UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
decided: May 17, 1983.
COASTAL STEEL CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY
TILGHMAN WHEELABRATOR LTD. AND WHEELABRATOR-FRYE INC. WHEELABRATOR-FRYE INC. AND TILGHMAN WHEELABRATOR LIMITED, APPELLANTS
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY.
Gibbons, Hunter and Rosenn, Circuit Judges. Rosenn, Circuit Judge, concurring.
Opinion OF THE COURT
GIBBONS, Circuit Judge.
Wheelabrator-Frye, Inc. (Wheelabrator) and Tilghman Wheelabrator Limited (Tilghman) seek appellate review of orders of the district court in a proceeding under 28 U.S.C. § 1334(b) (Supp. V 1981), which is in effect during the transition period under the Bankruptcy Code. Pub. L. No. 95-598, tit. IV, § 405, 92 Stat. 2686 (printed in note preceding 28 U.S.C. § 1471 (Supp. V 1981)). Wheelabrator seeks review of an order denying it leave to appeal from an order of the bankruptcy court. Tilghman seeks review of an order affirming the order of the bankruptcy court, which denied its motion to dismiss a civil proceeding against it related to a case under Title 11. See 28 U.S.C. § 1471(b) (Supp. V 1981), which is in effect during the transition period under the Bankruptcy Code. Pub. L. No. 95-598, tit. IV, § 405, 92 Stat. 2686 (printed in note preceding 28 U.S.C. § 1471 (Supp. V 1981)). Tilghman's motion asserted (1) that the contract on which its liability, if any, is predicated contains a forum selection clause which should be enforced, and (2) that the bankruptcy court is an inconvenient forum. The plaintiff in the section 1471(b) action is the debtor, Coastal Steel Corporation (Coastal). It contends that we lack jurisdiction to review either order, but should such jurisdiction exist, both orders should be affirmed. Assuming we have jurisdiction to review either order under any of the statutory provisions defining our reviewing authority, we must also consider whether in light of the decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982), there is subject matter jurisdiction over the dispute in any federal court.
On November 9, 1976 Coastal, a steel fabricator with its principal place of business in New Jersey, contracted with Sir James Farmer Norton & Co., Ltd. (Farmer Norton), a British corporation, for an in-line steel working plant in turn-key condition ready for commercial production of cold-drawn steel bar in accordance with contract specifications. The Coastal-Farmer Norton contract contained a provision that any dispute between the parties would be settled by arbitration "where the property in contest is located." The plant was to be erected in New Jersey.
One component of the plant was a bar cleaning machine or blast unit. The contract did not specify the supplier of the blast unit, but prior to the execution of the agreement Coastal had suggested to Farmer Norton that it investigate such a unit manufactured by a British firm called St. Georges Engineers, Ltd. (St. Georges). In June of 1976 St. Georges submitted to Farmer Norton a quotation on a blast unit. Shortly after St. Georges submitted the quotation, it was acquired by Tilghman, a British corporation and a subsidiary of Wheelabrator-Frye, Inc. On November 26, 1976, several weeks after the execution of the Coastal-Farmer Norton contract, Tilghman informed Farmer Norton that St. Georges had seriously miscalculated the cost of the blast unit on which it quoted. Tilghman and Farmer Norton then contracted for a Tilghman blast unit at a price of $176,000, which was higher than St. Georges' original quotation but lower than Tilghman's revised cost estimate. The Tilghman-Farmer Norton contract provided that the blast unit would be built in England and delivered there to Farmer Norton. It also provided:
15. These conditions shall be construed in accordance with English law. In the event of any dispute arising the same shall be determined by the English Courts of Law.
Although delivery was made to Farmer Norton in England, Tilghman undertook to supervise the commissioning of the blast unit after its installation in Coastal's New Jersey plant. Tilghman arranged for its American parent company, Wheelabrator of Mishawaku, Indiana, to supervise the commissioning. In late 1979 Tilghman also sent a representative to New Jersey to make modifications on the blast unit.
On April 11, 1980, Coastal filed a petition for reorganization under Chapter 11 of the Bankruptcy Code. In July of 1980 the debtor filed in the bankruptcy court a complaint against Farmer Norton, Tilghman, Wheelabrator, and Charterhouse Japhet Export Finance Company (Charterhouse), an English firm which financed Coastal's purchase from Farmer Norton. Farmer Norton never appeared and has gone bankrupt. Coastal settled with and dismissed its complaint against Charterhouse. Against Tilghman and Wheelabrator its complaint seeks recovery of over $4 million in consequential damages resulting from alleged defects in the Tilghman supplied blast unit.
Tilghman and Wheelabrator appeared and filed answers denying the material allegations of the complaint. They also moved to dismiss. The bankruptcy court denied the motion to dismiss without prejudice to its renewal after further discovery. After fairly extensive discovery, including depositions initiated by Coastal of various witnesses in England, Tilghman again moved to dismiss, relying both on the forum selection clause in the Tilghman-Farmer Norton contract and on the forum non conveniens doctrine. Wheelabrator joined in the motion in a reply brief. The bankruptcy court denied the Tilghman motion by an order dated November 9, 1981.
Both Tilghman and Wheelabrator applied to the district court, pursuant to 28 U.S.C. § 1334(b), for leave to appeal. The court granted such leave on January 27, 1982, but only as to Tilghman. On May 27, 1982 the district court granted Coastal's motion to dismiss Wheelabrator as an appellant and affirmed the order denying Tilghman's motions, for reasons which we address in Part IV.B infra. Tilghman and Wheelabrator moved the district court to certify, pursuant to 28 U.S.C. § 1292(b) (1976), that its order involved a controlling question of law as to which there is a substantial ground for a difference of opinion and that an immediate appeal might materially advance the ultimate termination of the litigation. The district court denied that motion. Tilghman and Wheelabrator have both appealed.
Tilghman and Wheelabrator originally relied for appellate jurisdiction, on 28 U.S.C. § 1291. The parties and this court recognized, however, that the less than clear provisions of Pub. L. No. 95-598, §§ 236-41, 405, 92 Stat. 2667-71, 2685 (1978), respecting appealability of orders in civil proceedings related to cases under Title 11, require this court to consider all possible sources of its authority to review the orders in question. Coastal contends that they are entirely unreviewable, while Tilghman and Wheelabrator urge that Congress could not have intended to foreclose review of orders denying enforcement of forum selection clauses or compelling litigation in inconvenient forums. The Northern Pipeline decision presents a further complication, for it is now clear that the bankruptcy court, the order of which the district court affirmed, does not have jurisdiction over Coastal's action against Tilghman and Wheelabrator. If the district court has such jurisdiction, as Local Rule 47(C)(3) of the District Court for the District of New Jersey appears to assume, we must consider whether our jurisdiction under 28 U.S.C. §§ 1651, 1291 or 1292 applies, or whether 28 U.S.C. § 1293 or 28 U.S.C. § 1471(d) governs. The problem is not a simple one.
If the case had been before the district court as a section 1332 federal question or a section 1331 diversity case, we would have jurisdiction under section 1292(a)(1). A motion to dismiss an action in order to give effect to a forum selection clause is in practical effect an application for specific performance of that contractual provision. It is analytically indistinguishable from a motion to stay an action at law pending arbitration. Grants or denials of such orders are reviewable under section 1292(a)(1). Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 293 U.S. 449, 79 L. Ed. 583, 55 S. Ct. 313 (1935); Gavlik Construction Co. v. H.F. Campbell Co., 526 F.2d 777 (3d Cir. 1975); Merritt-Chapman & Scott Corp. v. Pennsylvania Turnpike Comm., 387 F.2d 768 (3d Cir. 1967). Deferrals to non-arbitral tribunals have been treated similarly. In re Unterweser Reederei G.M.B. H., 428 F.2d 888 (5th Cir. 1970), aff'd en banc, 446 F.2d 907 (5th Cir. 1971), vacated on other grounds sub nom. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972); Alberto-Culver Company v. Scherk, 484 F.2d 611 (7th Cir. 1973), rev'd on other grounds, Scherk v. Alberto-Culver Co., 417 U.S. 506, 41 L. Ed. 2d 270, 94 S. Ct. 2449 (1974). The Bremen and Scherk are the Supreme Court's definitive modern pronouncements on the enforceability of contractual forum selection clauses. In each case the Supreme Court's appellate jurisdiction was, under 28 U.S. C. § 1254, derivative of the jurisdiction of the court of appeals, and in each case that jurisdiction was predicated on section 1292(a)(1).
