Petition — Coastal Steel Corp. v. Wheelabrator-Frye, Inc.

IN THE

Supreme Court of the United States

Octroper TERM, 1983

COASTAL STEEL CORPORATION,

Petitioner,

vs.

WHEELABRATOR-FRYE, INC. and

TILGHMAN WHEELABRATOR LIMITED,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT

Davi N. Ravry,

Counsel of Record,

80 Main Street,

West Orange, New Jersey 07052.

(201) 736-9180

On the Petition:

Davp N. Ravn,

Peter R. Sarasoun,

Bernarp SCHENEKLER.

TED EE ES SDT OTE,

Adams Press Corp., 50 Park Place, Newark, New Jersey 07102—(201) 623-8611

Questions Presented

1. Whether the Bankruptcy Reform Act sets forth a pub-

lie policy which precludes the enforcement of a contractual

forum selection clause providing for an English forum.

2. Whether the Bankruptcy Court and District Court

properly exercised their discretion in determining that en-

forcement of a contractual forum selection clause was un-

reasonable under the circumstances based on (a) status of

the plaintiff as third party beneficiary, (b) presence of

colorable non-contractual tort claims, (c) need to view ma-

chinery in New Jersey, and (d) recovery for bankrupety

creditors.

3. Whether the jurisdiction of the Court of Appeals pur-

suant to the Enelow-Ettelson rule extends to an appeal

from the denial of a motion to dismiss a complaint on the

basis of a contractual forum selection clause.

4. Whether the jurisdiction of the Court of Appeals pur-

suant to the collateral order doctrine extends to an appeal

from the denial of a motion to dismiss a complaint on the

basis of a contractual forum selection clause.

5. Whether 28 U.S.C. §2105 prohibits review by a Court

of Appeals of a denial of a motion to dismiss a complaint

on the basis of a contractual forum selection clause.

6. Whether a writ of mandamus, 28 U.S.C. $1651, is

properly the basis for review by the Court of Appeals of a

denial of a motion to dismiss a complaint on the basis of a

contractual forum selection clause.

ii

7. Whether finality under Gillespie v. United States

Steel Corp., 379 U.S. 148 (1964) extends to a appeal from

a denial of a motion to dismiss a complaint on the basis

of a contractual forum selection clause.

8. Whether 28 U.S.C. §1293(b), which provides for Bank-

ruptcy appellate jurisdiction of the Court of Appeals is re-

pealed by implication as a result of Northern Pipeline Co.

v. Marathon Pipeline Co., U.S. , 102 S.Ct. 2858, 79

L.Ed.2d 598 (1982).

9. Whether Northern Pipeline Co. v. Marathon Pipeline

Co., supra may be applied retroactively to invalidate Bank-

ruptey Court Orders.

Parties

All the parties to the Appeal are set forth in the cap-

tion.

Petitioner Coastal Steel Corporation hereby sets forth

its original designation of corporate relationships. It is

not owned by any parent corporation and has no owner-

ship interest in any subsidiaries. It has an affiliate, Blair

Realty, a limited partnership.

Dated: September 7, 1983

iv

TABLE OF CONTENTS

Eg NRGAE SEE Mae Ven TL

EER oor rine ie A PAARL te OR FE a

ae EE RI Ea ce PRD

SU a as eeahanbonmnnnencnelbibe

BIER GS eset ae a

Spr WP i cccectiereees

REASONS FOR GRANTING THE WRIT ............-0cc0cceeeceeeeeeeeeeees

I. The Court of Appeals erroneously held the con-

tractual forum selection clause to be enforce-

OR ER ee DE LA IS EE EOE EOD EC

II. The decision of the Court of Appeals as to the

basis for appellate jurisdiction is in conflict with

statutory authority, and with decisions of the

United States Supreme Court and courts of

appems for ciner Circuits.

A. The decision of the Court of Appeals re-

pealing 28 U.S.C. $1292(b), and applying

Marathon retroactively was erroneous and

in conflict with other circuits 22.0.0...

B. The decision of the Court of Appeals er-

roneously extended by analogy the Enelow-

Ettelson rule to dismissal of a complaint

based on a forum selection clause ....................

C. The Court of Appeals misapplied the col-

lateral order rule by reviewing an order

enmeshed in the mePits 2...............:cccscscsceseeeseeees

F 8)

®D

TABLE OF CONTENTS v

PAGE

D. The Court of Appeals improperly extended

28 U.S.C. $2105 as a limitation of appellate

III, seisenaesenicentitcikinninarientinianesesentnccamuettcnnsmnen 11

E. Review by Mandamus was improperly exer-

cised by the Court of Appeals ......................-+ 11

F. Review under Gillespie was improper ........... 12

Cee aed erahinspremmmneesienasenannenninensiiin 13

APPENDIX:

A—Opinion of the United States Court of Ap-

i easit ciitcentinetpeuniteticenaessions om la

B—Judgment of the United States Court of

Appeals a en emiclatescatecniabbohe 49a

C—Order Denying Petition for Rehearing ........ Sla

D—Oral Opinion of the United States Bankrupt-

ey Court (September 21, 1981) ..................... 53a

E—Opinion of the United States District Court

a od EA Sea ceo 65a

F—Oral Opinion of the United States District

I RD i rtrsipesnlecereneteeniensintocense Tla

G—Oral Opinion of the United States District

SE CAEIINND it RIDER D ~ cccacestittnertsessercnreptneeneaninii

82a

H—Statutory Appendix ................ 88a

vi TABLE OF AUTHORITIES

PAGE

Table of Authorities

Cases Cited

Boyd v. Grand Trunk W.R. Co., 338 U.S. 263, 70

A a cee Oe (AON 7

Bremen v. Zapata Offshore Co., 407 U.S. 1, 92 S.Ct.

rae GS” GL > | cc cn 6-8, 10

Coopers & Lybrand v. Livesay, 437 U.S. 567, 98 S.Ct.

woe, oe See oo. (2078) 10

Enelow v. New York Life Insurance Co., 293 U.S.

379, 55 S.Ct. 310, 79 L.Ed. 440 (1935) ou. 9

Ettelson v. Metropolitan Life Insurance Co., 317

U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176 (1942) .0.00000.... 9

Gillespie v. United States Steel Corp., 379 U.S. 148

S.Ct. 308, 13 L.Ed.2d 199 (1964) ....2..........c.ccececeee- ii, 4, 12

L.O. Koven & Bros., Ine. v. Local U. No. 5767, 381

ae aoe, ee Ce ae, BOGe) 7

Matter of International Horizons, Inc., 689 F.2d 996

REE EES rn eC 8

Mairino v. Bradford Savings Bank, 691 F.2d 89 (2d

Ne ec nsepestimnscinoomsenace 8

Morgantown v. Royal Insurance Co., 377 U.S. 254,

69 S.Ct. 1067, 93 L.Ed. 1347 (1945) ...............c--ceceees 9

Northern Pipeline Co. v. Marathon Pipeline Co.,

— US. —, 102 S.Ct. 2858, 79 L.Ed.2d 590

ESSE SCRE MS LS SEG EE ii

Shanferoke Coal & Supply Corp. v. Westchester,

293 U.S. 449, 55 S.Ct. 313, 79 L.Ed. 583 (1935) ... = 9

TABLE OF AUTHORITIES vii

PAGE

Will v. Calvert Fire Insurance Co., 437 U.S. 665, 98

S.Ct. 2552, 57 L.Bd.2d 504 (1978) nnn 2o..2.---.n2cc2c.-00 11

Zimmerman vy. Continental Airlines, Inc.. —— F.2d

— (No. 82-1639; 7/11/83 3d Cir.) 22... esseeeeees 7

Statutes Cited

28 U.S.C.:

OI: MRO dceas accapeassetaalcabaticeeonlep detec vasestilacissenecamitaith 2

Bs I derassrieniiensiscinebbeahasiacineinbiciatnsraesimiedatendisiesanin 2, 4, 10

DN I RUIN Sisscicssecinntnpatpicraterintdeisssbinstesiocbononnetnareatl 2, 4, 9

nT Tagh |_| PRR PRES A SEEN near ENN sane an 4,8

Pe ND sates Sionihssnaecrichialcicuamcinapiacenicienh ii, 2, 4, 5, 8, 9

|: sR SARE ASB ower ee FELASA ES 2, 3, 5, 6

BS UID. setts settendactecencceenbedosnnte saelvenieraictipsecotinitnenl 6

A 9 ph a aN A RSID te Re Fa eS ii, 2,11

RE RENE AT OIC LE MES ARI L260

Other Authorities Cited

1 Collier, Bankruptcy (15th Ed.), par. 3.01 00...

H.Rep. 595, 95th Cong., pp. 445-446 0. eeeeeeeee

NO.

IN THE

Supreme Court of the United States

Octosen Term, 1983

=

—————

COASTAL STEEI, CORPORATION,

Petitioner,

WHEELABRATOR-FRYE, INC. and

TILGHMAN WHEELABRATOR LIMITED,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT

Coastal Steel Corporation petitions for a writ of certi-

orari to review the judgment of the United States Court

of Appeals for the Third Circuit in this case.

Opinion Below

The opinion of the Court of Appeals (App. A infra, 1a)

is reported at 709 F.2d 190. The petition for rehearing in

bane was denied on June 14, 1983, (App. C imfra, 5la).

2

The decisions of the United States District Court and

Bankruptcy Court are unreported. The transcript of the

oral opinion of the Bankruptcy Court is set forth at App.

D, infra, 53a. The written opinion of the District Court

granting leave to appeal is set forth at App. EK, infra, 65a.

Transcripts of the two oral opinions of the District Court

are set forth at App. F, infra, 71a and App. G infra, 82a.

Jurisdiction

The judginent of the Court of Appeals (App. B, infra,

49a) was entered ou May 17, 1983, A timely petition for

rehearing was filed on May 31, 1983 and was denied on

June 14, 1983 (App. C, 5la). The mandate was stayed

pending the petition on June 17, 1983. The jurisdiction of

this Court is invoked under 28 U.S.C. §1254(1).

Statutes Involved

This petition involves the interpretation of the follow-

ing statutes: 28 U.S.C. §1291; 28 U.S.C. §1292(a)(1); 28

U.S.C. §1293(b) ; 28 U.S.C. $1471; 28 U.S.C. $1651; and 28

U.S.C. $2105.

The statutes are set forth in the appendix.

Statement of the Case

Petitioner Coastal Steel Corporation, a New Jersey Cor-

poration (“Coastal”), filed a Chapter 11 petition for a re-

organization in Bankruptcy on April 11, 1980, On July 14,

1980, it filed a Complaint in Bankruptcy Court against,

inter alia, respondents Tilghman Wheelabrator Limited

3

(“Tilghman”), an English corporation, Wheelabrator-Frye,

Inc., (“Wheelabrator”), its American parent corporation,

and Sir James Farmer Nortion, Ltd. (“Norton”) an Eng-

lish corporation, seeking specific performance, rescission,

damages for breach of contract, as well as damages aris-

ing in tort. The basis for federal jurisdiction in Bank-

ruptcy Court was 28 U.S.C, §1471.

In 1976, Coastal, then known as Jersey Cold Drawn Steel,

a manufacturer of cold drawn steel bar, commenced nego-

tiations with Norton for the acquisition of an in-line turn-

key steel plant to be erected in New Jersey, A major com-

ponent of the plant was a blast cleaning unit to be manu-

factured by St. Georges Engineers Ltd., (“St. Georges’’)

an English company. The proposal and purchase order be-

tween St. Georges and Norton did not provide for any

forum selection clause. Coastal and Norton executed the

main contract in November, 1976. That agreement pro-

vided for arbitration of disputes in New Jersey, A month

later, unknown to Coastal, Tilghman, which had since ac-

quired St. Georges, renegotiated the blast cleaning com-

ponent contract for a lesser price and substituted a differ-

ent machine which was designed for a different application.

That renegotiated contract provided for performance spe-

cifications and an English forum for resolution of disputes.

After delivery and erection of the components, Wheela-

brator, the parent of Tilghman, was engaged by Tilghman

to commission the blast cleaning plant in New Jersey. It

became apparent that the blast cleaning component failed

to meet the specifications required under the contract, and

Wheelabrator turned the commissioning back to Tilghman.

Wheelabrator and Tilghman then attempted to make modi-

fications to the blast cleaning machine but were unsuccess-

ful, and the machine was never able to perform to the con-

tract specifications,

4

Thereafter, suit was commenced on July 14, 1980, which

was followed by extensive discovery. Tilghman moved to

dismiss the Complaint on the grounds of forum non con-

veniens and the contractual forum selection clause. The

Bankruptcy Court denied the motion by oral opinion of

September 21, 1981 (App. D) and Order dated November

9, 1981. Tilghman and Wheelabrator (not a party to the

motion) filed an interlocutory appeal to the United States

District Court which granted the leave to appeal to Tilgh-

man only, by written Opinion (App. E) and Order dated

January 27, 1982. By Oral Opinion dated May 3, 1982,

(App. F) and Order dated May 28, 1982, the District Court

dismissed Wheelabrator as an appellant and affirmed the

Bankruptcy Court. Both Tilghman and Wheelabrator filed

a motion for certification pursuant to 28 U.S.C. $1292(b)

which was denied by oral decision of the District Court on

June 21, 1983 (App. C) and Order dated June 25, 1982.

Both Tilghman and Wheelabrator filed a Notice of Appeal

with the Court of Appeals on June 25, 1982. Coastal moved

to dismiss for lack of appellate jurisdiction.

