Tommy Coleman; Jason Perkins v. System One Holdings, LLC

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 22-1461
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TOMMY COLEMAN; JASON PERKINS
v.
SYSTEM ONE HOLDINGS, LLC,
Appellant
_____________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 2:21-cv-01331)
District Judge: Honorable Arthur J. Schwab
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Submitted Under Third Circuit L.A.R. 34.1(a)
January 29, 2024
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Before: CHAGARES, Chief Judge, RESTREPO and
FREEMAN, Circuit Judges
(Filed: August 30, 2024)
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Taylor Brailey
Robert W. Pritchard
Littler Mendelson
One PPG Place
Suite 2400
Pittsburgh, PA 15222
Counsel for Appellant
Richard J. Burch
Bruckner Burch
11 Greenway Plaza
Suite 3025
Houston, TX 77046
Lindsay I. Reimer
Andrew W. Dunlap
Josephson Dunlap
11 Greenway Plaza
Suite 3050
Houston, TX 77046
Counsel for Appellees
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OPINION OF THE COURT
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CHAGARES, Chief Judge.
This case presents the question of whether we have
jurisdiction over an interlocutory appeal taken from a district
court order that requires the parties to conduct limited

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discovery into the arbitrability of the claims asserted, but that
leaves pending a motion to compel arbitration and to stay
litigation rather than denying it. We hold that we lack appellate
jurisdiction in such circumstances, and we will therefore
dismiss this appeal.
I.1
Plaintiffs Tommy Coleman and Jason Perkins worked
as oil and gas pipeline inspectors for defendant System One
Holdings, LLC (“System One”). System One paid the
plaintiffs a flat daily rate for each day worked rather than
paying them an annual salary or an hourly wage, and it did not
pay them additional amounts as overtime even when they
worked more than forty hours in a single week. They claim
that this failure to pay overtime violated the Fair Labor
Standards Act (the “FLSA”), 29 U.S.C. § 201 et seq., and they
seek to recover unpaid overtime on behalf of themselves and a
putative class consisting of all System One pipeline inspectors
who were similarly compensated.
The plaintiffs filed this lawsuit alleging one count of
failure to pay overtime in violation of the FLSA. After they
amended their complaint to assert their claim on behalf of the
putative class and to add class action allegations, System One
moved to dismiss and to compel arbitration. It argued that
Coleman and Perkins had each signed an agreement to arbitrate
the claims asserted in this case and that the agreement to
arbitrate is enforceable under the Federal Arbitration Act
1 We draw these background facts, which are not material to
our jurisdictional analysis, from the allegations in the amended
complaint.

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(“FAA”), 9 U.S.C. § 1 et seq. The plaintiffs opposed System
One’s motion by arguing that as pipeline inspectors, they fall
within the transportation workers’ exception to the FAA, see
id. § 1, which “exempts from the FAA . . . contracts of
employment of transportation workers,” Cir. City Stores, Inc.
v. Adams, 532 U.S. 105, 119 (2001).
Under our decision in Guidotti v. Legal Helpers Debt
Resolution, L.L.C., 716 F.3d 764 (3d Cir. 2013), if “the
plaintiff has responded to a motion to compel arbitration with
additional facts sufficient to place the agreement to arbitrate in
issue, then the parties should be entitled to discovery on the
question of arbitrability.” Id. at 776 (quotation marks omitted).
The district court then must “judg[e] the motion under a
summary judgment standard” once that limited discovery has
been completed. Id.
After System One’s motion had been fully briefed, the
District Court issued an order (the “Discovery Order”) holding
that the plaintiffs’ invocation of the transportation workers’
exemption was supported by “additional facts sufficient to
place the parties’ Agreements to Arbitrate in issue.” Joint
Appendix (“JA”) 4. It therefore “grant[ed] the parties a 30-day
period to engage in discovery, limited solely to the issue of the
arbitrability of Plaintiffs’ FLSA claims.” Id. And it explained
that following the close of limited discovery, it would
“promptly decide [System One’s] Motion to Dismiss or,
Alternatively, to Compel Arbitration and Stay Further Judicial
Proceedings, under a summary judgment standard.” JA 5
(quotation marks omitted). System One moved for
reconsideration, arguing that the District Court erred by
ordering discovery into arbitrability without first considering
whether state law required the plaintiffs’ claims to be