Coastal contends that because some of the relief requested was equitable rather than legal, the Enelow-Ettelson*fn1 rule does not apply. We note that in The Bremen the underlying suit was in admiralty and that in Scherk both legal and equitable relief was requested. Thus it may well be that for purposes of reviewing interlocutory decisions on enforceability of forum selection clauses pursuant to section 1292(a)(1), the Supreme Court no longer recognizes the artificial Enelow-Ettelson distinction. But see Cotler v. Inter-County Orthopaedic Ass'n, 526 F.2d 537, 540-41 (3d Cir. 1975); Rodgers v. United States Steel Corp., 508 F.2d 152, 160 (3d Cir.), cert. denied, 423 U.S. 832, 46 L. Ed. 2d 50, 96 S. Ct. 54 (1975). In any event, we have examined the pleadings, and we conclude that whether on a contract or a tort theory, what Coastal seeks is money damages for the alleged malfunctioning of a machine. This is classic legal relief. Thus the appeal falls within the classic Enelow-Ettelson formulation, assuming section 1292(a)(1) applies to proceedings relating to bankruptcy.
Tilghman and Wheelabrator also urge that the orders are in any event appealable under section 1291 as collaterally final. Appellate jurisdiction, even in a section 1331 or section 1332 case, is on this theory more problematical. Section 1291 permits review of "all final decisions of the district courts," and Fed. R. Civ. P. 54(b) provides that "any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action . . . and . . . is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties." The orders here in question fit literally within Rule 54(b). The Supreme Court has, however, recognized that some orders which fall literally within Rule 54(b) are nevertheless final for purposes of appellate review. The task of the lower federal courts in identifying such orders has not been aided by the Court's propensity to treat as interchangeable cases arising from state courts under section 1257 and from district courts under section 1291.*fn2 Its most recent effort, on the federal side, to instruct as to what orders are reviewable under section 1291 despite Rule 54(b) is Moses H. Cone Memorial Hospital v. Mercury Construction Corporation, 460 U.S. 1, 103 S. Ct. 927, 935, 74 L. Ed. 2d 765 (1983), which reiterated the test for collateral finality announced in Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 57 L. Ed. 2d 351, 98 S. Ct. 2454 (1978):
To come within the "small class" of decisions excepted from the final judgment rule by Cohen [v. Beneficial Loan Corporation, 337 U.S. 541, 93 L. Ed. 1528, 69 S. Ct. 1221 (1949)], the order must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment.
For purposes of our analysis we perceive Tilghman and Wheelabrator to be similarly situated, in that the denial of leave to appeal deprived the latter of the opportunity to pursue the two issues -- enforceability of the forum selection clause and forum non conveniens -- which Tilghman raised in its section 1334(b) appeal. Thus we will address those two issues.
The forum non conveniens contention does not fit comfortably within the three-part Coopers & Lybrand formulation. The district court's affirmance established the rejection of the forum non conveniens contention as law of the case, and thus satisfied the first criterion -- conclusive determination of the disputed question. A forum non conveniens determination cannot easily be made, however, without reference to the merits of the case. As the Supreme Court observed in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 91 L. Ed. 1055, 67 S. Ct. 839 (1947), considerations relevant to a forum non conveniens ruling include:
the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.
These are considerations going to the merits of the case and requiring assessment of the substantive issues in the litigation. Moreover, even when a trial court misjudges a forum non conveniens claim, a reviewing court can, after final judgment, ascertain the degree of prejudice and reverse. See United States v. MacDonald, 435 U.S. 850, 859, 56 L. Ed. 2d 18, 98 S. Ct. 1547 (1978) (discussing post-trial review of speedy trial claim). Thus we do not believe that the rejection of a forum non conveniens claim is reviewable as a collaterally final order under section 1291.
The refusal to enforce the contractual forum selection clause, however, presents a different set of considerations. As with the forum non conveniens motion, the district court's affirmance has established that rejection as law of the case. Thus the first Coopers & Lybrand factor is satisfied. Moreover, the forum selection clause is far less obviously related to the substantive merits of the underlying dispute than is the forum non conveniens contention. We recognize, of course, that in determining whether or not to enforce such a clause the forum court may, as a matter of forum policy, look to factors similar to those bearing on the grant or denial of a forum non conveniens motion. See Copperweld Steel Co. v. Demag-Mannesmann-Bohler, 578 F.2d 953, 965 n.18 (3d Cir. 1978). Nevertheless a contractual clause selecting either a judicial or an arbitral forum for the resolution of disputes establishes a legal right which is analytically distinct from the rights being asserted in the dispute to which it is addressed. It is a right somewhat analogous to those recognized in Abney v. United States, 431 U.S. 651, 52 L. Ed. 2d 651, 97 S. Ct. 2034 (1977) (denial of motion to dismiss on double jeopardy grounds appealable under section 1291), and Helstoski v. Meanor, 442 U.S. 500, 61 L. Ed. 2d 30, 99 S. Ct. 2445 (1979) (denial of motion to dismiss on speech and debate clause grounds appealable under section 1291).
The more difficult question is whether the third Coopers & Lybrand factor is satisfied. In the Abney and Helstoski cases it was, because those cases involved claims of absolute immunity from participation in the legal proceedings in question, which could never be vindicated after final judgment. See also Forsyth v. Kleindienst, 599 F.2d 1203 (3d Cir. 1979), cert. denied, 453 U.S. 913, 101 S. Ct. 3147, 69 L. Ed. 2d 997 (1981) (claim of absolute official immunity). The right to specific performance of a forum selection clause is not absolute. Under the Supreme Court's formulation a court having subject matter jurisdiction must weigh competing considerations in deciding on enforceability of such a clause.
If the party asserting the applicability of the forum selection clause prevails on the merits of the underlying dispute, however, an erroneous denial of its specific performance will obviously escape review after final judgment. Moreover, if that party should lose on the merits of the underlying dispute, it is not at all clear that the forum selection clause would be an available ground for a post-final judgment reversal. The trial would ordinarily have been held in a court having jurisdiction, and a federal statute provides:
There shall be no reversal in the Supreme Court or a court of appeals for error in ruling upon matters in abatement which do not involve jurisdiction.
28 U.S.C. § 2105 (1976). This statute originated in section 22 of the Judiciary Act of 1789 as a qualification to the appellate jurisdiction of both the circuit courts and the Supreme Court over "final decrees and judgments in civil actions . . . upon a writ of error. . . ." 1 Stat. 73, 84. Thus it has never had any application to criminal cases, which under the 1789 Act were not appealable after final judgment,*fn3 or in appeals from state courts.*fn4 Moreover, since under the 1789 Act there was no equivalent of section 1292(a) or (b), the qualification should have no application to those subsequently enacted provisions. And since the 1789 Act in section 14, 1 Stat. 73, 81, provided separately for the exercise of discretionary review by common-law writs other than writs of error with no similar qualification, section 2105 can have no application to the discretionary interlocutory review provided for in the present equivalent of section 14, 28 U.S.C. § 1651 (1976). Finally, when section 2105 was enacted there was no Cohen doctrine. Thus we think that the section was originally intended to apply only to writs of error after a full trial, and to prevent post-trial consideration of non-jurisdictional pleas in abatement. Consistent with that purpose, it should not be held to be applicable to those collateral matters not going to the merits of the underlying dispute which are appealable to the courts of appeal by virtue of the Cohen doctrine. The only instance in which section 2105 can properly apply is in an appeal from a final judgment after a trial on the merits.
In that context the statute may well apply to an erroneous rejection of a claim that a forum selection clause should have been enforced. Nineteenth century lawyers were obviously better versed in the meaning of pleas in abatement than are we, since Fed. R. Civ. P. 7(c) has abolished them in favor of motions. What is now included, we suppose, are those non-jurisdictional motions which, if granted, would result in the dismissal of an action without prejudice to its reconsideration when refiled in another forum or in another pleading. See Bowles v. Wilke, 175 F.2d 35, 37-38 (7th Cir.), cert. denied, 338 U.S. 861, 94 L. Ed. 528, 70 S. Ct. 104 (1949). A motion for specific enforcement of a forum selection clause would seem to fit that mold. Such a motion is non-jurisdictional and has no direct bearing on the merits of the underlying dispute.
If, as appears, section 2105 would apply to a forum selection clause motion in a post-trial appeal, a ruling denying a motion would appear to satisfy all three of the criteria for review under the Cohen doctrine announced in Coopers & Lybrand. Thus entirely apart from the Enelow-Ettelson rule discussed in Part II. A. above, we hold that an order denying a pre-trial motion to enforce a forum selection clause is reviewable as a collaterally final order under section 1291. We hold, moreover, that since section 2105 was intended to protect the interest of the parties and the federal courts in fully completed trials, it does not apply to a Cohen appeal on a collateral order. Thus assuming section 1291 applies to proceedings relating to bankruptcy it would be a basis for jurisdiction to review the order denying the motion to enforce the forum selection clause.