By decision dated May 17, 1983 the Court of Appeals

reversed the decisions of the District Court and Bankruptcy

Court, and held that 28 U.S.C. $1293(b) as a basis for

appellate jurisdiction, was repealed by implication as a

result of Marathon, and that the Order was appealable

alternatively (a) pursuant to 28 U.S.C. §1292(a)(1) under

the Enelow-Ettelson rule, (b) as a final order pursuant to

28 T.S.C. §1291 under the “collateral order rule”; and (c)

by mandamus. The concurring opinion was essentially a

dissent on the issue of jurisdiction, concluding that the

Order properly lay within the “twilight zone of finality”

and was appealable only under Gillespie v. United States

Steel Corp., 379 U.S. 148 (1964). As to the merits, both

the majority and concurring opinions concluded that (a)

there was no bankruptcy policy precluding enforcement of

the contractual forum selection clause, (b) the factors con-

sidered by the trial court (i.e., the Bankruptcy Court) and

the District Court in denying enforcement of the forum

selection clause were improper.

Reasons for Granting the Writ

The Court of Appeals, reversing both the Bankruptcy

Court and the District Court, concluded that a contractual

forum selection clause is absolutely enforceable in a Bank-

ruptcy Court, notwithstanding the conflicting public policy

embodied in the broad grant of jurisdiction under 28 U.S.C.

$1471, now exercised by District Courts. In addition to

the publie policy grounds for not enforcing the forum selec-

tion clause, both the Bankruptcy Court and District Court

had found that enforcement of the clause would be unrea-

sonable because (1) the forum selection clause was in a

third party contract not negotiated or known to exist by

Coastal, (2) there were colorable non-contractual tort

claims, (3 )the need to view the machinery in New Jersey

was significant; and (4) the creditors in Bankruptcy had

an interest in maintaining the action in New Jersey. The

Court of Appeals rejected these factors and improperly

substituted its own subjective judgment as to the standard

by which enforcement of contracts forum selection clause is

unreasonable.

In reaching the merits, the Court of Appeals announced

a new rule for appellate jurisdiction unsupported by statu-

tory authority or case law, to wit that 28 U.S.C. $1293 (b),

which provides for bankruptcy appeals, was repealed by im-

plication as a result of the Marathon decision. The Court

of Appeals also substituted several alternative bases for

appellate jurisdiction. all improperly applied, which effec-

tively destroy the integrity of the appellate process: (1)

The Enelow-Ettelson rule, (permitting an appeal from a

motion for a stay, which is deemed tantamount to an ap-

peal from an injunction), was extended to a motion to

dismiss a complaint. (2) The collateral order doctrine was

apnlied to an appeal from an Order enmeshed in the merits

of a case, ie., the unreasonableness of enforcement. (3)

The collateral order rule was further supported by a novel

application of 28 U.S.C, $2105 to limit the jurisdiction of

appellate courts. (4) Mandamus was invoked to review an

exercise of discretion. (5) The extraordinary remedy of

Gillespie was utilized to review an exercise of discretion.

_ Review by this Court is necessary to correct an erro-

heous decision on the enforceability of a contractual forum

selection clause, and to correct a bizarre and highly im-

proper construction of appellate jurisdiction which funda-

mentally alters the bases for bankruptcy and nonbank-

raptey appeals.

I. The Court of Appeals erroneously held the con-

tractual forum selection clause to be enforceable.

The Court of Appeals erroneously held that the Bank-

ruptcy Reform Act was not imbued with a strong public

policy which would preclude enforcement of a forum selec-

tion clause under Bremen v. Zapata Offshor’ Co., 407 U.S.

1 (1972). In fact, the purpose of the Bankruptcy Reform

Act was to invest the Bankruptcy Court and the District

Court pursuant to §1471(b) with the most comprehensive

and pervasive jurisdictional grant and to resolve all mat-

ters in one forum. 1 Collier, Bankrupcty (15th Ed.) % 3.01.

The legislative history itsg]f states that $1471 was intended

to “leave no doubt as to the scope of the bankruptcy court's

jurisdiction over disputes.” H.Rep. 595, 95th Cong. pp.

445-446. The Bankruptcy policy is no less significant then

“J

the policy underlying the Federal Employee Liability Act

in Boyd vy. Grand Trunk W. i}. Co., 228 U.S, 263 (1949),

which was cited in the Bremen case. See Zimmerman vy.

Continental Airlines, Inc, —— F.2d —— (No. 82-1639,

7/11/83, 3d Cir.) holding that the Bankruptcy Reform Act

modifies the Arbitration Act. It is not merely Coastal Steel

Corporation which resists enforcement, but a debtor-in-

possession which is a different entity, and which acts not

only on its behalf but also on behalf of general unsecured

creditors. See, L.O. Koven & Bros., Inc. Local U, No. 5767,

381 F.2d 196, 203 (3d Cir, 1957).

Further, the trial court and District Court properly con-

sidered the factors as to whether enforcement of a forum

selection clause would be unreasonable and unjust under

the Bremen standard: (1) Coastal Steel did not bargain for

the forum selection clause and, indeed, did not know of its

existence, Its Complaint against Tilghman as a third party

beneficiary was premised on a contract between St. Georges

and Norton which Coastal believed was still in effect.

Coastal did not know that Tilghman had acquired St.

Georges and further that subsequent to execution of

Coastal’s contract with Norton, Coastal did not know that

Tilghman had secretly negotiated a new contract to include

a forum selection clause. Indeed, English law does not even

recognize a cause of action based on a third party bene-

ficiary. (2) The secret renegotiation and secret replace-

ment of an inferior machine designed for a completely dif-

ferent application gave rise to colorable tort claims inde-

pendent of contract and not limited by a forum selection

clause. (3) The need for an expert and possibly the Court

to examine and review the machine in New Jersey was es-

sential. (4) The interest of creditors to be paid their

claims from the bankruptcy estate and from this litigation

was significant. Creditors will share in a recovery, which

would be significantly reduced by the additional expense of

is 2

litigation in England. The Court of Appeals lightly dis-

missed this as a “Robin Hood quality.” (27a).

These factors were properly considered by the District

Court and trial court under the Bremen standard. The

Court of Appeals improperly rejected Bremen and relied

upon a discretionary subjective and sui generis review pro-

cess as to the enforcement of a forum selection clause, sub-

stituting its own judgment for that of the Bankruptcy

Court and District Court.

II. The decision of the Court of Appeals as to the

basis for appellate jurisdiction is in conflict with statu-

tory authority, and with decisions of the United States

Supreme Court and courts of appeals for other Cir-

cuits.

A. The decision of the Court of Appeals repealing 28

U.S.C. §1292(b), and applying Marathon retroactively

was erroneous and in conflict with other circuits.

Section 1293(b) has been uniformly recognized in other

circuits as barring interlocutory appeals. See e.g., Maio-

rino v. Branford Sav. Bank, 691 F.2d 89 (2d Cir. 1982),

Matter of International Horizons, Ine., 689 F.2d 996 (11th

Cir. 1982). The Court of Appeals below not only rejected

those decisions but held Section 1293 (b) to he repealed by

implication as a result of the opinion of the United States

Supreme Court in Marathon, reasoning that since all bank-

ruptcy orders will only be effective if signed by a District

Court Judge, under the Emergency Rule adopted by New

Jersey as Local Rule 47, the need for a special bankruptey

appellate statute is eliminated.

Further, the Court of Appeals below held that Marathon

could be selectively applied retroactively where appropri-

ate to invalidate a Bankruptcy Court judgment filed prior

to December 24, 1982. The Court of Appeals thus expressly

contravened the retroactivity limitation in Marathon, and

repealed Section 1293(b), substituting a new basis for ap-

pellate jurisdiction of bankruptcy appeals.-

This bizarre decision turns all similar bankruptcy ap-

peals on end, and effectively invalidates all Bankruptcy

Court Orders rendered both before and after Marathon. It

is for Congress to determine whether Section 1293(b)

should be repealed or whether it should remain the sole

repository of bankruptcy appellate jurisdiction. Review by

the Supreme Court is compelled because of the Supreme

Court’s own position in Marathon and because of the con-

flicts in the circuits as to the meaning and very existence of

Section 1293(b).

B. The decision of the Court of Appeals erroneously ex-

tended by analogy the Enelow-Ettelson rule to dismissal

of a complaint based on a forum selection clause.

The Enelow-Ettelson rule (Enelow v. New York Life In-

surance Co., 293 U.S. 379 (1935) and Ettelson v. Metropoli-

tan Life Ins. Co., 317 U.S. 188 (1942) recognized the exist-

ence of a legal fiction as tantamount to an appeal from

a request for injunction under 28 U.S.C. $1292(a)(1). The

fiction requires the equivalent of a request to stay an action

at law pending an action for equitable relief in a court of

equity, An example is a stay pending arbitration, Shan-

feroke Coal & Supply Corp. v. Westchester, 293 U.S. 449

(1935).

The Supreme Court in Morgantown v. Royal Ins. Co.,

377 U.S. 254 (1945) held, however, that the legal fiction

should not he extended by analogy. The Court of Appeals

in Coastal Steel did extend the fiction, by analogy, from a

10

stay pending arbitration to a denial of a motion to dismiss

a Complaint on the basis of a contractual forum selection

clause, Further, the rule was erroneously applied to a dis-

missal rather than merely a stay, thus extending the rule

beyond the fiction which created it. This new basis for ap-

pellate jurisdiction is contrary to the limitations estab-

lished by the Supreme Court.

C. The Court of Appeals misapplied the collateral order

rule by reviewing an order enmeshed in the merits.

Finality under 28 U.S.C. $1291 is articulated under a

three part test in Coopers & Lybrand vy. Livesay, 437 U.S.

567 (1978), each of which must be satisfied. One part of the

test is that the Order must not require a consideration

of the merits of the underlying litigation. The enforce-

ment of the forum selection clause under Bremen vy. Za-

pata Offshore Co., 407 U.S. 1 (1972) requires the trial

court to make a determination of whether enforcement

would be wnreasonable under the circumstances, which

necessarily requires the court to plunge into the proba-

tive evidence, potential hardship, materiality of testi-

mony and inspection of the blast equipment. The deci-

sion of the Court of Appeals thus extends the collateral

order doctrine beyond its established guidelines and into

a new basis for appellate jurisdiction under which all

orders relating to a change of venue would be appealable

as of right.

D. The Court of Appeals improperly entended 28 U.S.C.

§2105 as a limitation of appellate jurisdiction.

As a further basis for finding finality under the col-

lateral order doctrine, the Court of Appeals determined

that the order denying a motion to dismiss a complaint

11

based on a forum selection clause was not reviewable on

appeal because of 28 U.S.C. §2105, which provides that

there “shall be no reversal in... a Court of Appeals

for error in rulings upon matters in abatement which do

not involve jurisdiction.” The Court of Appeals there-

by concluded that the third test of the collateral order

rule, i.e., the order could not be adequately reviewed after

trial, was met.

This novel interpretation of 28 U.S.C. $2105 introduces

a new limitation on appellate jurisdiction which wovld

bar all review, not only of orders concerning a forum

selection clause, but also a stay pending arbitration, forum

non conveniens, and venue transfer actions. Such a dras-

tie limitation on jurisdiction should be reviewed by the

United States Supreme Court.

Further, by its own terms, Section 2105 prohibits ap-

pellate review of the within appeal by the Court of Ap-

peals under the collateral order doctrine as well as after

trial.

E. Review by Mandamus was improperly exercised by the

Court of Appeals.

The Supreme Court has held that mandamus pursuant

to 28 U.S.C. $1651 is not appropriate to review the exer-

cise of discretion by the trial court, Will v. Calvert Fire

Ins. Co., 4387 U.S. 665 (1978). The Bankruptey Court and

District Court below did exercise their discretion and did

weigh various factors in determining whether enforce-

ment of the forum selection clause was unjust or unrea-

sonable. Mandamus should not have been utilized as a

“catch-all” when other bases for appellate jurisdiction

failed. The effect of the decision by the Court of Ap-

peals is to improperly expand the use of the All Writs

statute in lieu of an appeal. This result is erroneous,

contrary to the cases, and should be reviewed by the

Supreme Court.

F. Review under Gillespie was improper.

The concurring opinion determined that the appeal lay

in the “twilight zone of finality” and thus appellate juris-

diction came within Gillespie v. United States Steel Corp.,

379 U.S. 148 (1964). This extraordinary remedy is ap-

propriate only when the danger of denying justice by

delay outweighs the prohibition of piecemeal review.

The only delay here would be a trial on the merits.

The case is ripe for pre-trial and trial since all discovery

is complete. The pre-trial has been delayed only be-

cause of the pendency of the appeal. The appeal on

the enforcement of the forum selection clause should be

raised after trial together with all other interlocutory

matters. The decision of the Court of Appeals has raised

Gillespie from an extraordinary remedy to a new basis

for appeal which is readily applicable to every interlocu-

tory appeal from an order relating to discovery, a forum

selection clause, forum non conveniens, change of venue,

stay pending arbitration, or stay or dismissal pending

administrative action. There is no distinction between

interlocutory appeals from any of those actions and the

within appeal. Gillespie has thus been improperly broad-

ened and expanded into a broad discretionary basis for

appellate jurisdiction.

13

CONCLUSION

The Court should review this case because of the

public importance in resolving the conflict between

public policy under the Bankruptcy Reform Act and a

contractual forum selection clause, as well as determin-

ing the standards for refusal to enforce the clause.