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arbitrated. The District Court denied the motion for
reconsideration (the “Reconsideration Order”). System One
filed a notice of appeal challenging both the Discovery Order
and the Reconsideration Order.
II.
The District Court had jurisdiction over the plaintiffs’
FLSA claims under 28 U.S.C. § 1331. “We have jurisdiction
to review our own jurisdiction when it is in doubt.” LeBoon v.
Lancaster Jewish Cmty. Ctr. Ass’n, 503 F.3d 217, 222 (3d Cir.
2007).
We generally “have jurisdiction over only the ‘final
decisions’ of district courts.” Bacon v. Avis Budget Grp., Inc.,
959 F.3d 590, 597 (3d Cir. 2020) (quoting 28 U.S.C. § 1291).
But the “FAA sets forth an exception to the final decision rule.”
Id. It permits interlocutory appeals to be taken from a variety
of non-final orders, including those “refusing a stay of any
action under section 3 of [title 9],” 9 U.S.C. § 16(a)(1)(A), or
“denying a petition under section 4 of [title 9] to order
arbitration to proceed,” id. § 16(a)(1)(B).2 We therefore
2 The FAA additionally permits interlocutory appeals from
orders “denying an application under section 206 of [title 9] to
compel arbitration,” 9 U.S.C. § 16(a)(1)(C), “confirming or
denying confirmation of an award or partial award,” id.
§ 16(a)(1)(D), or “modifying, correcting, or vacating an
award,” id. § 16(a)(1)(E). No colorable arguments exist that
any of these provisions grant us jurisdiction over this appeal.
The latter two could apply only if the Discovery Order or
Reconsideration Order confirmed, denied confirmation of,
modified, corrected, or vacated an arbitral award, but

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consider whether either provision applies to the Discovery
Order or the Reconsideration Order, bearing in mind the
Supreme Court’s instruction that “statutes authorizing appeals
are to be strictly construed.” Off. of Senator Mark Dayton v.
Hanson, 550 U.S. 511, 515 (2007) (quoting Perry Educ. Ass’n
v. Perry Local Educators’ Ass’n, 460 U.S. 37, 43 (1983)).
System One concedes that the District Court did not
formally deny its motion to compel arbitration and stay further
judicial proceedings. See System One Br. 11 (“[The Discovery
Order] suspended resolution of System One’s motion . . . .”
(emphasis added)). This concession is plainly confirmed by
the record: rather than denying that motion, the Discovery
Order expressed the District Court’s intention to “promptly
decide Defendant’s Motion” following the completion of
limited discovery and the submission of supplemental briefing.
arbitration in this dispute has not even begun. And the first
provision does not apply because System One’s application to
compel arbitration does not arise under section 206. That
section applies only when a court’s jurisdiction arises “under
this chapter.” Id. § 206. Jurisdiction exists under that chapter,
in turn, over “[a]n action or proceeding falling under the
Convention,” id. § 203, referring to the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, id.
§ 201. That convention does not apply to arbitration
agreements or awards arising out of a relationship between
United States citizens that does not involve property located
abroad, performance or enforcement abroad, or “some other
reasonable relation with one or more foreign states.” Id. § 202.
Because the relationship between the plaintiffs and System
One involves no foreign nexus, System One’s motion to
compel arbitration did not arise under 9 U.S.C. § 206.

