Accenture LLP, et al. v. Spreng, No. 11-222 (2d Cir. 2011)
Annotate this Case
Justia Opinion Summary
Want to stay in the know about new opinions from the Second Circuit U.S. Court of Appeals?
Sign up for free summaries delivered directly to your inbox. Learn More ›
You already receive new opinion summaries from Second Circuit U.S. Court of Appeals. Did you know we offer summary newsletters for even more practice areas and jurisdictions? Explore them here.
In June 2009, defendant filed an arbitration demand against plaintiff alleging claims for wrongful termination and breach of contract based on plaintiff's failure to pay a performance bonus. Defendant subsequently filed a new demand for arbitration in October 2010, which included his original claims plus claims of fraud and breach of contract, after the arbitrator denied his motion to amend the original arbitration demand when he discovered evidence suggesting that plaintiff had padded estimated revenues for defendant's companies by $17 million. Plaintiff argued on appeal that the district court erred by not granting its motion for a preliminary injunction and temporary restraining order; that defendant's withdrawal from the first arbitration waived his right to a second arbitration; and that the first arbitration's October Order, denying defendant leave to amend, was an enforceable arbitration award. The court held that the Federal Arbitration Act, 9 U.S.C. 16(b)(4), precluded the court's review of the district court's order refusing to enjoin the arbitration. The court also held that a final decision with respect to an arbitration required an official dismissal of all claims and thus, where the district court stayed proceedings in lieu of dismissal, the decision was not final. The court further concluded that an arbitration award was a final adjudication of a claim on the merits and a procedural ruling that denied leave to amend was not an award since the decision had no effect on the merits of the proposed claims. Accordingly, the court dismissed the appeal for lack of jurisdiction.
Download PDF
11-222 Accenture, et al. v. Spreng 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2010 (Argued: May 5, 2011 Decided: May 27, 2011) Docket No. 11-222 ACCENTURE LLP and LESLIE ALAN BAILEY, Plaintiffs-Appellants, -v.JIM L. SPRENG, Defendant-Appellee. Before: FEINBERG, MINER, and WESLEY, Circuit Judges. Appeal from an order of the United States District Court for the Southern District of New York (Marrero, J.) denying Plaintiffs-Appellants motion for a preliminary injunction and temporary restraining order after they failed to demonstrate irreparable harm. Plaintiffs-Appellants moved the district court to enjoin an arbitration, and the court denied relief. We conclude that the Federal Arbitration Act, 9 U.S.C. § 16(b)(4), precludes our review of the district court s order refusing to enjoin the arbitration. Notwithstanding the statute, Plaintiffs-Appellants claim that we have appellate jurisdiction because the district court s order 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 was a final decision with respect to an arbitration. 9 U.S.C. § 16(a)(3). We conclude, however, that a final decision with respect to an arbitration requires an official dismissal of all claims. Thus, where the district court stays proceedings in lieu of dismissal, the decision is not final. Plaintiffs-Appellants also claim that we have jurisdiction to enforce an interim arbitration award pursuant to 9 U.S.C. § 16(a)(1)(D). We conclude, however, that an arbitration award is a final adjudication of a claim on the merits, and a procedural ruling that denies leave to amend is not an award, since the decision has no effect on the merits of the proposed claims. As a result, we dismiss the appeal for lack of jurisdiction. DISMISSED. BRIAN D. MURPHY (Peter A. Walker, on the brief), Seyfarth Shaw LLP, New York, NY, for Plaintiffs-Appellants. THEODORE R. SNYDER, Krebsbach & Snyder, P.C., New York, NY (Anthony J. LaCerva, Collins & Scanlon LLP, Cleveland, OH, on the brief), for DefendantAppellee. WESLEY, Circuit Judge: 30 Plaintiff-Appellant Accenture LLP ( Accenture ) 31 provides global management and technology consulting 32 services. 33 Spreng ( Spreng ) from August 2006 to March 31, 2009. 34 Before Spreng joined Accenture, he owned two companies: 35 Advantium and XPAN. Accenture employed Defendant-Appellee Jim L. Advantium prevented clients from 2 1 overpaying vendors by using software applications, while 2 XPAN recouped clients overpayments through an audit 3 recovery process. 