Further, insofar as the Court of Appeals found a basis

for appellate jurisdiction, it created a dangerous and

bizarre precedent undermining the statutory appellate

jurisdiction and decisions to the contrary by this Court

and other Circuits.

Respectfully submitted,

Ravin & KessetHavut

Attorneys for Petitioner, Coastal

Steel Corporation

Davip N. Ravin

Counsel of Record

On the Petition:

Davip N. Ravin

Peter R. SarasoHn

BerNarp SCHENKLER

Dated: September 7, 1983

(Aprenpices Fottow]

APPENDIX A

Opinion of the United States Court of Appeais

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 82-5391

COASTAL STEEL CORPORATION,

a Corporation of the State of New Jersey

v.

TILGHMAN WHEELABRATOR LTD. and

WHEELABRATOR-FRYE INC.

Wheelabrator-Frye Inc. and

Tilghman Wheelabrator Limited,

Appellants

(D.C. Civil No. 82-412)

Hon. Harold A. Ackerman, District Judge

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

Argued: February 14, 1983

Before: GIBBONS, HUNTER and ROSENN, Circuit Judge's

(Opinion Filed: May 17, 1983)

RIKER, DANZIG, SCHERER & HYLAND

744 Broad Street

Newark, New Jersey 07102

Of Counsel:

DOUGLAS S. EAKELEY. ESQ. (Argued)

Attorneys for Appellants

[la]

2a

Appendiz A

RAVIN & KESSELHAUT .

80 Main Street

West Orange, New Jersey 07052

On the Brief:

DAVID N. RAVIN, ESQ.

PETER R. SARASOHN, ESQ. (Argued)

BERNARD SCHENKLER, ESQ.

Attorneys for Appellee

OPINION OF THE COURT

GIBBONS, Circuit Judge.

Wheelabrator-Frye, Inc. (\Wheelabrator) and

Tilghman Wheelabrator Limited (Tilghman) seek appel-

late 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 in 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 dis-

miss a civil proceeding against i 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 Bank-

ruptcy 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 con-

tract on which its liability, if any. is predicated contains a

torum 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 Stee] Corporation (Coastal). It contends that we

3a

Appendiz A

lack jurisdiction to review either order, but should such

jurisdiction exist. both orders should be affirmed. As-

suming we have jurisdiction to review either order un-

der any of the statutory provisions defining our review-

ing authority, we must also consider whether in light of

the decision in Northern Pipeline Construction Co. v.

Marathon Pipe Line Co.,__. U.S. ___. 102 S.Ct. 2858

(1982). there is subject matter jurisdiction over the dis-

pute in any federal court.

On November 9, 1976 Coastal, a steel fabricator

with its principal place of business in New Jersey, con-

tracted 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 com-

mercial 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 erect-

ed in New Jersey.

One component of the plant was a bar cleaning ma-

chine or blast unit. The contract did not specify the sup-

plier 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 quo-

tation 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 execu-

tion 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

4a

Appendiz A

for a Tughman blast unit at a price of $176,000, which

was higher than St. Georges origina] quotation but low-

er 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 accor-

dance with English law. In the event of any dispute

arising the same shall be determined by the English

Courts of Law.

Although deliverv was made to Farmer Norton in Eng-

land, Tughman undertook to supervise the commission-

ing 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 su-

pervise the commissioning. In late 1979 Tilghman also

sent a representative to New Jersey to make modifica-

tions on the blast unit.

On Apri! 11. 1980. Coastal filed a petition for reorga-

nization under Chapter 11 of the Bankruptcy Code. In

July of 1980 the debtor filed in the bankruptcy court a

complaint against Farmer Norton. Tilghman, Wheel-

abrator. and Charterhouse Japhet Export Finance Com-

pany (Charterhouse). an English firm which financed

Coastal's purchase trom 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 S4 million in consequential damages re-

sulting from alleged defects in the Tilghman supplied

blast unit.

Tilghman and Wheelabrator appeared and filed an-

swers denying the material allegations of the complaint.

They also moved to dismiss. The bankruptcy court de-

nied the motion to dismiss without prejudice to its re-

newal after further discovery. After fairly extensive dis-

covery, including depositions initiated by Coastal of

5a

Appendiz A

various witnesses in England, Tilghman again moved to

dismiss, relying both on the forum selection clause in

the Tughman-Farmer Norton contract and on the forum

non conveniens doctrine. Wheelabrator joined in the

motion in a reply brief. The bankruptcy court denied the

Tughman motion by an order dated November 9, 1981.

Both Tughman and Wheelabrator applied to the dis-

trict 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 Tulghman. On May 27, 1982 the dis-

trict court granted Coastal’s motion to dismiss

Wheelabrator as an appellant and affirmed the order

denying Tilghman’s motions, for reasons which we ad-

dress 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 an opinion and that an immediate ap-

pea] might materially advance the ultimate termination

of the litigation. The district court denied that motion.

Tilghman and Wheelabrator have both appealed.

Il.

Tilghman and Wheelabrator onginally relied, for ap-

pellate 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], re-

quire this court to consider all possible sources of its au-

thority in this court to review the orders in question.

Coastal contends that they are entirely unreviewable,

while Tughman and Wheelabrator urge that Congress

could not have intended to foreclose review of orders

denying enforcement of forum selection clauses or com-

pelling litigation in inconvenient forums. The Northern

Pipeline decision presents a further complication, for it

6a

Appendiz A

is now clear that the bankruptcy court, the order of

which the district court affirmed. does not have jurisdic-

tion 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 Dis-

trict 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.

A.

It the case had been before the district court as a

section 1332 federal] quesuon or a section 133] diversity

case. we would have jurisdiction under section

}292/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 mo-

tion 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. West-

chester Service Corp.. 293 U.S. 449 (1935): Gavlik Con-

struction 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 (Sth Cir. 1971), va-

cated on other grounds sub nom. The Bremen v. Zapata

Off-Shore Co.. 407 U.S. 1 (1972): Alberto-Culver Com-

pany v. Scherk, 484 F.2d 611 (7th Cir. 1973). rev'd on

other grounds. Scherk v. Alberto-Culver Co., 417 U.S.

306 (1974). The Bremen and Scherk are the Supreme

Courts definitive modern prouncements on_ the

cntorceability of contractual] forum selection clauses. In

7a

Appendix A

each case the Supreme Court's appellate jurisdiction

was, under 28 U.S.C. §1254. derivative of the jurisdic-

tion of the court of appeals. and in each case that juris-

diction was predicated on section 1292(a)(1).

Coastal contends that because some of the relief re-

quested was equitable rather than legal, the

Enelow-Ettelson' 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 re-

quested. Thus it may well be that for purposes of review-

ing interlocutory decisions on enforceability of forum se-

lection 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

(1975). In any event, we have examined the pleadings,

and we conclude that whether on a contract or a tort the-

orv, what Coastal seeks is money damages for the al-

leged 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.

B.

Tilghman and Wheelabrator also urge that the or-

ders are in any event appealable under section 129] as

collaterally final. Appellate junsdiction, even in a section

1331 or section 1332 case, is on this theory more prob-

lematical. Section 1291 permits review of “all final deci-

sions of the district courts,” and Fed. R. Civ. P. 54(b)

1. Enelow v. New York Life Ins. Co.. 293 U.S. 379 (1935) (a

stay of a legal action on a contract to hear and determine an equita-

ble fraud defense): Ettelson \. Metropolitan Life Ins. Co.. 317 U.S.

188 (1942 same).

Sa

Appendix A

provides that “any order or other form of decision, how-

ever designated. which adjudicates fewer than all the

claims or the nghts and Liabilities of fewer than all the

parties shall not terminate the action... and... is sub-

ject to revision at anv time before the entry of judgment

adjudicating al] the claims and the nghts and liabilities

of all the parties.” The orders here 1n 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 tor purposes of appel-

late review. The task of the lower federal courts in identi-

fying such orders has not been aided by the Court's pro-

pensity to treat as interchangeable cases arising from

state courts under section 1257 and from district courts

under section 1291.* Its most recent effort, on the feder-

a] side. to instruct as to what orders are reviewable under

section 1291 despite Rule 54/b) is Moses H. Cone Memo-

rial Hospital v. Mercury Construction Corporation,

—____~;U.S. ___, 103 S.Ct. 927, 935 (1983), which reiter-

ated the test for collateral finality announced in Coopers

& Lybrand v. Livesay, 437 U.S. 463, 468 (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 (1949)],

the order must conclusively determine the disputed

question, resolve an important issue completely sep-

arate from the merits of the action, and be effective-

jy 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

2. See. ¢.g.. Cox Broadcasting Corp. ». Cohn. 420 U.S. 469.

478-82 (1975). North Dakota State Board of Pharmacy \. Snyder's

Drug Stores. Inc. 414 U.S. 156. 159-62 (1973). Local 438. Con-

strucuon & Genera] Laborers’ Union v. Curry. 5343 US. 542. 549

(1963).

9a

Appendiz A

pursue the two issues — enforceability of the forum se-

lection clause and forum non conveniens — which

Tilghman raised in its section 1334 _b) appeal. Thus we

will address those two issues.

(1)

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 criteria —

conclusive determination of the disputed question. A fo-

rum 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 (1947), considerations rel-

evant to a forum non conveniens ruling include:

the relative ease of access to sources of proof; avail-

ability of compulsory process for attendance of un-

willing, and the cost of obtaining attendance of will-

ing. witnesses; possibility of view of premises, if

view would be appropriate to the action; and all oth-

er 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 mis-

judges a forum non conveniens claim, a reviewing court

can, after final judgment, ascertain the degree of preju-

dice and reverse. See United States v. MacDonald, 435

U.S. 850, 859 (1978) (discussing post-trial review of

speedy trial claim). Thus we do not believe that the re-

jection of a forum non conveniens claim is reviewable as

a collaterally final order under section 1291.

10a

Appendiz A

(2)

The refusal to enforce the contractual] forum selec-

tion clause, however. presents a different set of consider-

auons. 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 fac-

tor 1s satisfied. Moreover, the forum selection clause is

far less obviously related to the substantuve 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 select-

ing either a judicial or an arbitral forum for the resolu-

tion of disputes establishes a legal nght which is analyu-

cally distinct from the nights being asserted in the

dispute to which it is addressed. It is a mght somewhat

analogous to those recognized in Abney v. United States,

431 U.S. 651 (1977) (denial of motion to dismiss on dou-

ble jeopardy grounds appealable under section 1291),

and Helstoski v. Meanor. 442 U.S. 500 (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 le-

gal proceedings in question, which could never be vindi-

cated after final judgment. See also Forsyth v.

Kleindienst, 599 F.2d 1203 (3d Cir. 1979), cert. denied,

453 U.S. 913 (1981) ‘claim of absolute official immuni-

ty). The right to specific performance of a forum selec-

tion clause is not absolute. Under the Supreme Court's

formulation a court having subject matter jurisdiction

lla

Appendix A

must weigh competing considerations in deciding on

enforceability of such a clause.

If the party asserting the applicability of the forum

selecuon clause prevails on the merits of the underlying

dispute, however, an erroneous denial of its specific per-

formance will obviously escape review after final judg-

ment. Moreover, if that party should lose on the merits of

the underlying dispute, it is not at all clear that the fo-

rum 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 fed-

eral statute provides:

There shall be no reversal in the Supreme Court ora

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 sec-

tion 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 wnit 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,* or in appeals from state courts.* Moreover,

since under the 1789 Act there was no equivalent of sec-

tion 1292(a) or (b), the qualification should have no ap-

plication 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 wnits of error with no simi-

lar 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

3. Roche. Evaporated Muk Ass'n. 319 U.S. 21, 27n.3(1943).

4. Buck Stove and Range Co. \. Vickers. 226 U.S. 205. 213

(1912).

l2a

Appendix A

was no Cohen doctrine. Thus we think that the section

was onginally intended to apply only to writs of error

after a full tnal. 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 coljateral matters not going to theymerits of the

underlving dispute which are appealable to the courts of

appeal bv 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 erro-

neous 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 includ-

ed, we suppose, are those non-jurisdictional motions

which, if granted, would result in the dismissal of an ac-

tion 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. de-

nied, 338 U.S. 861 (1949). A motion for specific enforce-

ment of a forum selection clause would seem to fit that

mold. Such a motion is non-jurisdictional, and has no di-

rect 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 tor 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 fi-

nal 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 tn-

als, it does not apply to a Cohen appeal on a collateral or-

der. Thus assuming section 1291 applies to proceedings

13a

Appendix A

relating to bankruptcy it would be a basis for jurisdiction

to review the order denying the mouon to enforce the fo-

rum selection clause.

C.

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 wmits in aid of their

potential appellate jurnsdiction. Unlike appeals under

sections 1291 and 1292(a)1), however, the relief avail-

able under section 1651 is not a matter of right. It in-

volves the exercise of discretion in the appellate court in

determining the appropmateness 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,

No. 82-1282, slip op. (3d Cir. March 23, 1983); Hackett

vu. General Host Corp., 455 F.2d 618, 626 (3d Cir.), cert.

denied, 407 U.S. 925 (1972). See 9 Moore’s Federal Prac-

tice ©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 discre-

tionary rules which have been developed under that sec-

tion, 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 tri-

l4a

Appendix A

al court's error is on either issue egregious and the likely

harm from delaved review serious we should exercise

such review. Obviously, then, the appropriateness of

section 165] interlocutory review to some extent in-

volves consideration of the merits of the challenged rul-

ing. But we hold that if section 1651 applies to proceed-

ings relating to bankruptcy we have discretionary power

under that section to review both challenged rulings.

