Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-15-02814/USCOURTS-ca2-15-02814-0/pdf.json

Parties Involved:
Armory Advisers, LLC
Appellee
Armory Fund, LP
Appellee
Drew Doscher
Appellant
Michael Meagher
Appellee
Michael Meyer
Appellee
Sea Port Group Securities, LLC
Appellee
Seaport V, LLC
Appellee
Stephen Smith
Appellee
The Seaport Group, LLC
Appellee

Document Text:

15‐2814

Doscher v. Sea Port Group Sec., LLC

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

______________              

August Term 2015

(Argued: March 8, 2016     Decided: August 11, 2016)

Docket No. 15‐2814

              

DREW DOSCHER,

Petitioner‐Appellant,

–v.–  

SEA PORT GROUP SECURITIES, LLC, STEPHEN SMITH,

MICHAEL MEAGHER, MICHAEL MEYER, THE SEAPORT

GROUP, LLC, ARMORY ADVISERS, LLC, ARMORY

FUND, LP, and SEAPORT V, LLC,

Respondents‐Appellees.

______________

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Before:

POOLER and WESLEY, Circuit Judges, and EATON, Judge.

*

______________

Appeal from the August 5, 2015 order and August 7, 2015

judgment of the United States District Court for the Southern

District of New York (Furman, J.). Petitioner‐Appellant Drew

Doscher appeals from the dismissal of his petition to vacate a

final arbitral award under section 10 of the Federal Arbitration

Act, 9 U.S.C. § 10 (the “Act”). The District Court concluded that

this Court’s decision in Greenberg v. Bear, Stearns & Co., 220 F.3d

22 (2d Cir. 2000), precluded it from using the so‐called “look‐

through” approach in determining whether federal‐question

jurisdiction exists over the petition. While the District Court

correctly applied Greenberg, we conclude that the Supreme

Court’s subsequent decision in Vaden v. Discover Bank, 556 U.S.

49 (2009), casts doubt upon Greenberg’s continued vitality. Upon

reconsideration of Greenberg, therefore, we conclude that the

reasoning of Vaden and the nature of the Act require overruling

Greenberg. We therefore hold that district courts may apply a

look‐through approach to § 10 petitions. We also conclude that

allegations that arbitrators disregarded rules of a self‐regulatory

organization do not allege a manifest disregard of federal law.

Accordingly, we VACATE the District Court’s order and

judgment and REMAND the case for further proceedings.

______________

 

* The Honorable Richard K. Eaton of the United States Court of

International Trade, sitting by designation.

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A. TODD MEROLLA, Merolla & Gold, LLP, Atlanta, GA,

for Petitioner‐Appellant.

RONALD G. BLUM (Benjamin J. Wolfert, on the brief),

Manatt, Phelps & Phillips, LLP, New York, NY, for Respondents‐

Appellees.

______________

WESLEY, Circuit Judge:

This case arises from the dismissal of a petition to vacate

an arbitral award pursuant to section 10 of the Federal

Arbitration Act (the “FAA” or the “Act”), 9 U.S.C. § 10. It

requires us to reconsider the continuing viability of our Court’s

precedent in Greenberg v. Bear, Stearns & Co., 220 F.3d 22 (2d Cir.

2000), in which we held that a district court may exercise federal‐

question jurisdiction over a § 10 petition only if the petition

states a substantial federal question on its face—i.e., a district

court may not “look through” the petition to determine if the

underlying dispute that was subject to arbitration involved

substantial questions of federal law. Greenberg premised its

conclusion on a now‐overruled decision of this Court that

rejected a look‐through approach as applied to section 4 of the

Act, 9 U.S.C. § 4. See Westmoreland Capital Corp. v. Findlay, 100

F.3d 263 (2d Cir. 1996), overruled by Vaden v. Discover Bank, 556

U.S. 49 (2009).  

We would not need to decide whether Greenberg remains

good law if, as Appellant argues, federal‐question jurisdiction

exists on the face of the petition because of an arbitration panel’s

alleged manifest disregard of a self‐regulatory organization’s

internal rule. But because the arbitration panel’s conduct

implicates no federal law and thus cannot form the basis of

jurisdiction, Greenberg’s continued viability takes center stage.

We conclude that Greenberg cannot survive Vaden’s later‐

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established precedent; accordingly, we vacate the order and the

judgment of the District Court.

BACKGROUND1

In June 2013, Petitioner‐Appellant Drew Doscher—the

onetime co‐head of sales and trading for The Seaport Group,

LLC and Sea Port Group Securities, LLC (together, “Seaport”)—

commenced arbitration against his former employers; both are

members of the Financial Industry Regulatory Authority

(“FINRA”).2 Doscher also included the individual Respondents‐

Appellees—the two founders of Seaport and his former co‐head

of sales and trading—as well as the other three entity

Respondents‐Appellees. His initial statement of claim against his

counterparties alleged breach of contract, retaliatory discharge,

and unjust enrichment, but he later amended his statement to

add a claim for securities fraud under section 10(b) of the

Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C.