Sections 1291 and 1292(a)(1) afford appeals of right. In addition, 28 U.S.C. § 1651 (1976), vests in the courts of appeals authority to issue writs in aid of their potential appellate jurisdiction. Unlike appeals under Section 1291 and 1292(a)(1), however, the relief available under section 1651 is not a matter of right. It involves the exercise of discretion in the appellate court in determining the appropriateness of interlocutory review of the order in question. There is no time limit for the filing of a petition for the relief available under section 1651, and thus there is no reason why this court may not treat an attempted appeal as such a review. We have on occasion done so. Cheney State College v. Hufstedler, 703 F.2d 732 (3d Cir. 1983); Hackett v. General Host Corp., 455 F.2d 618, 626 (3d Cir.), cert. denied, 407 U.S. 925, 32 L. Ed. 2d 812, 92 S. Ct. 2460 (1972). See 9 Moore's Federal Practice para. 110.28, at 316 (1982). Thus we clearly have the power under section 1651 to review both the forum non conveniens ruling and the forum selection clause ruling, assuming section 1651 applies to proceedings relating to bankruptcy. The question is whether, under the discretionary rules which have been developed under that section, that power should be exercised in given instances. 16 C. A. Wright, A. R. Miller, E. H. Cooper & E. Gressman, Federal Practice and Procedure § 3932, at 206 (1977); see generally Berger, The Mandamus Power of the United States Courts of Appeals: A Complex and Confused Means of Appellate Control, 31 Buffalo L. Rev. 37 (1982). No authority has been called to our attention which would preclude the exercise of discretion in favor of pretrial review of either a forum non conveniens issue or a forum selection clause issue. In a case where the trial court's error is on either issue egregious and the likely harm from delayed review serious we should exercise such review. Obviously, then, the appropriateness of section 1651 interlocutory review to some extent involves consideration of the merits of the challenged ruling. But we hold that if section 1651 applies to proceedings relating to bankruptcy we have discretionary power under that section to review both challenged rulings.
Coastal contends that the jurisdictional provisions of the Bankruptcy Act of 1978 (Bankruptcy Code) preclude the exercise of this court's reviewing authority over either the forum non conveniens issue or the forum selection clause issue. Those provisions, Coastal contends, preempt sections 1291, 1292 and 1651. In its view, the Bankruptcy Code intended to place all pendente lite rulings of a bankruptcy court beyond the reach of the courts of appeals and the Supreme Court. Since the federal appellate courts have had the remedial powers conferred by section 1651 since 1789, and those conferred in section 1292(a)(1) since 1891, Coastal's proposition is that the Bankruptcy Code placed the bankruptcy courts in a position in which their pendente lite rulings are to be more insulated from appellate review than those of any civil federal court in history. On its face the proposition seems extreme. Yet Coastal's argument from the text of the statute is plausible.
Original jurisdiction over Coastal's lawsuit depends on 28 U.S.C. § 1471(b), which authorizes the district courts to exercise jurisdiction over "all civil proceedings arising under title 11 or arising in or related to cases under title 11." Coastal's claims depend on state law, and its complaint does not allege complete diversity, but article III of the Constitution permits the exercise of a protective federal jurisdiction as broad as section 1471(b). Schumacher v. Beeler, 293 U.S. 367, 79 L. Ed. 433, 55 S. Ct. 230 (1934). However, the rulings in this instance were not made initially by an article III judge, but by a judge appointed under 28 U.S.C. § 153 (Supp. V 1981). In light of Northern Pipeline, that judge can no longer proceed with the trial. That judge also may have lacked power to make the challenged rulings, since they are of a type ordinarily requiring judicial action. For present purposes, however, we will assume arguendo that because the Northern Pipeline mandate was withheld until December 23, 1982, the bankruptcy judge had authority to pass on the Tilghman and Wheelabrator motions.
Bankruptcy appeals are dealt with in two Bankruptcy Code provisions. 28 U.S.C. § 1293 (Supp. V 1981) refers to the courts of appeals:
(a) The courts of appeals shall have jurisdiction of appeals from all final decisions of panels designated under section 160(a) of this title.
(b) Notwithstanding section 1482 of this title, a court of appeals shall have jurisdiction of an appeal from a final judgment, order, or decree of an appellate panel created under section 160 or District Court of the United States, or from a final judgment, order, or decree of a bankruptcy court of the United States if the parties to such appeal agree to a direct appeal to the court of appeals.
Because in this circuit no panels have been designated under section 160(a), and in this case the parties did not consent to a direct appeal to the court of appeals, only the italicized language of section 1293(b) is relevant; "a court of appeals shall have jurisdiction of an appeal from a final judgment, order, or decree of . . . a District Court of the United States. . . ." That language must be read in conjunction with the section governing appeals from bankruptcy courts to district courts:
(a) The district courts for which panels have not been ordered appointed under section 160 of this title shall have jurisdiction of appeals from all final judgments, orders, and decrees of bankruptcy courts.
(b) The district courts for such districts shall have jurisdiction of appeals from interlocutory orders and decrees of bankruptcy courts, but only by leave taken of the district court to which the appeal is taken.
28 U.S.C. § 1334 (Supp. V 1981).*fn5 Coastal's position as to the meaning of these provisions is straightforward. According to Coastal, section 1293(b) is exclusive and preemptive. It permits review of district court appellate decisions made under section 1334(a), but not district court decisions under section 1334(b). The former include only judgments which would be final under section 1291. The latter include all matters formerly reviewable under section 1292(a)(1), section 1292(b) and section 1651. All such matters, Coastal urges, are now the province of the district court, and neither the courts of appeals nor the Supreme Court may review them until after final judgment, if then.
Although section 1293(b) has been considered by us twice before, in neither case did we have occasion to address the Coastal contention.*fn6 Both involved matters which were before the district court under section 1334(a). See Matter of Marin Motor Oil, Inc., 689 F.2d 445, 447 (3d Cir. 1982), cert. denied, 459 U.S. 1206, 103 S. Ct. 1196, 75 L. Ed. 2d 440 (1983); Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 100-01 (3d Cir. 1981). Thus the availability of interlocutory appellate review of orders in proceedings relating to bankruptcy is a question of first impression in this court. It is, moreover, a question of enormous significance, involving the power of this court and of the Supreme Court to review such important matters as preliminary injunctions issued in the vast range of cases entertainable under section 1471(b). If Coastal is right, the bankruptcy courts have been given pendente lite powers, subject only to district court review, equivalent to those exercised by the federal circuit courts prior to the passage of the Evarts Act in 1891.
Prospectively, Coastal's position, at least in cases such as this which are proceedings relating to bankruptcy, must be rejected. Northern Pipeline holds that bankruptcy courts may not entertain such related proceedings. In reaction to that holding the Judicial Conference of the United States urged adoption of local rules for the processing of bankruptcy and bankruptcy related cases. The District of New Jersey has done so. Its rule provides that
orders and judgments of bankruptcy judges in civil proceedings related to cases arising under Title 11, but not arising in or under Title 11, or wherever otherwise constitutionally required, judgments as defined in Rule 54(a) of the Federal Rules of Civil Procedure, which would be appealable if rendered by a district judge and which do not result from a stipulation among the parties, shall not be effective and shall not be entered until the judgment has been signed by a district judge.
Local Rule 47(C)(3). Since the purpose of this provision is to meet the constitutional deficiencies recognized in Northern Pipeline, it is plain that orders entered in related proceedings must be considered orders of the district courts, not of the bankruptcy courts. They will not fall within section 1334, and thus will not be governed by section 1293. As orders of the district court they will be governed by sections 1291, 1292 and 1651. Indeed in this case all future orders must, under Local Rule 47(C)(3), be entered by the district court.
The question thus presented is whether, in related proceedings in which orders have been entered prior to December 23, 1982, we should hold that section 1293 applies rather than sections 1291, 1292 and 1651. From a purely mechanical viewpoint sections 1334 and 1293 were technically applicable during that period because the Supreme Court in Northern Pipeline made its holding effective on December 23, 1982. The policies which it identified for a nonretroactivity holding in Northern Pipeline have no application, however, to the instant appeal. In Northern Pipeline the Court observed "that retroactive application would not further the operation of our holding, and would surely visit substantial injustice and hardship upon those litigants who relied upon the Act's vesting of jurisdiction in the bankruptcy courts." 102 S. Ct. at 2880. There is no hardship in a retroactive application of the Northern Pipeline holding in this instance, because the case has not yet been tried, and when it is, it must be tried in the district court, not the bankruptcy court. Indeed the same motions could now be renewed, and under Local Rule 47(C)(3) orders disposing of them would have to be entered in the district court. It seems to us the height of artificiality to apply today the nonretroactivity holding of Northern Pipeline so as to place under section 1293 orders which tomorrow will fall within sections 1291, 1292 and 1651.
