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Badgerow v. Walters

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Supreme Court of the United States
Badgerow v. Walters
Term: 2021
Important Dates
Argued: November 2, 2021
Decided: March 31, 2022
Outcome
Reversed and remanded
Vote
8-1
Majority
Elena Kagan • Chief Justice John G. Roberts • Clarence Thomas • Samuel Alito • Sonia Sotomayor • Neil Gorsuch • Brett Kavanaugh • Amy Coney Barrett
Dissenting
Stephen Breyer

Badgerow v. Walters is a case decided by the Supreme Court of the United States on March 31, 2022, during the court's October 2021-2022 term. The case was argued before the court on November 2, 2021. The court reversed and remanded the decision of the United States Court of Appeals for the 5th Circuit in an 8-1 ruling, holding the look-through analysis established by the U.S. Supreme Court in Vaden v. Discover Bank does not apply to requests to confirm or vacate arbitral awards under Sections 9 and 10 of the Federal Arbitration Act. Justice Elena Kagan delivered the majority opinion of the court. Justice Stephen Breyer filed a dissenting opinion.[1] Click here for more information about the ruling.

HIGHLIGHTS
  • The case: After the Financial Industry Regulatory Authority (FINRA) issued an arbitration award against her, petitioner Denise Badgerow filed an action in Louisiana state court to vacate FINRA’s award, alleging fraud by the defendants in the matter. The defendants then removed the action to federal court. Badgerow objected to the removal, arguing that the federal court lacked subject-matter jurisdiction in the case. Using the look-through analysis established by the U.S. Supreme Court in Vaden v. Discover Bank for claims brought under the Federal Arbitration Act (FAA), the United States District Court for the Eastern District of Louisiana held that the parties’ underlying dispute could have been brought in federal court, and, therefore, federal jurisdiction over the FAA petition was valid. On appeal, the United States Court of Appeals for the 5th Circuit affirmed.[2] Click here to learn more about the case's background.
  • The issue: The case concerned the federal courts' jurisdiction to confirm or vacate an arbitration award under the Federal Arbitration Act.
  • The question presented: "Whether federal courts have subject-matter jurisdiction to confirm or vacate an arbitration award under Sections 9 and 10 of the [Federal Arbitration Act] where the only basis for jurisdiction is that the underlying dispute involved a federal question."[3]
  • The outcome: The court reversed and remanded the decision of the United States Court of Appeals for the 5th Circuit in an 8-1 ruling, holding the Vaden's look-through analysis does not apply to requests to confirm or vacate arbitral awards under Sections 9 and 10 of the Federal Arbitration Act.[1]


    • The case came on a writ of certiorari to the United States Court of Appeals for the 5th Circuit. To review the lower court's opinion, click here.

    Timeline

    The following timeline details key events in this case:

    Background

    From 2016 to 2018, petitioner Denise Badgerow worked as an associate financial advisor for REJ Properties, Inc. (REJ), a Louisiana corporation of which the defendants in this case—Greg Walters, Thomas Meyer, and Ray Trosclair—were the principals. The principals were independent franchise advisors for Ameriprise Financial.[2]

    While employed with REJ, Badgerow signed an agreement requiring that any disputes arising between Badgerow and Ameriprise or its affiliates, which included the REJ principals, must be arbitrated. After being terminated in 2018, Badgerow filed an arbitration proceeding against the principals and, later, Ameritrade, with the Financial Industry Regulatory Authority (FINRA). In December 2018, a FINRA arbitration panel issued an arbitration award in favor of the principals and Ameriprise and dismissed all of Badgerow's claims.[2]

    Badgerow subsequently filed a petition in Louisiana state court to vacate FINRA's award against her, alleging fraud on the part of Ameriprise and the principals. In her petition to vacate the award, Badgerow named only the REJ principals as defendants. The defendant principals then removed the case from state court to the United States District Court for the Eastern District of Louisiana. Badgerow filed a motion to remand the case to state court, arguing the federal district court lacked subject-matter jurisdiction over the matter.