§ 78j(b), and Rule 10b‐5 of the Securities and Exchange

 

1 The facts here are drawn from the District Court’s August 5, 2015

memorandum opinion and order. See Doscher v. Sea Port Group Sec.,

LLC, No. 15‐CV‐384 (JMF), 2015 WL 4643159 (S.D.N.Y. Aug. 5, 2015).

2 FINRA is a “self‐regulatory organization” registered under section

15A of the Exchange Act, 15 U.S.C. § 78o‐3, and subject to oversight

under section 19 of the same act, id. § 78s. See Fiero v. Fin. Indus.

Regulatory Auth., Inc., 660 F.3d 569, 571–72, 574 (2d Cir. 2011) (internal

quotation marks omitted). FINRA’s internal rules require arbitration of

disputes between Doscher and Seaport as a “dispute aris[ing] out of

the business activities of a member or an associated person” that “is

between or among . . . Members and Associated Persons.” FINRA Rule

13200; see also FINRA Rule 13100(a), (o) (defining “Associated Person”

and “Member”). FINRA’s rules may be found at

http://tinyurl.com/finrarules.

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Commission (“SEC”), 17 C.F.R. § 240.10b‐5. Doscher sought

more than $15 million in damages; ultimately, on October 22,

2013, the arbitral panel awarded him almost $2.3 million, with a

potential additional commission.

On January 20, 2015, Doscher filed a § 10 petition to

vacate and modify in part the award in the United States District

Court for the Southern District of New York (Furman, J.). His

petition identified two grounds for vacatur: (1) the arbitration

panel failed to ensure that documentary evidence was fully and

timely made available to Doscher, thereby warranting vacatur

under § 10(a)(3), and (2) the arbitration panel acted in manifest

disregard of FINRA Rule 13505 requiring parties to cooperate in

discovery. Doscher asserted that the District Court possessed

subject matter jurisdiction because, first, FINRA Rule 13505 was

a rule of federal law and the petition thus stated a federal

question on its face, and, second, that his section 10(b) claim in

the underlying arbitration conferred federal‐question

jurisdiction. On August 5, 2015, the District Court issued a

memorandum opinion and order rejecting both arguments. First,

it held that violations of internal FINRA rules do not present

questions of federal law, and second, it held that Doscher’s

reliance on his section 10(b) claim was “squarely foreclosed” by

Greenberg, which the District Court concluded remained good

law. Doscher, 2015 WL 4643159, at *2–4. Finding no subject

matter jurisdiction, the District Court dismissed the petition in

its entirety and entered judgment in Appellees’ favor on August

7, 2015.

DISCUSSION

Both grounds for subject matter jurisdiction asserted by

Doscher turn on questions of law, which we review de novo. See

Hachamovitch v. DeBuono, 159 F.3d 687, 693 (2d Cir. 1998).

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Doscher’s argument that a substantial federal question appears

on the face of the petition receives our initial attention; if his

contention were correct, we would have no need to address

Greenberg’s continued vitality.

I.

As explained in Greenberg, federal‐question jurisdiction

lies on the face of the petition where “the petitioner complains

principally and in good faith that the award was rendered in

manifest disregard of federal law.” Greenberg, 220 F.3d at 27;

accord Perpetual Sec., Inc. v. Tang, 290 F.3d 132, 139 (2d Cir. 2002).3

Implicit in this holding is the requirement that the legal rule that

the arbitration panel allegedly manifestly disregarded is in fact a

rule of federal law.

Doscher argues that the internal rules of self‐regulatory

organizations (“SROs”) such as FINRA are federal law, because

those rules are subject to SEC approval, abrogation, or

modification, see 15 U.S.C. § 78s(b)–(c), and because SROs are

obligated both to abide by and to enforce their own internal

rules, see id. § 78s(g). He specifically alleges that the arbitration

panel failed to enforce FINRA Rule 13505, which provides, in

full, that “[t]he parties must cooperate to the fullest extent

practicable in the exchange of documents and information to

expedite the arbitration.”

In support of his argument, Doscher relies on a recent

decision of our Court, NASDAQ OMX Group, Inc. v. UBS

 

3 After the Supreme Court held that § 10 provides the exclusive

grounds for vacatur of an arbitration award, see Hall St. Assocs., L.L.C.

v. Mattel, Inc., 552 U.S. 576 (2008), our Court held that “manifest

disregard of the law” is a “judicial gloss” on § 10 that permits vacatur.

See Schwartz v. Merrill Lynch & Co., 665 F.3d 444, 451–52 (2d Cir. 2011)

(internal quotation marks omitted).  

