SCOTUS Settles Federal Jurisdiction Question When Claims Are Stayed Under the FAA

Quick Hits

• In a unanimous decision, the Supreme Court ruled that federal courts that have stayed claims in pending actions under Section 3 of the FAA maintain jurisdiction to confirm or vacate the resulting arbitral awards under sections 9 and 10 of the FAA.
• In this case, the original employment discrimination claims were sufficient to establish the federal district court’s jurisdiction. The Court ruled that the original claims also established that court’s “authority to resolve the motions to confirm or vacate the arbitral award resolving those claims.”
• According to the Court, “nothing in the FAA precludes the normal operation of federal jurisdiction.”

In Jules v. Andre Balazs Properties, No. 25–83, the Court affirmed a Second Circuit Court of Appeals ruling that a federal district court did have jurisdiction to confirm an arbitration award (in a case stemming from an employment discrimination dispute). According to Justice Sotomayor, who authored the opinion of the unanimous Court, “[b]ecause a federal court in this scenario has jurisdiction over the original claims and does not lose that jurisdiction while the case is stayed pending arbitration, it retains jurisdiction to determine whether the arbitral award resolving those claims is valid and should be confirmed.”

In the underlying case, Justice Sotomayor noted, the district court had original jurisdiction over the employee’s federal claims. “It was this very jurisdiction that authorized the court to adjudicate the arbitrability of [the employee’s] claims under the parties’ contract to begin with, before staying litigation pending arbitration. Nothing in the FAA eliminated that jurisdiction while the parties arbitrated,” she wrote.

Questions about federal courts’ jurisdiction over motions to compel arbitration and motions to confirm, vacate, or modify arbitration awards under the FAA can become complicated. Such jurisdiction may depend on whether there are federal or state underlying claims at issue. For further analysis of recent Supreme Court decisions in this area, see our prior articles “Supreme Court Rules FAA Requires Courts to Grant Stay Requests After Compelling Arbitration” and “Supreme Court’s New Arbitration Ruling: Limits Federal Jurisdiction For Confirming or Challenging Arbitration Awards Under the FAA.”

Ogletree Deakins’ Arbitration and Alternative Dispute Resolution Practice Group will continue to monitor developments and will provide updates on the Arbitration and Alternative Dispute Resolution blog as additional information becomes available.

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