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JA 5 (quotation marks omitted).3 Furthermore, as the
Reconsideration Order merely declined to vacate the
Discovery Order, JA 9-10, it did not deny System One’s
motion either. The FAA’s grant of jurisdiction over appeals
taken from district court orders “denying a petition under
section 4 of [title 9] to order arbitration to proceed,” 9 U.S.C.
§ 16(a)(1)(B), therefore does not apply to this case.
System One correctly notes, however, that while the
Discovery Order did not resolve its request to compel
arbitration, it did “direct[] the parties to engage in further
litigation in court” by requiring limited discovery and
3 This case thus differs from the two decisions primarily relied
upon by System One, which each asserted jurisdiction over an
appeal taken from a district court order that did formally deny
a motion to compel arbitration. See Bacon, 959 F.3d at 598-
99 (“[T]he language and substance of Defendants’ motion and
the Court’s order show that Defendants sought an order
compelling arbitration, and the Court denied that request.”
(emphasis added)), aff’g 357 F. Supp. 3d 401, 432 (D.N.J.
2018) (“For the foregoing reasons, the defendants’ motion for
summary judgment to compel arbitration (DE 81) is DENIED
as presented. The plaintiffs’ cross motion for summary
judgment denying arbitration (DE 93) is GRANTED IN
PART and DENIED IN PART.”); Sandvik AB v. Advent
Int’l Corp., 220 F.3d 99, 102 (3d Cir. 2000) (“[T]he District
Court entered an order denying Advent’s motion to compel.”
(emphasis added)), aff’g 83 F. Supp. 2d 442, 450 (D. Del.
1999) (“For the reasons stated above, defendants’ motions to
compel arbitration; to dismiss claims under Rules 12(b)(6) or
9(b); to stay the action; or to dismiss the claims on grounds of
forum non conveniens, are denied.”).

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supplemental briefing on the arbitrability of the plaintiffs’
FLSA claims. System One Br. 11. System One thus argues
that “[t]he Discovery Order is effectively an order refusing a
stay and is therefore appealable under § 16(a)(1) of the FAA.”4
Id. at 12. We disagree.
4 By arguing that the Discovery Order “effectively” refused a
stay, System One suggests that certain interlocutory orders
may be immediately appealable under the FAA, though they
do not technically fall within any of its enumerated bases for
jurisdiction, so long as they are equivalent in effect to orders
that do. Many of our sister Courts of Appeals have resisted
attempts to expand appellate jurisdiction under the FAA in this
manner. See, e.g., Van Dusen v. Swift Transp. Co., 830 F.3d
893, 898-99 (9th Cir. 2016) (“Review under § 16 is limited to
those types of orders specified in plain text of that section.”);
Grosvenor v. Qwest Corp., 733 F.3d 990, 999 (10th Cir. 2013)
(“9 U.S.C. § 16 directs us to exercise jurisdiction only over a
specific set of orders.”); Campbell v. Gen. Dynamics Gov’t
Sys. Corp., 407 F.3d 546, 551 (1st Cir. 2005) (“Since section
16(a) clearly enumerates the types of orders covered by the
FAA’s various jurisdictional shelters, we decline to treat that
provision as a general mechanism permitting the immediate
appeal of any order hostile to arbitration.”); Bombadier Corp.
v. Nat’l R.R. Passenger Corp., 333 F.3d 250, 254 (D.C. Cir.
2003) (disagreeing with the position “that any order hostile to
arbitration may be immediately appealed, even if the type of
order is not enumerated in Section 16”). The Court of Appeals
for the Eighth Circuit, however, has accepted the argument
made by System One here, holding that an order requiring the
parties to conduct discovery on arbitrability while a motion to
compel arbitration remained pending “was an order ‘refusing a
stay’ and directing that the litigation proceed, and was thus

