The Seventh Circuit’s decision in King v. Universal Health Services of Hartgrove, Inc., No. 23-3254, slip op. (7th Cir. August 5, 2024) (nonprecedential disposition), is yet another lesson about how important it is to take great care to ensure that subject-matter and appellate jurisdiction requirements are met. King may be a “nonprecedential disposition,” but that doesn’t mean one should disregard its lessons.
Background
The story begins back in December 2018 when employee A (the “Employee”) commenced an action (“Action I”) against employer B (the “Employer”) that asserted various claims, including for employment discrimination based on the Americans with Disabilities Act, 42 U.S.C. § 12112(a). Employer moved under Section 4 of the Federal Arbitration Act (“FAA”) to compel arbitration based on an agreement Employee signed at the commencement of employment. See 9 U.S.C. § 4.
The district court in Action I granted the motion and entered judgment in May 2020. We cannot tell from the Court’s brief opinion whether anyone requested a stay pending arbitration. (See our recent post on Smith v. Spizzirri, 601 U.S. 472 (2024).)
The arbitration proceeded and the arbitrator made an award in favor of the Employer. Employee commenced a new district court action (“Action II”) in which it sought an order vacating the award. Around the same time, the Employer made a motion in Action I to confirm the award under FAA Section 9. See 9 U.S.C. § 9.
That prompted the Court in Action II to make an order consolidating Action I with Action II. The Court designated no lead case and maintained separate dockets for each Action.
The Court in Action I made an order granting the motion to confirm. More than a month later the Court in Action II entered judgment for the employer, stating “‘[n]o further action’ was needed regarding King’s motion to vacate the award in that case.” Slip op. at 2.
The employer filed a timely notice of appeal in Action II. The notice of appeal referenced the case numbers for Actions I and II, as well as the Action I Court’s 45-day-prior decision confirming the award.
The Action II Court Lacked Subject-Matter Jurisdiction
Action I was apparently commenced by the Employee based on federal question jurisdiction, as one of the claims asserted was under the Americans with Disabilities Act. There was therefore subject matter jurisdiction over the motion to compel arbitration of that underlying federal claim. See 9 U.S.C. § 4; See 9 U.S.C. § 4; Vaden v. Discover Bank, 556 U. S. 49, 62 (2009); Badgerow v. Walters, 596 U.S. 1, 9-10 (2022).
Unlike Action I, Action II was simply a petition to vacate an arbitration award under Section 10 of the FAA. Under Badgerow, the Action II court could not base subject matter jurisdiction by “looking through” to the underlying federal-question-based claim in arbitration that resulted in the award because Section 10, unlike Section 4, does not textually confer upon the Court jurisdiction on such a “look through” basis. See Badgerow, 596 U.S. at 11-12; King, slip op. at 2-3. ] An independent basis for jurisdiction, apart from the FAA itself, must be present, such as, for example, diversity jurisdiction. Badgerow, 596 U.S. at 9. Here there was concededly no diversity jurisdiction and the Court could “see no other independent basis for subject matter jurisdiction.” King, slip op. at 3.
Because the Action II Court Lacked Subject Matter Jurisdiction, it Could not be Consolidated with Action I
The employee on its timely appeal of Action II sought to challenge the district Court’s confirmation of the Award in Action I, but the Court said that confirmation decision was not before it. Slip op. at 2. Action I and Action II “were not consolidated effectively here because the district court did not have jurisdiction over [Action II] and it therefore could not consolidate that case.” Slip op. at 2 (citations omitted).
The Court Could Consider the Action II Notice of Appeal Effective for Both Actions I and II but the Action I Appeal Would be Untimely
The Court said that “even without an effective consolidation,” the Action II notice of appeal could be deemed effective in both Actions. Slip op. at 3. The Court had the authority to disregard “defects in form in a notice of appeal[,]” “and this includes filing under the wrong case number.” Slip op. at 3 (citation omitted). Exercising that authority was appropriate here where the Action II “notice of appeal gave sufficient notice of [the Employee’s] intent to appeal in” “and it provided the information required by [Fed. R. App. P 3(c)(1)].” Slip op. at 3 (citation omitted).
But even that could not solve the problem. No notice of appeal concerning Action I was filed until the Employee served its Action II notice of appeal “45 days after the final decision to confirm the arbitration award. . . .” Slip op. at 3. That notice of appeal was untimely and the Action I decision was therefore not properly before the Court.
Contacting the Author
If you have any questions about this article, arbitration, or arbitration-related litigation, then please contact Philip J. Loree Jr., at (516) 941-6094 or PJL1@LoreeLawFirm.com.
Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has nearly 35 years of experience representing a wide variety of corporate, other entity, and individual clients in matters arising under the Federal Arbitration Act, as well as in insurance or reinsurance-related, and other, matters.
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Tags: Appellate Jurisdiction, Badgerow, Notice of Appeal, Spizzirri, Subject Matter Jurisdiction, Vaden
