SCOTUS Review: Can Federal Courts Exercise Jurisdiction on Arbitration Awards After Staying a Case?
By Sasha Hill
The U.S. Supreme Court has scheduled one of the hottest arbitration topics it has faced in recent years, federal court jurisdiction over the ADR process, for its Friday, Oct. 21 conference.
While cases involving the Federal Arbitration Act’s application to individuals based on where they work and what they do have attracted more attention in recent years—another one will be heard in 2026--the nation’s top Court also has taken a regular stream of FAA-centric jurisdiction cases.
At stake in the case coming to the second of two scheduled Court conferences this week is the breadth of the path for arbitration awards seeking confirmation or vacatur under the FAA to be heard in federal court.
In a writ for certiorari that was submitted in July, Adrian Jules petitioned the U.S. Supreme Court to hear a case that examines the federal courts’ application of FAA Sections 9 and 10, which, respectively, authorize federal courts to hear award confirmations and challenges. Jules v. Andre Balazs Properties, No. 25-83 (Supreme Court docket page available at https://bit.ly/4qZsL0z).
The specific issue presented by the petitioner is whether a federal court that initially exercises jurisdiction and stays a case pending arbitration maintains jurisdiction over a post-arbitration Section 9 or 10 application, where jurisdiction would otherwise be lacking.
It’s another in a series of periodic returns to the Court for the jurisdiction issue. The Court most recently looked at FAA jurisdiction last year in Smith v. Spizzirri, 601 U.S. 472 (2024), where it held that parties can rely on a federal court to enforce arbitration under FAA Sec. 3, dealing with stays of litigation for pending arbitration. Specifically, the Court held that under FAA Section 3, a federal district court must stay a suit when a party requests it, and the dispute is arbitrable (see CPR Speaks’ coverage here).
Jules also is a direct follow from Badgerow v. Walters, 596 U.S. 1 (2002) (available at https://bit.ly/47IX5Up), which holds that federal courts may exercise jurisdiction over Section 9 applications to confirm an award or Section 10 applications to vacate an arbitration award, respectively, only if there exists clear, independent jurisdictional basis on the face of the dispute—that is, diversity or federal question jurisdiction.
As a result, federal courts sometimes lack jurisdiction to confirm or vacate an arbitration award—even when the dispute arbitration arises from federal law. In other words, if an application to a federal court to confirm or vacate an arbitration award is based solely on state law and the parties are not diverse, the federal court lacks jurisdiction even if the dispute involved a federal claim.
But what should happen if a court first exercises jurisdiction over a dispute under Sec. 3 power and stays the case, and later is asked to confirm or vacate an arbitration award in the same case? Is jurisdiction “anchored” in federal court because of the Sec. 3 ruling? Unfortunately, Badgerow can’t fully answer these questions on its own because it didn’t reach federal court until after the arbitration had occurred.
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Petitioner Jules’ case arises out of his claim under federal and California law, where he filed suit against luxury hotel operator and residential developer Andre Balazs Properties, based in New York, in New York’s Southern District federal court. Related Balazs companies also were named. Jules alleged employment discrimination after being fired from his job at the iconic Chateau Marmont hotel in West Hollywood, Calif.
The petitioner, who claimed that the defendants failed to act when he reported a customer’s harassment, asserted federal jurisdiction under 28 U.S.C. §§ 1331 and 1332, which authorize federal court original and diversity jurisdiction. The defendants moved to stay the litigation and compel arbitration under, respectively, FAA Section 3 and 4; after the district court granted the stay, the arbitrator dismissed Balazs and the business defendants from the arbitration, substituting Chateau Marmont as the only respondent.
The arbitration was conducted by JAMS Inc. and found for the defendants, awarding Jules nothing, and granting sanctions against him and his counsel of more than $34,000.
The defendants filed a motion to confirm their arbitration award in federal court, pursuant to FAA Sec. 9. Jules then filed a cross-application to vacate the award under FAA Section 10, challenging the court’s subject-matter jurisdiction over the case under the Supreme Court’s Badgerow decision.
The district court confirmed the arbitration award, citing its power to do so pursuant to the fact that the claim was concerning federal law--and seemingly in violation of the Badgerow decision in the face of a $0 award, far below the amount-in-controversy federal jurisdiction requirement.
As the petitioner’s brief explains, “[b]ecause of the federal questions presented” by petitioner’s initial complaint, the federal court “had subject matter jurisdiction when it stayed the action pending arbitration.”
On appeal, the Second Circuit affirmed the decision in an unpublished opinion, reasoning that the federal court had jurisdiction when the case originally filed and it was retained after the arbitration, pursuant to Cortez Byrd Chips Inc. v. Bill Harbert Construction Co., 529 U.S. 193 (2002) (available at https://bit.ly/4os8OO2); the trial court had noted that Cortez Byrd Chips stated that “[d]istrict courts with jurisdiction to stay an action pursuant to 9 U.S.C. § 3 retain jurisdiction to confirm resulting arbitral awards”—endorsing the concept of a jurisdictional anchor for action under the later FAA sections. The Second Circuit stated that Badgerow wasn’t sufficient to overturn Cortez Byrd Chips.
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According to the petitioner, several circuit courts, including the Second Circuit, followed the “pre-Badgerow circuit precedent holding that a federal court’s pre-arbitration exercise of jurisdiction serves as an anchor that gives the court continuing jurisdiction over a subsequent Section 9 or 10 application, even if the jurisdiction would otherwise be lacking.” See Kinsella v. Baker Hughes Oilfields Operations LLC, 66 F.4th 1099 (7th Cir. 2023) (available at https://bit.ly/4nH2W2c).