Case 15-2814, Document 58-1, 08/11/2016, 1838485, Page6 of 34
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Securities, LLC, 770 F.3d 1010 (2d Cir. 2014). In NASDAQ,

although the plaintiffs alleged four claims arising under state

law, “a singular duty underl[ay] all four”—namely, “NASDAQ’s

duty to operate a fair and orderly market—a duty sourced in the

Exchange Act, amplified by SEC regulations, and implemented

through SEC‐approved NASDAQ rules.” Id. at 1021. Thus, we

concluded, any inquiry into whether this duty was violated—an

essential element of the four state‐law claims—necessarily raised

substantial and disputed questions of federal law. Id. at 1023

(applying Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013)).

Doscher’s case is built on a distinctly different and,

unfortunately for him, unstable foundation. As discussed above,

the Exchange Act requires FINRA to subject its internal rules to

SEC approval, abrogation, or modification. See 15 U.S.C.

§ 78s(b)(1), (c).4 The Exchange Act also requires FINRA to

comply with its own internal rules and to enforce compliance by

its members and associated persons. Id. § 78s(g)(1)(B). While

Doscher must allege that the arbitration panel manifestly

disregarded a rule of federal law, federal law imposes

obligations only on self‐regulatory organizations—not on

arbitration panels applying their rules. Moreover, the rule

implicated here is one step further removed: it directs “[t]he

parties [to] cooperate to the fullest extent practicable.” FINRA

Rule 13505 (emphasis added). Doscher’s claim is, in essence, that

the Exchange Act requires FINRA to require the arbitration

panel to require the parties to cooperate, and the parties did not

 

4 Internal rules must be approved by the SEC if the rule “is consistent

with the requirements of this chapter and the rules and regulations

issued under this chapter that are applicable to” the SRO.

§ 78s(b)(2)(C)(i). The rule is also deemed approved by default if the

SEC fails to approve or disapprove the rule within the deadlines

provided by the Exchange Act. See § 78s(b)(2)(D).

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cooperate. The only federal obligation is the one imposed by the

Exchange Act on FINRA, and none of FINRA’s conduct is

implicated by Doscher’s petition. Doscher’s asserted violation is

simply too attenuated to constitute a colorable claim that any

obligation or duty of federal law was manifestly disregarded.

Thus, this case is wholly unlike NASDAQ, in which an

obligation imposed by federal law on an SRO—to operate a fair

and orderly market—was a necessary element of the state law

actions.  

Doscher’s position is not without some support. He

directs our attention to Sacks v. Dietrich, 663 F.3d 1065, 1069 (9th

Cir. 2011), in which the Ninth Circuit ruled that federal‐question

jurisdiction extended to claims premised on violations of

internal FINRA rules by arbitrators. Specifically, the plaintiff in

Sacks filed a suit in state court, challenging the arbitrators’

decision to disqualify him as a party’s representative in a FINRA

arbitration, because he had been barred from the securities

industry twenty years prior. Id. at 1067; see also FINRA Rule

13208(c) (precluding persons “currently suspended or barred

from the securities industry in any capacity” from representing a

party in FINRA arbitration). The defendants removed the case to

federal court. The Ninth Circuit concluded that the removal was

proper “because the central question of this case [was] whether

FINRA rules were violated” and thus “application of federal law

[was] necessary to resolve each of the state law theories.” Sacks,

663 F.3d at 1069.

In reaching this conclusion, the court relied heavily on a

prior Ninth Circuit precedent, Sparta Surgical Corp. v. National

Ass’n of Securities Dealers, Inc., 159 F.3d 1209 (9th Cir. 1998). In

Sparta, the plaintiffs had asserted state common‐law claims that

alleged, as a necessary component of the claims, conduct by the

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National Association of Securities Dealers (“NASD”)5 that

violated its internal rules. The Ninth Circuit concluded that

“[b]ecause federal courts are vested by 15 U.S.C. § 78aa with the

exclusive jurisdiction over actions brought ‘to enforce any

liability or duty’ created by exchange rules,” federal jurisdiction

was proper. Id. at 1212. Relying on Sparta, the Sacks court saw no

distinction between a case in which the SRO violated its own

rules and one in which an arbitrator was charged with the rule

violation: the Sacks panel chose to ground its decision on the

characterization of internal SRO rules as federal law, regardless

of the identity of the alleged violator. Sacks, 663 F.3d at 1069.  

With due respect to our sister circuit, its reasoning is

unpersuasive. There is a critical difference between cases like

Sparta and NASDAQ involving allegations that the SRO

breached its own internal rules and cases like Sacks and

Doscher’s involving allegations that someone other than the SRO

violated the internal rules. In the former, the SRO’s conduct may

breach § 78s(g)(1), while in the latter, neither the cause of action

nor any necessary element of it involves adjudicating any breach

of a federal obligation.

More importantly, however, whatever force existed in the

Ninth Circuit’s conclusion that any violation of internal SRO

rules falls categorically within 15 U.S.C. § 78aa’s grant of

“exclusive [federal] jurisdiction of violations of [Chapter 2B of

Title 15] or the rules and regulations thereunder,” it is no longer

tenable following the Supreme Court’s recent decision in Merrill

Lynch, Pierce, Fenner & Smith Inc. v. Manning, 136 S. Ct. 1562

 

5 NASD was the predecessor organization to FINRA. See Fiero, 660 F.3d

at 571 & n.1.