III.

Coastal] contends that the jurisdictional provisions

of the Bankruptcy Act of 1978 (Bankruptcy Code) pre-

clude the exercise of this court’s reviewing authority

over either the forum non conveniens issue or the forum

selection clause issue. Those provisions, Coastal con-

tends, 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 re-

view than those of any civil federal court in history. On

its face the proposition seems extreme. Yet Coastal’s ar-

gument 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 un-

der title 11. Coastal’s claims depend on state law, and

its complaint does not allege complete diversity, but arti-

cle III of the Constitution permits the exercise of a pro-

tecuve federal jurisdiction as broad as section 1471(b).

Schumacher v. Beeler, 293 U.S. 367 (1934). However,

lda

Appendiz A

the rulings in this instance were not made initially by an

article II] judge, but by a judge appointed under 28

U.S.C. §153 (Supp. V 1981). In light of Northern Pipe-

line, 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 re-

quiring judicial action. For present purposes, however,

we will assume, arguendo, that because the Northern

Pipeline mandate was withheld until] December 23,

1983, the bankruptcy judge had authority to pass on the

Tilghman and Wheelabrator motions.

Bankruptcy appeals are dealt with in two Bankrupt-

cy Code provisions. 28 U.S.C. §1293 (Supp. V 1981) re-

fers 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 appel-

late panel created under section 160 or District

Court of the United States. or from a final judg-

ment, order, or decree of a bankruptcy court of the

United States if the parties to such appeal agree toa

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 ti-

l6a

Appendix A

tle 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 ot appeals from interlocutory orders and

decrees of bankruptcy courts, but only by leave tak-

en of the district court to which the appeal is taken.

28 U.S.C. §1334 (Supp. V 1981).° 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 in-

clude only judgments which would be final under sec-

tion 1291. The latter include all matters formerly

reviewable under section 1292(a1), 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.” 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, 103 S.Ct. 1196

(1983); Universal Minerals, Inc. v. C.A. Hughes & Co.,

5. The provisions governing appeals to panels designated pur-

suant to section 60(a) are essenually idenucal. 28 U.S.C. §1482

(Supp. V 1981).

6. In re Bildisco, 682 F.2d 72 (3d Cir 1982), cert. granted sub

nom. NLRB v. Bildisco and Bildisco. 103 S Ct. 784 (1983) (Nos.

82-818, 82-852), does not discuss appellate junsdiction, but appears

to have involved an appeal trom a matter which was before the dis-

trict court under section 1334(a).

17a

Appendix A

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 sig-

nificance, involving the power of this court and of the

Supreme Court to review such important matters as pre-

liminary injunctions issued in the vast range of cases

entertainable under section 1471(b). If Coastal is nght,

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 bankrupt-

cy, must be rejected. Northern Pipeline holds that bank-

ruptcy courts may not entertain such related proceed-

ings. 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

[o|lrders and judgments of bankruptcy judges in civ-

il proceedings related to cases arising under Title

1], 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 relat-

ed proceedings must be considered orders of the district

courts, not of the bankruptcy courts. They will not fall

18a

Appendix A

within section 1334, and thus will not be governed by

section 1293. As orders of the distnct 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 hold-

ing effective on December 23, 1982. The policies which

it identified for a nonretroactivity holding in Northern

Pipeline have no application, however, to the instant ap-

peal. In Northern Pipeline the Court observed “that ret-

roactive 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 in-

stance, 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 dis-

trict court. It seems to us the height of artificiality to ap-

ply today the nonretroactivity holding of Northern Pipe-

line 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 proceed-

ings related to bankruptcy, which were made by the dis-

trict 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 unneces-

sary in this case to consider whether Congress intended

19a

Appendiz A

in sections 1293 and 1334 to insulate pendente lite or-

ders of the bankruptcy court from all supervision by the

courts of appeals. The question will anse, of course, with

respect to cases ansing under ute 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 Coasta] may not have been intend-

ed by Congress.” We are particularly doubtful that Con-

gress intended in sections 1293 and 1334(b) to limit the

powers of the courts of appeals or the Supreme Court

under Section 1651.

7. The evolution of secuon 1293 is complex. The original bank-

ruptcy code bill) H.R. 8200. which passed the House on February 1,

1981, 124 Cong. Rec. H 478 (daily ed Feb. 1, 1978), made bankrupt-

cy courts article II] courts, and provided for appeals to the courts of

appeals under sections 1291 and 1292. H.R. 8200, 95th Cong., Ist

Sess. §§237, 238 (1977). Under the orginal version of the Senate

bill. S. 2266, appeals were routed through the district courts, and no

reference was made to the jumsdiction of the courts of appeals. The

Report of the Senate Judiciary Committee on S. 2266 observed that

secuon 129] governed such appeals S. Rep No. 989, 95th Cong.,

2d Sess. 18 (1978). The Senate approved S. 2266 on September 7,

1978. 124 Cong Rec. $14745 (daily ed. Sept. 7, 1978). As enacted

the Bankruptcy Code resulted from a compromise between the Sen-

ate and House floor managers of the legislation, and it is in this bill

that what is now section 1293 first appears as section 236a). In its

original version, secuon 236 merely addressed court of appeals ju-

msdiction over orders of the bankruptcy courts and panels. The only

discussion of the secuon is as follows:

An appeal from a decision of a bankruptcy court will be taken to

the distnct court of the district within which the bankruptcy

court is located. unless the circuit council of the circuit in

which the bankruptcy court is located orders appeals to be tak-

en to a panel of bankruptcy judges comprised of three bank-

ruptcy judges, or both parues by agreement agree to proceed

directly to the circuit court of appeals of the circuit in which the

bankruptcy court is located. The subject of appeals is dealt with

in sections 201, 236, 237, 238, 240, and 241 of title II of the

20a

Appendiz A

Our holding that orders entered in proceedings re-

lating to bankruptcy are distnict court orders reviewable

pursuant to sections 1291, 1292 and 165] is necessarily

predicated on the tacit assumption that despite Northern

Pipeline the grant of distnct court subject matter juris-

diction 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 jurisdic-

NOTE — ‘Continued,

House amendments which in tum create provisions in sections

136. 1293. 1294. 1344. 1408. and 1482 of utle 28 implementing

the previously descnbed system of appeals.

124 Cong Rec. H11107 (daily ed. Sept. 28. 1978). The additional

reterence to review of distnct court orders was made on the Senate

fivor without explanation or discussion. 124 Cong. Rec. H1 1865-67

(daily ed Oct 6 1978) Thus tor all pracucal purposes there is no

legislative history for the secuon

One commentator descnbing the appeal provisions of the

Bankruptcy Code as “nearly incomprehensible.” suggests three al-

ternative readings of secuon 1293. 16C A Wnght. A. R. Miller, E.

H Cooper & E Gressman. Federal Practice and Procedure §3926,

at 38-43 (Supp. 1983). Another commentator suggests that in the

absence of a specific reference courts should not attribute to Con-

gress un intention to supercede secuon 1292 in bankruptcy cases.

Kennedy. The Bankruptcy Court Under the New Bankruptcy Law,

11 St Marv’s LJ. 251, 292-93 (1979) Nowhere in the Congression-

al Record or in the bills which either house of Congress considered

is there any reference to section 1651]

Given the enormity of the change in law which would bar all

court of appeals and Supreme Court review of interlocutory orders

in bankruptcy cases. and the complete absence of discussion of

such a change. we are not ready to assume without critical analysis

that those courts which have held such review to be barred are cor-

rect. See In re Regency Woods Apartments. Ltd., 686 F.2d 899, 901

(llth Cir. 1982), In re Riddervold. 647 F.2d 342, 343 (2d Cir.

1981). In re Conunental Investment Corp., 637 F.2d 1, 3 (1st Cir.

1980)

2la

Appendix A

tion 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) jurisdic-

tion by the district courts is consistent with the Bank-

ruptcy 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 1] or arising in or re-

lated to a case under title 11. Such abstention, ora

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 nei-

ther a forum selection clause ruling nor a forum non

conveniens ruling is an abstention decision. The House

Report on the Bankruptcy Code states that “(t]he

subsection recognizes the exigencies that arise in such

cases as Thompson v. Magnolia Petroleum, 309 U.S. 478

(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., Ist Sess. 446 (1977), reprinted in

1978 U.S. Code Cong. & Ad. News 6401. There is no in-

dication in the legislative history of the Bankruptcy Code

that Congress regarded issues like the enforceability of a

contractual forum selection clause to be abstention is-

sues. A decision on enforceability of such a clause in-

volves 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 par-

ties to prepare and present their respective cases.

Tilghman and Wheelabrator are not asking the court to

22a

Appendix A

refrain from entertaining the action and 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 dis-

pute 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(aX 1) to review the order denying the

Tilghman-Wheelabrator motion to enforce the forum se-

lection 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 de-

nial of a motion to dismiss on forum non conveniens

grounds, Coastal’s motion to dismiss the appeal will be

denied.

IV.

Our ruling on Coastal’s jurisdictional motion re-

quires consideration of the ments.

A. The Forum Selection Clause

An initial concern is the governing law for determi-

nation of enforceability of the forurn 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 au-

thorizes Congress to provide a federal forum for the con-

venient enforcement of mghts of debtors dependent

upon legal relationships arising out of non-federal law.

Schumacher v. Beeler, 293 U.S. 367 (1934). But Con-

gress 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).

23a

Appendiz A

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. vw.

Demag-Marnnesmann-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 Ma-

rine 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 Coprerweld Steel suggests that in this

circuit it remains unresolved. It need not be resolved in

this case either, for each junsdiction the law of which is

arguably relevant takes substantially the same position

with respect to enforceability of contractual forum selec-

tion provision. See The Bremen v. Zapata Off-Shore Co.,

407 U.S. 1, 10-11 (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 Con-

tracting 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 ap-

plied in each of the arguably interested jurisdictions.

24a

Appendiz A

That rule is that a forum selection clause is pre-

sumptively valid and wil be enforced by the forum un-

less the party objecting to its enforcement establishes

(1) that it 1s the result of traud 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 juris-

diction so senously 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 tum

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 pro-

ceedings 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 nghts 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, 103 S.Ct. 784 (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 in-

tended to make a change in the public policy favoring fo-

rum selection clauses which is manifested in the Feder-

al Arbitration Act, 9 U.S.C. §§1-14 (1976), or in the

common law announced in The Bremen and similar

25a

Appendiz A

state and federal cases. Section 1471(b) does not an-

nounce a contrary public policy. At best the grant of pro-

tecuve federal jurisdiction over proceedings related to ti-

tle 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 fo-

rum selection clause is Coastal’s claimed status as a

third-party beneficiary with the Tiighman-Farmer Nor-

ton 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 pol-

icy of noninterference with a freely negotiated contract.

407 U.S. at 12, 14, 16. 17. The pnmary rationale of that

Court, however, and of others which have enforced fo-

rum selection clauses, is that those clauses promote sta-

ble and dependable trade relations. Id. at 8-9, 13-14. In-

troducing into the common law of enforceability of

forum selection clauses a third-party beneficiary excep-

tion 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 pro-

visions otherwise enforceable. See, e.g., Trans-Bay Engi-

neers and Builders, Inc. v. Hills, 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 Nor-

ton, 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 liti-

26a

Appendiz A

gation 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 denving enforcement is that Coastal has assert-

ed tort claims as well as contract claims. and that the fo-

rum selection clause is inapplicable to the former. The

difficulty with this reasoning 1s that it ignores the reality

that the Tilghman-Farmer Norton contract is the basic

source of any duty to Coastal. There is no evidence sug-

gesting that the clause was not intended to apply to all

claims growing out of the contractual relationship. If fo-

rum selection clauses are to be enforced as a matter of

public policy, that same public policy requires that they

not be defeated bv artful pleading of claims such as neg-

ligent design, breach ot implied warranty, or misrepre-

sentation. Coastal’s claims ultimately depend on the ex-

istence 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. Il. 1979) (distributorship agreement with fo-

rum 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 rec-

ord improper.

A third circumstance relied on by the district court

for denying enforcement is the presence in the case of

27a

Appendiz A

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 signifi-

cant status in the case is as Tilghman’s parent. The

pleadings suggest that Wheelabrator did some work on

the blast unit on Tughman’s behalf, but they do not sug-

gest that this work. separately. was responsible for

Coasta!’s losses. Thus reliance on Wheelabrator’s pres-

ence in the case as a ground for requiring that Tughman

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 re-

quired. however. and the depositions on file show that

Coastal has examined in England a number of English

witnesses. Under The Bremen formulation the party ob-

jecting 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 Eng-

land. Tilghman has the same problem here.

Finally the district court referred to the fact that un-

der a plan of reorganization, now confirmed, Coastal’s

creditors have an interest in any sums which may be re-

covered 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 re-

lied on by either the bankruptcy court or the district

28a

Appendiz A

court for denying the motion for enforcement of the fo-

rum selection clause 1s legally sufficient. Coastal ad-

vances 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 Tughman might have

to the exercise of jumsdiction 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 tnal in the bankruptcy

court. The confirmed Plan plainly did not adjudicate

anything respecting the instant dispute. Thus, both con-

tentions 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.

V.

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 prob-

ably could not hold that the bankruptcy court committed

an abuse of discretion in denying the motion to dismiss

on that ground.

V1.

Coastal’s motion to dismiss the appeal will be de-

nied. 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 re-

29a

Appendiz A

spect 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 com-

menced on date of original action).

