.


On May 19, 2014, the undersigned United States District Judge heard oral argument on Defendants' Motion to Stay Pending Appeal [Docket No. 50] and Plaintiff Unison Co., Ltd.'s ("Unison") Motion for Partial Summary Judgment [Docket No. 40]. For the reasons set forth below, Defendants' motion to stay is granted and Plaintiff's motion for partial summary judgment is denied.


The context of this dispute is more fully recited in the Court's previous order, Unison Co. v. Juhl Energy Dev., Inc., 2014 U.S. Dist. LEXIS 47469 (D. Minn. Apr. 7, 2014). To the extent necessary, the relevant facts and allegations are incorporated here by reference. In summary, Unison, a wind turbine manufacturer, provides financing for purchasing turbines. Unison entered into contracts with Defendant Juhl Energy Development, Inc. ("JEDI"), and affiliated parties, for the financing and purchase of wind turbines, as well as for the design, development and maintenance of the wind farm where the turbines would be installed. The dispute centers on allegedly conflicting language in two main contracts, the Turbine Supply Agreement ("TSA") and Financing Agreement. Am. Compl. [Docket No. 14] ¶¶ 18-22.

The TSA provides for arbitration in the event of a dispute. The Financing Agreement provides for dispute resolution in the District Court of Minnesota. On April 7, 2014, the Court found that the Financing Agreement governs this dispute and denied Unison's motion to compel arbitration. Unison, 2014 U.S. Dist. LEXIS 47469, at *12. Defendants have filed an appeal from the Order of April 7, 2014. Defendants request the Court stay proceedings pending resolution of its appeal to the Eighth Circuit Court of Appeals.


A. Motion to Stay Pending Appeal

A "federal district court and a federal court of appeals should not attempt to assert jurisdiction over a case simultaneously." Griggs v. Provident Consumer Disc. Co. , 459 U.S. 56, 58 (1982). Therefore, "the filing of a notice of appeal is an event of jurisdictional significance-it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal." Id .; see Gundacker v. Unisys Corp. , 151 F.3d 842, 848 (8th Cir. 1998) ("Generally, a notice of appeal divests the district court of jurisdiction, " but matters that are collateral to the merits may properly be considered.).

The Eighth Circuit Court of Appeals has not definitively ruled whether an appeal from a denial of a motion to compel arbitration divests the district court of jurisdiction. The Second, Fifth, and Ninth Circuits have held that a stay is not automatic "because arbitrability is an issue easily separable from the merits of the underlying dispute." Weingarten Realty Investors v. Miller , 661 F.3d 904, 907-08 (5th Cir. 2011); see also Motorola Credit Corp. v. Uzan , 388 F.3d 39, 53-54 (2d Cir. 2004); Britton v. Co-Op Banking Grp. , 916 F.2d 1405, 1411-12 (9th Cir. 1990). The majority of the circuit courts of appeal considering the issue have ruled that a notice of appeal under 9 U.S.C. § 16, the Federal Arbitration Act, divests the district court of jurisdiction to proceed with the case pending appeal. Bradford-Scott Data Corp., Inc. v. Physician Computer Network, Inc. , 128 F.3d 504, 506 (7th Cir. 1997); see also Levin v. Alms & Assocs, Inc. , 634 F.3d 260, 264-66 (4th Cir. 2011); Ehleiter v. Grapetree Shores, Inc. , 482 F.3d 207, 215 n.6 (3d Cir. 2007); McCauley v. Halliburton Energy Servs., Inc. , 413 F.3d 1158, 1160-62 (10th Cir. 2005); Blinco v. Green Tree Servicing, LLC , 366 F.3d 1249, 1251-52 (11th Cir. 2004). The majority have found the federal policy favoring arbitration discourages district courts from proceeding with a case while the issue of arbitrability is being reviewed by the appeals court. Wells Enters. v. Olympic Ice Cream, No. C11-4109-DEO, 2013 U.S. Dist. LEXIS 18431, *6-7 (N.D. Iowa Jan. 31, 2013) (analyzing circuit split); see also A.O.A. v. Doe Run Res. Corp., Case No. 4:11CV44, 2012 U.S. Dist. LEXIS 34275 (E.D. Mo. Mar. 14, 2012). As the Eleventh Circuit has explained:

Section 16 of the Federal Arbitration Act grants a party the right to file an interlocutory appeal from the denial of a motion to compel arbitration. See 9 U.S.C. § 16(a)(1)(A). By providing a party who seeks arbitration with swift access to appellate review, Congress acknowledged that one of the principal benefits of arbitration, avoiding the high costs and time involved in judicial dispute resolution, is lost if the case proceeds in both judicial and arbitral forums. If the court of appeals reverses and orders the dispute arbitrated, then the costs of the litigation in the district court incurred during appellate review have been wasted and the parties must begin again in arbitration.... Thus, the underlying reasons for allowing immediate appeal of a denial of a motion to compel arbitration are inconsistent with continuation of proceedings in the district court, and a non-frivolous appeal warrants a stay of those proceedings.

Blinco , 366 F.3d at 1251-52. In addition, the majority of circuits have found severing arbitrability from the merits of the case is much more difficult than is suggested by the minority. Bradford-Scott , 128 F.3d at 506 ("Whether the litigation may go forward in the ...

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