Legal Definitions - Enelow–Ettelson rule

Enelow–Ettelson rule

The Enelow–Ettelson rule was a legal doctrine, now no longer in effect, that determined when a specific type of federal court order could be immediately appealed to a higher court.

Historically, the American legal system distinguished between "actions at law" (cases primarily seeking monetary compensation, like for breach of contract or personal injury) and "actions in equity" (cases seeking non-monetary remedies, such as specific performance of a contract, injunctions, or the enforcement of arbitration agreements). Although these separate systems have long merged, this historical distinction sometimes influenced procedural rules.

Under the Enelow–Ettelson rule, if a federal court issued an order to pause (or "stay") a lawsuit that was originally an "action at law," and it did so to allow for the consideration of an "equitable defense" (such as a request to compel arbitration), that order to pause was considered an immediately appealable "injunction." This meant that parties did not have to wait for the entire case to conclude before they could challenge the judge's decision to temporarily halt the proceedings. This rule was eventually superseded by later legal developments and is no longer applied in federal courts.

Here are some hypothetical scenarios where the Enelow–Ettelson rule would have applied:

• Example 1: Contract Dispute and Arbitration
  • Imagine a software development company sues a client in federal court for $500,000 in unpaid fees, which is a classic "action at law" seeking monetary damages. The client, however, argues that their contract includes a mandatory arbitration clause and asks the court to pause the lawsuit and send the dispute to arbitration. This request for arbitration is considered an "equitable defense." If the federal judge granted the client's request to stay the lawsuit pending arbitration, the Enelow–Ettelson rule would have allowed the software company to immediately appeal that stay order to a higher court, rather than waiting for the arbitration process to conclude.
• Example 2: Insurance Claim and Policy Rescission
  • Consider a situation where an individual sues an insurance company in federal court to recover $100,000 under a life insurance policy after a family member's death. This is an "action at law" for monetary payment. The insurance company responds by claiming the policyholder committed fraud on the application and seeks to have the policy declared void (rescinded). The company asks the court to stay the payment lawsuit while the "equitable" issue of fraud and policy rescission is determined. If the court granted this stay, the Enelow–Ettelson rule would have permitted the individual to immediately appeal the decision to pause their claim for payment.
• Example 3: Product Liability and Mediation Agreement
  • Suppose a consumer files a federal lawsuit against a car manufacturer, seeking compensation for injuries sustained due to a defective part – another "action at law" for damages. The manufacturer then presents evidence that the consumer previously signed an agreement requiring all disputes to go through mediation before litigation, and asks the court to stay the lawsuit to enforce this "equitable" mediation agreement. If the federal judge ordered a stay of the proceedings to compel mediation, the Enelow–Ettelson rule would have allowed the consumer to immediately appeal that order, challenging the decision to halt their lawsuit.