ROSENN, Circuit Judge, Concurring.

Like the majority, | believe that this case should be

tried in the English courts in accordance with the forum

selection clause in the Tiighman-Farmer Norton con-

tract under which Coastal Steel claims third-party bene-

ficiary status. I therefore join in the majority's discus-

sion of the merits and disposition of the case. I write

separately, however, because | 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 no-

tion 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 deci-

sion, 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,

30a

Appendiz A

however, that the majonty’s analysis is tortuous and un-

necessary. Instead, I would rely on the fexible and

straightforward logic of Gillespre v1. L’nited States Steel

Corp., 379 U.S. 148 (1964). as the basis tor appealability

in this case.

I.

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), relving on the pendency of the bank-

ruptcy 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 un-

der 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 ar-

gument that, because this is an appeal from an action re-

lated 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 spe-

cial requirements of section 1293, which is in effect dur-

ing the transition period under the Bankruptcy Reform

Act of 1978. Pub. L. No. 95-598, 95 Stat. 2549. The ma-

jority disingenuously manages to avoid this problem.

Moreover, even assuming that it is appropriate to evalu-

ate this case with reference to the standards for

3la

Appendix A

appealability of ordinary (non-bankruptcy) civil matters,

Il am certain that jurisdiction does not exist under sec-

tion 1292, and I have grave doubts as to the applicability

of sections 129] and 1651.

A.

Coastal argues that our authority to review the or-

ders of the bankruptcy court and the district court can-

not 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 appel-

late 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 165] authorize interlocu-

tory review in certain types of civil cases, section 1293 by

its terms limits appellate jurisdiction to a “final judg-

ment, 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 sec-

tion 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. aenied. 103 S.Ct. 1196 (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 state-

32a

Appendiz A

ments may be treated as dictum for purposes of the in-

stant case for both of these cases involved orders that

were adjudged to be tinal. Thus, there was no need for

us to consider whether section 1293 actually precluded

interlocutory review. The majonty summanzes several

sound arguments for the view that Congress could not

possibly have intended to insulate orders of the bank-

ruptcy courts from interlocutory review by the courts of

appeals. Ultimately. however, the majonity avoids ruling

on this question by taking refuge in the Supreme Court's

decision in Northern Pipeline Construction Co. v. Mara-

thon Pipe Line Co., 102 S.Ct. 2858 (1982).

As alluded to by the majonty, the Court held in

Northern Pipeline that Congress acted unconstitution-

ally in granting bankruptcy courts the authority to enter-

tain proceedings “relating to” bankruptcy. The effect of

that decision is to require that henceforth all such pro-

ceedings 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 mis-

placed for several reasons.

First, the majonty’s analysis involves a novel exten-

sion of the retroactive effect of Northern Pipeline. To

prevent the havoc that would have ensued if actions tak-

en 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 ted, there will be no hardship to the parties in in-

validating the actions taken by the bankruptcy court.

But it cannot be doubted that the Supreme Court, in de-

ciding 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

33a

Appendiz A

would not be served by making the decision retroactive.

No legal basis justifies the majonty’s decision to em-

brace ‘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 major-

ity 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 bankrupt-

cy court thus acted beyond its authority, the inescapable

conclusion is that its order is void. Admittedly, if this or-

der 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 major-

ity 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 distnct 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 lo-

cal 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

to and affirmed by the district court under 28

U.S.C. §1334(b). Its life ended at the moment the rule of

34a

Appendiz A

Northern Pipeline became applicable to such orders.

The majonty completely ignores this insurmountable

problem: once it has held — erroneously, in my view —

that Northern Pipeline applies retroactively to the bank-

ruptcy court's order in the instant case. it has totally de-

stroved the validity of that order. Therefore, instead of

reviewing the ments of the appeal. the majority must di-

rect that the bankruptcy court’s unlawful order be

vacated.

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 sur-

vive. | question the majority's assumption that the diffi-

cult section 1293 problem is thereby avoided. The ma-

jority concludes that “orders entered in proceedings

relating to bankruptcy are district court orders

reviewable pursuant to sections 1291, 1292, and 1651.”

Typescript op. at 28. 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 ap-

peals only in accordance with the provisions of 28

U.S.C. §1293. There is no basis for the majority's implic-

it 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 langauge so limits it application. Indeed, on its

1. This problem demonstrates precisely why the Supreme

Court must have elected not to make its Northern Pipeline decision

retroactive. In the wake of that decision. it was relatively easy for the

federal district courts to adopt local rules for the processing of future

bankruptcy cases. But there was no way for the federal judiciary to

validate retroacuvely those bankruptcy court orders entered prior to

Northern Pipeline and appealed to the district courts under 28

U.S.C. §1334/b). To prevent these orders from being suddenly in-

validated, the Court had no choice but to make its decision

nonretroactive.

35a

Appendiz A

face the provision appears to pertain to appeals from any

district court proceeding in bankruptcy: it refers to juris-

diction over appeals from “a final judgment, order, or de-

cree 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.*

I fail to see why Congress’ attitude toward interlocu-

tory appellate review in proceedings relating to bank-

ruptcy 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 sche-

ma 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 im-

plied, then neither section 1292 nor section 1651 is an

available source for appealability in this case.’

2 J recognize that. as the statute is wntten, Congress appar-

ently did not expect the district courts to exercise junsdiction under

1471(b), as section 1471(c) appears to require that bankruptcy-

related cases be brought first in a bankruptcy court. See Northern

Pipeline, supra, 102 S.Ct. at 2862. Congress may have expected that

secuon 1293(b) would be used in conjunction with section 1334.

But | do not believe we can conclude that Congress intended sec-

tion 1293 not to apply in conjunction with section 1471.

3. Technically. of course. section 1291 appellate jurisdiction

would also be unavailable. However. section 1291 itself contains a

finality requirement. and several courts. including our own, have

grafted onto section 1293/b) the qualifications on the finality rule

that have been developed by the courts under 28 U.S.C. §1291. See

In re Marin Motor Oil. Inc., supra; In re Regency Woods Apart-

ments, Ltd., 686 F.2d 899, 902 (11th Cir. 1982); In re Callister, 673

F.2d 305, 306 (10th Cir. 1982).

36a

Appendiz A

B.

Having dealt with the formidable obstacle presented

by 28 U.S.C. §1293/b) in an unsatisfactory manner, the

majority concludes that we have jursdiction 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 ma-

jority 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 inter-

locutory appeals involving district court orders “grant-

ing, continuing, modifving, refusing or dissolving in-

junctions, 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 re-

lies on the so-called Enelow-Ettelson doctrine, Enelow v.

New York Life Insurance Co., 293 U.S. 379 (1935);

Ettelson v. Metropolitan Life Insurance Co., 317 U.S.

188 (1942), under which a request to stay an action at

law pending resolution of an equitable defense is consid-

ered analogous to a request for an injunction. The ma-

jority concludes that the instant case comes within the

Enelow-Ettelson rule because Tilghman’s motion to dis-

miss the action in order to give effect to a forum selec-

tion clause is “analytically indistinguishable from a mo-

tion to stay an action at law pending arbitration.”

Typescript op. at 8. In essence, the majority’s argument

is that Tilghman’s motion is analogous to another type of

37a

Appendiz A

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 argu-

ment can withstand scrutiny.

Professor Moore explains the Enelow-Ettelson doc-

trine as follows:

If an initial action is filed that could formerly have

been maintained only at law. and if a stay of that ac-

tion 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

€ 110.20[3). 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 con-

tends are subject to an arbitration agreement. In

Shanferoke Coal & Supply Corp. v. Westchester Service

Corp., 293 U.S. 449 (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 Arbi-

tration 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 ex-

pand the contours of this doctrine, preferring to keep

Enelow-Ettelson as a narrow modification of the injunc-

tion 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

(1955), the Court was not persuaded to extend the rule

merely because of “incongruities” that arise out of “the

38a

Appendiz A

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 per-

mit appeals from “two kinds of orders: (1) orders grant-

ing or denving tnal by jury: and (2) orders staying or re-

fusing to stay pending actions until issues involved in

them are referred to arbitration.” 9 Moore’s Federal Prac-

tice, supra, at 240. But in numerous other seemingly

similar situations the rule has not been applied. For ex-

ample, 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 (1965). Moreover,

when a district court stays an action pending before it to

await developments in another action previously com-

menced involving the same issues, or to compel the par-

ties 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 Su-

preme 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 ana-

logical reasoning is proper, the majority inexplicably

leaps to the conclusion that this case is “analytically in-

distinguishable” 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 de-

39a

A ppendiz A

fense. Abeyance is not sought here because the court is

asked to surrender junsdiction absolutely. Tilghman

seeks not to have an equitable defense (such as an arbi-

tration agreement) resolved outside the bankruptcy

courts. It requests that the underlving 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, 320 F.2d 1027, 1029-30 (Sth

Cir. 1975); Wallace v. Norman Industries, Inc., 467

F.2d 824, 827 (Sth 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 mat-

ter 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.‘ 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 ba-

sis for interlocutory review in this case. This section

4. The majority suggests that appellate jurisdiction in the in-

stant case rests on the same hasis as appellate jurisdiction in The

Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972). and Scherk v.

Alberto-Culver Co., 417 U.S. 506 (1974 This is not correct. Both

Scherk and Bremen involved motions to stay the proceedings pend-

ing the termination of ongoing proceedings elsewhere, and in both

of these cases the district courts had enjoined the defendants from

further participation in the proceedings in the other forum. Thus,

these cases were appealable under 28 U.S.C. §1292(a) as orders

granting injunctions, totally apart from the Enelow-Ettelson rule.

40a

Appendiz A

gives the courts of appeals discretionary power to issue

wnits in aid of their potential jumsdiction. ! do not dis-

agree with the majonty’s holding that we can sua sponte

invoke our discretionary power under section 1651. But

] am not convinced that, under the law of this circuit,

this case is appropriate for mandamus.

It is hornbook law that the wnt of mandamus is an

“extraordinary” remedy “reserved for exceptional cir-

cumstances.” 9 Moore's Federal Practice, supra,

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 in-

volving 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 man-

damus 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 mer-

its 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.

4la

Appendiz A

Id. at 1012. This restrictive view still prevails. See Wood

v. Zapata Corp., 482 F.2d 350. 357 ‘3d Cir. 1973); Solo-

mon i. Continental American Life Insurance Co., 472

F.2d 1043 (3d Cir. 1973). The Supreme Court has also

indicated that mandamus is not an appropnate way to

review allegations of abuse of discretion. See Will v. Cal-

vert Fire Insurance Co., 437 U.S. 655 (1978); Parr v.

United States, 351 U.S. 513, 520 (1956).

The instant case falls squarely within the rationale

of All States Freight. Both the bankruptcy court and the

distnct court examined the factors relevant to the deci-

sion whether to dismiss the case on account of the forum

selection clause, or on forum non coveniens grounds.

The issue on appeal is whether these courts made a cor-

rect assessment of these factors. This is the kind of judg-

ment that under our cases cannot be reviewed by means

of section 1651.

C.

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 pro-

ceedings in bankruptcy, judicial interpretations of the fi-

nality requirement under section 1291 have been ap-

plied to section 1293. The majority reties on the so-called

collateral order doctrine in finding that the district

court's order is final and therefore reviewable under sec-

tion 129]. | 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 Co-

hen v. Beneficial Industrial Loan Corp., 337 U.S. 541

(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 ac-

tion. Recently, in Coopers & Lybrand v. Livesay, 437

42a

Appendix A

U.S. 463 (1978). the Court articulated the collateral or-

der 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 sep-

arate from the merits of the action. and be effective-

ly unreviewable on appeal from a final judgment.

Id. at 468. See also Moses H. Cone Memorial Hospital v.

Mercury Construction Corp.. 51 U.S.L.W. 4156. 4158

(Feb. 23. 1983): Firestone Tire & Rubber Co. v. Risjord,

449 U.S. 368 (1981): Yakowrcz v. Commonwealth of

Pennsylvania, 683 F.2d 778 (3d Cir. 1982).

The majonty holds that although Tilghman’s forum

non conveniens contention does not satisfy the elements

of the collateral order doctrine, the request for enforce-

ment 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 Rogers v. United States Steel

Corp., 508 F.2d 152. 159 (3d Cir. ), cert. denied, 423 U.S.

832 (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 ele-

ments is necessary for the doctrine to apply. Yakowicz,

supra, 683 F.2d at 783. A serious question exists wheth-

er two of the three Coopers & Lybrand factors are satis-

fied in this case.

First, | 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 re-

quires. It is true. as the majomnity 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

43a

Appendiz A

not whether the various asserted Jegal nghts are related,

but whether the same body of tacts must be considered

in evaluating those legal mghts. As the Supreme Court

explained in Coopers & Lybrand, supra. a collateral or-

der 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 compnsing the plaintiff's cause

of action.’” Id. at 469 ‘quoting Mercantile National

Bank v. Langdeau, 371 U.S. 555, 558 (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 (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 or-

der to rule on Tiighman’s motion to dismiss, both the

bankruptcy court and the distnct court had to decide

whether enforcement of the forum clause would be un-

reasonable 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(1972). This inevitably required the bankrupt-

cy court and the distnct court to plunge into the merits

in order to determine what items of evidence would like-

ly 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 pre-

ferred 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

Ha

Appendiz A

States.’ In this regard. the question of whether the fo-

rum selection clause should be enforced is identical to

the torum non conveniens issue: both issues would re-

quire us to consider the merits of the underlying dispute

in order to identify the practical problems facing the par-

ties in each potential forum.