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(2016).6 In Manning, the Supreme Court adopted the Third

Circuit’s test for determining what actions fall under exclusive

federal jurisdiction under § 78aa, laying out an identical inquiry

to the familiar “arising under” test for federal‐question

jurisdiction under 28 U.S.C. § 1331. Id. at 1567–68. In doing so, it

expressly rejected Sparta’s broader interpretation. See id. at 1567

& n.1. Applying the same principles as the “arising under”

 

6 Sparta’s interpretation of the scope of § 78aa did not necessarily make

sense prior to Manning either. Section 19 of the Exchange Act, for

example, requires compliance by an SRO with “the provisions of this

chapter, the rules and regulations thereunder, and its own rules,”

§ 78s(g)(1) (emphasis added). The Act thus clearly distinguishes

between “rules and regulations thereunder” and internal SRO rules,

and “[g]enerally, identical words used in different parts of the same

statute are presumed to have the same meaning,” Merrill Lynch, Pierce,

Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 86 (2006) (alteration and

internal quotation marks omitted); see also Sebelius v. Cloer, 133 S. Ct.

1886, 1894 (2013) (“We have long held that where Congress includes

particular language in one section of a statute but omits it in another

section of the same Act, it is generally presumed that Congress acts

intentionally and purposely in the disparate inclusion or exclusion.”

(alteration and internal quotation marks omitted)).  

Concluding that the Exchange Act’s phrase “rules and regulations

thereunder” includes internal SRO rules would also have the

necessary result under § 78(g)(1) of requiring each individual SRO to

comply with the rules of every other SRO. This interpretation not only

produces absurd results but would turn the requirement of

compliance with an SRO’s “own rules” in § 78s(g)(1) into surplusage,

thus running contrary to two canons of construction at once. See

Duncan v. Walker, 533 U.S. 167, 174 (2001) (reiterating the preference

for statutory interpretations that do not render terms superfluous);

United States v. Am. Trucking Ass’ns, 310 U.S. 534, 543 (1940)

(articulating the preference against interpretations producing absurd

or plainly unreasonable results).

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standard, the Court held that § 78aa applies to two kinds of suits:

(1) those in which “federal law creates the cause of action

asserted” and (2) “‘a special and small category of cases’” that

“‘necessarily raise[] a stated federal issue, actually disputed and

substantial.’” Manning, 136 S. Ct. at 1569–70 (quoting Gunn, 133

S. Ct. at 1064; Grable & Sons Metal Prods., Inc. v. Darue Eng’g &

Mfg., 545 U.S. 308, 314 (2005)). The Court characterized the first

category as encompassing those cases “asserting an Exchange

Act cause of action”—i.e., “the prototypical way of enforcing an

Exchange Act duty.” Id. at 1569. For the second category, the

Court twice framed the inquiry as whether the non‐Exchange

Act action “necessarily depends on a showing that the defendant

breached the Exchange Act” or whether the plaintiff must prove

“as the cornerstone of his suit, that the defendant infringed a

requirement of the federal statute.” Id. (emphases added).7 As

described above, the Exchange Act itself imposes no duty to

comply with FINRA rules either on the arbitrators or non‐SRO

parties to arbitration. An action to vacate an arbitration award

on either ground therefore falls into neither of Manning’s

categories.

Doscher’s petition does not present a facial claim of any

manifest disregard of federal law. All that remains is to check

Greenberg’s pulse for vital signs in light of the Supreme Court’s

decision in Vaden.

 

7 Although it is unnecessary to decide conclusively, we nonetheless

note that Manning’s second category is identical to the basis asserted

for jurisdiction in NASDAQ. See NASDAQ, 770 F.3d at 1020. Thus, at

least on a facial read of the two cases, we think there is no reason to

suspect that Manning called NASDAQ into question, and we are

comfortable relying on NASDAQ’s reasoning here.

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II.

It is a longstanding rule of our Circuit that a three‐judge

panel is bound by a prior panel’s decision until it is overruled

either by this Court sitting en banc or by the Supreme Court. See

United States v. Wilkerson, 361 F.3d 717, 732 (2d Cir. 2004); see also

Ingram v. Kumar, 585 F.2d 566, 568 (2d Cir. 1978). Nonetheless,

we have consistently recognized two instances in which a three‐

judge panel may issue an opinion that overrules Circuit

precedent. The first is often called a “mini–en banc,” in which the

panel circulates its opinion among all active judges and receives

no objections to its filing. See, e.g., Shipping Corp. of India Ltd. v.

Jaldhi, 585 F.3d 58, 67 & n.9 (2d Cir. 2009); see also United States v.

