COURT REFUSES SUBJCT MATTER JURISDICTION TO REVIEW ARBITRATION AWARD, SINCE THE VALUE OF THE AWARD WAS LESS THAN THE COURT’S JURISDICTIONAL AMOUNT
A dispute arose between Hansen Beverage Company and DSD Distributors over a distribution agreement. The agreement included an arbitration clause providing that all disputes were to be arbitrated in California. The parties submitted to arbitration in San Diego where the arbitrator found that defendant had not breached the contract and Hansen did not constructively terminate the contract. Thus, no monetary damages or attorneys’ fees were awarded to either party.
On the day the arbitration award was handed down, DSD filed a motion in Wisconsin state court (the company’s state of domicile) to vacate or modify the award. That court declined jurisdiction holding that the arbitration should be finalized in California Federal Court. On the same day, Hansen filed a motion in the Southern Dist. of California to confirm the arbitration award, while DSD moved to stay or dismiss the award.
DSD contends that the action must be dismissed for lack of subject matter jurisdiction because the arbitration award fell below the $75,000 minimum for diversity jurisdiction. The court, noting a circuit split on this issue, held that where a petition seeks confirmation or vacatur of an award, without seeking remand for further arbitration proceedings, the amount in controversy is the value of the arbitration award itself. The court additionally stated that although the arbitrator’s judgment was essentially equivalent to a declaratory judgment, that aspect of the arbitration award was merely a collateral consequence of the arbitrator’s decision. Thus, the Motion to Dismiss or Stay was granted. The court did note specifically, however, that its decision may have been different if DSD was seeking to reopen arbitration in the California court rather than Wisconsin. Hansen Beverage Co. v. DSD Distributors, Inc., Case No. 08-0619 (USDC S.D. Cal. Dec. 12, 2008).
This post written by John Black.