    On the question of federal subject-matter jurisdiction, the district court analyzed whether the Federal Arbitration Act (FAA) granted original jurisdiction to the federal district courts in arbitration proceedings brought under section 10 of the act. In the 2008 case of Vaden v. Discover Bank, the U.S. Supreme Court established a look-through analysis for claims brought under section 4 of the FAA. This allowed courts to look through the petition to determine if the parties' underlying dispute gave rise to federal jurisdiction. Though the petition in Badgerow's case was brought under section 10, the district court cited the 5th Circuit's holding in Quezada v. Bechtel OG & C Construction Services that the Supreme Court's look-through analysis applied to actions brought under sections 9, 10, and 11 of the FAA. Accordingly, the district court found it was appropriate to look-through the FAA petition to the parties' underlying substantive controversy to determine if, from a jurisdictional standpoint, it could have been brought in federal court.

    The court determined that the parties' underlying dispute—the claims brought in the FINRA arbitration proceeding—could have been brought in federal court and, therefore, the district court had subject-matter jurisdiction to adjudicate Badgerow's petition to vacate FINRA's award against her. Given its finding of jurisdiction, the district court denied Badgerow's motion to remand the case to state court. On appeal, the United States Court of Appeals for the 5th Circuit affirmed.[2]

    Question presented

    The petitioners presented the following question to the court:[3]

    Question presented:
    “ Whether federal courts have subject-matter jurisdiction to confirm or vacate an arbitration award under Sections 9 and 10 of the [Federal Arbitration Act] where the only basis for jurisdiction is that the underlying dispute involved a federal question.[4] ”

    Oral argument

    The U.S. Supreme Court heard arguments in the case on November 2, 2021.

    Audio

    Audio of oral argument:[5]



    Transcript

    Transcript of oral argument:[6]

    Outcome

    In an 8-1 opinion, the court reversed and remanded the judgment of the United States Court of Appeals for the 5th Circuit, holding the look-through analysis established by the U.S. Supreme Court in Vaden v. Discover Bank does not apply to requests to confirm or vacate arbitral awards under Sections 9 and 10 of the Federal Arbitration Act. Justice Kagan delivered the opinion of the court. Justice Breyer filed a dissenting opinion.[1]

    Opinion

    In the court's majority opinion, Justice Kagan wrote:[1]

    “

    The question presented here is whether that same “look through” approach to jurisdiction applies to requests to confirm or vacate arbitral awards under the FAA’s Sections 9 and 10. We hold it does not. Those sections lack Section 4’s distinctive language directing a look-through, on which Vaden rested. Without that statutory instruction, a court may look only to the application actually submitted to it in assessing its jurisdiction.[4]

    		”
    —Justice Elena Kagan

    Dissenting opinion

    Justice Breyer filed a dissenting opinion.

    In his dissent, Justice Breyer wrote:[1]

    “

    When interpreting a statute, it is often helpful to consider not simply the statute’s literal words, but also the statute’s purposes and the likely consequences of our interpretation. Otherwise, we risk adopting an interpretation that, even if consistent with text, creates unnecessary complexity and confusion. That, I fear, is what the majority’s interpretation here will do. I consequently dissent. [4]

    		”
    —Justice Stephen Breyer

    Text of the opinion

    Read the full opinion here.

    October term 2021-2022

    See also: Supreme Court cases, October term 2021-2022

    The Supreme Court began hearing cases for the term on October 4, 2021. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[7]

    The court agreed to hear 68 cases during its 2021-2022 term.[8] Four cases were dismissed and one case was removed from the argument calendar.[9]

    The court issued decisions in 66 cases during its 2021-2022 term. Three cases were decided without argument. Between 2007 and 2021, SCOTUS released opinions in 1,128 cases, averaging 75 cases per year.


    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 Supreme Court of the United States, Badgerow v. Walters - "Opinion," March 31, 2022
    2. ↑ 2.0 2.1 2.2 2.3 United States Court of Appeals for the 5th Circuit, Badgerow v. Walters, decided September 15, 2020
    3. ↑ 3.0 3.1 U.S. Supreme Court, "No. 20-1143: Question Presented," accessed May 17, 2021
    4. ↑ 4.0 4.1 4.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    5. ↑ Supreme Court of the United States, "Oral Argument - Audio," argued November 2, 2021
    6. ↑ Supreme Court of the United States, "Oral Argument - Transcript," argued November 2, 2021
    7. ↑ SupremeCourt.gov, "The Supreme Court at Work: The Term and Caseload," accessed February 4, 2021
    8. ↑ Consolidated cases are counted as one case for purposes of this number.
    9. ↑ U.S. Supreme Court, "Order List: 593 U.S.," May 17, 2021
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