Until today, Federal District Courts employed the so-called look-through analysis, by which the court would look through a petition to confirm or vacate an arbitration award to the parties’ underlying dispute in order to determine whether subject matter jurisdiction (i.e. a federal question) exists over the petitioner’s Federal Arbitration Act (FAA) petition. This morning the U.S. Supreme Court issued its ruling in Badgerow v. Walters (Case No. 20-1143). The decision confirms that FAA Sections 9 and 10 do NOT provide an independent basis for federal court subject matter jurisdiction over petitions to confirm or vacate arbitration awards. However, the look through analysis will no longer be employed in determining subject matter jurisdiction (the Court found that the look-through analysis is not authorized under Sections 9 or 10 of the FAA). Instead, the Court must look to the FAA petition itself. If the District Court cannot find a basis for subject matter jurisdiction (e.g. federal question, diversity) on the face of the petition, then the petition will be dismissed. Today’s decision will certainly create some degree of upset with regard to the numerous FAA petitions currently pending in Federal District Courts where jurisdiction is based on the now defunct look-through analysis. No doubt many petitioners will be seeking leave to amend their petitions in an effort to avoid dismissal, and many petitions will be dismissed.
Today’s ruling was written by Justice Kagen, joined by Justices Roberts, Thomas, Alito, Sotomayor, Gorsuch, Kavanaugh and Barrett. Justice Brayer dissented.
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