Roglieri, 700 F.2d 883, 887 n.2 (2d Cir. 1983). The second is

“where an intervening Supreme Court decision casts doubt on

the prior ruling.” E.g., Finkel v. Stratton Corp., 962 F.2d 169, 174–

75 (2d Cir. 1992); cf. Boothe v. Hammock, 605 F.2d 661, 663 (2d Cir.

1979).8  

To qualify as an intervening decision, the Supreme

Court’s conclusion in a particular case must have “broke[n] the

link . . . on which we premised our [prior] decision,” Finkel, 962

F.2d at 175, or “undermine[d] [an] assumption” of that decision,

Sullivan v. Am. Airlines, Inc., 424 F.3d 267, 274 (2d Cir. 2005). It is

not, however, necessary that the Supreme Court have

 

8 We have not been particularly clear whether this latter situation is

merely an application of the rule, recognizing that the Supreme Court

may “implicitly” overrule the “rationale” of one of our precedents, e.g.,

United States v. Santiago, 268 F.3d 151, 154 (2d Cir. 2001) (Sotomayor, J.)

(internal quotation marks omitted), or whether it constitutes a separate

“exception” to the rule, e.g., Union of Needletrades, Indus. & Textile Emps.

v. INS, 336 F.3d 200, 210 (2d Cir. 2003) (citing Boothe, 605 F.2d at 663).

Whatever its origins, however, the rules governing the principle’s

application are well established, as we explain below.

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“address[ed] the precise issue decided by the panel for this

exception to apply.” In re Zarnel, 619 F.3d 156, 168 (2d Cir. 2010).

If a panel concludes that a particular Supreme Court decision

does not cast sufficient doubt on our precedent, the precedent

continues to be binding. See, e.g., FDIC v. First Horizon Asset Sec.,

Inc., No. 14‐3648, 2016 WL 2909338, at *3 (2d Cir. May 19, 2016);

United States v. Robbins, 729 F.3d 131, 135–36 (2d Cir. 2013);

European Cmty. v. RJR Nabisco, Inc., 424 F.3d 175, 179 (2d Cir.

2005) (Sotomayor, J.). When sufficient doubt exists, however,

and the panel must reconsider whether that precedent should

continue as the law of the Circuit, it not only applies the

conclusions of the intervening Supreme Court case but also

employs normal interpretive methods and examines such things

as the internal consistency of the statute, statutory purpose and

legislative history, analogous statutes, and even changes in the

judicial landscape and the conclusions of other Circuits. See, e.g.,

Lotes Co. v. Hon Hai Precision Indus. Co., 753 F.3d 395, 405–08 (2d

Cir. 2014); United States v. Gill, 748 F.3d 491, 501–04 (2d Cir.

2014); Sullivan, 424 F.3d at 274–77; Union of Needletrades, Indus. &

Textile Emps. v. INS, 336 F.3d 200, 210 (2d Cir. 2003). Even if the

effect of a Supreme Court decision is “subtle,” it may

nonetheless alter the relevant analysis fundamentally enough to

require overruling prior, “inconsistent” precedent. Wojchowski v.

Daines, 498 F.3d 99, 108 (2d Cir. 2007) (alteration and internal

quotation marks omitted).

A less‐than‐stringent application of the standards for

overruling prior decisions not only calls into question a panel’s

respect for its predecessors but also increases uncertainty in the

law by revisiting precedent without cause. Nonetheless, a three‐

judge panel must answer a question squarely presented if no

other avenue for resolution of the case exists. See Sullivan, 424

F.3d at 274 (“Because the [Supreme] Court’s more recent

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decision . . . entirely undermines [our prior] assumption about

the RLA, we must reconsider [prior] conclusions about RLA

preemption without rehearing this case en banc.”).9 Doscher has

argued to us that Vaden displaces Greenberg. Finding no other

basis for decision in this case, we must therefore evaluate

Greenberg’s continuing validity.

A.

Section 4 of the Act provides, in relevant part:

A party aggrieved by the alleged failure,

neglect, or refusal of another to arbitrate

under a written agreement for arbitration

may petition any United States district court

which, save for such agreement, would have

jurisdiction under Title 28, in a civil action or in

admiralty of the subject matter of a suit arising

out of the controversy between the parties, for an

order directing that such arbitration proceed

in the manner provided for in such

agreement.

9 U.S.C. § 4 (emphasis added). By contrast, section 10 of the Act

provides that “the United States court in and for the district

wherein the award was made may make an order vacating the

award upon the application of any party to the arbitration” if

certain grounds for vacatur exist. Id. § 10(a) (emphasis added).10

 

9 In addition, this opinion was circulated to all judges of this Court

prior to filing, and we received no objection. See In re Zarnel, 619 F.3d

156, 168 n.5 (2d Cir. 2010); United States v. Parkes, 497 F.3d 220, 230 n.7

(2d Cir. 2007).

10 Sections 9 and 11 of the Act contain substantially identical language

to § 10; all three lack the italicized clause in § 4. See 9 U.S.C. §§ 9–11.