I also have considerable doubts concerning the ma-

jority’s treatment of the third Coopers & Lybrand factor

— whether the order appealed from can be effectively re-

viewed on appeal from final judgment. The question

here is whether “an important nght 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 subjected to legal pro-

ceedings in an American forum. a nght which by nature

could only be vindicated before trial. Instead, the major-

ity 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 stat-

ute, 28 U.S.C. §2105 (1976). which provides that the

court of appeals may not reverse a district court “for er-

ror in ruling upon matters in abatement which do not in-

volve jurisdiction.” The majonty suggests that we would

apply this statute and would refuse to grant relief to

Tilghman if it should lose on the ments after being im-

properly subjected to trial in this country.

5. Similarly. an inquiry into the ments was essenual in order to

detemine whether an inspection of the blast equipment located in

New Jersey would be such a central part of the evidence on the

underlying contract claim that it justified disregarding the forum

clause of the agreement.

45a

Appendiz A

Under the majority's analvsis. section 2105 would

appear to present a significant restriction on our appel-

late review ot judgments rendered after tnal. If so, then

one would expect the statute to be the focus of numer-

ous court decisions and much scholarly comment. Yet

Protessors Wnght. Miller. and Cooper — whose treatise

is one of the few secondary authorities giving any con-

sideration at al! to this statute — describe it quite candid-

lv as “one of the most commonly ignored provisions of

the Judicial Code” and sav that its “most important fea-

ture... is certainly its disuse.” See 15 C. Wright, A.

Miller & E. Cooper. Federal Practice and Procedure

§3903 at 412, 413 (1976). lt 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. | am verv concerned about the im-

plications of the majority's analvsis upon our appellate

jurisdiction over orders which are undoubtedly final.

Under the majority's reading. section 2105 might pre-

clude from appellate review. on appeal from a final order,

a wide range ot issues, such as whether the district court

should have abstained or deferred to either state, admin-

istrative. or private proceedings. See United States v.

Alcon Laboratories, 636 F.2d 876. 885 (1st Cir. 1981),

cert. denied, 451 U.S. 1017 (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 juridiction. See C.

Wnight. 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

46a

Appendix A

2105 is to be resurrected, it should be done in a case

where the issue is directly presented.‘

II.

I understand fullv the laudable reasons that moti-

vate the majority in reaching the ments of this appeal

and | share them. We are constrained, however, as a

court of law. by statutory and judicial principles that re-

grettably do not permit us to apply the narrow collateral

order doctrine. section 1292/a). or section 165i. But we

can exercise appeljate jurisdiction in this case on a

straghtforward basis under the rule of Gillespie v. Unit-

ed States Steel Corp.. 379 U.S. 148 (1964). Gillespie es-

tablished 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 contruction,” id. at 152 (quoting

Cohen v. Beneficial Industrial Loan Corp., supra, 337

U.S. at 546), the Court said in Gillespie that

in deciding the question of finality the most impor-

tant competing considerations are “the inconve-

nience 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

6. In addition. 1t should be pointed out that the majority has

implicitly assumed that 28 U.S.C. §2105 applies only to wns of er-

ror after a full tal, not to appeals from collateral orders issued prior

to tnal. There is nothing in the language of the statute, nor in the

scant authonty on this section, that so limits its application. It would

seem to me that if this statute does limit our review of final orders,

as the majority suggests. it makes no difference whether the order

was fina] because the case had been fully disposed of or final be-

cause it fell under the collateral order doctrine.

47a

Appendiz A

that the inconvenience and cost of trving this case

will be greater because the Court of Appeals decided

the issues raised instead of compelling the parties to

go to tral with them unanswered... . And it

seems clear now that the case is before us that the

eventual costs, as all the parties recognize, will cer-

tainly be less if we now pass on the questions pre-

sented 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 Divi-

sion v. White, 681 F.2d 275 (Sth Cir. 1982); United

States v. Mississippi Power & Light Co.. 638 F.2d 899

(5th Cir. ), cert. denied, 454 U.S. 892 (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 for-

ward in our courts. As we have indicated in another con-

text. “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 dis-

48a

Appendiz A

courage piecemeal appeals.” First Jersey Securities, Inc.

v. Bergen. 605 F.2d 690. 702 : 3d Cir. 1979), cert. denied,

444 U.S. 1074 (1980). In Light of the reality of the situa-

tion. | think the order appealed from 1s sufficiently with-

in the “twilight zone of finalitv” to warrant immediate

appellate review under Gillespie.

Accordingly, on this basis 1 too would deny Coastal’s

motion to dismiss the appeal.

Il.

I join in parts IV and V of the majority's discussion

of the ments of the appeal. I also join in its disposition of

the case as set forth in part VI.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Crrcurt

49a

APPENDIX B

Judgment of the United States Court of Appeals

UNITED STATES COURT OF APPEALS

For the Third Circuit

No, 82-5391

ins

a

COASTAL STEEL CORPORATION, a Corporation of

the State of New Jersey,

V.

TILGHMAN WHEELABRATOR LTD. and

WHEELABRATOR-FRYE INC.

WheelabratorF rye Inc. and Tilghman

Wheelabrator Limited,

Appellants

(D. C. Civil No, 82-412)

in.

—

On Appeal from the United States District Court of the

District of New Jersey—Trenton

Present: Gibbons, Hunter and Rosen, Circuit Judges.

This cause came on to be heard on the record from the

United States District Court for the District of New Jer-

sey, Trenton and was argued by Counsel February 14,

1983.

50a

Appendix RB

On consideration, Whereof, jt js now here Ordered and

adjudged by this Court that the Judgment Of the said

District Court entered May 28, 1982, be, and the same js

hereby reversed and the cause remanded to the said Dis.

trict Court for the entry of an order, pursuant to Loca)

Rule 47(¢) (3), dismissing (, astal’s ¢ Mmplaint on appro.

priate conditions with respect to Wheela] rator’s appear.

ance in an English Court, and with respect to waiver of

any statute of limitations problem, Jt jg further ordered

and adjudged that Coasta]’s Motion to dismiss the Within

appeal, filed September 1, 1982. he and the Same js hereby

denied, Costs taxed against appellee.

ATTEST

SALLY Mrvos

Clerk

5la

APPENDIX C

Order Denying Petition for Rehearing

UNITED STATES COURT OF APPEALS

For the Third Circuit

Civil No. 82-5391

"™

———

COASTAL STEEL CORPORATION, a Corporation of

the State of New Jersey,

v.

TILGHMAN WHEELABRATOR LTD. and

WHEELABRATOR-FRYE INC,

WheelabratorF rye Inc. and Tilghman

Wheelabrator Limited,

Appellants

(D. C. Civil No, 82-412)

A

a

SUR PETITION FOR REHEARING

Present: Seitz, Chief Judge, Adams, Gibbons, Hunter,

Weis, Garth, Higginbotham, Sloviter, Becker and Rosen,

Circuit Judges.

The petition for rehearing filed by appellee in the above

entitled case having been submitted to the judges who par-

ticipated in the decision of this court and to all the other

S2a

Appendiz C

available circuit judges of the circuit in regular active

service, and no judge who concurred in the decision hav-

ing asked for rehearing, and a majority of the circuit

judges of the circuit in regular active service not having

voted for rehearing by the court in banc, the petition for

rehearing is denied.

Judges Adams and Garth would grant the petition for

rehearing.

By the Court,

Joun J. Gippons

Judge

Dated: June 141983

53a

APPENDIX D

Oral Opinion of the United States Bankruptcy Court

(September 21, 1981)

UNITED STATES BANKRUPTCY COURT

District of New Jersey-Bankruptey

Docket No. 80-0414

<>

~<-

IN THE MATTER OF

COASTAL STEEL CORPORATION

<<

—

TRANSCRIPT OF PROCEEDINGS

September 21, 1981

United States Courthouse and

Post Office Building, Trenton

New Jersey 08602

Commencing at 10:30 A.M.

Before:

The Honorable Amel Stark

Appearances:

Ravin & Kesselhaut, Esqs.

By: Peter R. Sarasohn, Esq.

Attorney for Debtor in Possession

Sta

Appendix D

Riker, Danzig, Scherer & Hyland, Esqs.

By: Douglas S. Eakeley, Esq.

Attorney for Tilghman Wheelabrator, Ltd.

and Wheelabrator-Frye, Inc.

Susan Schaub

Shorthand Reporter of N.J.

(2)* The Court: We now have Coastal Steel Corpora-

tion, a 7:,0tion by the Debtor to file a reply to a counter.

claim out of time. Gentlemen, do you have anything to

add to the voluminous briefs that have been filed?

Mr. Sarasohn: No, sir.

Mr. Eakeley: No, your Honor.

The Court: In this matter, the Plaintiff, Coastal Steel

Corporation, has filed, first, a motion for permission to

file a reply to a counterclaim. And the second motion is

for leave to amend its complaint to allege a Tort claim.

Now, as for the motion to permit a reply; to deny

this motion is, effectively, to construe the failure to an-

swer the counterclaim as an admission. I believe that

the sum involved in the counterclaim is some fifteen thou-

sand odd dollars. Absent any showing of bad faith, un-

due delay, undue prejudice, or the like, the leave to amend

a complaint or a pleading should be freely given in the

interest of justice; for to do otherwise is to deny the

Plaintiff its right to a day in Court.

*Figures in parentheses refer to each new page of the

stenographic transcript.

55a

Appendix D

This isn't a situation where there has been a demand

for admission, or a request for admission and no response,

where there has been no response to (3) interrogatories.

Interrogatories in this matter were so voluminous that it

is almost impossible to decipher either them or the an-

swer.

The policy of liberality appears to be applicable here,

since the attorney for the Plaintiff, Coastal Steel Cor-

poration has represented and indicated to the Court that

his failure to reply in time was caused by an inadvert-

ence, because of the voluminous pleadings filed in this

proceeding. I can well understand the attorney for the

Plaintiff missing the very last page of the reply, reply-

ing to some ten counts, which, I believe, were in the ori-

ginal complaint.

There is no doubt that the Federal Rule of Liberality

in pleadings, as set forth in Foman v. Davis, 371 US.

178 (1962), has been applied in Bankruptcy Court. And

the same was held In re David M. Hunt Construction

Company, 3 E.R. 92 (B.C.E.D. Pa. 1980), an Eastern Dis-

trict of Pennsylvania case, decided in 1980, wherein it

stated that it is, “entirely contrary to the spirit of the

Federal Rules of Civil Procedure for decisions to be

avoided on the basis of such mere technicalities.” I’m

quoting Foman at 371 U.S., at Page 181.

I don’t want to belabor the point. It would seem to

me the Plaintiff’s motion to file a reply to (4) Defend-

ant’s counterclaim must be granted. And I will grant

the motion of the Plaintiff to file an answer to the count-

erclaim. The Answer will be filed within five days of the

entry of the Order.

56a

Appendix D

Now, as to the second: The Plaintiff's second motion

seeks leave to amend its original Complaint to include

counts sounding in Tort.

Clearly, there are situations in attendant circumstances

wherein amendments which change the complexion of the

litigation are not permitted. In Bernstein v. N.V. Neder-

landsche-Amerikaansche, Etc., 79 F.2d 38 (E.D.N.Y. 1948),

a Eastern District of New York Case states, “but such

strict, harsh construction and application of the Federal

Rules of Civil Procedure are the exception to the gen-

eral rule of liberality in the amendment of pleadings.”

The Plaintiff Coastal Steel Corporation may encounter

great difficulty in proving negligence or any Tort claim

for that matter. But the Plaintiff, Coastal, has, at a

minimum, a colorab! action in Tort. The Defendant's

claim that Coastal’s causes of action, presented in its

would-be thirteenth and fourteenth courts are, as observed

by the quotes as set forth in page seven of Defendant's

brief, “absurd on the facts,” does not—does not render,

I should say, (5) the allegations of those claims legally

insufficient.

The second motion of Plaintiff, that is, to amend the

Complaint, it seems to the Court, must be granted. The

Amended Complaint will be filed within five days after

entry of the order.

Now, gentlemen, the next motion is a notice of motion

to dismiss the compiaint of the Debtor in possession on

behalf of the Defendant Tilghman Wheelabrator, Ltd.

Again, we’ve had voluminous briefs, replies, letter mem-

orandum. I understand you request an adjournment at

this time?

57a

Appendix D

Mr. Sarasohn: Yes, your Honor, in order to respond

to the last memorandum.

The Court: When is this going to end? If you re-

spond, Mr. Eakeley also is going to respond to your re-

sponse. And you're going to respond to him. And de-

spite the fact that the Court insists that it will not read

briefs that are submitted at the last moment, I spent

the weekend on this case. I don’t think you need an ad-

journment. I don't think you have to respond to that .

brief, Mr. Sarasohn. Do you have anything to add?

Mr. Sarasohn: No, I don’t, your Honor.

The Court; Actually, gentlemen, the motion to dis-

miss the complaint is on two basis; first, the (6) Defend-

ant Tilghman Wheelabrator, Ltd., moves for dismissal as

to it. Counsel for Tilghman also represents another De-

fendant, Wheelabrator Frye U.S.A., which is not a party

to this motion.

In its brief, Tilghman makes two distinct arguments

in support of its motion. First, that Plaintiff Coastal

Steel Corporation is bound by the choice of forum pro-

visions of a contract between Tilghman and Sir James

Farmer Norton & Co., Ltd., since Coastal claims third-

party beneficiary of that contract. The second argument

advanced by Tilghman is the argument of forum non-

convenience. And this argument apparently is rooted in

the contention by Tilghman that the “critical issue” in

this matter is not expert testimony, but, rather, “the

credibility of English witnesses,” as they set forth in

their brief.