We hold, therefore, that orders entered in proceedings related to bankruptcy, which were made by the district court pursuant to section 1334, should be deemed orders of the district court and governed by sections 1291, 1292 and 1651. That holding makes it unnecessary in this case to consider whether Congress intended in sections 1293 and 1334 to insulate pendente lite orders of the bankruptcy court from all supervision by the courts of appeals. The question will arise, of course, with respect to cases arising under title 11 as distinguished from cases in or related to such cases. For the present it suffices to note that even with respect to cases arising under title 11 the construction of sections 1334(b) and 1293(b) advanced by Coastal may not have been intended by Congress.*fn7 We are particularly doubtful that Congress intended in sections 1293 and 1334(b) to limit the powers of the courts of appeals or the Supreme Court under section 1651.
Our holding that orders entered in proceedings relating to bankruptcy are district court orders reviewable pursuant to sections 1291, 1292 and 1651 is necessarily predicated on the tacit assumption that despite Northern Pipeline the grant of district court subject matter jurisdiction in section 1471(b) survives. We find nothing in the Northern Pipeline opinions suggesting otherwise. Indeed the Northern Pipeline holding that article III judges must exercise the related proceedings jurisdiction rests on the assumption that the jurisdictional grant is operative. Thus Local Rule 47(C)(3) which provides for the continued exercise of section 1471(b) jurisdiction by the district courts is consistent with the Bankruptcy Code and the Northern Pipeline decision.
Coastal also urges that appellate review is precluded by 28 U.S.C. § 1471(d) (Supp. V 1981), which provides:
Subsection (b) or (c) of this section does not prevent a district court or a bankruptcy court, in the interest of justice, from abstaining from hearing a particular proceeding arising under title 11 or arising in or related to a case under title 11. Such abstention, or a decision not to abstain, is not reviewable by appeal or otherwise.
We have held that section 1471 (b) jurisdiction still lies in the district court. Obviously then, section 1471(d) still qualifies that jurisdiction. We hold, however, that neither a forum selection clause ruling nor a forum non conveniens ruling is an abstention decision. The House Report on the Bankruptcy Code states that "the subsection recognizes the exigencies that arise in such cases as Thompson v. Magnolia Petroleum, 309 U.S. 478, 84 L. Ed. 876, 60 S. Ct. 628 (1940), in which it is more appropriate to have a State court hear a particular matter of State law." H.R. Rep. No. 595, 95th Cong., 1st Sess. 446 (1977), reprinted in 1978 U.S. Code Cong. & Ad. News 6401. There is no indication in the legislative history of the Bankruptcy Code that Congress regarded issues like the enforceability of a contractual forum selection clause to be abstention issues. A decision on enforceability of such a clause involves a substantive contractual right. A forum non conveniens ruling also involves a substantive right, in the sense that it relates directly to the ability of the parties to prepare and present their respective cases. Tilghman and Wheelabrator are not asking the court to refrain from entertaining the action and to relegate Coastal to a New Jersey court. Their position is that any New Jersey forum, state or federal, must as a matter of law dismiss because they are legally entitled to have the dispute resolved in England. Section 1471(d) does not bar appellate review of the rejection of that position.
Since we clearly have jurisdiction under section 1292(a)(1) to review the order denying the Tilghman-Wheelabrator motion to enforce the forum selection clause, since that order is also reviewable as a collaterally final order under section 1291, and since we can under section 1651 consider the propriety of the denial of a motion to dismiss on forum non conveniens grounds, Coastal's motion to dismiss the appeal will be denied.
Our ruling on Coastal's jurisdictional motion requires consideration of the merits.
A. The Forum Selection Clause
An initial concern is the governing law for determination of enforceability of the forum selection clause. The fact that the case is in the district court because of the grant of protective federal jurisdiction in section 1471(b) does not alter the legal rules which created the original relationship between Coastal and the parties with which it dealt. The federal question jurisdiction provided in article III, section 2 of the Constitution authorizes Congress to provide a federal forum for the convenient enforcement of rights of debtors dependent upon legal relationships arising out of non-federal law. Schumacher v. Beeler, 293 U.S. 367, 79 L. Ed. 433, 55 S. Ct. 230 (1934). But Congress did not in section 1471(b), and perhaps could not constitutionally, federalize those legal relationships. See Hill, The Erie Doctrine in Bankruptcy, 66 Harv. L. Rev. 1013 (1953).
The Supreme Court in The Bremen and in Scherk appears to have assumed without saying so that in a federal forum the enforceability of a forum selection clause is determined by a generally applicable federal law. This court in Copperweld Steel Co. v. Demag-Mannesmann-Bohler, 578 F.2d 953, 965-66 (3d Cir. 1978), appears to have made the same unarticulated assumption. It is not entirely clear why, absent a statute such as the Federal Arbitration Act, the enforceability of a contractual forum selection clause should properly be divorced from the law which in other respects governs the contract. See Leasewell, Ltd. v. Jake Shelton Ford, Inc., 423 F. Supp. 1011, 1014 (S.D. W. Va. 1976); Davis v. Pro Basketball, Inc., 381 F. Supp. 1, 3 (S.D.N.Y. 1974) (state law determines enforceability). Compare, e.g., Taylor v. Titan Midwest Construction Corp., 474 F. Supp. 145, 147 (N.D. Tex. 1979); St. Paul Fire and Marine Insurance Co. v. Travelers Indemnity Co., 401 F. Supp. 927, 929 (D. Mass. 1975) (federal law determines enforceability). We noted the choice of law problem in Central Contracting Co. v. Maryland Casualty Co., 367 F.2d 341, 344-45 (3d Cir. 1966), and the absence of a discussion of it in Copperweld Steel suggests that in this circuit it remains unresolved. It need not be resolved in this case either, for each jurisdiction whose law is arguably relevant takes substantially the same position with respect to enforceability of contractual forum selection provisions. See The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10-11, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972) (federal admiralty law); id. at 11 & n.12 (English law); Air Economy Corp. v. Aero-Flow Dynamics, Inc., 122 N.J. Super. 456, 457, 300 A.2d 856, 857 (App.Div. 1973) (citing Central Contracting Co. v. Maryland Casualty Co., which was cited with approval in The Bremen) (New Jersey law).
The Bremen announces a general rule which would be applied in each of the arguably interested jurisdictions. That rule is that a forum selection clause is presumptively valid and will be enforced by the forum unless the party objecting to its enforcement establishes (1) that it is the result of fraud or overreaching, (2) that enforcement would violate a strong public policy of the forum, or (3) that enforcement would in the particular circumstances of the case result in litigation in a jurisdiction so seriously inconvenient as to be unreasonable. Coastal does not contend that the clause in the Tilghman-Farmer Norton contract was the result of fraud or overreaching, and neither the district court nor the bankruptcy court relied on this factor. Thus we turn to their treatment of the other two.
(1) Policy of the Forum
The bankruptcy court, but not the district court, found in the Bankruptcy Code's provision for related proceedings jurisdiction a codification of a policy disfavoring forum selection clauses. Coastal Appendix, Exhibit I, at 11-13. We agree that Congress, in enacting a broad protective federal jurisdiction provision, adopted a policy of facilitating the collection and distribution of debtor estates. We do not agree, however, that section 1471(b) was meant to change the contractual rights of the parties. A bankruptcy trustee may assume or reject an executory contract. 11 U.S.C. § 365(a); In re Bildisco, 682 F.2d 72 (3d Cir. 1982), cert. granted sub nom. NLRB v. Bildisco and Bildisco, 459 U.S. 1145, 103 S. Ct. 784, 74 L. Ed. 2d 992 (1983) (Nos. 82-818, 82-852). But, when relying on a contract in proceedings brought under section 1471(b), a trustee or debtor takes the contract as the parties made it. Nothing in the legislative history of the Bankruptcy Code has been called to our attention suggesting that Congress intended to make a change in the public policy favoring forum selection clauses which is manifested in the Federal Arbitration Act, 9 U.S.C. §§ 1-14 (1976), or in the common law announced in The Bremen and similar state and federal cases. Section 1471(b) does not announce a contrary public policy. At best the grant of protective federal jurisdiction over proceedings related to title 11 is one circumstance to be taken into account in making the unreasonableness determination.