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The critical question before us is whether the textual difference

between § 4 and § 10 means that a look‐through approach

applies only to the former.

Westmoreland rejected the look‐through approach with

respect to § 4 based on the decisions of a number of district

courts in our Circuit, as well as the decisions of our sister

circuits. See 100 F.3d at 267 (citing cases). In chief, Westmoreland

accepted the reasoning of Drexel Burnham Lambert, Inc. v.

Valenzuela Bock, 696 F. Supp. 957 (S.D.N.Y. 1988), a decision

penned by Judge Leval while still on the district court. Valenzuela

Bock held, and Westmoreland agreed, that the “save for” clause in

§ 4 constituted a congressional repudiation of the “ouster

theory”—an “antiquated common law principle that an

agreement to arbitrate would oust the federal courts of

jurisdiction.” Westmoreland, 100 F.3d at 268 (citing Valenzuela

Bock, 696 F. Supp. at 961–62). Additionally, Westmoreland noted

that the provisions lacking § 4’s unique language “have not been

interpreted to confer jurisdiction on the federal courts” and that

it “would produce an odd distinction” if “a petition to compel

arbitration could be brought in federal court, but a petition

under FAA §§ 9 or 10 to confirm or vacate the arbitration award

in the same dispute could not.” Id. Westmoreland again relied on

Valenzuela Bock’s reasoning:

This distinction would truly be “bizarre,”

because “[t]he interest of the federal court in

determining whether the arbitration award

was entered in manifest disregard of the

federal law . . . would seem to be far greater

than the federal interest in seeing that the

claims could be arbitrated.”

Id. (alterations in original) (quoting Valenzuela Bock, 696 F. Supp.

at 963).

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Four years later, a second panel of this Court was asked to

determine whether it possessed federal‐question jurisdiction

over a § 10 petition. It rejected the look‐through approach for

such petitions squarely and exclusively on the basis of

Westmoreland. See Greenberg, 220 F.3d at 26. In doing so, it

reiterated Westmoreland’s reliance on the “ouster theory”

explanation and then held that “[t]he holding in Westmoreland

logically extends to motions to vacate an arbitration award

under § 10 of FAA,” additionally citing the holdings of two other

circuits and two district courts in our Circuit. Id. The Greenberg

panel reasoned:  

As with a motion under § 4, the only federal

rights that a motion under § 10 necessarily

implicates are those created by the FAA

itself, which rights do not give rise to federal

question jurisdiction. In both contexts, there

is no necessary link between the requested

relief and the character of the underlying

dispute. For example, a petition to compel

arbitration because the dispute falls within

the scope of an arbitration clause, or to

vacate an award because the arbitrators

exceeded their powers under that clause,

will turn on the interpretation of the clause,

regardless of whether the actual dispute

implicates any federal laws.  

Id. It went on to conclude, however, that if a petition raised an

argument “that the award was rendered in manifest disregard of

federal law, a substantial federal question is presented and the

federal courts have jurisdiction to entertain the petition.” Id. at

27.

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17

Nine years after Greenberg, the Supreme Court expressly

overruled Westmoreland in its Vaden decision. It began by

reaffirming its longstanding conclusion that the Act “is

something of an anomaly in the realm of federal legislation: It

bestows no federal jurisdiction but rather requires for access to a

federal forum an independent jurisdictional basis over the

parties’ dispute.” Vaden, 556 U.S. at 59 (alterations and internal

quotation marks omitted). Next, it laid out the general rules of

federal‐question jurisdiction under 28 U.S.C. § 1331—the

“independent jurisdictional basis” relied upon by the petitioner.

Id. The Court then announced that “[a] federal court may ‘look

through’ a § 4 petition to determine whether it is predicated on

an action that ‘arises under’ federal law.” Id. at 62.

This rule was, the Court held, driven by the text of § 4:

The phrase “save for [the arbitration]

agreement” indicates that the district court

should assume the absence of the arbitration

agreement and determine whether it “would

have jurisdiction under title 28” without it.

Jurisdiction over what? The text of § 4 refers

us to “the controversy between the

parties[,]” . . . [which is] most

straightforwardly read to mean the

“substantive conflict between the parties.”

Id. (first alteration in original) (citations omitted) (quoting § 4).

The Court noted that a majority of the federal courts of appeals

had rejected such an approach but concluded that the “ouster

theory” explanation on which most relied was not persuasive: if

any lingering ouster doctrine existed, section 2 of the Act, which

declared all arbitration agreements valid and enforceable,

“directly attended to the problem.” Id. at 64. The Court then

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18

noted that rejecting the look‐through approach had “curious

practical consequences”:  

It would permit a federal court to entertain a

§ 4 petition only when a federal‐question

suit is already before the court, when the

parties satisfy the requirements for

diversity‐of‐citizenship jurisdiction, or when

the dispute over arbitrability involves a

maritime contract.

