The United States Supreme Court has continued to show its interest in defining the role of the federal courts in the arbitration process by hearing three more arbitration cases this term.
Vaden v. Discover Bank
Vaden v. Discover Bank, Docket No. 07-773 (decided March 9), raised two related issues concerning federal jurisdiction over petitions to compel arbitration under Section 4 of the Federal Arbitration Act (“FAA”), 9 U.S.C. Section 4. The first was whether a district court has jurisdiction over such a petition when the only basis for federal jurisdiction is that the underlying dispute, i.e., the dispute to be arbitrated, raises a federal question. The Supreme Court unanimously answered this question “yes,” resolving a split among the Courts of Appeals. The second issue was whether such a federal question must be pled in the underlying complaint or whether it is sufficient that it was first asserted in a counterclaim. On this issue, the Court was split 5-4, with the majority ruling that the federal question must be pled in the complaint; the existence of a federal question in a counterclaim will not suffice for federal jurisdiction.
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