(2) Unreasonableness Under the Circumstances
The first circumstance relied on by the district court in support of the conclusion that enforcement of the forum selection clause is Coastal's claimed status as a third-party beneficiary with the Tilghman-Farmer Norton contract. The court reasoned that in The Bremen the clause was enforced in order to leave the parties to their bargain, whereas Coastal was not a participant in the Tilghman-Farmer Norton bargain. Coastal Appendix, Exhibit J, at 9-10. The Bremen Court did refer to the policy of noninterference with a freely negotiated contract. 407 U.S. at 12, 14, 16, 17. The primary rationale of that Court, however, and of others which have enforced forum selection clauses, is that those clauses promote stable and dependable trade relations. Id. at 8-9, 13-14. Introducing into the common law of enforceability of forum selection clauses a third-party beneficiary exception would be inconsistent with that rationale. It would, moreover, be inconsistent with the law of contracts, which has long recognized that third-party beneficiary status does not permit the avoidance of contractual provisions otherwise enforceable. See, e.g., Trans-Bay Engineers and Builders, Inc. v. Hills, 179 U.S. App. D.C. 184, 551 F.2d 370, 378 (D.C. Cir. 1976); Process and Storage Vessels, Inc. v. Tank Service, Inc., 541 F. Supp. 725, 733 (D. Del. 1982). Coastal chose to do business with Farmer Norton, an English firm, knowing that Farmer Norton would be acquiring components from other English manufacturers. Thus it was perfectly foreseeable that Coastal would be a third-party beneficiary of an English contract, and that such a contract would provide for litigation in an English court. Reliance on Coastal's third-party beneficiary status as a reason for disregarding such a clause was an error of law.
The second circumstance relied on by the district court for denying enforcement is that Coastal has asserted tort claims as well as contract claims, and that the forum selection clause is inapplicable to the former. The difficulty with this reasoning is that it ignores the reality that the Tilghman-Farmer Norton contract is the basic source of any duty to Coastal. There is no evidence suggesting that the clause was not intended to apply to all claims growing out of the contractual relationship. If forum selection clauses are to be enforced as a matter of public policy, that same public policy requires that they not be defeated by artful pleading of claims such as negligent design, breach of implied warranty, or misrepresentation. Coastal's claims ultimately depend on the existence of a contractual relationship between Tilghman and Farmer Norton, and those parties bargained for an English forum. We agree with those courts which have held that where the relationship between the parties is contractual, the pleading of alternative non-contractual theories of liability should not prevent enforcement of such a bargain. See Bense v. Interstate Battery System of America, Inc., 683 F.2d 718 (2d Cir. 1982) (franchise agreement with forum selection clause and antitrust claim); Gordonsville Industries, Inc. v. American Artos Corp., 549 F. Supp. 200 (W.D. Va. 1982) (contract for industrial installation with forum selection clause and state law design defect, negligence, and warranty claims); Hoes of America, Inc. v. Hoes, 493 F. Supp. 1205 (C.D. Ill. 1979) (distributorship agreement with forum selection clause and state law business tort claim). Reliance on the new contract claims as a reason for disregarding the forum selection clause was on this record improper.
A third circumstance relied on by the district court for denying enforcement is the presence in the case of Wheelabrator, an American corporation. But while it would be inconvenient for Coastal to have to proceed in two separate forums against the separate defendants, in this instance Coastal does not face that problem. Wheelabrator has agreed to submit to the jurisdiction of an English court. Moreover Wheelabrator's only significant status in the case is as Tilghman's parent. The pleadings suggest that Wheelabrator did some work on the blast unit on Tilghman's behalf, but they do not suggest that this work, separately, was responsible for Coastal's losses. Thus reliance on Wheelabrator's presence in the case as a ground for requiring that Tilghman litigate in New Jersey was on this record improper.
The district court also alluded to the large amount of potential evidence in this country. Neither court found expressly that an inspection of the plant would be required, however, and the depositions on file show that Coastal has examined in England a number of English witnesses. Under The Bremen formulation the party objecting to enforcement of a forum selection clause has the burden of establishing the unreasonableness of such enforcement. In this case Coastal's showing is in our view legally insufficient. The availability of witnesses is a problem in either jurisdiction, but an insurmountable problem in neither. That factor appears to us essentially in equipoise. The only additional factor Coastal alludes to is the supposed difficulty of obtaining counsel in England. Tilghman has the same problem here.
Finally the district court referred to the fact that under a plan of reorganization, now confirmed, Coastal's creditors have an interest in any sums which may be recovered from Tilghman. This factor has a Robin Hood quality, and reliance on it would be plainly improper.
(3) Other Contentions
We conclude, therefore, that none of the reasons relied on by either the bankruptcy court or the district court for denying the motion for enforcement of the forum selection clause is legally sufficient. Coastal advances two others. The first is that Wheelabrator filed a proof of claim in the bankruptcy proceeding, and in so doing, waived any objection it or Tilghman might have to the exercise of jurisdiction under section 1471(b) in New Jersey. We know of no authority supporting the proposition that the filing of a proof of claim is a waiver of the provisions of a forum selection clause. The second is that by virtue of the provisions of the confirmed Plan of Reorganization, which retained jurisdiction over the Tilghman-Wheelabrator case, the defendants are barred by res judicata from objecting to trial in the bankruptcy court. The confirmed Plan plainly did not adjudicate anything respecting the instant dispute. Thus, both contentions are entirely without merit. The Tilghman-Wheelabrator motions to dismiss the complaint so as to enforce the forum selection clause should in this case have been granted.
Because we hold that the forum selection clause should have been enforced, the forum non conveniens ruling need not be addressed in detail. It suffices to note that since there are inconveniences associated with the trial of the underlying dispute in either forum, we probably could not hold that the bankruptcy court committed an abuse of discretion in denying the motion to dismiss on that ground.
Coastal's motion to dismiss the appeal will be denied. The order affirming the bankruptcy court's denial of the Tilghman-Wheelabrator motion will be reversed, and the case remanded to the district court for the entry of an order, pursuant to Local Rule 47(C)(3), dismissing Coastal's complaint on appropriate conditions with respect to Wheelabrator's appearance in an English court, and with respect to waiver of any statute of limitations problem. See MacLeod v. MacLeod, 383 A.2d 39 (Me. 1978) (forum non conveniens dismissal conditioned on consent to have action in another court deemed commenced on date of original action).
ROSENN, Circuit Judge, Concurring.
Like the majority, I believe that this case should be tried in the English courts in accordance with the forum selection clause in the Tilghman-Farmer Norton contract under which Coastal Steel claims third-party beneficiary status. I therefore join in the majority's discussion of the merits and disposition of the case. I write separately, however, because I fear that the majority, in struggling to find a basis for appellate jurisdiction in this case, has employed an analysis that leaves in disarray doctrines of appealability that are firmly established in the law of this circuit.
The majority concludes on three different but equally shaky grounds that the bankruptcy court's order of November 9, 1981, which the district court affirmed, is now properly before us. The majority also attempts, through a dubious path of reasoning, to circumvent the constraints arguably imposed on appellate review of bankruptcy cases by 28 U.S.C. § 1293, relying on a notion of retroactivity that I believe lacks legal foundation and logic as applied to the instant case.
I fully appreciate the need for an inquiry into whether authority exists to justify appellate jurisdiction in this case. If statutes and judicial doctrines provide a reasonable basis for us to review the district court's decision, we should not take an exceedingly narrow and technical approach to our own jurisdiction, but instead should dispose of the case on the merits. I do believe, however, that the majority's analysis is tortuous and unnecessary. Instead, I would rely on the flexible and straightforward logic of Gillespie v. United States Steel Corp., 379 U.S. 148, 13 L. Ed. 2d 199, 85 S. Ct. 308 (1964), as the basis for appealability in this case.
The instant case arose as part of a proceeding in the United States Bankruptcy Court for the District of New Jersey. Coastal Steel, the debtor, filed its complaint against Tilghman and the other defendants under 28 U.S.C. § 1471(b), relying on the pendency of the bankruptcy proceeding as the basis for federal subject matter jurisdiction. The bankruptcy court denied Tilghman's motion to dismiss on the basis of the forum selection clause and the doctrine of forum non conveniens, and the district court granted Tilghman leave to appeal under 28 U.S.C. § 1334(b). On May 27, 1982, the district court affirmed the order of the bankruptcy court denying Tilghman's motion, and refused to certify its own order for interlocutory appellate review under 28 U.S.C. § 1292(b). Tilghman now attempts to invoke this court's jurisdiction, offering several possible theories for appealability.
The majority finds that appellate jurisdiction is proper under sections 1291, 1292(a), and 1651. The most serious obstacle to this conclusion is Coastal's argument that, because this is an appeal from an action related to a bankruptcy proceeding, none of these three sections applies, and that instead we must determine whether we have jurisdiction solely in terms of the special requirements of section 1293, which is in effect during the transition period under the Bankruptcy Reform Act of 1978. Pub. L. No. 95-598, 95 Stat. 2549. The majority disingenuously manages to avoid this problem. Moreover, even assuming that it is appropriate to evaluate this case with reference to the standards for appealability of ordinary (non-bankruptcy) civil matters, I am certain that jurisdiction does not exist under section 1292, and I have grave doubts as to the applicability of sections 1291 and 1651.
