The Third Circuit refused to address standing in an arbitration appeal. But other courts say that they must address subject-matter jurisdiction in interlocutory appeals.
March 19, 2021
When a court of appeals hears an interlocutory appeal, must the court ensure that the district court had subject-matter jurisdiction? A Third Circuit decision from earlier this week—O’Hanlon v. Uber Technologies, Inc.—says no. In the course of deciding an appeal from the denial of arbitration, the Third Circuit refused to address whether the plaintiffs had standing. The court could resolve arbitrability without considering standing, so standing was outside of the scope of interlocutory review.
I’m not aware of any decisions to the contrary in the context of arbitration appeals. But some courts of appeals have said that they must address the district court’s subject-matter jurisdiction in the course of deciding other kinds of interlocutory appeals. So it seems that a split exists on this general issue.
The O’Hanlon Litigation
The plaintiffs in O’Hanlon sued Uber for violating the Americans with Disabilities Act, alleging that Uber “discriminated against individuals with mobility disabilities by not offering a ‘wheelchair accessible vehicle’ option in the Pittsburgh area.” The plaintiffs had not used the Uber app or Uber’s ridesharing services. But they alleged that they would do so if Uber provided wheelchair accessible vehicles.
Uber responded by moving to compel arbitration in accordance with Uber’s Terms of Use. Granted, the plaintiffs had never agreed to those terms, as they had never used Uber’s services. But Uber argued that the plaintiffs could establish standing only by acting as though they were actual Uber users.
The district court rejected Uber’s motion. The plaintiffs had established an injury in fact. They did not need to go through the “futile gesture” of joining Uber and requesting a ride that Uber did not offer. And the plaintiffs’ claims did not rely on Uber’s Terms of Service. They instead relied solely on the Americans with Disabilities Act. Although non-signatories to an arbitration agreement can be equitably estopped from avoiding arbitration if the non-signatories “knowingly exploited the agreement to their benefit,” that was not the case with the O’Hanlon plaintiffs.
The Scope of the Arbitration Appeal
A district court decision refusing to order arbitration is immediately appealable under 9 U.S.C. § 16(a). So Uber appealed to the Third Circuit. But Uber wanted review of more than just the arbitration decision. It wanted the Third Circuit to also address the plaintiffs’ standing. That required the Third Circuit to inquire into the scope of its interlocutory appellate jurisdiction.
The Scope of Interlocutory Appeals Generally
In any appeal, a court must determine the scope of its review—i.e., the issues that are properly before it. Most of the time this isn’t a difficult issue. That’s because most appeals come after the end of district court proceedings. At that point, almost every district court decision merges into the final judgment. And those merged decisions are within the scope of review so long as subsequent events have not rendered them moot.
Appeals that come before the end of district court proceedings are not always as easy. Most of the rules allowing for interlocutory appeals apply to a specific kind of issue or order (e.g., 28 U.S.C. § 1292(a)(1) permits appeals from orders granting, denying, or modifying an injunction). Appeals under these rules obviously include the particular decision or order to which the rule applies (e.g., the injunction).
But parties aren’t always satisfied with immediate review of just that particular decision or order. They sometimes want the court of appeals to address other decisions or orders that, standing alone, are not immediately appealable.
That’s what Uber sought in O’Hanlon: interlocutory review of the standing issue. Standing issues normally aren’t immediately appealable. But Uber argued that the court could address standing for two reasons.
Standing as a Necessary Part of the Arbitration Appeal
First, Uber argued that the Third Circuit must address standing.
The Third Circuit had previously rejected this argument in Griswold v. Coventry First LLC. According to Griswold, the court of appeals can address standing to appeal—not standing to sue—in an arbitration appeal. “Once a district court has determined that a plaintiff has standing to sue, [the court’s] power to adjudicate that issue on an interlocutory basis is limited.” The court would review standing only if doing so was necessary to decide arbitrability. Otherwise, “on interlocutory appeal of the denial of a motion to compel arbitration, the court must assure itself of jurisdiction in two, and only two, respects: (1) that the appellant has standing to appeal; and (2) that, save for the arbitration agreement, the district court would have jurisdiction in a civil action arising out of the controversy between the parties.” (Cleaned up.) And the dispute in O’Hanlon easily satisfied of those two requirements.
