Opinion
MDL No. 1334, Master File No. 00-1334-MD-MORENO
November 6, 2002
ORDER GRANTING PLAINTIFFS' MOTION TO ENJOIN ARBITRATION
I. Introduction
THIS MATTER came before the Court upon Plaintiffs' Motion for Clarification and to Enjoin Arbitration (D.E. No. 1272), filed on June 12, 2001 .
The Court has determined in order to protect the judgment of the Eleventh Circuit Court of Appeals in affirming this Court's Order Granting in Part and Denying in Part Defendants' Motions to Compel Arbitration (D.E. No. 711), an injunction is necessary to prevent Defendants from circumventing both this Court's and the Eleventh Circuit's determination of which claims should be arbitrated and which should not. The Plaintiffs filed a Notice of Dismissal of Arbitrable Claims (D.E. No. 1637) on October 10, 2002 . Thus, the Defendants only remaining claims for arbitration are those this Court has deemed "non-arbitrable." Since this Court has already deemed those claims "non-arbitrable," this Court must order an injunction to prevent the Defendants from circumventing its prior ruling.
II. Background
On December 11, 2000, this Court determined that claims between plaintiffs and defendants who are both signatories to contracts containing enforceable arbitration clauses must be arbitrated. In re Managed Care Litigation, 132 F. Supp.2d 989 (S.D. Fla. 2000). The Court also found several instances in which arbitration is not compelled: a) where the arbitration clauses exclude punitive damages, because they preclude recovery of treble damages under RICO; b) where an HMO attempts to arbitrate aiding-and-abetting charges regarding a doctor's contractual rights with a different HMO; and c) where a non-party HMO attempts to invoke the arbitration provision of a contract, even though it is not a party to that contract. Id.
The Eleventh Circuit "affirm[ed] in its entirety the district court's order for the reasons set forth in its comprehensive opinion found at 132 F. Supp.2d 989 (S.D. Fla. 2000)," on March 14, 2002.
III. Analysis
The Defendants do not claim to be forcing Plaintiffs to arbitrate their dismissed, abandoned, arbitrable claims, but instead only seek arbitration of their own declaratory judgment claims, which are "in the nature of counterclaims." These declaratory judgment claims can be divided into two categories: 1) those claims relating to the "arbitrable" causes of action such as breach of contract and quantum meruit; and 2) those claims relating to the "non-arbitrable" causes of action such as the RICO claims, the aiding-and-abetting charges, and the claims against non-signatories.
For example, United attached to its Memorandum of Law in Opposition to Plaintiffs' Motion for Clarification a list of the claims filed in the arbitration proceedings.
Two legal issues are implicated by Plaintiffs' request for an injunction. First, in order to be entitled to declaratory relief, as the Defendants claim they are, there must be an actual, justiciable controversy. Malowney v. Federal Collection Deposit Group, 193 F.3d 1342, 1347 (11th Cir. 1999) (finding "a declaratory judgment may be issued only in the case of an `actual controversy'"). Based on the facts alleged, there must be a substantial continuing controversy between two adverse parties. Id. Plaintiffs claim the controversy is lacking on these arbitrable claims because they have been dismissed.
Second, a court may enjoin arbitration proceedings in order to protect its own judgment. Kelley v. Merrill Lynch, Pierce, Fenner Smith, 985 F.2d 1067, 1069 (11th Cir. 1993) (stating "the All Writs Act, 28 U.S.C. § 1651, gives federal courts broad injunctive powers to protect their own judgments."). Plaintiffs claim this is precisely why this Court must grant their request for an injunction.
A. "Arbitrable" Claims
There is no actual, justiciable controversy for the declaratory claims falling within the first category. Plaintiffs have made clear to this Court, and to the Defendants, that they do not wish to pursue any claims this Court has deemed arbitrable. Thus, there is no longer any controversy regarding those claims. The only justiciable controversy that exists between the parties relates to the Plaintiffs' nonarbitrable claims.
Although this Court did rule that those claims must be arbitrated, it now clarifies that if Plaintiffs were to pursue those claims at all, it must be in arbitration. Because the claims have been dismissed, however, there is no controversy for the arbitration panel to resolve. Thus, an injunction is warranted.
B. "Non-arbitrable" Claims
On the other hand, the Defendants also attempt to bring declaratory actions regarding many factual issues that form the basis for the "non-arbitrable" claims that will be litigated in this Court. These declaratory actions can be viewed as nothing more than an attempt to circumvent not only this Court's prior order, but also the Eleventh Circuit's decision affirming that order. These "declaratory actions" are nothing more than attempts to compel arbitration as to the non-arbitrable claims. This Court, as previously stated, has already ruled, and been affirmed by the Court of Appeals, that those claims must be litigated in front of this Court.
C. Injunction Standard
Although Defendants assert the defense of lack of subject matter jurisdiction is for the arbitrators to determine in an arbitration proceeding, this Court may grant an injunction to protect its determination of which claims are arbitrable. The Defendants do not claim this Court does not have the ability or jurisdiction to enter an injunction. Granted, this Court previously held that either party is entitled to submit the dispute to arbitration. The Defendants, however, do not have an "arbitrable" dispute. This Court has already made that determination, and an injunction may be entered to prevent the Defendants from trying to avoid this Court's prior ruling.
A district court may grant injunctive relief where the moving party shows that: i) there is a substantial likelihood of success on the merits; ii) irreparable harm will be suffered unless the injunction issues; iii) the threatened injury to the movant outweighs whatever injury the proposed injunction might inflict on the opposing party; and iv) if issued, the injunction would not be adverse to the public interest. Siegel v. LePore, 234 F.3d 1153, 1176 (11th Cir. 2000).
This Court finds that all of the elements for issuing an injunction have been met. First, there is a substantial likelihood of success on the merits. This Court has already deemed those claims that remain non-arbitrable. Thus, Plaintiffs success on the merits is guaranteed. Second, Plaintiffs would suffer irreparable harm by being forced to arbitrate non-arbitrable issues. Third, the balancing weighs heavily in favor of Plaintiffs because of their guaranteed success. Finally, although the Court recognizes the strong public interest in favor of arbitration, this Court has also already considered those factors and made the determination that these claims can not be arbitrated. It is therefore in the public interest to avoid needless litigation and expense of arbitration proceedings and move the case forward.
IV. Conclusion
THE COURT has considered the motions and the pertinent portions of the record, and being otherwise fully advised in the premises, it is
ADJUDGED that the Motion for Injunction is GRANTED. An Injunction is issued preventing Defendants from proceeding with the arbitration proceedings until further notice from this Court.