New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

Commercial Litigation and Arbitration

New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
Commercial Litigation and Arbitration
« Back to Complex Lit Blog

Federal Arbitration Act: Jurisdiction to Confirm/Vacate: Although Circuits Are Split on Whether Amount in Controversy Is Determined by Award or Amount at Issue, Cases Turn on Whether Party Seeking to Vacate Also Seeks to Reopen

Download PDF

XPO Last Mile Inc. v. Anessa's Transp. Inc., 2018 U.S. Dist. LEXIS 63927 (N.D. Cal. Apr. 16, 2018):

ORDER TO SHOW CAUSE REGARDING JURISDICTION

Pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. § 1, et seq., Petitioner XPO Last Mile Incorporated filed this action for an order confirming an arbitration award providing Respondent Anessa's Transport Incorporated with nothing. Now pending before the Court is Petitioner's motion to confirm the arbitration award. However, after reviewing the petition and motion, the Court directs Petitioner to Show Cause why this matter should not be dismissed for lack of subject matter jurisdiction.

Under the FAA, and unless otherwise agreed by the parties, a petition to confirm, vacate, or modify an arbitration award may be made to the district court "for the district in which the award was made." 9 U.S.C. §§ 9, 10, 11. "However, the FAA does not itself confer jurisdiction on federal district courts over actions to compel arbitration or to confirm or vacate arbitration awards, nor does it create a federal cause of [*2]  action giving rise to federal question jurisdiction under 28 U.S.C. § 1331." United States v. Park Place Associates, Ltd., 563 F.3d 907, 918 (9th Cir. 2009) (citations omitted). Thus, a federal court has jurisdiction to enter judgment on an arbitration award only where there is an independent basis for federal jurisdiction. Id.; see also Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983).

Petitioners invoke this Court's diversity jurisdiction under 28 U.S.C. § 1332. Federal district courts have jurisdiction over civil actions in which the matter in controversy exceeds the sum or value of $75,000 (exclusive of interest and costs) and is between citizens of different states. 28 U.S.C. § 1332. The petition asserts that the parties are citizens of different states and that the amount in controversy in the underlying arbitration exceeds $75,000.

Whether the jurisdictional amount is based on the amount in controversy in the underlying arbitration, or on the amount of the arbitration award depends upon whether the parties are seeking to re-open the arbitration proceedings. See Theis Research, Inc. v. Brown & Bain, 400 F.3d 659 (9th Cir. 2005). In Theis Research, the plaintiff moved to vacate an arbitration award of zero dollars, but also filed a complaint seeking damages for substantially the same claims asserted in the underlying arbitration. Id. at 661. The court held that the amount in controversy was satisfied because the plaintiff was [*3]  seeking to obtain $200 million in damages in the underlying action, and that attempt to seek that amount equated to a request to reopen its arbitrated claims. Id. at 665 ("Although [neither party has] asked that the arbitration proceedings be reopened, Theis sought to obtain by its district court complaint substantially what it had sought to obtain in the arbitration. Theis simply chose to 'reopen' its claims in the district court rather than in arbitration.").

The Theis Research court noted that, although there is a split among the circuits on whether the amount in controversy is determined by the arbitration award or the amount at issue in the underlying arbitration, in general "the cases have turned upon whether the party seeking to vacate an arbitration award also sought to reopen the arbitration." Id. at 664 (citing cases). The court cited Baltin v. Alaron Trading Corp., 128 F.3d 1466 (11th Cir. 1997), in which the court found the amount in controversy was not met where the plaintiffs sought to vacate an arbitration award requiring them to pay $36,284.69 but did not seek to reopen arbitration. "The maximum remedy sought by the Baltins was the vacatur of the arbitration award" which did not meet the jurisdictional minimum. Theis Research, 400 F.3d at 665. The court in Ford v. Hamilton Investments, Inc., 29 F.3d 255 (6th Cir. 1994), also concluded that [*4]  the jurisdictional minimum was not satisfied because the plaintiffs sought only to vacate a $30,524 arbitration award and neither party sought additional damages. Theis Research, 400 F.3d at 665. The court in Ford "was quite clear that, had the losing party sought to challenge the arbitrator's denial of that party's counterclaims," which were valued over the jurisdictional minimum, then the amount in controversy would have been met. Id. (citing Ford, 29 F.3d at 260); accord Peebles v. Merrill Lynch, Pierce, Fenner & Smith Inc., 431 F.3d 1320 (11th Cir. 2005) (holding amount in controversy was met where plaintiff sought to vacate a zero-dollar award and requested a new hearing before a different arbitration panel where he would seek recovery of up to two million dollars).

Following Theis Research, courts have held that "[w]hen a petitioner seeks confirmation or vacatur of an award, without seeking a remand for further arbitration proceedings, the amount in controversy is the value of the [arbitration] award itself . . . ." Hansen Bev. Co. v. DSD Distribs., 2008 U.S. Dist. LEXIS 101022, 2008 WL 5233180 at *5 (S.D. Cal. Dec. 12, 2008) (quotations and citation omitted); see also Coffey v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 2012 U.S. Dist. LEXIS 3998, 2012 WL 94545 at *5 (C.D. Cal., Jan. 11, 2012) (same); cf. Shannon Assocs. LLC v. MacKay, CW, 2009 U.S. Dist. LEXIS 121737, 2009 WL 4756568 at *3 (N.D. Cal., Dec. 8, 2009) (concluding that petition to confirm a $7,000 arbitration award did not meet the required amount for diversity jurisdiction, but that petitioners' request to strike the arbitrators' $260,000 offset in damages satisfied the jurisdictional amount). [*5] 

Here, no one is seeking to reopen the arbitration proceedings. Therefore, based on Theis Research, it appears as though the amount in controversy is determined by the amount of the arbitration award, which is zero dollars. If Petitioner obtains all the relief requested in its Petition, it will receive zero dollars. Likewise, Respondent will receive zero dollars. Accordingly, Petitioner is directed to file a response to this order, showing cause why this matter should not be dismissed for lack of subject matter jurisdiction, without prejudice to seeking confirmation of the arbitration award in a proper forum. Petitioner's response shall be filed no later than April 23, 2018 and shall not exceed 5 pages.

