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Supreme Court Affirms Jurisdiction of Federal Court under Federal Arbitration Act
In a unanimous decision, the Supreme Court of the United States affirmed a decision of the Second Circuit, holding that a federal court that has previously stayed claims in a pending action under Section 3 of the Federal Arbitration Act (“FAA”) has jurisdiction to confirm or vacate a resulting arbitral award on those claims as prescribed in Sections 9 and 10 of the FAA.
Plaintiff petitioner Adrian Jules (“Jules”) was employed by the Chateau Marmont Hotel from 2017 to 2020, when his employment ended due to the COVID-19 pandemic. Jules filed suit in New York federal court, alleging unlawful discrimination in violation of state and federal law. Respondents moved to stay the proceeding under Section 3 of the FAA, as Jules had signed an arbitration agreement prior to the start of his employment, which required the arbitration of any disputes regarding employment or termination. In 2021, the District Court held that the arbitration agreement covered Jules’ claims and stayed proceedings. In 2023, the arbitrator issued a final award against Jules on all claims and awarding sanctions to Respondents.
In the stayed federal court matter, Respondents moved to confirm the award under Section 9 of the FAA. Jules opposed the Motion and cross-moved to vacate the award. The District Court confirmed the arbitral award and the Second Circuit affirmed. Jules appealed, arguing that the court lacked jurisdiction to confirm the award because Sections 9 and 10 of the FAA are not bases for federal-question jurisdiction and the parties were not diverse.
The Supreme Court concluded that the District Court did have jurisdiction, explaining that where a federal court has previously stayed a claim over which it has jurisdiction so that the claim may be arbitrated, that court has jurisdiction to confirm or vacate an arbitration award.
Key Takeaway: This decision makes clear that the Court’s holding in Badgerow v. Walters does not divest federal courts of jurisdiction to confirm or vacate arbitration awards.