Coastal argues that our authority to review the orders of the bankruptcy court and the district court cannot be determined under sections 1291, 1292, or 1651, but is governed solely by 28 U.S.C. § 1293. Subsection (b) of this statute provides:
Notwithstanding section 1482 of this title, a court of appeals shall have jurisdiction of an appeal from a final judgment, order, or decree of an appellate panel created under section 160 or a District court of the United States or from a final judgment, order, or decree of a bankruptcy court of the United States if the parties to such appeal agree to a direct appeal to the court of appeals.
Coastal argues that this section totally preempts sections 1291, 1292, and 1651, and that if the order in this case is appealable, it must be in accordance with section 1293. Although sections 1292 and 1651 authorize interlocutory review in certain types of civil cases, section 1293 by its terms limits appellate jurisdiction to a "final judgment, order, or decree" of a district court or a bankruptcy court. Therefore, if section 1293 is indeed the exclusive route to the court of appeals in bankruptcy cases, Tilghman's appeal cannot be heard unless the decision below was "final."
In two recent cases, this circuit has described section 1293 as providing "a comprehensive and exclusive schema for jurisdiction of bankruptcy appeals." In re Marin Motor Oil, Inc., 689 F.2d 445, 447 (3d Cir. 1982), cert. denied, 459 U.S. 1206, 103 S. Ct. 1196, 75 L. Ed. 2d 440 (1983); Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101 n.3 (3d Cir. 1981). As the majority correctly observes, these statements may be treated as dictum for purposes of the instant case for both of these cases involved orders that were adjudged to be final. Thus, there was no need for us to consider whether section 1293 actually precluded interlocutory review. The majority summarizes several sound arguments for the view that Congress could not possibly have intended to insulate orders of the bankruptcy courts from interlocutory review by the courts of appeals. Ultimately, however, the majority avoids ruling on this question by taking refuge in the Supreme Court's decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982).
As alluded to by the majority, the Court held in Northern Pipeline that Congress acted unconstitutionally in granting bankruptcy courts the authority to entertain proceedings "relating to" bankruptcy. The effect of that decision is to require that henceforth all such proceedings be heard by the district courts under 28 U.S.C. § 1471. I believe the majority's reliance on this case to circumvent the need to construe section 1293 is misplaced for several reasons.
First, the majority's analysis involves a novel extension of the retroactive effect of Northern Pipeline. To prevent the havoc that would have ensued if actions taken by bankruptcy judges in good faith reliance on the statutory scheme were suddenly invalidated, the Court declared that its holding of unconstitutionality would not be retroactive. In the face of that recent unequivocal holding, the majority asserts that there is no reason not to apply the Northern Pipeline decision retroactively to this case, reasoning that since Coastal's claims have yet to be tried, there will be no hardship to the parties in invalidating the actions taken by the bankruptcy court. But it cannot be doubted that the Supreme Court, in deciding Northern Pipeline, must have contemplated the possibility that in some cases a holding of retroactivity would cause little hardship or injustice, but nevertheless believed that in a substantial number of cases justice would not be served by making the decision retroactive. No legal basis justifies the majority's decision to embrace "selective" retroactivity.
Second, if, despite the Supreme Court's holding of nonretroactivity, the instant case could somehow be brought within the bounds of Northern Pipeline, an even more serious problem is created. By applying Northern Pipeline to the orders involved here, the majority succeeds only in invalidating the bankruptcy court's order refusing to dismiss the complaint on the grounds of the forum selection clause or forum non conveniens. This order was entered on November 9, 1981, as part of a "related proceeding" that Northern Pipeline holds bankruptcy courts cannot entertain. Since the bankruptcy court thus acted beyond its authority, the inescapable conclusion is that its order is void. Admittedly, if this order had been entered after October 1, 1982, it would have been saved by Local Rule 47(C)(3) of the District of New Jersey, which provides that "orders and judgments of bankruptcy judges in civil proceedings related to cases arising under Title 11" will be effective only when they have been signed by a district judge. As the majority notes, this local rule was passed shortly after the Northern Pipeline decision to prevent disruption of such proceedings as a result of the Supreme Court's ruling. The effect of the local rule is to transform what would have been orders of the bankruptcy courts into orders of the district courts under 28 U.S.C. § 1471(b) so that the order will have been entered by an Article III judge. But because the order of the bankruptcy court rejecting Tilghman's motion to dismiss was entered before this local rule was passed, it cannot possibly be treated as an order entered by the district court under section 1471(b).
Whatever vitality the order possessed is attributable to it only as an order of the bankruptcy court that was appealed to and affirmed by the district court under 28 U.S.C. § 1334(b). Its life ended at the moment the rule of Northern Pipeline became applicable to such orders. The majority completely ignores this insurmountable problem: once it has held -- erroneously, in my view -- that Northern Pipeline applies retroactively to the bankruptcy court's order in the instant case, it has totally destroyed the validity of that order. Therefore, instead of reviewing the merits of the appeal, the majority must direct that the bankruptcy court's unlawful order be vacated.*fn1
I do not see how the orders involved in the instant case can possibly survive application of the Northern Pipeline decision. But even if they could somehow survive, I question the majority's assumption that the difficult section 1293 problem is thereby avoided. The majority concludes that "orders entered in proceedings relating to bankruptcy are district court orders reviewable pursuant to sections 1291, 1292, and 1651." At 200. But it is arguable that all orders in bankruptcy cases -- whether entered by a bankruptcy court and then appealed to a district court under 28 U.S.C. § 1334 or entered by a district court under 28 U.S.C. § 1471(b) -- are reviewable by the court of appeals only in accordance with the provisions of 28 U.S.C. § 1293. There is no basis for the majority's implicit assumption that section 1293 only governs appeals from district court decisions where the district court was itself acting as an appellate court. Nothing in section 1293(b)'s language so limits its application. Indeed, on its face the provision appears to pertain to appeals from any district court proceeding in bankruptcy: it refers to jurisdiction over appeals from "a final judgment, order, or decree of . . . [a] District Court of the United States." The order now before us is such a final order, regardless of the capacity in which the district court was acting when it entered the order.*fn2
I fail to see why Congress' attitude toward interlocutory appellate review in proceedings relating to bankruptcy would depend on whether the order originated in the bankruptcy court or in the district court. If section 1293(b) is indeed "a comprehensive and exclusive schema for jurisdiction of bankruptcy appeals," In re Marin Motor Oil, supra, 689 F.2d at 447-48, then our review under the statute would be limited to final orders of the district courts.
Thus, I believe the majority has no alternative but to face directly the question whether section 1293, which does not provide for interlocutory review, sets forth the exclusive route to the court of appeals in cases relating to bankruptcy. If it is, as our prior decisions have implied, then neither section 1292 nor section 1651 is an available source for appealability in this case.*fn3
Having dealt with the formidable obstacle presented by 28 U.S.C. § 1293(b) in an unsatisfactory manner, the majority concludes that we have jurisdiction over this appeal pursuant to both 28 U.S.C. § 1292 and 28 U.S.C. § 1651. Assuming that it is proper to look to these two sections as authority for jurisdiction over interlocutory bankruptcy appeals, neither section provides a basis for our review. The requirements of section 1292(a) cannot be met, notwithstanding the strained analogies the majority employs. And I have considerable doubts whether this is a proper case for review by mandamus.
1. Section 1292(a) and the Enelow-Ettelson Doctrine
Section 1292(a) provides for jurisdiction over interlocutory appeals involving district court orders "granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions." It cannot be seriously maintained that the bankruptcy court's order denying Tilghman's request to dismiss the case in accordance with the forum selection clause, or alternatively on the ground of forum non conveniens, is an order denying an injunction. Instead, the majority relies on the so-called Enelow-Ettelson doctrine, Enelow v. New York Life Insurance Co., 293 U.S. 379, 79 L. Ed. 440, 55 S. Ct. 310 (1935); Ettelson v. Metropolitan Life Insurance Co., 317 U.S. 188, 87 L. Ed. 176, 63 S. Ct. 163 (1942), under which a request to stay an action at law pending resolution of an equitable defense is considered analogous to a request for an injunction. The majority concludes that the instant case comes within the Enelow-Ettelson rule because Tilghman's motion to dismiss the action in order to give effect to a forum selection clause is "analytically indistinguishable from a motion to stay an action at law pending arbitration." At 194-195. In essence, the majority's argument is that Tilghman's motion is analogous to another type of motion which, according to the Supreme Court, is itself sufficiently analogous to a request for an injunction to come under section 1292. I do not believe that this argument can withstand scrutiny.
Professor Moore explains the Enelow-Ettelson doctrine as follows:
If an initial action is filed that could formerly have been maintained only at law, and if a stay of that action is sought to permit advance determination of matter that could formerly have been urged only by bill in equity, an order granting or denying the stay is appealable as an injunction under 28 U.S.C. § 1292(a)(1).