4 ( Bailey ) co-owned Meridian, a business that cooperated 5 with XPAN. 6 Plaintiff-Appellant Leslie Alan Bailey In July 2006, Spreng and Bailey sold their companies to 7 Accenture. In exchange, Accenture paid Spreng a lump sum 8 and a retention bonus, offered Spreng employment with 9 Accenture, and provided Spreng an opportunity to earn a 10 performance bonus. 11 specific agreements in an Asset Purchase and Framework 12 Agreement and an Employment Agreement. 13 included an arbitration clause. 14 Accenture and Spreng memorialized their Each agreement Spreng would earn the performance bonus if his 15 companies met certain revenue targets. 16 make commercially reasonable efforts to include Spreng s 17 products as service offerings within its invoice-to-pay 18 offerings, but Accenture reserved discretion to operate its 19 business in the manner that it saw fit, notwithstanding a 20 negative impact on Spreng s prospective income. 21 2008, Spreng s companies had fallen short of the revenue 22 threshold necessary to trigger any performance bonus for 3 Accenture agreed to By November 1 Spreng, so Accenture notified him that it would terminate 2 his employment as of March 31, 2009. 3 A. 4 Arbitration Proceedings On June 10, 2009, Spreng filed an arbitration demand. 5 He alleged claims for wrongful termination and breach of 6 contract based on Accenture s failure to pay a performance 7 bonus. 8 in nearly seven months of settlement negotiations before 9 Accenture determined that the dispute would require an Accenture attended a full-day mediation and engaged 10 actual arbitration hearing. 11 an arbitrator and commenced discovery. 12 Accenture and Spreng agreed on On September 16, 2010, after the arbitrator compelled 13 Accenture to produce various documents, Spreng discovered 14 several emails between senior Accenture executives that 15 allegedly suggested that Accenture had padded estimated 16 revenues for Spreng s companies by $17 million. 17 12, 2010, Spreng moved for leave to amend his statement of 18 claims in order to allege fraudulent inducement. 19 13, 2010, the arbitrator denied the motion to amend (the 20 October Order ), thus foreclosing Spreng s ability to 21 present his fraudulent inducement claim at the October 19, 22 2010 hearing. 4 On October On October 1 On October 14, 2010, Spreng filed a new demand for 2 arbitration that included his original claims, plus claims 3 of fraud and breach of contract. 4 withdrew his first demand for arbitration, styling the 5 withdrawal as without prejudice. 6 characterization and asked the arbitrator to deem Spreng s 7 withdrawal as with prejudice. 8 motion, finding that the American Arbitration Association 9 ( AAA ) had accepted Spreng s withdrawal and, as a result, 10 that he was without jurisdiction or authority to address 11 Accenture s request. 12 requested that the AAA reject Spreng s new arbitration 13 demand. 14 power to stay the second arbitration absent the parties 15 agreement or a court order. 16 B. 17 Later that day, Spreng Accenture disputed this The arbitrator denied the Thereafter, Accenture repeatedly The AAA, however, responded that it was without District Court Proceedings Two months after Spreng withdrew his first arbitration 18 request, Accenture brought the underlying action. 19 action, Accenture moved to enjoin the second arbitration 20 pending the district court s determination of Accenture s 21 claims that: (1) Spreng s withdrawal from the first 22 arbitration waived his right to a second arbitration; 5 In that 1 (2) the October Order was an enforceable arbitration award; 2 (3) Spreng had breached his contractual obligation to 3 arbitrate; and (4) the dispute should be remanded to the 4 first arbitrator. 5 Following oral argument, the district court denied 6 Accenture s motions. The court found that Accenture s 7 requests can be appropriately addressed within the context 8 of the arbitration and should be directed to the arbitrator 9 administering the Second Arbitration. Accenture LLP, et 10 al. v. Spreng, No. 10-cv-9393, 2010 WL 5538384, at *2 11 (S.D.N.Y. Dec. 23, 2010). 12 Accenture faced no irreparable harm because it alleged a 13 financial loss and could recover damages. 14 Accenture s motion for a preliminary injunction and 15 temporary restraining order. 