These witnesses being beyond the effective process of

this Court, in considering the Defendant’s claim of forum

58a

Appendiz D

non-convenience, the Court observes, initially, that the

cause of action that is the subject of this motion may

properly be in this Court, or an English Court, and that

such is the conceptual presupposition of forum non-con-

venience. This was so held in Dahl v. United Technolo-

gies Corporation, 632 (7) F2d 1027 (3rd Cir. 1980). Con-

venience for both the litigants and the witnesses is the

real issue, since venue and jurisdiction can be had at

either here or in England. Both parties have presented

persuasive argument in their copious memoranda of law.

It is obvious that where a complex contract claim exists,

the place or places where the witnesses would acknowl-

edge the contract, as well as the subject matter of the

contract with knowledge, are likely to determine proper

venue. The defendant’s factual statement, amply support-

ed by exhibits, leads the Court in one direction; the im-

portance of witness credibility available only in England.

The Debtor-Plaintiff leads the Court back to the United

States with its claim that the situs of the subject mat-

ter of the contract, as well as that of important witnesses,

should control. It therefore contends that the United

States is the proper situs of this action.

The Court has no doubt that—that some inconvenience

will be caused regardless of where this case is ultimately

heard. That much is apparently unavoidable. I believe

that so far there have been taken depositions in England

of some ten to 15 witnesses—I don’t exactly recall, but

I think it was 13 witnesses (8) on the first trip to Eng-

land.

Coastal Steel commenced the matter here in an Ameri-

can Court of Law. It is apparent that they want it kept

here. The difficulty, or even impossibility of enforcing

any judgment against a foreign corporation, as the Court

59a

Appendix D

has previously stated, is Coastal’s problem. There has

been argument raised before me on different occasions

that a judgment against the Defendant would not be en-

forceable, that they would have to go to England any-

way. Coastal has argued that that’s not before the Court,

and that it is still their problem.

Coastal’s actions indicate that it is either confident of,

or unconcerned about, enforcement at this juncture. The

Court should not now, and really should not, interfere

with that judgment, with that determination by Coastal.

While the sheer volume of the briefs, memoranda, and

exhibits filed relating to this motion prohibit a complete

point-by-point, case-by-case exposition of the Court’s ana-

lysis, it appears that a large percentage of the potential

admissible evidence is within the United States. The ma-

chine is here.

The United States Supreme Court has stated that, “The

doctrine of forum non-convenience leaves (9) much to the

discretion of the Court, to which the Plaintiff resorts.”

Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 508 (1947).

The real lesson of Gilbert, at least the Court feels that

the real lesson of Gilbert, is that “The Plaintiff’s cause

of choice of forum should rarely be disturbed.” This is

so indicated on Page 508. The Third Circuit in 1980

followed this line of reasoning in Reyno v. Piper Air-

craft Company, 630 F. 2nd 149 (3rd Cir. 1980).

The contract for the purchase of the equipment by the

Debtor, Plaintiff, which is the very crux of the instant

litigation, was negotiated, entered into, and performed in

the United States. The subject matter of the contract,

the steel processing plant, is here, as are many witnesses.

The rights of Plaintiff may well be seriously jeopardized

60a

Appendix D

if the Plaintiff is required to pursue its cause of action

in England. This line of reasoning is followed in Vanity

Fair Mills y. Eaton Company, a Second Cirenit case de-

cided in 1956, cited at 234 F.2nd, 633, in which the Su-

preme Court denied cert. or certification at 352 U.S. 871

(1956). The nexus between the Plaintiff’s case and its

choice of forum (i.e. the Bankruptey Court) is sufficient

to warrant retention of jurisdiction and venue.

The burden of proof in a motion to dismiss for (10)

forum non-convenience is on the moving party. The Court

is of the opinion that the Defendant, Movant, Tilghman

Wheelabrator, Ltd., has not totally met its burden. There-

fore, the Court is constrained to deny the motion to dis-

miss on the basis of forum non-convenience.

Now, we come to the second argument of the Defendant,

Movant, Tilghman Wheelabrator, Ltd. In its motion to

dismiss, the Court has considered the merits of Tilgh-

man’s contention that a contractual forum selection pro-

vision effectively strips this Court of jurisdiction.

In the voluminous briefs and memoranda of law, ori-

ginal, secondary, supplemental, and reply—and if I had

granted the motion for adjournment today, there would

have been more briefs on top of briefs filed in this case—

the Court was dispatched on an exhaustive journey

through virtually every applicable case regarding the en-

forceability of contractual choice of forum clauses.

A myriad of cases, resulting in a variety of holdings,

were brought to the Court’s attention. All manner and

review of authority were employed by opposing Counsel,

ranging from prior oral argument before the Court, to

hornbook law.

6la

Appendix D

(11) The efforts of Counsel for Coastal Steel and Tilgh-

men Wheelabrator have afforded the Court the oppor-

tunity to study and consider many learned opinions and

authoritative commentaries on the subject of forum selec-

tion. And the Court has learned quite a lot, as a result

of briefs which were submitted, and the research which

I’ve had to do.

But after it’s all said and done, the issue then, finally

before the Court today is this: Is the choice of forum

clause, and in the Tilghman Wheelabrator contract, bind-

ing upon Coastal Steel Corporation?

Case law concerning what this Court considers to be

the threshold issue of forum selection and provisions is

clear. An otherwise valid, enforceable contractual choice

of forum clause will be given its full effect, unless a

Court of competent jurisdiction exercises its discretion

to strike down that clause in the interest of justice.

The often cited M/S Bremen v. Zanata Off-Shore Oil

Company, 407 U.S. 1 (1972) states, “A contractual choice

of forum clause should be held unenforceable if enforce-

ment would contravene a strong public policy of the

forum in which suit is brought, whether declared by

statute, or by judicial decision.” This (12) is found at

page 15.

Congress, under the Bankrupety Code, has recently

expanded the jurisdictional reach of the Bankruptcy Court.

Title 28 of the U.S. Code, section 1471, at subsection (c)

states that the Bankruptcy Court “shall exercise all of

the jurisdiction conferred by this section.” Abstention,

we note, is limited to those situations where the interest

of justice is jeopardized. This is found in section (d)

of section 1471.

62a

Appendix D

The jurisdiction conferred by 28 U.S.C. 1471 has been

termed “substantially broader than any removal juris-

diction, hitherto known in Federal Jurisprudence.” This

is so stated in Jn re Project Omeco, 3 B.R. 286, 285 (B.C.

Dist. Colo. 1980). There are many cases of Bankruptcy

Court abstention in favor of State Court; and they're

easy to find. But they do not hold that the Court must

abstain. They hold that for reasons best known to the

Court, itself, that it may abstain.

Congress, in Section 1471, and the subsequent sections

under Title 28, has expressed an intent that the Bank-

ruptey Court be a “quick Court”, effecting expedited re-

coveries by Creditors, and speedy rehabilitation of Debt-

ors. This is so stated in the (13) Project Omeco matter,

which I have previously cited.

Subsection (b) of Title 28, section 1471 of the U.S.

Code, is the basic jurisdictional grant concerning cases

related to bankruptcy. Collier on Bankruptcy discusses

subsection 6 as, “evincing Congressional intent to bring

all the litigation within the umbrella of the Bankruptcy

Court.” It quotes the House Report, No. 595 of the

Ninety-Fifth Congress Session, 1977, at Pages 445 and

446. The Legislative history of the Title 28 U.S. Code

1471 is, in Congress’ own words, “intended to leave no

doubt as to the scope of the Bankruptcy Court’s juris-

diction.” Again, at Page 146. One need not to look too

hard to find persuasive evidence of the requisite “strong

public policy.”

The Court could find in reported decisions which would

be on the proverbial “all fours.” However, the United

States Court of Appeals for the Third Circuit has re-

cently upheld a District Court decision which applied a

second test for enforceability of contractual choice of

63a

Appendiz D

forum clauses, advanced by the United States Supreme

Court. The case of Copperwald Steel Company v. Demag-

Mannosmann-Boehler, 347 F. Supp. 53 (W.D. Pa.) (1972)

aff.’d 570 F. 2d 953 (3rd Cir. 1978), a Western District

of Pennsylvania Case, decided in 1972, and (14) affirmed

by the Third Circuit in 1978, deal with the “unreason-

able and unjust under the circumstances test” of Bremen.

ae Court, in Copperweld, held that an American pur-

chaser of a casting plant was not bound by a contractual

choice of forum clause, despite the fact that the plant

was designed in Germany by a German corporation. It

was noted by Judge McCune, in Copperweld, that wit-

ness inconvenience was unavoidable, regardless of the

Court’s decision, but that since the plant’s performance

was at issue, and the plant, itself, was located in the

United States, the jurisdiction over the matter would be

retained in the United States, due to the “obvious imprac-

ticability” of forcing the Plaintiff into a foreign Court.

To summarize, Bremen has given two related but

alternative tests for determining the enforceability of con-

tractual forum selection clauses.

The Court’s decision here today should not, and must

not be construed, due to the necessary overlapping and

intertwining nature of the Court’s discussionwof the issues

involved; under either the “unreasonable, under the cir-

cumstance” test, or the “strong public policy of the forum”

test, both set forth in Bremen, the Court must determine

that the interest of justice (15) would not be served by

the enforcement of the contractual forum selection clause

of the Farmer Norton-Tilghman contract.

While struggling with the complex issues presented by

this motion, the Court has ever been mindful of the Su-

ba

Appendix D

preme Court’s admonition, in Bremen, to avoid adoption

of the “provincial attitude” towards sound retention of

jurisdiction, But in the final analysis, the Court is per-

suaded that Tilghman’s motion to dismiss, based upon

the choice of forum clause, as well as the forum non-

convenience agreement, must be denied. An order will

be submitted.

Mr. Eakeley: Judge, will the Court entertain a mo-

tion to certify the—

The Court: I don’t think it’s a final order. I don’t

think it’s certifiable.

Mr. Eakeley: I mean, certifiable as an interlocutory

order.

The Court: I don’t think it’s—

Mr. Eakeley: We researched the issue.

The Court: Yes, but I don’t think it’s an appealable

order.

Mr. Sarasohn. Thank you, Judge.

The Court: You'll argue about that?

Mr. Eakeley: Well, with deference, we (16) definitely

will consider, further, our situation before—

The Court: In the event that it’s determined that

either or both of my determinations are appealable, I

will reserve the right to write more than a 21-page opin-

ion over the weekend.

Mr. Eakeley: Thank you, your Honor.

65a

APPENDIX E

Opinion of the United States District Court

(January 27, 1982)

UNITED STATES DISTRICT COURT

District of New Jersey

Mise. 81-195

=

— >

In Re:

COASTAL STEEL CORPORATION, a corporation of

the State of New Jersey, et al.,

Debtor

COASTAL STEEL CORPORATION, a corporation of

the State of New Jersey,

Plaintiff

vs.

SIR JAMES FARMER NORTON & CO. LTD., et al.,

Defendants

Ackerman, District Judge

This is an application for leave to appeal from an order

of the Bankruptcy Court, Judge Stark, dated November

9, 1981, denying the motion of defendant Tilghman Wheel-

abrator Inc. to dismiss the action brought against it by

66a

Appendix E

the plaintiff-debtor. For the reasons I will set forth be-

low, I am granting defendant leave to appeal.

Plaintiff Coastal Steel Corp., (“Coastal”), filed a com-

plaint against the defendants for alleged breaches of a

contract to purchase an in-line steel working plant. De-

fendant Sir James Farmer Norton & Co. Ltd., (“Norton”),

an English company, contracted to sell the plant to Coast-

al to be located in New Jersey. Norton went into re-

ceivership and the receiver has refused to appear in this

action. Defendants Charterhouse Japhet Export Finance

Ltd., and Charterhouse Group International, Inc., who fi-

nanced the transaction, have entered into a settlement

with the plaintiff. The remaining defendants are Tilgh-

man Wheelabrator Ltd., (“Tilghman”), an English com-

pany and Wheelabrator-Frye USA, whose principal place

of business is in Indiana. Tilghman is third-tier sub-

sidiart of Wheelabrator-Frye. In connection with the

Coastal-Norton contract, Norton entered into a contract

with Tilghman to supply a multiple bar stock cleaning

and handling system. The supervisory services required

under the Norton-Tilghman contract were supplied by

Wheelabrator-Frye pursuant to Tilghman’s request.

The machine was built, inspected and accepted in Eng-

‘land before being shipped to New Jersey. It is alleged

that the machine#ceased functioning properly in Febru-

ary 1980. Subsequently, Coastal filed a Chapter XI bank-

ruptey petition and this action followed. In its claims

against Tilghman Coastal claims it is a third party bene-

ficiary of the Norton-Tilghman contract. It also has

amended its complaint to include a cause of action sound-

ing in tort.

The order of Judge Stark of November 9, 1981, denied

Tilghman’s motions to dismiss the action under the doc-

67a

Appendix E

trine of forum non conveniens or under a forum selec-

tion clause in the Norton-Tilghman contract. Judge Stark

ruled that the defendant had not satisfied its burden of

proving inconvenience sufficient to upset the plaintiff's

choice of forum. He stated that some witnesses would

be inconvenienced no matter where the action was heard.