Id. at 65 (citing Westmoreland, 100 F.3d at 268–69). In other words,

if a federal‐question suit was filed in federal court, the court

could compel arbitration—but if the suit had not already been

filed, it could not. Id. This approach “‘create[d] a totally artificial

distinction’ based on whether a dispute is subject to pending

federal litigation.” Id. (quoting 1 I. MACNEIL, R. SPEIDEL & T.

STIPANOWICH, FEDERAL ARBITRATION LAW § 9.2.3.3, at 9:21 (1995)).

B.

We think it clear that Vaden satisfies the standard for an

intervening Supreme Court decision that “casts doubt on the

prior ruling” in Greenberg. Finkel, 962 F.2d at 175. The only

rationale Greenberg employed to reach its conclusion was

“logically extend[ing]” Westmoreland’s rejection of the look‐

through approach to § 10. Greenberg, 220 F.3d at 26. Put another

way, if one were to excise all reliance upon Westmoreland from

Greenberg, we would be left exclusively with a question and an

answer but no intervening reasoning. The necessary conclusion

is that Vaden both “broke the link,” Finkel, 962 F.2d at 175, and

“undermine[d] [the] assumption,” Sullivan, 424 F.3d at 274,

underlying Greenberg’s conclusion that the look‐through

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19

approach was inapplicable to § 10.11 Of course, the inquiry does

not end here: our task now is to determine whether Greenberg’s

result is “inconsistent” with Vaden and the post‐Vaden statutory

context of the Act. E.g., Wojchowski, 498 F.3d at 108; see also Lotes

Co., 753 F.3d at 406.

Vaden provides us with three critical pieces of guidance.

First, it reiterated the longstanding rule that the Act’s provisions

do not bestow or enlarge subject matter jurisdiction. Second, it

relied heavily upon the text of, and interaction between, the

relevant provisions of the Act. Third, it identified the practical

consequences resulting from the interpretive choices. The

application of these three guideposts, however, is significantly

more complicated.

Beginning with the most obvious point, § 10 lacks the

textual “save for” clause contained in § 4. This distinction is not

to be taken lightly, particularly in the face of the Supreme

Court’s statement that “[t]he text of § 4 drives our conclusion”

adopting the look‐through approach. Vaden, 556 U.S. at 62.12 In

 

11 In fact, two non‐precedential decisions of our Court have

suggested—if not directly stated—that Vaden may now permit a look‐

through approach in the § 10 context. See Giusti v. Morgan Stanley Smith

Barney, LLC, 581 F. App’x 34, 35 (2d Cir. 2014) (summary order); Bittner

v. RBC Capital Mkts., 331 F. App’x 869, 871 (2d Cir. 2009) (summary

order). No other Circuit has discussed Vaden’s applicability outside of

the § 4 context, though we note that a recent decision of the Third

Circuit applied the look‐through approach, without analysis, to a § 10

petition in which the underlying claims were, as here, based on

securities fraud under section 10(b). See Goldman, Sachs & Co. v. Athena

Venture Partners, L.P., 803 F.3d 144, 147 n.5 (3d Cir. 2015).

12 It is primarily for this reason that several district courts have

declined to apply Vaden to the Act’s provisions other than § 4. See

Doscher, 2015 WL 4643159, at *4; Trs. of Local Union No. 580 v. Gen. Fence

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20

construing § 10, however, we must also keep in mind “the

cardinal rule that a statute is to be read as a whole, since the

meaning of statutory language, plain or not, depends on

context.” King v. St. Vincent’s Hosp., 502 U.S. 215, 221 (1991)

(citation omitted); accord Auburn Hous. Auth. v. Martinez, 277 F.3d

138, 144 (2d Cir. 2002) (“[T]he preferred meaning of a statutory

provision is one that is consonant with the rest of the statute.”).

We think Vaden’s other two guiding principles counsel against a

too‐hasty reliance on the absence of the “save for” clause.

Perhaps in an ordinary case, this absence would end our

inquiry—but the Act’s anomalous characteristics warrant, we

think, a more careful examination. We focus first on the

jurisdictional context of Vaden and this case and second on the

practical consequences of both interpretations.

 

Corp., No. 13‐CV‐6006, 2014 WL 1800428, at *9–11 (E.D.N.Y. May 5,

2014); Crews v. S & S Serv. Ctr. Inc., 848 F. Supp. 2d 595, 599 (E.D. Va.

2012); Francis v. Landstar Sys. Holdings, Inc., No. 3:09‐CV‐328‐J‐32, 2009

WL 4350250, at *4 (M.D. Fla. Nov. 25, 2009). This was also the

conclusion reached by the United States District Court for the Eastern

District of Pennsylvania, see Goldman v. Citigroup Global Mkts. Inc., No.

