Federal Jurisdiction and the Vacation of Arbitration Awards

From How Appealing, Howard has a blurb on a case just down from the 11th Circuit Court of Appeals in which the issue was: where a plaintiff in an arbitration case is awarded no recovery, does his action to overturn the award involve an amount in controversy of $0?  Or in other words, in a case in which a party seeks to vacate an arbitration award, is the amount in controversy for diversity jurisdiction measured by the amount of the award or by the amount in dispute in the underlying litigation between the parties?

Consistent with a recent ruling from the 9th Circuit, Theis Research Inc. v. Brown & Bain (2004), the 11th Circuit has now also found in Peebles v. Merrill Lynch,  a decision issued today, that, "a federal court has subject matter jurisdiction where a party seeking to vacate an arbitration award [of $0] is also seeking a new arbitration hearing at which he will demand a sum which exceeds the amount in controversy for diversity jurisdiction purposes."

Interestingly, this ruling is likely to have little applicability for labor arbitration awards challenged under Section 301 of the Taft Hartley Act (as federal question, rather than diversity jurisdiction, will be the basis of the federal court's jurisdiction in those cases).  As for the arbitration of individual employment disputes under the FAA, whether federal question or diversity jurisdiction will appertain will depend on the nature of the claim being considered in the arbitration (i.e., a state law contract claim would have to rely upon diversity jurisdiction, while a Title VII discrimination claim would fall under federal question jurisdiciton).

Hat Tip: Ross Runkel (for the pointer about jurisdiction and the FAA)

PS