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SCOTUS: Federal court cannot
"look through"
arbitration award
for jurisdiction to
vacate or confirm |
Badgerow v. Walters
(US Supreme Ct 03/31/2022)
http://case.lawmemo.com/us/badgerow.pdf
Sent to Custom
Alerts™ subscribers on 03/31/2022
The U.S. Supreme Court
held that a federal court could not "look through" an arbitration
award to the underlying dispute to determine if it had
jurisdiction to confirm or vacate the award.
An employee
sued in state court to vacate an arbitration award in favor of an
employer on a wrongful termination claim. The employer then
removed the case to the federal trial court which granted the
employer's request to confirm the award. The Supreme Court
reversed because the federal court lacked subject matter
jurisdiction.
The Federal Arbitration Act (FAA) authorizes
a party to an arbitration agreement to petition a federal court to
vacate or confirm an arbitration award.
However, the FAA
itself does not create subject matter jurisdiction. That must be
based on diversity of citizenship or a federal question.
When someone petitions to compel arbitration
under FAA § 4, the federal court will “look through” the petition
to the “underlying substantive controversy.” That's based on
specific § 4 language: A party to an arbitration agreement may
petition for an order to compel arbitration in a “United States
district court which, save for [the arbitration] agreement, would
have jurisdiction” over “the controversy between the parties.”
It is FAA §§ 9 and 10 that apply to confirming or
vacating an existing arbitration award. Those sections
contain none of the same statutory language. Therefore, the "look
through" approach does not apply.
Bottom line:
As a result, federal courts will look through to the underlying
controversy when asked to compel arbitration, but not when asked
to confirm or vacate an existing arbitration award.
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