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Alabama Psychiatric Services, P.C. v. Alabama Psychiatric Services, P.C.

Supreme Court of Alabama

June 21, 2019

Alabama Psychiatric Services, P.C., and Managed Health Care Administration, Inc.
v.
Sheri Lynn Lazenby et al. Alabama Psychiatric Services, P.C., and Managed Health Care Administration, Inc.
v.
Sheri Lynn Lazenby et al.

          Appeals from Jefferson Circuit Court (CV-16-901279)

          BRYAN, JUSTICE

         Several former employees of Alabama Psychiatric Services, P.C. ("APS"), filed a putative class action against APS and Managed Health Care Administration, Inc. ("MHCA"), an affiliate of APS, in the Jefferson Circuit Court. The complaint alleged that APS had not paid the former employees for unused vacation time after they lost their jobs when APS went out of business. APS and MHCA moved the circuit court to compel arbitration pursuant to arbitration agreements the plaintiffs had entered into with APS. APS and MHCA asked the circuit court to determine, as a threshold question, whether class arbitration is available in this case. The arbitration agreements did not expressly mention class arbitration. The circuit court issued an order granting the motion to compel arbitration. In that same order, the circuit court declined to decide whether class arbitration is available, concluding that that issue was to be decided by the arbitrator.

         The case proceeded to arbitration, which was governed by the rules of the American Arbitration Association ("the AAA"). Under Rule 3 of the AAA's Supplementary Rules for Class Arbitration, a party may ask the arbitrator for a "clause- construction award" determining whether class arbitration is available; the plaintiffs here asked the arbitrator to issue such an award. The arbitrator subsequently issued a clause-construction award ("the award"), concluding that the relevant arbitration agreements authorize class arbitration in this case. Rule 3 also allows for the immediate judicial review of a clause-construction award. Accordingly, APS and MHCA sought review of the award in the circuit court.

         Rule 71B, Ala. R. Civ. P., establishes the procedure for appealing an arbitration award to the circuit court. Under Rule 71B,

"(1) [a] party must file a notice of appeal with the appropriate circuit court within 30 days after service of the notice of the arbitration award; (2) the clerk of the circuit court shall promptly enter the award as the final judgment of the circuit court; (3) the aggrieved party may file a Rule 59, Ala. R. Civ. P., motion to set aside or vacate the judgment, and such filing is a condition precedent to further review by any appellate court; (4) the circuit court grants or denies the Rule 59 motion; and (5) the aggrieved party may then appeal from the circuit court's judgment to the appropriate appellate court."

Guardian Builders, LLC v. Uselton, 130 So.3d 179, 181 (Ala. 2013).

          This case has various procedural irregularities that initially must be sorted out. First, APS and MHCA, in appealing the award, did not file a document titled "notice of appeal" with the circuit court. Instead, on January 5, 2018, APS and MHCA filed with the circuit court a "motion to vacate" the award. This Court has considered a "motion to vacate" as a notice of appeal for purposes of Rule 71B when the motion was in substance a notice of appeal. Honea v. Raymond James Fin. Servs., Inc., 240 So.3d 550, 559 (Ala. 2017). See also Guardian Builders, 130 So.3d at 182; and J.L. Loper Constr. Co. v. Findout P'ship, LLP, 55 So.3d 1152 (Ala. 2010). The motion to vacate was in substance a timely filed notice of appeal (in addition to being a motion to vacate); thus, the requirement in Rule 71B that a notice of appeal be filed with the circuit court was satisfied.

         Under Rule 71B, the clerk of the circuit court, as a ministerial matter, should have promptly entered the award as the judgment of the circuit court. However, the award was not promptly entered as the judgment of the circuit court, but the appeal proceeded as if it had been. On April 11, 2018, the circuit court purported to deny the motion to vacate the judgment. Then, 42 days later, on May 23, 2018, APS and MHCA filed a notice of appeal to this Court from the order purporting to the deny the motion to vacate the judgment; that appeal was docketed as appeal no. 1170856. The problem here is that, because the award had not yet been entered as the judgment of the circuit court, there actually was no judgment that formed the basis for the motion to vacate. However, that problem is not fatal, because a postjudgment motion filed before the entry of a judgment quickens upon the entry of the judgment, New Addition Club, Inc. v. Vaughn, 903 So.2d 68, 72 (Ala. 2004), and that is what happened here. On June 7, 2018, the clerk of the circuit court entered the arbitrator's award as the judgment of the circuit court. At that point, the motion to vacate quickened and was ripe for a decision by the circuit court under Rule 71B. Id. See also Ex parte Cavalier Home Builders, LLC, [Ms. 1170847, November 16, 2018] __So. 3d__, __ (Ala. 2018) (noting, in an appeal from an arbitration award, that a premature Rule 59(e), Ala. R. Civ. P., motion quickened when the circuit court later entered the award as the judgment of the circuit court). On July 17, 2018, the circuit court, perhaps realizing that its earlier motion purporting to deny the motion to vacate had been premature, entered an order denying the motion to vacate.