The Third Circuit also rejected Uber’s reliance on Larsen v. Senate, in which the Third Circuit addressed the justiciability of claims in a certified appeal under 28 U.S.C. § 12929(b). Larsen, Uber argued, required the Third Circuit “to resolve all jurisdictional questions” in an interlocutory appeal. But the Third Circuit distinguished Larsen as involving a necessarily antecedent question of justiciability:
Larsen arose in the context of a question that was certified under § 1292(b) and that we could not address on the merits without first determining that the subject matter belonged in federal court. Here, as in Griswold, however, no justiciability hurdles stand in the way of reaching the merits of the arbitrability issue: Uber has standing to appeal the denial of its motion to compel arbitration under 9 U.S.C. § 16(a)(1)(B), and there is no dispute that the District Court had subject matter jurisdiction under 28 U.S.C. § 1331
Given the differences in appealed orders and relief sought, the Third Circuit determined that Larsen did not control. Griswold did. And Griswold said that the court did not need to address standing.
Pendent Appellate Jurisdiction Over Standing
Uber also argued that the Third Circuit should extend pendent appellate jurisdiction to the standing issue.
Pendent appellate jurisdiction allows courts of appeals to review a decision that would not normally be appealable when that court has jurisdiction over another, related decision. The non-appealable decision tags along with the appealable one, giving the court jurisdiction over issues or parties (or both) that it would not normally have.
The standards for pendent appellate jurisdiction are not settled in the courts of appeals. In the Third Circuit, the exercise of pendent appellate jurisdiction is discretionary. And pendent jurisdiction is proper only when the appealed and pendent issues are “inextricably intertwined.” The Third Circuit (like most circuits) holds that issues are sufficiently intertwined if the appealable issue necessarily resolves the pendent one. But if the court can resolve the appealable issue without touching on the pendent one, it has “no need—and therefore no power—to examine” the pendent issue.
The Third Circuit concluded that the arbitrability and standing issues were not inextricably intertwined. The court could decide whether the plaintiffs were bound by Uber’s Terms of Service without venturing into the plaintiffs’ standing:
Here . . . , the only link Uber has established between the issues of injury-in-fact under the ADA and arbitrability under the FAA is its own theory that both arise from its Terms of Use. That does not mean, however, that the question whether Plaintiffs are equitably estopped from rejecting the arbitration clause ‘cannot be resolved without reference to’ Plaintiffs’ standing to claim discrimination.
The Third Circuit accordingly refused to address the plaintiffs’ standing. On the arbitrability point, the court affirmed. “There was no evidence that Plaintiffs ‘availed themselves’ of Uber’s service agreement prior to or in the course of litigation or ‘received any benefit under that agreement.’” (Cleaned up.) So the plaintiffs were “not equitably estopped from rejecting its arbitration clause.”
Other Courts on Standing & Interlocutory Appeals
Griswold and O’Hanlon are the only two cases I’m aware of involving arbitration appeals and the question of whether appellate courts can (or must) address the district court’s subject-matter jurisdiction. But courts have addressed that question in other kinds of interlocutory appeals. Some cases come to the same conclusion as Griswold and O’Hanlon. In Moniz v. City of Fort Lauderdale, for example, the Eleventh Circuit refused to review standing as part of a qualified-immunity appeal. The court could resolve the immunity issues without considering any standing issues.
But not everyone agrees. In Merritt v. Shuttle, for example, the Second Circuit concluded that addressing subject-matter jurisdiction was necessary to effectively review a denial of qualified immunity. Because “[t]he existence of subject matter jurisdiction [went] to the very power of the district court to issue the rulings . . . under consideration,” review of qualified immunity “would be meaningless if the district court was without jurisdiction over that claim in the first instance.” The Tenth Circuit followed Merritt in Timpanogos Tribe v. Conway, wherein that court reviewed federal-question jurisdiction in an absolute-immunity appeal. And in Smith v. Arthur Anderson LLP, the Ninth Circuit addressed subject-matter jurisdiction over state-law claims and a bankruptcy trustee’s Article III standing in an injunction appeal. Because these issues “call into question the district court’s authority to rule on a party’s motion for an injunction,” reviewing them was necessary to meaningfully review the injunction. (Cleaned up.)
So the courts appear split on this issue.
O’Hanlon v. Uber Technologies, Inc., 2021 WL 1011201 (3d Cir. Mar. 17, 2021), available at the Third Circuit and Westlaw.