U.S. Supreme Court Limits Federal Jurisdiction in Workers’ Arbitration – JURIST

The Supreme Court of the United States on Thursday Shrunk the role of federal courts in enforcing certain provisions of the Federal Arbitration Act (FAA). In an 8-1 decision written by Judge Elena Kagan, the court ruled in Badgerow v. Walters that federal courts do not have jurisdiction to uphold or set aside certain arbitral awards, even where the claim would normally fall within federal jurisdiction.

The case involved Denise Walters, who previously worked for a company partly owned by the defendant, Greg Walters. In a claim for wrongful termination under Title VII Civil Rights Act, Walters initiated arbitration proceedings as required by his employment contract. The arbitration resulted in a decision for the defendant, which Walters later challenged in Louisiana state court. The defendant then returned to federal court, seeking confirmation of the arbitration award.

In 2008, the court tenuous in Vaden vs. Discover Bank that federal courts have jurisdiction to compel arbitration in connection with certain claims. The court has the power to compel arbitration if a court “examines” the arbitration agreement down to the substantive issue and it is a matter over which federal courts may traditionally exercise jurisdiction .

However, the court refused to extend this analysis to the present case. Judge Kagan wrote that the court’s decision in wanderer was influenced by the particular language in Division 4 of the FAA, the provision concerning the execution of arbitration. Confirming or annulling the arbitral decision is, however, the responsibility of Items 9 and ten from the FAA. None of these sections includes the language considered in wanderer. Court says Congress’ failure to extend language to Sections 9 and 10 indicates Congress did not intend federal courts to have same review power over arbitration in early stages than in the latter.

Employer arbitration has been the subject of recent policy changes. In March, Congress passed a bill to end mandatory arbitration for workplace disputes. President Biden also signed into law a bill banning forced arbitration for workplace sexual harassment claims.

On Wednesday, the court also heard arguments in another arbitration case, Viking River Cruises vs. Moriana. The court’s decision, expected by the end of June, could make it more difficult to pursue legal action for employees who have signed an arbitration agreement as a condition of their employment.

Thelma J. Longworth