9 J. Moore, B. Ward & J. Lucas, Moore's Federal Practice para. 110.20, at 242 (1983) (footnote omitted). It is settled that one type of motion appealable under the Enelow-Ettelson doctrine is a motion to stay an action pending arbitration of issues that the defendant contends are subject to an arbitration agreement. In Shanferoke Coal & Supply Corp. v. Westchester Service v. Corp., 293 U.S. 449, 79 L. Ed. 583, 55 S. Ct. 313 (1935), the Supreme Court held that the defense setting up the arbitration agreement is in the nature of an equitable defense, and that the grant or denial of a stay sought under the United States Arbitration Act is therefore appealable, provided the action sought to be stayed is legal in nature. But as I see the cases, the Court has demonstrated a reluctance to expand the contours of this doctrine, preferring to keep Enelow-Ettelson as a narrow modification of the injunction exception to the finality requirement. The Court has indicated that the Enelow-Ettelson rule should not be extended into new areas on "merely logical grounds." 9 Moore's Federal Practice, supra, at 252. For example, in Baltimore Contractors v. Bodinger, 348 U.S. 176, 184, 99 L. Ed. 233, 75 S. Ct. 249 (1955), the Court was not persuaded to extend the rule merely because of "incongruities" that arise out of "the persistence of outmoded procedural differentiations." Rather, the Court concluded that "it is better judicial practice to follow the precedents which limit appealability of interlocutory orders, leaving Congress to make such amendments as it may find proper." Id. at 185.
Most courts have declined to extend the Enelow-Ettelson rule beyond the precise situations in which the Supreme Court has approved it. As a result, the Enelow-Ettelson rule is employed principally to permit appeals from "two kinds of orders: (1) orders granting or denying trial by jury; and (2) orders staying or refusing to stay pending actions until issues involved in them are referred to arbitration." 9 Moore's Federal Practice, supra, at 240. But in numerous other seemingly similar situations the rule has not been applied. For example, an order granting or denying a stay of litigation pending administrative agency action is not appealable under the Enelow-Ettelson rule. Allied Air Freight, Inc. v. Pan American World Airways, Inc., 340 F.2d 160, 161 (2d Cir.), cert. denied, 381 U.S. 924, 14 L. Ed. 2d 683, 85 S. Ct. 1560 (1965). Moreover, when a district court stays an action pending before it to await developments in another action previously commenced involving the same issues, or to compel the parties to bring a separate court action, the Enelow-Ettelson rule is inapplicable. See 9 Moore's Federal Practice, supra, at 251.
In the instant case, the majority disregards the Supreme Court's warnings as well as the prevailing view that the Enelow-Ettelson doctrine, itself an analogy, is not to be extended by further analogy. But even if analogical reasoning is proper, the majority inexplicably leaps to the conclusion that this case is "analytically indistinguishable" from a case involving a motion to stay pending arbitration. It is important to remember that the theory behind the Enelow-Ettelson doctrine is that the moving party is seeking to have the proceedings at law held in abeyance pending resolution of his equitable defense. Abeyance is not sought here because the court is asked to surrender jurisdiction absolutely. Tilghman seeks not to have an equitable defense (such as an arbitration agreement) resolved outside the bankruptcy courts. It requests that the underlying dispute be sent to the English courts for final determination of all claims and defenses. This is a crucial distinction. Moreover, since the contemplated proceedings before the English courts would themselves be in the nature of an action at law, Tilghman's defense is not equitable in nature. See Anderson v. United States, 520 F.2d 1027, 1029-30 (5th Cir. 1975); Wallace v. Norman Industries, Inc., 467 F.2d 824, 827 (5th Cir. 1972).
It is true, as the majority indicates, that a decision to defer to a non-arbitral tribunal sometimes will come within the Enelow-Ettelson rule. But this is only when the deferring court still retains jurisdiction over the matter pending resolution of an equitable defense. This is not the situation here. Neither the majority nor Tilghman has cited any case in which a court extended the Enelow-Ettelson rule to a situation where dismissal was sought on the basis of forum non conveniens or a forum selection clause.*fn4 Thus, in my view section 1292(a) affords no basis for appellate jurisdiction in this case.
2. Section 1651 and Mandamus
The majority also relies on 28 U.S.C. § 1651 as a basis for interlocutory review in this case. This section gives the courts of appeals discretionary power to issue writs in aid of their potential jurisdiction. I do not disagree with the majority's holding that we can sua sponte invoke our discretionary power under section 1651. But I am not convinced that, under the law of this circuit, this case is appropriate for mandamus.
It is hornbook law that the writ of mandamus is an "extraordinary" remedy "reserved for exceptional circumstances." 9 Moore's Federal Practice, supra, para. 110.28 at 302. Mandamus is clearly not a substitute for an appeal. See NLRB v. Interstate Dress Carriers, Inc., 610 F.2d 99, 104 (3d Cir. 1979). The general guiding principle is that mandamus is appropriate in cases involving serious abuse of discretion by the district court. See Eastern Maico Distributors, Inc. v. Maico-Fahrzeugfabrik, G.m.b.H., 658 F.2d 944, 951 (3d Cir. 1981).
Our circuit has shown considerable unwillingness to use mandamus to review district court decisions on motions to transfer venue. There is little doubt that mandamus is available in cases where the district court was "patently in error with respect to its power to transfer . . . or simply refused to consider the merits of the transfer request." 9 Moore's Federal Practice, supra, at 176. But where the district court does consider the merits of the transfer motion, we have held that mandamus is not available to review the contention that the district court abused its discretion. In All States Freight, Inc. v. Modarelli, 196 F.2d 1010 (3d Cir. 1952), we explained,
Every litigant against whom the transfer issue is decided naturally thinks the judge was wrong. It is likely that in some cases an appellate court would think so, too. But the risk of a party being injured either by the granting or refusal of a transfer order is, we think, much less than the certainty of harm through delay and additional expense if these orders are to be subjected to interlocutory review by mandamus.
Id. at 1012. This restrictive view still prevails. See Wood v. Zapata Corp., 482 F.2d 350, 357 (3d Cir. 1973); Solomon v. Continental American Life Insurance Co. 472 F.2d 1043 (3d Cir. 1973). The Supreme Court has also indicated that mandamus is not an appropriate way to review allegations of abuse of discretion. See Will v. Calvert Fire Insurance Co., 437 U.S. 655, 57 L. Ed. 2d 504, 98 S. Ct. 2552 (1978); Parr v. United States, 351 U.S. 513, 520, 100 L. Ed. 1377, 76 S. Ct. 912 (1956).
The instant case falls squarely within the rationale of All States Freight. Both the bankruptcy court and the district court examined the factors relevant to the decision whether to dismiss the case on account of the forum selection clause, or on forum non conveniens grounds. The issue on appeal is whether these courts made a correct assessment of these factors. This is the kind of judgment that under our cases cannot be reviewed by means of section 1651.
Section 1291 of Title 28 pertains to review of final decisions of the district courts. As noted above, although this provision technically may not be applicable to proceedings in bankruptcy, judicial interpretations of the finality requirement under section 1291 have been applied to section 1293. The majority relies on the so-called collateral order doctrine in finding that the district court's order is final and therefore reviewable under section 1291. I am not convinced that this order possesses the necessary elements of collateral finality to bring it within that doctrine of appealability.
The collateral order doctrine traces its roots to Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 93 L. Ed. 1528, 69 S. Ct. 1221 (1949). In the broadest sense, Cohen established that section 1291 allows appeals from a judgment which is final in effect, even though it may not terminate an action. Recently, in Coopers & Lybrand v. Livesay, 437 U.S. 463, 57 L. Ed. 2d 351, 98 S. Ct. 2454 (1978), the Court articulated the collateral order doctrine in terms of a three-part test:
To come within the "small class" of decisions excepted from the final-judgment rule by Cohen, the order must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment.
Id. at 468. See also Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S. Ct. 927, 74 L. Ed. 2d 765, 51 U.S.L.W. 4156, 4158 (Feb. 23, 1983); Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 66 L. Ed. 2d 571, 101 S. Ct. 669 (1981); Yakowicz v. Commonwealth of Pennsylvania, 683 F.2d 778 (3d Cir. 1982).
The majority holds that although Tilghman's forum non conveniens contention does not satisfy the elements of the collateral order doctrine, the request for enforcement of the contractual forum selection clause does fall within the class of orders reviewable under Cohen. Our circuit has made clear that the Cohen doctrine is to be applied narrowly. See Rodgers v. United States Steel Corp., 508 F.2d 152, 159 (3d Cir.), cert. denied, 423 U.S. 832, 46 L. Ed. 2d 50, 96 S. Ct. 54 (1975); Borden Co. v. Sylk, 410 F.2d 843 (3d Cir. 1969). See also Yakowicz, supra, 683 F.2d at 783 n.10. We also have stated that each of the three Coopers elements is necessary for the doctrine to apply. Yakowicz, supra, 683 F.2d at 783. A serious question exists whether two of the three Coopers & Lybrand factors are satisfied in this case.