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The FAA permits appeals to be taken from refusals of a
stay “under section 3 of this title” — not from all refusals to
stay an action. 9 U.S.C. § 16(a)(1)(B). We have emphasized
in other contexts that the mandatory stay arising under section
3 of the FAA is of limited scope. Some stays that might be
entered in a case involving arbitration arise instead from other
sources of law. For example, a “mandatory stay pending
arbitration under Section 3 of the FAA” applies only to a “party
[that has] committed itself to arbitrate one or more issues in
suit,” Mendez v. Puerto Rican Int’l Cos., Inc., 553 F.3d 709,
715 (3d Cir. 2009), while a “stay [of] litigation among the non-
arbitrating parties pending the outcome of the arbitration” is
instead “a matter of [the district court’s] discretion to control
its docket,” Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 20 n.23 (1983). A refusal to stay limited
discovery into arbitrability would be immediately appealable
only if such a stay would have arisen under section 3, had it
been issued. We thus examine whether limited discovery into
arbitrability pursuant to the Discovery Order would fall within
the scope of the mandatory stay required under that section.
Section 3 provides in full:
If any suit or proceeding be brought in any of the
courts of the United States upon any issue
referable to arbitration under an agreement in
writing for such arbitration, the court in which
appealable under § 16(a).” Madol v. Dan Nelson Auto. Grp.,
372 F.3d 997, 999 (8th Cir. 2004). But that court neither noted
that a stay must arise “under section 3 of this title” to be
immediately appealable, nor applied section 3 to the facts
before it, see id., as we do infra.

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such suit is pending, upon being satisfied that the
issue involved in such suit or proceeding is
referable to arbitration under such an agreement,
shall on application of one of the parties stay the
trial of the action until such arbitration has been
had in accordance with the terms of the
agreement, providing the applicant for the stay is
not in default in proceeding with such arbitration.
9 U.S.C. § 3. By its terms, this provision requires the district
court only to “stay the trial of the action,” id. (emphasis added),
not to stay all further litigation of any sort. System One
correctly notes that the Discovery Order required the parties to
engage in “court-supervised discovery and briefing.” System
One Br. 11. But the specific court-supervised discovery and
briefing required by the Discovery Order must form part of
“the trial of the action” if the order is to amount to the effective
refusal to grant a stay under section 3.
We hold that a stay of the limited discovery into
arbitrability required by Guidotti would not arise under section
3. Most naturally, “the action” is understood to refer back to
the “suit or proceeding . . . upon any issue referable to
arbitration” mentioned earlier in the same section. 9 U.S.C.
§ 3. The plaintiffs’ claims that System One violated the FLSA,
which System One argues must be arbitrated, supply such an
issue in this case. But the limited discovery and supplemental
briefing required by the Discovery Order did not constitute the
trial of an action upon that issue, as they would not address the
substance of whether System One violated the FLSA. They
instead addressed the antecedent and collateral question of

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which forum is proper to resolve those substantive questions.5
Furthermore, section 3 itself provides that a district court
should not “stay the trial of the action” until after it is “satisfied
that the issue involved in such suit or proceeding is referable
to arbitration,” indicating that “the trial of the action” to be
stayed does not encompass prior proceedings aimed at
resolving the question of arbitrability. Id.
Because “the trial of the action” does not encompass
such prior proceedings, the Discovery Order did not refuse to
5 Our holding depends on the fact that System One has not
argued that the parties agreed to arbitrate the question of
arbitrability; instead, in its motion to compel arbitration it
expressly asked the District Court to determine that the
plaintiffs’ claims are arbitrable. E.g., JA 12-13. A different
analysis would be required had the parties agreed to arbitrate
arbitrability, as in those circumstances the question of
arbitrability under Guidotti would itself constitute an “issue
referable to arbitration.” 9 U.S.C. § 3. We note, however, that
even in such circumstances a role remains for the district court,
which cannot compel parties to arbitrate any dispute, including
one over the arbitrability of the plaintiff’s claims, unless it
determines that they have contractually agreed to do so. See 9
U.S.C. § 4 (“[U]pon being satisfied that the making of the
agreement for arbitration or the failure to comply therewith is
not in issue, the court shall make an order directing the parties
to proceed to arbitration . . . .”); Field Intel. Inc v. Xylem
Dewatering Sols. Inc, 49 F.4th 351, 356 (3d Cir. 2022)
(holding, in the context of a dispute over whether the court
properly decided the arbitrability of a contract, that “before
sending parties to an arbitrator, a court must decide whether
they agreed to resolve their dispute in that forum”).

