Recent Amendments to Louisiana Appellate Procedure Cast Doubt on Right to Interlocutory Appeal from Order Denying Arbitration

The Louisiana Court of Appeals held that the right to appeal an order denying arbitration is a jurisdictional issue that is not preempted by the Federal Arbitration Act (FAA). However, the Court did not address whether the FAA would preempt state law if the parties specifically agreed that the FAA would govern their agreement.

In Allen v. Valero Energy Corporation, No. 06-CA-726, 2007 WL 60523 (La. Ct. App. Jan. 9, 2007), Allen sued Valero, his former employer, for wrongful termination. At the trial court level, Allen argued that his claims should be resolved in arbitration in accordance with a reinstatement agreement signed by the parties. The trial court denied Allen's motion for a stay.

On appeal, Allen argued that the FAA governed the agreement and that the denial of a stay was appealable under 9 U.S.C. § 16(a). The Court disagreed and dismissed the appeal.

First, the Court noted that there was no evidence that the parties agreed that the FAA would govern their agreement. Additionally, the Court held that the right to appeal the decision of a state court is a jurisdictional issue that is not preempted by the FAA and should be resolved in accordance with state law.

Under a 2006 amendment to Louisiana Code of Civil Procedure, interlocutory judgments are appealable only when expressly provided by law. See La. Code Civ. Proc. Ann. art. 2083. Since no law allowed Allen to appeal the trial court's interlocutory judgment, the Court dismissed the appeal. However, Allen was not left without recourse because the Court can review his right to demand arbitration under its supervisory powers.

The issue of whether the FAA preempts state appellate procedures has not arisen in other jurisdictions because most arbitration acts, including section 28 of the Revised Uniform Arbitration Act, provide for an interlocutory appeal from an order denying a motion to compel arbitration. It remains to be seen whether Louisiana courts will entertain an interlocutory appeal from an order denying a motion to compel arbitration where the arbitration agreement specifically calls for application of the FAA.