Arbitration, Immunity & the Collateral-Order Doctrine
In Ashley v. Clay County, the Fifth Circuit held that a municipal defendant could appeal a district court’s refusal to resolve an immunity defense despite the district court’s ordering arbitration.
Simplying a bit, Ashley involved a former hospital employee’s suit against a hospital and the county that owned the hospital. The hospital moved to compel arbitration under the plaintiff’s contract. And the county moved to dismiss the plaintiff’s claim on governmental-immunity grounds.
Despite the county’s never seeking arbitration or even being a party to the plaintiff’s contract, the district court ordered that the plaintiff’s claims against both defendants proceed to arbitration. The county then appealed, arguing that it was wrongly ordered to participate in arbitration and that the claims against it should have been dismissd on immunity grounds.
The Fifth Circuit noted a tension in its appellate jurisdiction. Denials of governmental immunities are often immediately appealable under the collateral-order doctrine. The county had effectively been denied immunity and normally could appeal. But 9 U.S.C. § 16(b) generally bars appeals from many decisions ordering arbitration under the Federal Arbitration Act. Given the district court district court had ordered arbitration, § 16(b)(2) seemed to bar the appeal.
The Fifth Circuit resolved this tension by explaining that it was not reviewing the propriety of the arbitration order. The court of appeals would instead address the decisional-sequencing issue: did the district court need to resolve the immunity defense before ordering arbitration? But the Fifth Circuit did not decide immunity in the first instance. It instead remanded the case for the district court to address it in the first instance.
Ashley v. Clay County, 2025 WL 64013 (5th Cir. Jan. 10, 2025), available at the Fifth Circuit and Westlaw
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