First, I am not convinced that the order denying the motion to dismiss on the ground of the forum selection clause resolves "an important issue completely separate from the merits of the action," as Coopers & Lybrand requires. It is true, as the majority indicates, that the contractual forum clause establishes a legal right that is analytically distinct from the legal rights at issue in the underlying litigation. But the test of a collateral order is not whether the various asserted legal rights are related, but whether the same body of facts must be considered in evaluating those legal rights. As the Supreme Court explained in Coopers & Lybrand, supra, a collateral order is one that not only concerns an issue "completely separate from the merits," 437 U.S. at 468, but does not even "involve  considerations . . . 'enmeshed in the factual and legal issues comprising the plaintiff's cause of action. '" Id. at 469 (quoting Mercantile National Bank v. Langdeau, 371 U.S. 555, 558, 9 L. Ed. 2d 523, 83 S. Ct. 520 (1963)). Our own cases have been totally faithful to this view. See Eastern Maico Distributors v. Maico-Fahrzeugfabrik, supra; Forsyth v. Kleindienst, 599 F.2d 1203 (3d Cir. 1979), cert. denied, 453 U.S. 913, 101 S. Ct. 3147, 69 L. Ed. 2d 997 (1981) (finding the collateral order test satisfied because the question of immunity from suit was totally unconnected with the merits of the action); Borden Co. v. Sylk, supra.
The majority acknowledges that, in determining whether to enforce a forum selection clause, the court must refer to the merits of the underlying dispute. In order to rule on Tilghman's motion to dismiss, both the bankruptcy court and the district court had to decide whether enforcement of the forum clause would be unreasonable or unjust. This depended on whether trial in the contractual forum would be "so gravely difficult and inconvenient" as effectively to deny Coastal Steel its day in court. See The Bremen v. Zapata Offshore Co., 407 U.S. 1, 18, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972). This inevitably required the bankruptcy court and the district court to plunge into the merits in order to determine what items of evidence would likely be probative in the case and where that evidence was located, as well as to make judgments concerning the potential hardship to each party of trial in the other's preferred forum. For example, the motion required the court to balance the materiality of the testimony to be given by the witnesses located in England against the materiality of the testimony of witnesses in the United States.*fn5 In this regard, the question of whether the forum selection clause should be enforced is identical to the forum non conveniens issue: both issues would require us to consider the merits of the underlying dispute in order to identify the practical problems facing the parties in each potential forum.
I also have considerable doubts concerning the majority's treatment of the third Coopers & Lybrand factor -- whether the order appealed from can be effectively reviewed on appeal from final judgment. The question here is whether "an important right will be lost, probably irreparably, if review must await a final judgment." Chrysler Corp. v. Fedders Corp., 670 F.2d 1316, 1318 n.2 (3d Cir. 1982). The majority appears to disclaim any belief that the forum selection clause confers a type of absolute immunity from being subject to legal proceedings in an American forum, a right which by nature could only be vindicated before trial. Instead, the majority asserts that unless the district court's ruling on the forum selection clause is reviewed at this juncture, an erroneous and prejudicial decision not to enforce the clause may escape review after final judgment. To reach this result, the majority relies upon an old, obscure statute, 28 U.S.C. § 2105 (1976), which provides that the court of appeals may not reverse a district court "for error in ruling upon matters in abatement which do not involve jurisdiction." The majority suggests that we would apply this statute and would refuse to grant relief to Tilghman if it should lose on the merits after being improperly subjected to trial in this country.
Under the majority's analysis, section 2105 would appear to present a significant restriction on our appellate review of judgments rendered after trial. If so, then one would expect the statute to be the focus of numerous court decisions and much scholarly comment. Yet Professors Wright, Miller, and Cooper -- whose treatise is one of the few secondary authorities giving any consideration at all to this statute -- describe it quite candidly as "one of the most commonly ignored provisions of the Judicial Code" and say that its "most important feature . . . is certainly its disuse." See 15 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3903 at 412, 413 (1976). It is sheer speculation for the majority to suggest that we suddenly might seize on this obscure and ambiguous statutory provision to preclude post-trial review of Tilghman's forum selection clause argument.
More important, I am very concerned about the implications of the majority's analysis upon our appellate jurisdiction over orders which are undoubtedly final. Under the majority's reading, section 2105 might preclude from appellate review, on appeal from a final order, a wide range of issues, such as whether the district court should have abstained or deferred to either state, administrative, or private proceedings. See United States v. Alcon Laboratories, 636 F.2d 876, 885 (1st Cir. 1981), cert. denied, 451 U.S. 1017, 69 L. Ed. 2d 388, 101 S. Ct. 3005 (1981). Wright, Miller & Cooper suggest that the reason why section 2105 has been commonly ignored is probably that it runs at odds with modern conceptions of appellate jurisdiction. See C. Wright, A. Miller & E. Cooper, supra. I think it would be extremely short-sighted to elevate this statute from a position of obscurity to a major limitation on appealability merely for the sake of molding the case to fit the collateral order doctrine. In my view, if section 2105 is to be resurrected, it should be done in a case where the issue is directly presented.*fn6
I understand fully the laudable reasons that motivate the majority in reaching the merits of this appeal and I share them. We are constrained, however, as a court of law, by statutory and judicial principles that regrettably do not permit us to apply the narrow collateral order doctrine, section 1292(a), or section 1651. But we can exercise appellate jurisdiction in this case on a straightforward basis under the rule of Gillespie v. United States Steel Corp., 379 U.S. 148, 13 L. Ed. 2d 199, 85 S. Ct. 308 (1964). Gillespie established that a court of appeals may review an order which is within the "twilight zone of finality," even though not strictly within 28 U.S.C. § 1291, where the circumstances warrant appellate review. Explaining that the finality requirement was to be given a "practical rather than a technical construction," id. at 152 (quoting Cohen v. Beneficial Industrical Loan Corp., supra, 337 U.S. at 546), the Court said in Gillespie that
in deciding the question of finality the most important competing considerations are "the inconvenience and costs of piecemeal review on the one hand and the danger of denying justice by delay on the other." Such competing considerations are shown by the record in the case before us. It is true that the review of this case by the Court of Appeals could be called "piecemeal"; but it does not appear that the inconvenience and cost of trying this case will be greater because the Court of Appeals decided the issues raised instead of compelling the parties to go to trial with them unanswered. . . . And it seems clear now that the case is before us that the eventual costs, as all the parties recognize, will certainly be less if we now pass on the questions presented here rather than send the case back with those issues undecided. . . . We think that the questions presented here are . . . "fundamental to the further conduct of the case."
379 U.S. at 152-54. The rationale of Gillespie has been relied upon by the courts of appeals to justify jurisdiction in appropriate cases. See, e.g., Ingalls Shipbuilding Division v. White, 681 F.2d 275 (5th Cir. 1982); United States v. Mississippi Power & Light Co., 638 F.2d 899 (5th Cir.), cert. denied, 454 U.S. 892, 102 S. Ct. 387, 70 L. Ed. 2d 206 (1981); Wescott v. Impresas Armadoras, S.A. Panama, 564 F.2d 875 (9th Cir. 1977).
Admittedly, the power recognized in Gillespie is somewhat extraordinary and accordingly should be used sparingly. Nevertheless, because the Gillespie rule gives appellate courts much discretion in deciding whether to review district court orders, I believe it furnishes a sound basis for jurisdiction in the instant case. As in Gillespie, the order appealed from cannot be fit within the literal terms of section 1291, nor does it seem to possess the necessary features of finality as a collateral order under the Cohen doctrine. Yet, as in Gillespie, circumstances clearly warrant our review. The questions presented in this appeal are "fundamental to the further conduct of the case" because they concern the appropriateness of an American forum. By reversing the district court on the merits, we rule that the litigation should not go forward in our courts. As we have indicated in another context, "The interest of the fair and prompt administration of justice is better served by ordering this case dismissed immediately, than by refusing to do so in order to discourage piecemeal appeals." First Jersey Securities, Inc. v. Bergen, 605 F.2d 690, 702 (3d Cir. 1979), cert. denied, 444 U.S. 1074, 100 S. Ct. 1020, 62 L. Ed. 2d 756 (1980). In light of the reality of the situation, I think the order appealed from is sufficiently within the "twilight zone of finality" to warrant immediate appellate review under Gillespie.
Accordingly, on this basis I too would deny Coastal's motion to dismiss the appeal.
I join in parts IV and V of the majority's discussion of the merits of the appeal. I also join in its disposition of the case as set forth in part VI.