Share this article:

Facebook
Twitter
LinkedIn
Email

Recent Posts

RICO Causation: Parents of Children with Disabilities Deprived In-Person Education and Services during the Pandemic Were Not Causally Injured by Teachers’ False Assurances to Federal Authorities That IDEA-Complaint Policies Were in Place, Which Caused Funds to Issue But Not to the Benefit of the Disabled Children — Damages Too Indirect — Proper Plaintiff Is U.S. Government — Private Injunctive Relief Under RICO Uncertain in Third Circuit

Sanctions: Rule 37(b)(2) Dismissal — Sixth Circuit Factors

Inherent Power Sanctions — Extrajudicial Misconduct: Sanctions Power Extends to Conduct Intended to Sabotage Court’s Ability to Adjudicate the Case Before It, Here, By Commencing State Court Actions Seeking to Enjoin the Federal Plaintiffs from Proceeding with Their Federal Litigation — Sanctions Fee Awards: The Factors Used For Calculating A Fee Award To A Prevailing Party Do Not Govern — Under Goodyear, the Relevant Inquiry Is Whether There Is A Sufficient Causal Link Between The Sanctioned Misconduct And The Fees Awarded

RICO: Members of Association-in-Fact Enterprise Must Act with a Common Purpose—Mere Allegation That Various Defendants Agreed at Different Times to Engage in Various Fraudulent Schemes Does Not Plausibly Support the Essential Inference, That They Acted with s Sufficiently Common Purpose

RICO Causation: (1) State’s Misrepresentation to Federal Government That It Was Providing Plaintiffs with Mandated Special Education Did Not Cause Plaintiffs’ Injury Because The Failure to Provide The Education Was Not Caused by the Fraud on the Federal Government — (2) The Three Factors for Assessing RICO Causation — (3) Limits of the Second Circuit’s Decision in Alix v. McKinsey That Causation Can Be Established Where A Fraud On The Judiciary “Or Other Governmental Entity” Resulted In A Resource Going To Someone Less Deserving

Rule 41(b): Five Factors to Be Weighed in Deciding Whether Dismissal Is Appropriate (Second Circuit) — Is A Finding of Bad Faith or Fault Required if Dismissal Is Without Prejudice? — Undecided If Truly Without Prejudice But It Is Required If the Without Prejudice Dismissal Will Act as a Dismissal on the Merits (Here, Because of the Statute of Limitations) — Failure To Consider A Lesser Sanction Than Dismissal Is Generally An Abuse Of Discretion

Spoliation Sanctions/Mootness: Stipulation Resolving “All Pending Discovery Disputes,” Which Are Enumerated, Does Not Moot Subsequent Sanctions Motion for ESI Spoliation — Postjudgment Sanctions Order Is Appealable When District Court Has Finally Disposed of Both Liability and Amount

Rule 37 Default Judgment Sanction: (1) Default Judgment Appropriate Only As a Last Resort, When Less Drastic Sanctions Would Not Ensure Compliance with the Court’s Orders — (2) Default Judgment Sanction Requires Willful or Bad Faith Failure to Obey Discovery Order — (3) Fugitive Defendant’s Failure to Appear at Court-Ordered, Remote Deposition Despite Court Warning That Sanctions Could Follow Disobedience Warrants Default Judgment — (4) District Court Afforded Wide Discretion in Interpreting Its Own Orders — (5) Filing a Notice of Appeal from a Non-Appealable Order (Here, a Discovery Order) Does Not Deprive the District Court of Jurisdiction over the Case

RICO and Injunctions: (1) State Court Actions Designed to Perpetuate and Monetize a RICO Violation Are Enjoinable under RICO, Even Though They Are Not Themselves Alleged to Be Predicate Acts [Note: Noerr Pennington Applies in RICO Actions] — (2) Although Civil RICO’s Text and Legislative History Fail to Reveal Any Intent to Override the Provisions of the Federal Arbitration Act, Arbitrations Are Enjoinable Under the “Effective Vindication” Doctrine Where They Operate As a Prospective Waiver of a Party’s Right to Pursue Statutory RICO Remedies — (3) Arbitration Findings May Be Given Collateral Estoppel Effect in a Civil RICO Action — (4) Injunction of Non-Corrupt State Court Litigations That Furthers a RICO Violation Are Enjoinable Under the Anti-Injunction Act’s “Expressly Authorized” Exception — (5) “The Irreparable Harm Requirement Is The Single Most Important Prerequisite For The Issuance Of A Preliminary Injunction” (Good Quote) — (6) When Injunction Is Based on “Serious Questions on the Merits” Rather Than “Likelihood of Success,” Court May Rely on Unverified Pleadings and Attached Exhibits to Assess the Merits, Unless the Opponent Has Raised Substantial Questions (Here, the Opponent Failed to Request an Evidentiary Hearing) — (7) Whether Amended Pleading Moots An Appeal Turns on Whether It Materially Changes the Substantive Basis for the Appeal — (8) Meaning of “In That” (“Used To Introduce A Statement That Explains Or Gives More Specific Information” About A Prior Statement)

RICO: Fraudulent Concealment Must Prevent Discovery of the Injury to Toll Statute of Limitations

Archives
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

New York Office

© 2024 Joseph Hage Aaronson LLC  
Disclaimer | Attorney Advertising Notice | Legal Notice