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Video Tutorial Services, Inc. v. MCI Telecommunications Corporation
Citations: 79 F.3d 3; 1996 U.S. App. LEXIS 3822Docket: 1093
Court: Court of Appeals for the Second Circuit; March 3, 1996; Federal Appellate Court
MCI Telecommunications Corporation (MCI) appealed an order from the United States District Court for the Eastern District of New York that temporarily stayed arbitration related to a billing dispute with Video Tutorial Services, Inc. (VTS) pending mediation of a related lawsuit. The court found the appeal moot because the stay had expired after mediation was completed, and MCI failed to show a reasonable expectation of a similar stay being imposed in future disputes. The case arose from VTS’s cancellation of its contract with MCI due to unsatisfactory service, leading to VTS refusing to pay $71,000 in phone bills. VTS then sued MCI for a declaratory judgment, claiming it owed nothing, while MCI sought arbitration for the owed amounts and additional damages. A pre-motion conference resulted in the court ordering mediation and a stay of arbitration, which MCI contested. Following failed mediation, the stay expired, prompting the dismissal of the appeal as moot. MCI contends that the district court's order to temporarily stay arbitration pending mediation violated the Federal Arbitration Act, which allows a stay only when a dispute is not arbitrable. MCI further argues that even if the stay were permissible, the appellate court should review the order de novo and vacate it. The court expresses some reluctance to deny the district court deference, particularly as it has not yet evaluated the validity of the arbitration clause or the arbitrability of the dispute. However, the appeal is deemed moot because the stay is no longer in effect, aligning with precedents indicating that moot appeals lack jurisdiction. MCI argues that the issue is "capable of repetition, yet evading review," but has not sufficiently demonstrated this claim. For an appeal to fall under this exception, the action must be too brief to fully litigate before expiration, and there must be a reasonable expectation that the same party will face similar actions again. While the court acknowledges MCI may have met these criteria, it does not definitively decide on this point, noting the temporary nature of the stay and the likelihood of encountering similar orders in future mediation scenarios. MCI must demonstrate that the same parties are likely to face future disputes regarding the issues raised in this appeal, as established by precedent. The decision to hear such a case hinges on the probability that the matter will recur in future litigation. MCI failed to meet this requirement, as its claim that the district court might stay arbitration pending mediation again is speculative. The strained relationship between the parties further diminishes the likelihood of similar future controversies. Consequently, the appeal is dismissed as moot.