NO INDEPENDENT SUBJECT MATTER JURISDICTION UNDER FEDERAL ARBITRATION ACT
Defendant, Sandra R. Sanchez, filed a Rule 12(b)(1) Motion to Dismiss for Lack of Subject Matter Jurisdiction against the plaintiff, Newton & Associates, LLC. Sanchez asserted that, because the Federal Arbitration Act (“FAA”) did not confer federal-court jurisdiction, the case should be dismissed because the parties are not diverse and there was no other basis for federal jurisdiction. The Eastern District of Louisiana granted Sanchez’s motion to dismiss, holding that while the FAA created a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate, it did not create any independent federal-question jurisdiction under 28 U.S.C. § 1331 or otherwise. The District Court noted in particular that section 10 of the FAA allowed federal district courts to vacate arbitration awards but did not confer upon federal courts subject matter jurisdiction. The court did, however, opine that under limited circumstances, the non-statutory ground for vacatur of an arbitration award (if made in manifest disregard of the law) may provide subject matter jurisdiction for the federal courts. As this was not the case here, the court dismissed the action. The case has been remanded to state court. Newton & Assoc., LLC v. Sanchez, Case No. 08-4558 (USDC E.D. La. Dec. 22, 2008).
This post written by John Black.
