Justices to Consider Federal Court Jurisdiction Over Arbitration Awards

The high court agreed to hear a case asking whether federal courts have jurisdiction to review arbitration awards when the underlying dispute involves a question of federal law.

(AP Photo/J. Scott Applewhite)

WASHINGTON (CN) — The U.S. Supreme Court agreed Monday to hear oral arguments this fall in a jurisdictional dispute over a provision in the Federal Arbitration Act.

Denise Badgerow was an associate financial advisor for a Louisiana financial service company whose three principles, including Greg Walters, were independent franchise advisors for Ameriprise. After Badgerow raised concerns about alleged workplace harassment and violations of securities laws, she was terminated.

Alleging securities violations and retaliation over her firing, Badgerow took her arbitration proceeding to a panel of the Financial Industry Regulatory Authority, which sided with Walters and the other principles and dismissed the case with prejudice.

Badgerow tried to vacate the arbitration decision in state court, but her former company sought to remove the case to federal court. The district court denied Badgerow’s remand motion, confirming the arbitration award in favor of Walters.

In the 2009 case Vaden v. Discover Bank, the Supreme Court ruled a federal court could “look through” a petition to compel arbitration brought under Section 4 of the Federal Arbitration Act to figure out whether the underlying dispute establishes subject matter jurisdiction. But the justices were ambiguous on whether federal courts could also “look through” motions to confirm or vacate arbitration awards under Sections 9 and 10 of the FAA.

The district court held that it had federal-question jurisdiction because Badgerow’s workplace allegations were predicated on federal employment law and denied her motion to send the case back to state court, and ultimately upheld the arbitration award. The Fifth Circuit affirmed, prompting Badgerow’s appeal to the Supreme Court.

In a petition to the high court, Badgerow’s attorney Daniel Geyser with Alexander Dubose & Jefferson pointed to a circuit split on the issue.

“As it now stands, federal jurisdiction under the FAA rises or falls based on where an action is filed — and countless parties are left guessing where to assert their basic rights under the FAA,” Geyser wrote. “The stark division over this fundamental question is untenable.”

The Supreme Court also agreed Monday to consider a jurisdictional issue in the case of a man convicted of killing an Arizona woman and her 15-year-old daughter.

On May 25, 1989, David Ramirez was found in a west Phoenix apartment described in a petition from state attorneys as “awash in blood.” He later admitted to sexually assaulting the minor and killing her mother, with whom he had a romantic relationship.

A jury found Ramirez guilty of his crimes and a judge found there were aggravated circumstances. He was sentenced to death and on appeal the Arizona Supreme Court agreed with the lower court that mitigating circumstances were not enough to grant leniency in sentencing.

In a federal habeas petition, Ramirez alleged his counsel hadn’t presented evidence of intellectual disability, failed to provide other relevant information in the sentencing phase and relied on an expert report that was contradictory.

While his appeal was pending before the Ninth Circuit, the Supreme Court ruled in the 2012 case Martinez v. Ryan that state inmates can pursue procedurally defaulted ineffective-counsel claims if they were defaulted because state habeas counsel failed to bring them up.

In light of that ruling, the San Francisco-based appeals court remanded the case to district court to reconsider Ramirez’s claims. The lower court expanded the record to include evidence newly proffered by Ramirez about his counsel’s ineffectiveness, but ultimately found his claim without merit.

However, on appeal again, a three-judge panel of the Ninth Circuit partially reversed that ruling, concluding the district court applied an incorrect standard to determining prejudice under Martinez. That prompted Arizona to take the case to the Supreme Court.

Ramirez’s case was consolidated with that of Barry Jones, who was convicted of felony murder in 1995. The district court ordered Jones released unless the state retried him with competent counsel and the Ninth Circuit affirmed.

Per their custom, the justices did not comment on their decision to hear the cases.

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