16 The court concluded that Thus, it denied The district court inquired as to whether Accenture 17 contemplated any further proceedings. Accenture responded 18 that it intended to pursue its claims for a permanent 19 injunction, enforcement of the October Order, and breach of 20 contract. 21 for a stay pending appeal, which the court denied. 22 Nevertheless, on February 14, 2011, with Accenture s Accenture requested permission to file a motion 6 1 consent, the court stayed all proceedings pending appeal. 2 Before this Court, Accenture moved for an injunction 3 pending appeal and requested an expedited briefing schedule. 4 We denied an injunction, but granted an expedited appeal. 5 On appeal, Accenture argues: (1) that the district court 6 erred by not granting its motion for a preliminary 7 injunction and temporary restraining order; (2) that 8 Spreng s withdrawal from the first arbitration waived his 9 right to a second arbitration; and (3) that the first 10 arbitration s October Order (denying Spreng leave to amend) 11 was an enforceable arbitration award. 12 II. DISCUSSION 13 Congress enacted the Federal Arbitration Act ( FAA ) 14 to reverse the longstanding judicial hostility to 15 arbitration agreements that had existed at English common 16 law and had been adopted by American courts. 17 Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). 18 FAA s provisions manifest a liberal federal policy 19 favoring arbitration agreements. 20 H. Cone Mem l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 21 (1983)). 22 eliminating barriers to arbitration by promoting appeals Gilmer v. The Id. at 25 (quoting Moses Section 16 of the FAA furthers [the FAA s] aim of 7 1 from orders barring arbitration and limiting appeals from 2 orders directing arbitration. 3 Zegna, 133 F.3d 177, 180 (2d Cir. 1998) (internal quotation 4 marks and brackets omitted). 5 6 7 A. Ermenegildo Zegna Corp. v. FAA § 16(b)(4) Restricts Appellate Jurisdiction Over District Court Orders that Refuse to Enjoin Arbitration. 8 We lack jurisdiction over this appeal because Accenture 9 seeks review of a district court s order refusing to enjoin 10 an arbitration. 11 § 1292(a)(1) grants us broad appellate jurisdiction over 12 district courts interlocutory orders refusing injunctions, 13 FAA § 16(b)(4) limits our review of interlocutory orders 14 refusing to enjoin arbitration.1 15 9 U.S.C. § 16(b)(4). While 28 U.S.C. Our sister circuits agree. In ConArt, Inc. v. Hellmuth, for example, the Eleventh 16 Circuit held that § 16(b)(4) limits § 1292(a)(1) s broad 17 grant of appellate jurisdiction. 18 Cir. 2007). 19 against a subcontractor to an architectural firm supervising 20 construction. 504 F.3d 1208, 1210 (11th There, a general contractor assigned its rights The contract between the general contractor 1 Section 16(b) still allows us to review, in our sole discretion, decisions that a district court certifies pursuant to 28 U.S.C. § 1292(b). The district court did not certify its decision for our immediate review. 8 1 and the architectural firm included an arbitration 2 provision, and after the subcontractor sued the 3 architectural firm in federal court, the firm asserted its 4 assigned counterclaims in a demand for arbitration. 5 response, the subcontractor moved to enjoin the arbitration, 6 but the district court denied relief. 7 In Id. at 1209-10. On appeal, the Eleventh Circuit rejected the 8 subcontractor s claim that § 1292(a)(1) superceded 9 § 16(b)(4): 10 11 12 13 14 15 16 17 That argument has too much throw weight. Accepting it would write out FAA § 16(b)(4) s clear command, because all orders refusing to enjoin an arbitration are orders refusing...injunctions. We don t have the authority to excise specific statutory provisions in favor of more general ones. 504 F.3d at 1210 (citations omitted).2 18 two canons of statutory interpretation to conclude that 19 § 16(b)(4) limited 28 U.S.C. § 1292(a)(1) s broad grant of 20 appellate jurisdiction. The court applied First, the court found that because 2 See also ON Equity Sales Co. v. Pals, 528 F.3d 564, 56768 (8th Cir. 2008) (holding that while the court had general jurisdiction over interlocutory orders denying motions for injunctive relief, FAA § 16(b)(4) foreclosed its review of nonfinal arbitration orders); Hardie v. United States, 367 F.3d 1288, 1290 (Fed. Cir. 2004) (dismissing appeal for lack of jurisdiction pursuant to FAA § 16(b)(4)); see also Televisa S.A. De C.V. v. DTVLA WC Inc., 374 F.3d 1384 (9th Cir. 2004) (withdrawing opinion after recognizing that FAA § 16(b)(4) stripped the court of appellate jurisdiction). 