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grant a stay under section 3, effectively or formally, in
requiring the parties to litigate arbitrability alone.6 Neither did
the Reconsideration Order, which merely declined to vacate
the Discovery Order. The FAA’s grant of jurisdiction over
appeals taken from district court orders “refusing a stay of any
action under section 3 of [title 9],” id. § 16(a)(1)(A), therefore
does not apply to this case. Cf. Cont’l Cas. Co. v. Staffing
Concepts, Inc., 538 F.3d 577, 580-81 (7th Cir. 2008) (holding
that the FAA does not grant jurisdiction over an appeal taken
from an order that defers consideration of a stay pending
arbitration until after the district court has resolved threshold
questions of personal jurisdiction and venue, so long as
discovery into the merits has not begun).
* * * * *
Although federal law permits interlocutory appeals
more freely in the context of arbitration than elsewhere, that
permission extends only to appeals taken from the types of
orders enumerated in the FAA. As with all sources of appellate
jurisdiction, we must construe that statute strictly. See Off. of
Senator Mark Dayton, 550 U.S. at 515. A district court order
6 We have already held that a district court does refuse to grant
a stay under section 3 by ordering proceedings to resolve the
substance of a plaintiff’s claims — proceedings unlike the
limited discovery and supplemental briefing required by the
Discovery Order in this case. See Corpman v. Prudential-
Bache Sec., Inc., 907 F.2d 29, 30 (3d Cir. 1990) (per curiam)
(holding that “an order vacating the stay and reinstating the
case on [the district court’s] trial calendar . . . is in essence an
order refusing to stay an action under section 3 of the Federal
Arbitration Act”).

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requiring the parties to conduct limited discovery into
arbitrability pursuant to Guidotti does not deny a motion to
compel arbitration under 9 U.S.C. § 4 if it merely leaves such
a motion pending until that limited discovery is complete. And
such an order does not refuse a stay under 9 U.S.C. § 3, as such
stays apply to proceedings upon an arbitrable issue, not
proceedings upon the antecedent question of whether an issue
is arbitrable. We therefore hold that we lack jurisdiction under
the FAA over appeals taken from such orders.7
7 System One argues in the alternative that we may reach the
merits of its appeal by treating it as a petition for mandamus.
But even were we to do so, we would deny the petition.
Mandamus is “a drastic remedy that a court should grant only
in extraordinary circumstances,” In re Briscoe, 448 F.3d 201,
212 (3d Cir. 2006) (quotation marks omitted), and “petitioners
seeking extraordinary writs” have a “general duty . . . to show
that alternative means of appeal are inadequate,” In re Sch.
Asbestos Litig., 977 F.2d 764, 774 (3d Cir. 1992).
Consequently, “[w]here interlocutory appeal [under section
1292(b)] seems a practical but untried avenue, we will
ordinarily deny a petition for mandamus.” Id. System One has
not asked the district court to certify an interlocutory appeal.
And the only reason it proffers for why that avenue would be
impractical is that such a request would have been futile once
the District Court denied its motion for reconsideration. But
the District Court’s holding that “the [Discovery Order] need
not be vacated, as Defendant contends, to correct a clear error
of law,” JA 9-10 (emphasis added), does not establish the
futility of seeking certification based on “substantial ground
for difference of opinion” as to a “question of law,” 28 U.S.C.
§ 1292(b).

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III.
For the forgoing reasons, we will dismiss this appeal for
lack of jurisdiction.

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