But petitioner Jules argues that the Second Circuit acknowledged that the federal appeals courts have split on the issue, citing SmartSky Networks LLC v. DAG Wireless Ltd., 93 F.4th 175 (4th Cir. 2024) (available at https://bit.ly/4nTWIwl). The Fourth Circuit followed the Badgerow reasoning, holding that a court must have independent jurisdictional basis for a Section 9 or 10 application.
In that view, whether the application to confirm or vacate an award is filed in a new case or in a case that was previously stayed, the same jurisdictional rules apply in that Badgerow’s rule explicitly requires independent jurisdictional basis on the face of a Section 9 or 10 application. Additionally, Jules argues that Cortez Byrd is inapplicable to this case, as the issue discussed was about venue and not jurisdiction.
The petitioner asks the Supreme Court to address this circuit split, arguing that there is no resolving this issue without its intervention; appeals courts on either side of the issue have openly recognized the disagreement between them and yet have failed come to a consensus.
If this issue is not resolved, Jules contends, the split will result in inefficiencies as it “creates an incentive to file useless federal-court lawsuits or Section 4 petitions in cases inevitably headed for arbitration”—which is a particularly unhelpful scenario since the FAA “is intended to minimize unnecessary federal litigation in arbitrable disputes.” Jules also argues that this circuit split will cause forum-shopping, which will result in time-wasting litigation in cases that are inevitably bound for arbitration.
The petitioner argues that the Supreme Court should reject the Second Circuit’s decision because it is wrong and conflicts with the Scotus Badgerow decision; there is no FAA textual basis that allows a court to make an exception for stayed cases, and Badgerow’s rule explicitly requires independent jurisdictional basis on the face of a Section 9 confirmation or Section 10 vacatur application.
Though Smith v. Spizzirri, linked above, ensures that parties can return to litigate disputes in federal court pursuant to Section 3 if the arbitration fails between parties. If all is resolved (as it has been in this case), petitioner Jules asserts there this is no further federal issue and the stay’s purpose has been satisfied; the subsequent dispute about the award’s enforceability is a new issue for which the court will have to establish independent jurisdiction.
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In October, the respondents asked the Court to deny the writ for certiorari. First, they argue that the petitioner’s claim of a split is overstated because only the Fourth Circuit in Smartsky has adopted the petitioner’s stance that Badgerow requires an independent jurisdictional basis for all Section 9 and 10 applications to confirm or vacate arbitration awards.
The response notes that several other circuits, however, issued their jurisdiction decisions before Badgerow was decided in 2022, so most haven’t yet had a meaningful opportunity to interpret it. Therefore, the respondents argue there is no genuine Badgerow conflict if the Fourth Circuit is the sole circuit that has had the opportunity to consider its implications.
Indeed, only the Seventh Circuit addressed the issue briefly in Kinsella, linked above, which was decided before Smartsky, and there was no opportunity for the court to address the Fourth Circuit’s contrary reasoning. Moreover, the respondents contend that time might eventually solve the split as more circuits are given the opportunity to weigh in on Badgerow’s application, without the Supreme Court’s intervention. “Indeed, the Fourth Circuit might even correct its own position after allowing the question to further percolate in other courts of appeals,” the Balazs responding brief notes.
Thus, the respondents argue, there is no immediate need for this case to be granted certiorari.
Next, the respondents assert that the case is a poor vehicle. They claim the petitioner has taken inconsistent positions on the question presented by flip-flopping on the district court’s power to decide post-arbitration motions. The response notes, “Petitioner contested the court’s jurisdiction to resolve Respondents’ motion to confirm while simultaneously invoking the same court’s jurisdiction to resolve his own motion to vacate,” while “offer[ing] no explanation for that internally contradictory position.”
Next, the response notes that the Second Circuit’s decision was unpublished (see the summary order linked on Scotusblog at https://bit.ly/3LDlfZ7) and fact-specific. In addition, they contend the case’s procedural record is messy. For example, the petitioner initially filed suit against entities that were not his actual employer, Chateau Marmont, to avoid the arbitration agreement, later allowing the hotel to join the post-arbitration proceedings even though it had not been named in the federal suit.
In addition, the Balazs respondents were not named parties to the arbitration, though they are named in the litigation claim.
The respondents note petitioner Jules’ own misconduct during the arbitration and his repeated attempts to relitigate in multiple courts, and assert that these facts make the case ill-suited for Supreme Court review.
The respondents’ closing argument asserts that the petitioner’s policy arguments that the supposed circuit split will lead to forum-shopping and inefficient and unnecessary litigation are entirely hypothetical and without evidence or examples.
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New York arbitration practitioner and litigator Philip J. Loree Jr. teed up the post-Badgerow issues discussed in Jules v. Balazs extensively in CPR’s Alternatives to the High Cost of Litigation last year after Smartsky. Loree’s articles can be found at “The Fourth Circuit Weighs the Post-Badgerow Jurisdictional Anchor—and Finds It Won’t Set,” 142 Alternatives 73 (May 2024), and “More on Independent Actions and the ‘Jurisdictional Anchor’: Where the Law on Award Enforcement May Be Going, 142 Alternatives 95 (June 2024).
More recently, he revisited federal arbitration jurisdiction circuit court decisions in “Two New Jurisdiction Traps: Arbitration Amounts In Controversy, and New York Convention Application,” 43 Alternatives 141 (October 2025), and, last month, in “N.Y. Convention ‘Trap’: No Subject Matter Jurisdiction Over Petitions to Vacate Foreign Arbitral Awards,” 43 Alternatives 168 (November 2025).
Loree’s Alternatives analysis articles are available on Westlaw or e-mail Alternatives@cpradr.org for access.
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The author is the CPR Institute’s 2025-2026 academic year intern from the Howard University School of Law ADR Program, where she is a second-year student in Washington, D.C. Alternatives editor Russ Bleemer contributed to the research and writing.
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