9 1 § 16(b)(4) was narrow and specific, while § 1292(a)(1) was 2 broad and general, the specific [w]as an exception to the 3 general. 4 because Congress enacted § 1292(a)(1) before § 16(b)(4), 5 § 1292(a)(1) must yield to § 16(b)(4) to the extent 6 necessary to prevent the conflict. 7 504 F.3d at 1210. Second, the court found that Id. Accenture challenges an interlocutory order refusing to 8 enjoin an arbitration. As such, Accenture s appeal clearly 9 falls within § 16(b)(4) s reach. Recognizing this 10 jurisdictional bar respects the ongoing arbitration and is 11 in accord with our well established view favoring 12 arbitration. 13 F.3d 90, 93 (2d Cir. 2002); Ermenegildo, 133 F.3d at 180. 14 15 B. 16 See Salim Oleochemicals v. M/V Shropshire, 278 This Court Also Lacks Jurisdiction Under FAA § 16(a)(3) Because the District Court s Order is Not Final. Notwithstanding § 16(b)(4), Accenture claims that we 17 have appellate jurisdiction because it appeals from a final 18 decision with respect to an arbitration. 19 § 16(a)(3). 20 did not dismiss the underlying proceedings, the practical 21 effect of the order denying relief rendered it final. 22 cases, however, leave no doubt that the decision was not 23 final. See 9 U.S.C. Accenture claims that while the district court 10 Our 1 A final decision is one that ends the litigation on 2 the merits and leaves nothing more for the court to do but 3 execute the judgment. 4 346 F.3d 360, 362 (2d Cir. 2003) (per curiam) (quoting Green 5 Tree Fin. Corp. v. Randolph, 531 U.S. 79, 86 (2000)). 6 date, our decisions defining a final decision with respect 7 to an arbitration have arisen in the context of § 16(b)(3) 8 (orders to compel arbitration). 9 analysis is equally applicable to § 16(b)(4) (orders 10 Cap Gemini Ernst & Young v. Nackel, To Nevertheless, our prior refusing to enjoin an arbitration ). 11 In Cap Gemini, after compelling arbitration, the 12 district court transferred the case to its suspension 13 docket. 14 that its decision would be final and that the only reason it 15 had retained the case was to allow the parties to enforce an 16 award, if any, without filing another lawsuit. 17 appellate jurisdiction because of the unique circumstances 18 in the case, but declared: [H]enceforth, we will abide by 19 both the letter and spirit of Green Tree and require an 20 official dismissal of all claims before reviewing an order 21 to compel arbitration. 22 (emphasis added). The district court had indicated that it intended We exercised Cap Gemini, 346 F.3d at 363 11 1 We apply Cap Gemini and extend its holding to FAA 2 § 16(b)(4). 3 Oleochemicals: 4 5 6 7 8 9 10 11 12 As early as 2002, we cautioned in We urge district courts in these circumstances to be as clear as possible about whether they truly intend to dismiss an action or mean to grant a stay pursuant to 9 U.S.C. § 3, which supplies that power, or whether they mean to do something else entirely. Courts should be aware that a dismissal renders an order appealable under § 16(a)(3), while the granting of a stay is an unappealable interlocutory order under § 16(b). 13 Oleochemicals, 278 F.3d at 93. 14 is equally applicable to § 16(b)(4). 15 Oleochemicals instruction Accenture argues that CPR v. Spray, 187 F.3d 245 (2d 16 Cir. 1999), supports its argument that the district court s 17 order was final and appealable. 18 our outdated precedent that determined finality based on 19 whether the order was entered in an embedded or 20 independent proceeding. 21 Court rejected that analysis in Green Tree. 22 531 U.S. at 88-89; Oleochemicals, 278 F.3d at 92 23 (recognizing abrogation). Spray, however, relied on 187 F.3d at 253-54. The Supreme See Green Tree, Therefore, Spray is inapposite.3 3 Our sister circuits now generally agree that finality requires a dismissal. Sanford v. MemberWorks, Inc., 483 F.3d 956, 958-61 (9th Cir. 2007); CitiFinancial Corp. v. Harrison, 453 F.3d 245, 251-52 (5th Cir. 2006); Comanche Indian Tribe of Okla. v. 49, L.L.C., 391 F.3d 1129, 1132 (10th Cir. 2004); McCaskill v. SCI Mgmt. Corp., 298 F.3d 677, 679 (7th Cir. 2002); Blair v. 12 1 It matters not how Accenture characterizes the district 2 court s order; it is clear that it was not a final decision 3 with respect to an arbitration. 