COFFIN, Chief Judge.
Nearly a half century after the merger of law and equity in the federal courts, we are called upon in this appeal to decide whether a complaint is "legal" or "equitable". The cause of our labors is the so-called Enelow-Ettelson rule, a much-criticized exception to the general bar on interlocutory appeals, under which the denial (or grant) of an equitable defense—here, arbitration
The action arose when appellee David Langley, doing business in Rhode Island as Dave's Auto Service Center, became dissatisfied with pipe-bending equipment he had bought from Major Muffler via a lease/finance arrangement with Colonial Leasing Co. of New England, and refused to make further payments under the lease. Colonial sued for breach and obtained a default judgment against Langley in federal district court in Oregon pursuant to a clause in the lease purporting to permit suit in that remote forum. In response, Langley sued Colonial and Major in Rhode Island state court to block enforcement of the Oregon judgment and, inter alia, to void the lease and sale contract. Colonial then removed the Rhode Island action to federal court, whereupon Major moved the district court for an arbitration order, invoking an arbitration clause in its sales contract with Langley.
We address at the outset the jurisdictional implications of Major's claim that it sought not only a stay pending arbitration under section 3 of the federal arbitration act, 9 U.S.C. § 3, but also an order compelling arbitration under section 4 of the act, 9 U.S.C. § 4. It is well settled that the denial of motion or petition for stay pending arbitration under 9 U.S.C. § 3 is not appealable as a "final judgment" under 28 U.S.C. § 1291 or as a "collateral" order under Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949); see USM Corp. v. GKN Fasteners, Ltd., 574 F.2d 17, 18-19 (1st Cir. 1978), and is appealable as an injunction under 28 U.S.C. § 1292(a)(1) only if Enelow-Ettelson requirements are met—that is, only if the underlying claim is "legal". See USM Corp. v. GKN Fasteners, Ltd., 574 F.2d 17, 18-19 (1st Cir.1978). By contrast, language in three cases of this court suggests that the denial of an order compelling arbitration under 9 U.S.C. § 4 is immediately appealable as a final judgment under 28 U.S.C. § 1291, without regard to Enelow-Ettelson. See USM Corp. v. GKN Fasteners, Ltd., supra; New England Power Co. v. Asiatic Petroleum Corp., 456 F.2d 183, 188 (1st Cir.1972); County of Middlesex v. Gevyn Construction Corp., 450 F.2d 53 (1st Cir. 1971).
Whatever its formal denomination, we are persuaded that Major's "petition" was in substance only a motion for stay under section 3 of the arbitration act and not for an order compelling arbitration under section 4. As Major's counsel himself argued below, Major is in effect home free; it has no claim against Langley and nothing to gain from arbitration. Major thus has no interest in initiating, much less compelling, arbitration:
For this reason, we might reasonably deem Major's section 4 request abandoned. In argument here, however, Major's counsel equivocated on the issue. We therefore do not rest on abandonment alone, but examine the question taken for granted in USM Corp., New England Power, and County of Middlesex, supra: namely, the general appealability of section 4 petitions brought in federal court after federal suit is already pending on the underlying claim for which arbitration is sought.
1. Appealability Under 28 U.S.C. § 1291
We begin our analysis with the observation that in none of the three cited cases was the question presented here actually decided. USM was a section 3 case which we specifically refused to treat as a section 4 case. In New England Power, the district court granted a stay under section 3 without ruling on the defendant's request for an order compelling arbitration under section 4; the section 4 request was thus not before us. Middlesex was a declaratory judgment action in which the district court's "order compelling arbitration" was in reality a full final judgment. Whether or not the denial of an order compelling arbitration in pending litigation is appealable as a final judgment generally, the grant of the order in Middlesex was. Moreover, Middlesex dealt with arbitration under Massachusetts law, not section 4 of the federal arbitration act.
First, we have no jurisdiction except as granted by Congress. That jurisdiction is for the most part confined to final decisions, subject to limited, narrowly enumerated exceptions. In the absence of express statutory authorization, we are reluctant to find implied jurisdiction under 28 U.S.C. § 1291 over what are in essence interlocutory orders. Since suit is left to proceed, denial of a section 4 request in the course of suit on the underlying claim is not a "final" order in the literal sense. Nor is it a "collateral" order under Cohen. To be appealable under Cohen, an order "must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978) (emphasis added). Whatever the application of the first two criteria, it is clear that no right is irrevocably prejudiced by the lack of immediate appeal from the denial of the section 4 request here. If erroneous, the denial can always be reversed on appeal from final judgment on the underlying claim, and the dispute referred to arbitration on remand.
Second, to give broader appealability to section 4 denials in pending cases than to section 3 requests would invite litigants interested in delay to concoct appealable orders by simply renumbering their motions or by joining section 3 and section 4 prayers. Although the two sections differ, the differences are irrelevant to the question of interlocutory appealability, and do not warrant different treatment here.
Third, litigants who wish to insure immediate appealability will have an incentive to seek arbitration early, before litigation on the underlying claim has begun. Given the strong Congressional policy in favor of arbitration, such early resort should be encouraged.
