Badgerow v. Walters

Denise Badgerow (plaintiff) worked for a firm run by Greg Walters and others (collectively, Walters) (defendants). Badgerow brought an arbitration claim against Walters alleging wrongful termination in violation of federal and state law. The arbitrators ruled for Walters, but Badgerow sued in state court to vacate the award. Walters removed the case to federal court and moved, pursuant to the Federal Arbitration Act, to confirm the award. Badgerow moved to remand to state court, arguing that neither § 9 nor § 10 (which governed petitions to confirm or vacate arbitration awards, respectively) of the act established federal jurisdiction. The district court ruled that it had federal jurisdiction by utilizing the look-through approach the United States Supreme Court approved in Vaden v. Discover Bank for motions to compel arbitration pursuant to § 4 of the act. Under the look-through approach, federal courts examined whether an underlying dispute established federal jurisdiction (i.e., due to diversity or a federal question) even if the petition did not. The court of appeals affirmed. Badgerow appealed, arguing that (1) the look-through approach for § 4 cases was an exception to the usual approach to federal jurisdiction, (2) this exception was based on § 4’s specific language that §§ 9 and 10 did not include, and (3) courts could not expand federal jurisdiction. Walters responded that (1) the look-through approach related only to venue and thus using it in §§ 9 and 10 cases would not expand jurisdiction; (2) § 6 of the act instructed courts to treat applications under the act like other motions, and courts in non-act cases effectively used the look-through approach; and (3) allowing the look-through approach for §§ 9 and 10 cases would be good policy.