         Complicating matters is the fact that APS and MHCA had filed a notice of appeal on May 23 (appeal no. 1170856), before the motion to vacate quickened on June 7. Rule 4(a)(4), Ala. R. App. P., provides that "[a] notice of appeal filed after the announcement of a decision or order but before the entry of the judgment or order shall be treated as filed after the entry and on the day thereof." In this case, the circuit court essentially announced its decision by purporting to deny the motion to vacate the first time around, on April 11. However, the motion to vacate did not actually quicken until June 7, when the circuit clerk performed the ministerial duty of entering the award as the judgment of the circuit court. The circuit court then denied the motion to vacate on July 17, and, under Rule 71B, that is the judgment from which the appeal lies. Under Rule 4(a)(4), the notice of appeal filed on May 23 was, in effect, suspended until the circuit court denied the motion to vacate on July 17. Pursuant to Rule 4(a)(4), we will treat the notice of appeal in appeal no. 1170856 as having been filed on July 17.

          We now address another procedural irregularity regarding the notice of appeal in appeal no. 1170856. The notice of appeal listed the appellants as "Alabama Psychiatric Services, P.C., et al." and listed the appellees as "Sheri Lynn Lazenby, et al." Rule 3(c), Ala. R. App. P., was amended effective January 1, 2017, to provide that "[a]n appellant may not use the terms 'et al.' or 'etc.' to designate multiple appellants or appellees in lieu of naming each appellant or appellee." In light of that provision, this Court on June 20, 2018, ordered that appeal no. 1170856 be docketed only as to those parties specifically identified in the notice of appeal, i.e., APS as the sole appellant and Sheri Lynn Lazenby as the sole appellee. On July 16, 2018, APS filed a motion seeking to amend the notice of appeal to specifically list all the parties in this case, in compliance with Rule 3(c). This Court denied that motion by order on August 10, 2018. However, as explained above, when APS filed its motion to amend the notice of appeal on July 16, the notice of appeal not yet become effective; it would not become effective until the following day, July 17, when the circuit court denied the motion to vacate. Thus, in retrospect, APS should have been allowed to amend the notice of appeal in appeal no. 1170856. Accordingly, we rescind our order of June 20, 2018, which ordered that the appeal be docketed only as to those two parties specifically identified in the notice of appeal. Further, we amend the notice of appeal to include all the parties in this case. Accordingly, the appellants in appeal no. 1170856 are APS and MHCA, and the appellees are the plaintiffs, Sheri Lynn Lazenby, Robert Doyle, Latanya Renee Keith, Margie Dukes, January Simpson, Mary Ferdon, Lisa Marlowe, Anita Clark, Debra McAuliffe, Dolores Bray, Judith Madelyn Basham, Patricia Nowlin, and Elizabeth Wood.

         On August 28, 2018, 42 days after the circuit court's July 17 order denying the motion to vacate, APS and MHCA filed a second notice of appeal, listing all the parties in this case, in compliance with Rule 3(c); this Court docketed that appeal as appeal no. 1171150. In the second appeal, like the first appeal, APS and MHCA challenge the circuit court's denial of the motion to vacate, and they present the same arguments. The second notice of appeal appears to have been filed out of uncertainty regarding the unusual procedural history in this case. However, as explained above, the second notice of appeal is redundant, given that the first notice of appeal has now been amended to include all the parties. Accordingly, we dismiss appeal no. 1171150.

         APS and MHCA's first argument on appeal does not address any decision the circuit court made in its order denying the motion to vacate the arbitrator's award. Rather, APS and MHCA first argue that the circuit court, in its earlier order compelling arbitration, erred by declining to decide the threshold issue whether class arbitration is available. As noted, the circuit court concluded that the arbitrator, not the circuit court, should decide the availability of class arbitration. However, the issue whether the circuit court erred in this regard is not properly before us. Rule 4(d), Ala. R. App. P., provides:

"An order granting or denying a motion to compel arbitration is appealable as a matter of right, and any appeal from such an order must be taken within 42 days (6 weeks) of the date of the entry of the order, or within the time allowed by an extension pursuant to Rule 77(d), Alabama Rules of Civil Procedure."

         An order granting a motion to compel arbitration is a final judgment, Bowater, Inc. v. Zager, 901 So.2d 658, 667 (Ala. 2004), and "failure to take an appeal from it within the 42-day time period forecloses later appellate review." 901 So.2d at 664. APS and MHCA now attempt to challenge that part of the order compelling arbitration in which the circuit court declined to decide the availability of class arbitration. However, to properly challenge that aspect of the earlier order, APS and MHCA should have appealed from the order, pursuant to Rule 4(d). APS and MHCA failed to appeal from that order, and the time for such an appeal has long since expired. Thus, the issue whether the circuit court properly declined to decide the availability of class arbitration is not properly before us in this appeal.