Finally, while arbitration may well be warranted in this case and a waste of judicial
Irrationalities may remain in this area of the law, and appealability may sometimes continue to turn on a race to the court-house, but some irrationality is unavoidable under Enelow-Ettelson and the present statutory scheme. See New England Power, supra, 456 F.2d at 189. We therefore hold that when federal suit on the underlying claim is pending, a district court's denial of an order compelling arbitration is not appealable under 28 U.S.C. § 1291.
2. Appealability Under 28 U.S.C. § 1292(a)
There remains the question of appealability under 28 U.S.C. § 1292(a)(1), which permits interlocutory appeals of orders denying injunctions. While a section 4 order is not ordinarily considered an injunction, see John Thompson Beacon Windows, Ltd. v. Ferro, Inc., 232 F.2d 366, 369 (D.C. Cir.1956); 9 J. Moore, Moore's Federal Practice ¶ 110.20[4.-1] at 247 & nn. 6-7, we are persuaded that Enelow-Ettelson compels us, purely for the purpose of appealability, to treat section 4 orders in pending suits as if they are "injunctions," whenever the underlying claim is "legal." Whether motion is made under section 3 or section 4 of the arbitration act, arbitration remains an equitable defense, and such a defense previously could be asserted against claims at law only by separate suit for injunctive relief in equity.
Applying these principles to the present case, it is clear that Major's petition, however numbered, is not appealable under the final decision provision of 28 U.S.C. § 1291. While formally denominated a "petition", it was not brought as an independent proceeding, for it bears the same docket number as Langley's underlying suit, and was heard by the same judge. We therefore conclude that the denial of Major's petition is appealable, if at all, only under 28 U.S.C. § 1292(a)(1), and then only if Langley's suit is "at law" for Enelow-Ettelson purposes.
Given Langley's repeated prayers for rescission of the equipment lease, Major wisely concedes that the action against Colonial is predominantly equitable. Major
Although the lease document itself purports to be between Langley and Colonial alone, the complaint alleges that "[b]oth defendants jointly extend credit and lease equipment in the order course of business and are tied to each other", and that "defendants" induced Langley "to enter into an equipment lease". Although Major has denied these allegations, we cannot say that they are a sham, and therefore take them at face value in determining the character of the complaint against Major. Insofar as the complaint against Colonial is equitable, it is likewise equitable vis-a-vis Major.
Moreover, the complaint asks not only that the equipment lease be rescinded, but "1. That said equipment lease and/or contract between plaintiffs and defendants be declared void and unenforceable" and "2. That said equipment lease and/or contract be . . . rescinded".
The context confirms our reading. The theory of the complaint is that Langley "was led to believe `that if he were dissatisfied with the equipment, within a two year period' that `he could send the equipment back' and that `the only thing he would lose would be his down payment and monthly payments that he had been paid.'" Since only the sales contract refers to a down payment, it is evident that rescission of the sales contract as well as the lease agreement is intended, for the sales contract declares itself integrated and gives Langley no right to return the pipe-bending equipment if dissatisfied, much less to do so at any time within two years.
Whether a "historical" or "predominant purpose" test is used, see USM Corp. v. GKN Fasteners, Ltd., 574 F.2d at 21-22 & n. 8, the result is the same. Given the claims for rescission, a chancellor would have had jurisdiction over Langley's whole suit against Major, including the claims for damages at law, under the so-called equitable clean-up doctrine. Under the predominant purpose test, a complaint seeking legal and equitable relief is deemed equitable in the face of an equitable defense unless the complaint is "wholly or basically and predominantly" an action at law, and the request for equitable relief is "merely incidental". USM Corp. v. GKN Fasteners, Ltd., 574 F.2d at 21; Standard Chlorine, supra, 384 F.2d at 309; Alexander v. Pacific Maritime Ass'n, 332 F.2d 266, 267 (9th Cir.1964). Since Congressional policy disfavors interlocutory appeals, doubts under the predominant purpose test are resolved against appealability. See USM, supra, 384 F.2d at 22 and authorities cited thereat; Danford v. Schwabacher, 488 F.2d 454 (9th Cir.1973). While Langley's prayers for damages are substantial, we cannot say that his action against Major is wholly or basically and predominantly at law, or that his claims for rescission against Major are merely incidental. We therefore conclude that the complaint against Major is equitable for Enelow-Ettelson purposes, and that the district court's denial of Major's petition is not appealable.
Although the quality of briefs and arguments on appeal makes us sympathetic to the trial court's impatience below, we note finally that our denial of jurisdiction does not signify approval of the district court's decision on the merits. Nor do we mean to prevent Major from initiating arbitration itself to secure an arbitral declaration of its and Langley's rights while trial is still pending. With those caveats, the appeal is hereby dismissed.
Nothing in our holding alters the appealability of independent section 4 petitions, or arbitration orders and stays that effectively operate as final judgments or collateral orders within the rule of Cohen. See, e.g., Moses H. Cone Memorial Hospital v. Mercury Construction Corp., ___ U.S. ___, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). At the same time, we do not believe that a separate docket number alone will suffice: The question is, as it should be, substance, not form.