Non-Party Immunity from Arbitration Awards: Third Circuit Upholds Permanent Injunction in Trustees v. Patterson

Introduction

Trustees of the General Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith, Inc. (“Corporation”) and the Church of the Lord Jesus Christ of the Apostolic Faith (“Church”) appealed the District Court’s conversion of a preliminary injunction into a permanent injunction. The dispute centers on whether an arbitration award and a subsequent writ of possession in favor of Anthonée Patterson may be enforced against the Church and Corporation, neither of which were parties to the prior arbitration or the underlying state-court litigation. Key issues include subject-matter jurisdiction under the Rooker-Feldman doctrine, the application of issue preclusion (collateral estoppel), and the exercise of equitable relief to protect the Church’s autonomy under the First, Fifth, and Fourteenth Amendments.

Summary of the Judgment

On June 6, 2025, a Third Circuit panel affirmed the District Court’s order granting a permanent injunction protecting the Church and Corporation from enforcement of the arbitration award. The appellate court held:

The District Court did not abuse its discretion in converting the preliminary injunction into a permanent one, finding actual success on the merits, irreparable harm absent relief, balanced equities, and public-interest considerations favoring protection of non-party religious entities.
Issue preclusion was proper: the findings from the extensive preliminary-injunction record were “sufficiently firm” and deserving of preclusive effect.
The Rooker-Feldman doctrine does not bar the suit because the Church and Corporation were not “losers” in the state-court Patterson Action.
Collateral estoppel does not apply to prevent the Church and Corporation from litigating on the merits of the arbitration award, because they were neither parties nor in privity with the arbitrating parties.
There is no right to a jury trial when relief sought is equitable—here, a declaration and injunction.

Analysis

Precedents Cited

Hawksbill Sea Turtle v. FEMA (126 F.3d 461): Established that findings from a preliminary-injunction hearing can carry issue-preclusive weight if the decision was reasoned, fully litigated, and appealable.
Dyndul v. Dyndul (620 F.2d 409): Emphasized factors relevant to applying preclusion to preliminary-injunction findings.
In re Brown (951 F.2d 564): Outlined the criteria for determining whether a prior decision is sufficiently firm to merit preclusive effect.
NAACP v. N. Hudson Reg’l Fire & Rescue (665 F.3d 464) and Kelly v. Maxum Specialty Ins. Grp. (868 F.3d 274): Govern standards of review for injunctions and declaratory judgments.
Shields v. Zuccarini (254 F.3d 476): Articulated the four-factor test for permanent injunctions (success on the merits; irreparable injury; balance of harms; public interest).
Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc. (458 F.3d 244): Set the standard for reviewing issue-preclusion determinations.
Great W. Mining & Min. Co. v. Fox Rothschild LLP (615 F.3d 159): Clarified the scope of the Rooker-Feldman doctrine.
Witkowski v. Welch (173 F.3d 192): Defined collateral-estoppel prerequisites in the Third Circuit.

Legal Reasoning

The Court grounded its decision on two principal lines of analysis:

Injunction Standards: Under Shields v. Zuccarini, the District Court must find (1) success on the merits, (2) irreparable injury, (3) balanced equities, and (4) public-interest alignment. Having held a three-day hearing, received voluminous evidence, and issued an 85-page reasoned opinion, the District Court found each factor weighed in favor of the Church and Corporation. No new evidence undermined those findings.
Preclusive Effect of Preliminary Findings: Citing Hawksbill and its progeny, the Third Circuit confirmed that a fully litigated, appealable, reasoned opinion from a preliminary injunction can be given preclusive effect in the same proceeding. The Church and Corporation did not need to relitigate the same issues at the merits stage, because the facts were firmly established and Patterson did not present new evidence.

The Court rejected Patterson’s Rooker-Feldman challenge on jurisdictional grounds: the doctrine applies only when a federal plaintiff is a “state-court loser” seeking review of a state judgment. Because the Church and Corporation never participated in the prior state litigation, they cannot be considered state losers. Similarly, collateral estoppel did not bar the suit, since the Church and Corporation were neither parties to nor in privity with any party in the Patterson Action.

Impact

This decision reinforces several important principles:

Non-Party Immunity: Arbitration awards and state-court judgments cannot be enforced against entities or individuals who were not parties or in privity with a prior action, even when an arbitrator issues broad relief.
Issue Preclusion in Equitable Proceedings: Courts may give preclusive effect to detailed preliminary-injunction findings, promoting efficient resolution and discouraging re-litigation of the same facts.
Limits of Rooker-Feldman: The decision clarifies that the doctrine does not strip jurisdiction when a non-party to state litigation seeks to defend itself in federal court.
Religious Autonomy and Due Process: By recognizing constitutional interests (First Amendment free-exercise and associational rights, Fifth and Fourteenth Amendment due-process safeguards), the court underscores that private religious bodies have a federal-court forum to vindicate structural and procedural rights.

Complex Concepts Simplified

Rooker-Feldman Doctrine: A narrow rule barring federal courts from reviewing final state-court decisions—only applies to “state‐court losers” seeking federal review of state judgments.
Issue Preclusion (Collateral Estoppel): Prevents re-litigation of an issue that was (1) actually litigated, (2) decided by a final judgment, (3) essential to that judgment, and (4) between the same parties (or their privies).
Privity: A legal concept under which a non-party is bound by a prior judgment because their legal interests are sufficiently aligned with a party to the earlier litigation.
Preliminary vs. Permanent Injunction: A preliminary injunction preserves the status quo pending a full hearing. A permanent injunction issues after a trial on the merits, reflecting a final decision on injunctive relief.
Equitable Relief: Non-monetary remedies—such as injunctions and declaratory judgments—traditionally decided by judges, not juries.

Conclusion

The Third Circuit’s decision in Trustees of the General Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith, Inc. v. Patterson cements the principle that arbitration awards—and by extension, state-court judgments—cannot be enforced against entities that never participated in the underlying dispute. By affirming the District Court’s well-reasoned preliminary-injunction findings and converting them into a permanent injunction, the Court protected religious bodies’ autonomy while clarifying the scope of Rooker-Feldman and issue preclusion. The case will guide future litigants on the limits of executing arbitration awards, the binding nature of injunction-stage findings, and the availability of equitable relief for non-party defendants asserting constitutional and procedural protections.