         APS and MHCA argue that this issue is properly before us because, they say, the order compelling arbitration was not a final judgment and, therefore, was not appealable. As noted, that position is unsupported by Alabama law, which considers such an order to be a final judgment. Bowater, 901 So.2d at 667. In making their argument, APS and MHCA cite federal caselaw discussing federal procedural law regarding the appealability of various arbitration decisions. Thus, APS and MHCA seem to imply that federal procedural law regarding arbitration -- not Alabama procedural law -- applies in this case. The pertinent federal provision, 9 U.S.C. § 16, which is a part of the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("the FAA"), lists the types of arbitration decisions from which an appeal may and may not be taken in federal court. Under that provision, a federal-court order compelling arbitration generally is not appealable unless the federal court also dismisses the underlying action. Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 84-89, n.2 (2000) (determining that an order compelling arbitration is appealable as a "final decision" under 9 U.S.C. § 16(a)(3) if the federal district court dismisses the underlying action but is not appealable if the federal district court enters a stay instead of a dismissal). However, although the FAA contains federal substantive law that is applicable in both state and federal courts, Southland Corp. v. Keating, 465 U.S. 1, 12 (1984), the FAA's procedural rules are simply inapplicable in this case.

         "States may apply their own neutral procedural rules to federal claims, unless those rules are pre-empted by federal law." Howlett v. Rose, 496 U.S. 356, 372 (1990). As the United States Supreme Court has explained, "[t]he FAA contains no express pre-emptive provision, nor does it reflect a congressional intent to occupy the entire field of arbitration." Volt Info. Scis., Inc. v. Board of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 477 (1989). Nevertheless, the FAA preempts a state provision "to the extent that it actually conflicts with [the FAA] -- that is, to the extent that it 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" Id. (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). The United States Supreme Court has observed that the "primary purpose" of the FAA is to "ensur[e] that private agreements to arbitrate are enforced according to their terms." Volt, 489 U.S. at 479. The Court has further stated that "[t]here is no federal policy favoring arbitration under a certain set of procedural rules; the federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate." Id. at 476. In sum, as the Supreme Court of South Carolina succinctly explained, "[t]he FAA's substantive provisions apply to arbitration in federal or state courts, but a state's procedural rules apply in state court unless they conflict with or undermine the purpose of the FAA." Henderson v. Summerville Ford-Mercury Inc., 405 S.C. 440, 450, 748 S.E.2d 221, 226-27 (2013). Many other state courts have reached a similar conclusion. See, e.g., Morgan Keegan & Co. v. Smythe, 401 S.W.3d 595, 605-607 (Tenn. 2013) (collecting cases). Particularly relevant here, other state courts have concluded that state procedural rules allowing for the immediate appeal of an order compelling arbitration -- like our Rule 4(d) -- do not run afoul of the FAA. See, e.g., Kremer v. Rural Cmty. Ins. Co., 280 Neb. 591, 597-603, 788 N.W.2d 538, 546-50 (2010); Wells v. Chevy Chase Bank, F.S.B., 363 Md. 232, 241-50, 768 A.2d 620, 624-29 (2001); and Simmons Co. v. Deutsche Fin. Servs. Corp., 243 Ga.App. 85, 87-89, 532 S.E.2d 436, 438-40 (2000).

         Accordingly, the FAA does not preempt Rule 4(d), which, unlike § 16 of the FAA, always allows for the appeal of an order granting a motion to compel arbitration. Rule 4(d) does not conflict with or undermine the purposes of the FAA, in particular the "primary purpose of ensuring that private arbitration agreements are enforced according to their terms." Volt, 489 U.S. at 479. "The timing of the right to appeal from an order compelling arbitration is a procedural matter which may delay but does not prevent enforcement of a valid arbitration agreement." Simmons Co., 243 Ga.App. at 89, 532 S.E.2d at 440. As the Supreme Court has observed: "[T]he basic objective in this area is not to resolve disputes in the quickest manner possible, no matter what the parties' wishes, ... but to ensure that commercial arbitration agreements, like other contracts, '"are enforced according to their terms"' ... and according to the intentions of the parties." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947 (1995) (quoting Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 54 (1995), quoting in turn Volt, 489 U.S. at 479). Further, allowing for an immediate appeal of an order compelling arbitration is consistent with the fundamental principle that a party "'cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" AT & T Techs., Inc. v. Communications Workers of America, 475 U.S. 643, 648 (1986) ...


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