In Sr. Kate Reid, and others, v Doe Run Resources, (8th Cir. Nov. 13, 2012), 35 children living near a smelting plant in Peru brought a claim against the owner of the facility, Doe Run Resources (Doe Run), for environmental contamination injuries. Doe Run sought a stay of the case pending the outcome of a related arbitration in Peru against Renco, a Doe Run affiliate.

In the related arbitration, Renco sought to compel Peru to defend claims against Renco and indemnify Renco based on a Stock Transfer Agreement (STA) from when the facility was privatised.

The lawsuit was filed in state court and Doe Run removed the case to federal court based on 9 U.S.C. § 205, which grants federal jurisdiction of any case that "relates to" an arbitration covered by the New York Convention. The plaintiffs argued that the suit did not "relate to" the Renco arbitration and moved for remand back to state court. However, that motion was denied.

On appeal, the Eighth Circuit noted that the removal right under § 205 is "substantially broader" than the general removal statute and held that a case may be removed to federal court under § 205 if a New York Convention arbitration "could conceivably affect" the outcome of the case. The court concluded that the issues in the Renco arbitration, including causation and culpability, could conceivably affect the outcome of the pending litigation, such that the case was properly removed under § 205.

Doe Run moved to stay the litigation pending the outcome of the Renco arbitration based on a:

The District Court denied Doe Run's motion to stay on both grounds and Doe Run appealed to the Eighth Circuit.

The plaintiffs argued that the Eighth Circuit did not have pendent appellate jurisdiction over the discretionary stay claim. The Eighth Circuit emphasised that pendent appellate jurisdiction is appropriate only in exceptional circumstances when the claim is "inextricably intertwined" with a claim over which the court has appellate jurisdiction. Claims are "inextricably intertwined" when the resolution of the direct claim "necessarily resolves" the attached pendent claim.

The Eighth Circuit held that Doe Run's claims for the two types of stays were not "inextricably intertwined" because the factors considered for the direct claim for a mandatory stay do not "necessarily resolve" the pendent claim for a discretionary stay. Therefore, the Eighth Circuit held that it did not have pendent appellate jurisdiction over the discretionary stay claim.

Regarding the mandatory stay under 9 U.S.C § 3, Doe Run argued that the District Court improperly denied that stay because the case was "referable to" arbitration based on the STA arbitration clause. Doe Run relied on an estoppel theory to argue that the plaintiffs, although non-signatories to the STA, were nevertheless bound by that agreement's arbitration clause, because they referenced and relied on the STA in their suit.

The Eighth Circuit was unconvinced and held that estoppel was inapplicable because the plaintiffs did not "directly benefit" from the STA. The Eighth Circuit stressed that the Renco arbitration against Peru differed significantly from the suit before the court, because the Renco arbitration centered on a breach of contract dispute and the litigation addressed claims of negligent operation of the smelting facility. The Eighth Circuit therefore held that the issues in the case were not "referable to" arbitration and the court affirmed the District Court's denial of Doe Run's request for a mandatory stay of the litigation.

This case demonstrates the difference between the "related to" standard for establishing federal jurisdiction over a claim and the "referable to" standard for purposes of obtaining a mandatory stay of litigation.