In another case involving the Federal Arbitration Act (FAA), the U.S. Supreme Court in Badgerow v. Walters addresses the issue of whether federal courts can modify, confirm, or vacate an arbitration award when an underlying federal question is the only basis for their jurisdiction.
Justice Elena Kagan wrote for an 8-1 majority, holding there are circumstances in which federal courts do not have the jurisdiction in post-award claims – meaning that federal courts do not have the jurisdiction under Sections 9 and 10 of the FAA to vacate, modify, or confirm arbitration awards. The underlying case involved an unlawful termination claim.
Federal courts are permitted under Section 4 of the FAA to “look through” a petition to the “underlying substantive controversy” to establish jurisdiction. If the dispute presents a federal question, then the court has jurisdiction and may rule on the motion to compel arbitration pursuant to Section 4. Vaden v. Discover Bank, 556 U. S. 49. However, the question before the Supreme Court was if that same “looking through” approach can be used on arbitral awards under Section 9 and 10 of the FAA.
The plaintiff, Denise A. Badgerow, worked as a financial adviser when she signed an arbitration agreement during the course of her employment. She was later fired and initiated arbitration proceedings against her employer for unlawful termination. After her claim was dismissed by the arbitration panel, she filed in Louisiana state court to vacate the...
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