Noting that defendant contended that issues of credibility

of witnesses in England who could not be subpoenaed

would be centrally involved in the case, the court was

persuaded that the action was properly in a United States

court because of the large percentage of potential ad-

missible evidence.

In ruling on the defendant’s second argument in favor

of dismissal, Judge Stark refused to give full effect to

the contractual choice of forum clause. Relying upon

the two tests enunciated in M/S Bremen vy. Zapata Off-

Shore Co., 407 U.S. 1 (1972), he held that the clause

should not be enforced because it would contravene the

strong public policy of broad bankruptcy jurisdiction evi-

denced in the legislative history of 28 U.S.C. 41471 and

because the contracted forum was unreasonable under the

circumstances.

Defendant Tilghman applies to this court for leave to

appeal from this interlocutory order pursuant to Interim

Bankruptcy Rule 8004 and 28 U.S.C.A. §1334(b), which

is in effect during the transition period under the new

Bankruptcy Code. See note preceding 28 U.S.C.A. $1471.

Section 1334(b) provides for appeal of an interlocutory

order “only by leave of the District Court to which the

appeal is taken.” While the test of appealability has

not been set forth in section 1334(b), it appears that

analogy to 28 U.S.C. §1292(b) is appropriate. See Mat-

ter of West Coast Computer Services, Inc., 6 B.R. 330

6Sa

Appendix E

(M.D. Fla. 1980). 1 Collier on Bankruptcy, §3.03 (1981

ed.).

The standard under 1292(b) imposes three requisites

for certification. The order must 1) involve a controlling

question of law, 2) offer substantial ground for differ-

ence of opinion as to correctness, and 3) if appealed im-

mediately materially advance the ultimate termination of

the litigation. See Katz vy. Carte Blanche Corp., 496 F.2d

747 (3d Cir. 1974) (reargued en bane). While plaintiff

argues that issues submitted to the discretion of the bank-

ruptey judge are not ordinarily certifiable, citing Stand-

ard vy. Stoll Packing Corp., 315 F.2d 626 (3d Cir. 1963),

Katz is to the contrary. Judge Gibbons’ statement for

the court is apposite here and worth quoting at length:

A controlling question of law must encompass at

the very least every order which, if erroneous,

would be reversible error on final appeal. If the

statute were interpreted to exclude any such order

that interpretation would be inconsistent with the

clear intention of the sponsors to avoid a wasted

trial.

2 > *

The clear case of a controlling question of law—

one which would result in a reversal of a judg-

ment after final hearing—serves to focus upon the

limited precedential value of statements about the

exercise of discretioh appearing in §1292(b) cases

dealing with orders granting a change of venue.

If an order changes venue to a place where there

would be no jurisdiction, no discretion is involved

and the certain reversal of the judgment on juris-

dictional grounds after trial should be avoided. See

28 U.S.C. §1404(a); cf. Swindell-Dressler Corp. v.

69a

Appendix E

Dumbauld, supra. If there are two districts, either

of which would have jurisdiction, but one of which

is in the opinion of the district court superior, it

is extremely unlikely that a change of venue would

result in a reversal after final judgment. As to

most such orders it matters little whether one says

that they do not decide a controlling question of

law or that their review will not materially advance

the litigation. However they are decided the liti-

gation will go forward and a resulting final judg-

ment will not, on the basis of the order, be dis-

turbed on appeal. But a district court could so

abuse the discretion vested in it by 28 U.S.C. $1404

(a) as to commit error reversible after final judg-

ment. It could, for example, in a case in which

credibility of witnesses was crucial, transfer to a

venue in which the critical witness on one side

was beyond the reach of a subpoena and available

for testimony only by deposition. That would be

an exercise of discretion. It might also be a ground

for the grant of a new trial after final hearing.

Obviously such a result should be preventable by

a §1292(b) appeal if the district judge anticipat-

ing the problem certified the change of venue order

for interlocutory appeal. The key consideration is

not whether the order involves the exercise of dis-

cretion, but whether it truly implicates the policies

favoring interlocutory appeal. The determination

of what orders are properly reviewable under

§1292(b) must be made by a practical application |

of those policies, not by a mechanical application

of labels such as “discretionary” or “nondiscretion-

ary”. Those policies, both before and since the

enactment of §1292(b) have included the avoidance

70a

Appendix E

of harm to a party pendente lite from a possibly

erroneous interlocutory order and the avoidance of

possibly wasted trial time and litigation expense.

496 F. 2d at 755-56.

In this case, the order does implicate the policies favor-

ing interlocutory appeal. Plaintiff argues that the case

essentially involves expert testimony, but defendant claims

that the credibility of English witnesses who were in-

volved in the building, inspecting, and approving of the

machine may be at issue. The prejudice from this pos-

sibly erroneous order is clear as is the expense and time

which may be wasted if the order is reversed after a

lengthy trial in this country. Also, because it appears

to be a matter of first impression, there is substantial

ground for difference of opinion whether the clause in the

contract selecting a forum should be enforced against

Coastal or whether there is strong public policy against

its enforcement in the jurisdictional provisions of the

bankruptcy court.

For these reasons, I will grant leave to defendant

Tilghman to appeal from Judge Stark’s denial of its mo-

tions. Argumen’ will be scheduled for the February 19,

1982 motion day in this court. Briefs should be sub-

mitted, according to the rules, ten (10) days before the

motion day.

An order in conformance with this opinion has been

filed by the court.

Dated: January 27, 1982.

7la

APPENDIX F

Oral Opinion of the United States District Court

(May 3, 1982)

UNITED STATES DISTRICT COURT

District of New Jersey

Civil No. 82-412

—

—

COASTAL STEEL CORPORATION

vs.

TILGHMAN WHEELABRATOR, LTD. and

WHEELABRATOR-FRYE, INC.

&

——_

May 3, 1982

Trenton, New Jersey

Before:

The Honorable Harold A. Ackerman, Y.S.D.J .

Appearances:

Ravin & Kisselhaut,

By: Peter R. Sarasohn, F'sq.

For Coastal Steel Corporation

Riker, Danzig, Scherer & Hyland

By: Douglas S. Eakeley, Esq.

For Tilghman Wheelabrator, Ltd. and

Wheelabrator-Frye, Inc.

72a

Appendiz F

(2)*° The Court: I want to say this at the outset,

because I think if one reads appellant’s first brief, one

might draw the conclusion that appellant was critical of

Judge Stark for reading his opinion. He came out and

read his opinion. I think that is a fair statement to

make.

I announced to the parties that I was prepared to rule

this morning. I made that very, very clear. I have

listened to the arguments, and I must say to counsel

that I haven’t changed my mind, but I has listened to

you and I want to be absolutely up-front with you.

If you were here earlier on a previous motion, I don’t

know if you were here or not, the attorney did change

my mind, so I would like to think that I am not totally

inflexible.

This is an appeal from an order of the Bankruptcy

Court, Judge Stark presiding, dated November 9, 1981,

denying the motion of defendant Tilghman Wheelabrator,

Inc. (Tilghman) to dismiss the action.

On January 27, 1982, I granted the defendant leave to

appeal this interlocutory drder. That grant was based

principally on the fact that even though the Judge’s order

involved an exercise of discretion, an interlocutory re-

view might avoid a perhaps unnecessary lengthy and ex-

pensive trial. See Katz v. Carte Blanche Corporation, 496

F.2d 747, 755-56 (3d Cir. 1974). It was reargued, I might

say, en (3) banc.

For the reasons I will set forth, I am affirming the

Bankruptcy Court’s order.

The facts relevant to this appeal show the following:

the plaintiff, Coastal Steel Corporation (Coastal) is the

73a

Appendiz F

Bankruptcy Court has jurisdiction over this action under

28 U.S.C. § 1471(b) as a civil proceeding “arising in or

related to cases under Title XI.” Specifically, this is

a suit filed against various defendants for damages al-

legedly due the plaintiff under contractual and tort theo-

ries of recovery.

Plaintiff is the successor in interest to Jersey Cold

Drawn Steel Corporation (JCD). It is a New Jersey

corporation which fabricates steel wire.

On November 9, 1976, JCD entered into a contract

with defendant Sir James Farmer Norton, an English

company, for an “in-line steel working plant in turn-key

condition ready for commercial production.”

The plant was to be established on the New Jersey

premises of JCD. In connection with the JCD-Norton

contract, Norton subcontracted with defendant Tilghman

for a multiple bar stock cleaning and handling system.

At Tilghman’s request, defendant Wheelabrator-Frye, Inc.

(Wheelabrator) was to “commission” in New Jersey the

machine provided by (4) Tilghman.

Tilghman is an English company and a third-tier sub-

sidiary of Wheelabrator.

Wheelabrator is an American company with its prin-

cipal place of business in Indiana and an office in New

Jersey.

The other defendants named in the complaint were

Charterhouse Group International, Inc., who financed the

transaction. These companies, both of which are English,

have entered into a settiement with the plaintiff.

Defendant Norton has gone into receivership and the

receiver has refused to appear in this action.

74a

Appendix F

The only remaining defendants, therefore, are Tilgh-

man and Wheelabrator.

The order of Judge Stark denied Tilghman’s motion

to dismiss on two proffered grounds: the doctrine of

forum non conveniens and the enforcement of a forum

selection clause in the Norton-Tilghman subcontract man-

dating that the action be tried in an English court of

law.

Judge Stark ruled, as I summarized in my January

opinion, that the defendant had not satisfied its burden

of proving inconvenience sufficient to upset the plaintiff’s

choice of forum. There would be inconvenience to some

witnesses no matter which side of the ocean the action

was heard.

(5) Noting that the defendant contended that the cred-

ibility of unavailable English witnesses would be cen-

trally involved in the case, the Court was persuaded that

venue was proper in the United States because of a

large percentage of potential admissible evidence.

On the issue of the effect of the forum selection @nse,

Judge Stark held the clause to be unenforceable under

either of the tests enunciated in M/S Bremen y. Zapata

Off-Shore Company, 407 U.S. 1 (1972). He found that

enforcement of the clause in the Norton-Tilghman sub-

contract would contravene the strong public policy of

broad bankruptcy jurisdiction evidenced in the legisla-

tive history of 28 U.S.C. § 1471 and that it would be

unreasonable under the circumstances.

Before I discuss the merits of this appeal, there is a

procedural matter to be taken care of. By motion filed

on short notice, which I might emphasize was by per-

mission of this Court, that plaintiff has sought clarifi-

75a

Appendix F

cation of exactly which party is before the Court on this

appeal. The plaintiff argues that only Tilghman moved

to dismiss the complaint in the Bankruptcy Court, that

the order of Judge Stark was only as to Tilghman, and

that my certification of this appeal was correspondingly

limited in application to Tilghman.

Wheelabrator, on the other hand, argues that it is

represented by the same counsel as Tilghman, that it

(6) explicitly joined in the dismissal motion in the papers

in support of the motion, and that it preserved its ob-

jections to the from of the November 9th order. I am not

persuaded by defendant’s protestations.

I was aware of the difference of opinion on this mat-

ter when I ruled on the certification, and quite conscious-

ly restricted my order to defendant Tilghman. The order

being appealed from is limited in application to defend-

ant Tilghman. Defendant Wheelabrator, therefore, has

nothing to appeal from. Also I do not find that Judge

Stark erred in refusing to accept the informal method

of notification of joinder put forward by defendant’s

counsel. See Federal Rule of Civil Procedure 7.

I note that that rule applicable to adversary proceed-

ings is applicable to adversary proceedings in bankruptcy.

Proposed Rulé 2007 allows for oral motions only in cer-

tain circumstances.

An example of a permissible oral motion is one to strike

evidence or for a directed verdict during a trial. But

argument on a motion does not constitute a trial or

hearing for purposes of this rule. See Shapiro v. Free-

man, 38 FRD 308 (S.D. N.Y. 1965).

Furthermore, as I am affirming the decision of the Bank-

ruptecy Court, defendant Wheelabrator is not really prej-

udiced.

Ta

Appendix F

(7) The standard of review on this appeal is whether

the Bankruptcy Court abused its discretion in finding it

proper to maintain the action in the defendant’s chosen

forum. See In re Pigott, No. 81-2044 (March 23, 1982

3d Cir.). As the forum selection clause issue invokes

a written agreement, I shall consider it before reaching

the equitable doctrine of forum non conveniens,

Appellant argues that the complaint presents a single

cluster of operative allegations centering on the Norton-

Tilghman subcontract for a blast cleaning machine to

which appellee may, at best, be a third-party benefici-

ary.

Most generously viewed, the claims are contractual and

cannot be styled in tort. Furthermore, appellee is bound

by the forum selection clause because it is neither vio-

lative of a public policy nor unreasonable under all the

circumstances. Appellee entered the international market

when it purchased an English turn-key plant and it should

not now be allowed to hide behind provincial skirts.

Appellee does not dispute that some of its causes of

action rely upon the contractual agreement between Tilgh-

man and Norton. However, the non-contractual claims

are not subject to the terms of the forum selection clause.

These include claims for strict design liability, negligent

design, manufacture, installation and repair, fraudulent

(8) representation, and tortious interference.

The remaining claims sound in breach of contract in

express and implied warranties. Under these circum-

stances, and when supplemented by the facts of appellee’s

bankruptcy and its less direct connection to the subcon-

tract, the Judge’s decision below was not incorrect.

Tia

Appendix F

Appellant is correct in its statement that forum selec-

tion clauses do not “oust jurisdiction” and are now, as

a general rule, held enforceable. See Bremen cited supra

at page 12.

In Bremen, the Court st

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