4 The district court did not dismiss the proceedings, and 5 Accenture admits that it contemplates further proceedings 6 before the district court. 7 court, Accenture respectfully request[ed] that the 8 [district court] retain jurisdiction as [Accenture] does 9 contemplate further proceedings. See 9 U.S.C. § 16(a)(3). In a letter to the district Endorsed Letter at 1, 10 Accenture LLP, et al. v. Spreng, No. 1:10-cv-9393 (S.D.N.Y. 11 Dec. 30, 2010), ECF No. 11. 12 it intend[ed] to still advance its claims for a permanent 13 injunction, enforcement of [the October Order], and breach 14 of the employment agreement. 15 pre-motion conference before moving for a stay of any 16 further proceedings in [the district court] pending appeal. 17 Id. at 2. 18 19 Accenture also indicated that Id. Accenture requested a At oral argument before this Court, Accenture claimed that it had asked the district court to clarify whether its Scott Specialty Gases, 283 F.3d 595, 602 (3d Cir. 2002). But see Brown v. Pac. Life Ins. Co., 462 F.3d 384, 392-93 (5th Cir. 2006) (finding order to be final, even though the district court had stayed proceedings, because the district court had stayed state proceedings such that the stay was not pursuant to 9 U.S.C. § 3). 13 1 decision was final for purposes of § 16(a)(3). In 2 Accenture s request for reconsideration, however, it neither 3 asked for such relief nor mentioned § 16(a)(3) or 4 § 16(b)(4). 5 Dec. 30, 2010), ECF No. 11. 6 to a stay. 7 Feb. 14, 2011), ECF No. 16 ( Accenture has no objection to a 8 stay of District Court proceedings pending appeal. ). 9 clear that the dispute below remains open, albeit stayed. See Endorsed Letter, No. 1:10-cv-9393 (S.D.N.Y. Moreover, Accenture consented Endorsed Letter at 2, No. 1:10-cv-9393 (S.D.N.Y. It is 10 As a result, the district court s decision was not final; we 11 lack jurisdiction over the appeal. 12 13 C. 14 Accenture also claims that this Court has jurisdiction over 15 two merits-based claims: (1) that Spreng s withdrawal from 16 the first arbitration waived his right to a second 17 arbitration; and (2) that the October Order (denying Spreng 18 leave to amend) was an enforceable arbitration award. But 19 Accenture presents us with no final order for review. Thus, 20 Accenture s merits-based claims are beyond our reach unless 21 the claims themselves provide a jurisdictional hook. This Court Otherwise Lacks Jurisdiction Over Accenture s Merits-Based Claims. 22 23 14 1 Of the two, only the second presents a conceivable 2 jurisdictional premise.4 3 Accenture correctly argues that we may review an order 4 confirming or denying confirmation of an award or partial 5 award. 6 however, was not an award. 7 final adjudication of a claim on the merits. 8 Carol Fashions, Inc. v. Cranston Print Works Co., 453 F.2d 9 1177, 1184 (3d Cir. 1972). 9 U.S.C. § 16(a)(1)(D). The October Order, An arbitration award is a See Lynne While an arbitrator may grant 10 interim relief as an interim award, the interim award must 11 finally and definitely dispose[] of a separate independent 12 claim. 13 790 F.2d 280, 283 (2d Cir. 1986). 14 Metallgesellschaft A.G. v. M/V Capitan Constante, The October Order does not qualify as an arbitration 15 award because it does not finally and definitely dispose 16 of Spreng s fraud claim. 17 arbitrator explained that [i]t is one thing to add 18 alternative theories of relief arguably arising from the 19 same set of facts; it is quite another to try to add a In the October Order, the 4 While Accenture claims that we have pendent appellate jurisdiction over its merits-based claims, we cannot exercise pendent jurisdiction without a central, appealable claim in the first place. See Myers v. Hertz Corp., 624 F.3d 537, 552 (2d Cir. 2010). 15 1 mutually exclusive theory of relief on a new set of facts 2 on the eve of the hearing. 3 the substance of Spreng s proposed amended claims. 4 he made a procedural ruling that denied Spreng leave to 5 amend. 6 interim procedural ruling, not an arbitration award.5 7 FAA § 16(a)(1)(D) does not grant us jurisdiction to review 8 the arbitrator s ruling. The arbitrator did not rule on Rather, For purposes of our review, the October Order was an Thus, 9 III. CONCLUSION 10 We must DISMISS Appellants claims because we lack 11 appellate jurisdiction. 5 The second arbitrator remains free to determine the preclusive effect, if any, of the October Order. 16
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
