The Supreme Court granted review earlier today in another FAA case. If a federal court stays an action pursuant to section 3 of the FAA, does the court have subject matter jurisdiction to confirm or vacate an award issued by an arbitrator, or does the Supreme Court’s ruling in Badgerow control and require an independent basis for jurisdiction to confirm or vacate the award? Under Badgerow, the underlying dispute or claim to be arbitrated no longer serves as a jurisdictional anchor for a proceeding to vacate or confirm. The Court will decide these issues in the case of Jules v. Andre Balazs Properties, an employment discrimination case arising from the famed Chateau Marmont in Hollywood.
The Court, which has become more textual in recent years, may be tempted to focus narrowly just on sections 9 and 10 of the FAA, and based on Badgerow, some Justices may find that an independent basis for jurisdiction must exist. However, I view Badgerow as wrongly decided, and I hope the Justices view the entire FAA as a comprehensive whole and use section 3’s stay as a basis to support other parts of the statute in order to facilitate arbitration. Furthermore, the Court will have to grapple with older precedent from the 1930s, shortly after the FAA was enacted, where the Court previously said:
“We do not conceive it to be open to question that, where the court has authority under the statute, as we find that it had in this case, to make an order for arbitration, the court also has authority to confirm the award or to set it aside for irregularity, fraud, ultra vires, or other defect.”
Marine Transit Corp. v. Dreyfus, 284 U.S. 263, 275–76 (1932).
Also, in the case of Smith v. Spizzirri (2024), the Court recognized the “supervisory” power of the (federal) judiciary in connection with section 3 stays. Such supervisory power should include the power to confirm or vacate an award.