12‐4469, 2015 WL 2377962, at *3 (E.D. Pa. May 19, 2015) (citing

Greenberg); Royal Bank Am. v. Kirkpatrick, Nos. 11‐1058, 11‐1112, 2011

WL 4528349, at *3 n.5 (E.D. Pa. Sept. 30, 2011), but these decisions may

have been implicitly overruled by the Third Circuit decision discussed

supra at note 11. By contrast, a few district courts within our Circuit

have applied Vaden outside of § 4 petitions. See Santos v. Gen. Elec. Co.,

No. 10 Civ. 6948, 2011 WL 5563544, at *6 (S.D.N.Y. Sept. 28, 2011)

(report and recommendation) (§ 10 petition to vacate), adopted in full by

2011 WL 5563536 (S.D.N.Y. Nov. 15, 2011); In re September 11 Litig., 765

F. Supp. 2d 587, 591 (S.D.N.Y. 2011) (§ 3 petition to stay); UBS Sec. LLC

v. Voegeli, 684 F. Supp. 2d 351, 354 (S.D.N.Y. 2010) (§ 3 petition to stay);

see also Harris v. Sycuan Band of Diegueno Mission Indians, No. 08‐cv‐

2111, 2009 WL 5184077, at *4 (S.D. Cal. Dec. 18, 2009).

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21

Vaden repeated the Supreme Court’s longstanding

conclusion that the Act “bestows no federal jurisdiction but

rather requires for access to a federal forum an independent

jurisdictional basis over the parties’ dispute.” 556 U.S. at 59

(alterations and internal quotation marks omitted); see also id. at

79 (Roberts, C.J., concurring in part and dissenting in part)

(explaining that the Act “enlarg[es] the range of remedies

available in the federal courts[,] . . . not extend[s] their

jurisdiction” (second and third alterations in original)). The

“independent jurisdictional basis” in Vaden, like this case, was

federal‐question jurisdiction deriving from § 1331. Id. at 59–60

(majority opinion). After laying out the contours of federal‐

question jurisdiction, the Court concluded that the “dispute”

giving rise to § 1331 jurisdiction was the “substantive conflict

between the parties.” Id. at 63 (internal quotation marks

omitted). Although the Court was unanimous on these points—

and on the applicability of the look‐through approach—it was

divided on how to define the substantive controversy.13 Despite

this disagreement over the scope of the dispute, all nine Justices

agreed that “the basic rules of federal‐court jurisdiction . . . must

 

13 The five‐Justice majority concluded that the substantive dispute was

the recovery of past‐due charges by a card‐issuing bank, and the

cardholders’ counterclaims alleging that the charges were preempted

by the Federal Deposit Insurance Act could not, under the well‐

pleaded complaint rule, constitute the required federal question. Id. at

66–67 (citing Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535

U.S. 826 (2002)). By contrast, the four‐Justice minority concluded that

the dispute asserted in the § 4 petition exclusively related to the

legality under federal law of the bank’s charging of fees, and the filing

of a state complaint on a related issue did not affect jurisdiction over

this discrete dispute. Id. at 75–77 (Roberts, C.J., concurring in part and

dissenting in part).  

Case 15-2814, Document 58-1, 08/11/2016, 1838485, Page21 of 34
22

be followed under § 4.” Id. at 79 (Roberts, C.J., concurring in part

and dissenting in part).

The only reasonable reading of Vaden’s jurisdictional

analysis thus makes clear two conclusions. First, the district

court possessed jurisdiction only by operation of § 1331. Second,

the federal question required by § 1331 arose from the

underlying dispute, not the face of the petition. These

conclusions, however, pose a challenge to the proposition that

no look‐through approach is appropriate in § 10 petitions, based

solely on the statutory text.  

Pre‐Vaden, rejecting the look‐through approach with

respect to all of the Act’s provisions made sense, because a

federal court simply compared its jurisdictional statutes to the

face of the petition. See Greenberg, 220 F.3d at 26 (holding that, in

both § 4 and § 10, “the only federal rights . . . necessarily

implicate[d] are those created by the FAA itself, which rights do

not give rise to federal question jurisdiction”); Westmoreland, 100

F.3d at 267–68 (assuming no look‐through approach would

apply to §§ 9 and 10). Under such a construction, for example,

whether an action under the Act presented a substantial federal

question sufficient to confer jurisdiction under § 1331 always

depended on whether the face of the petition met the standards

of federal‐question jurisdiction.14 In essence, the “well‐pleaded

 

14 Although Greenberg stated that “[j]urisdiction would plainly lie if,

among other things, . . . the claim arose in admiralty,” 220 F.3d at 25,

this conclusion is less plain in the § 10 context than § 4. If jurisdiction

must lie on the face of the petition, the nature of the underlying

claim—whether arising under admiralty or federal law—would seem

to be irrelevant. But if the nature of the underlying claim is relevant in

admiralty, there is no reason—logical or textual—to distinguish

between those claims and federal‐question claims. The answer with

respect to § 4 may lie in the fact that the enforcement of any maritime

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23

complaint” for our jurisdictional inquiries was the petition,

regardless of which particular remedy under the Act the

petitioner sought. Post‐Vaden, however, that consistency has

been called into question. If we assume that § 4’s unique textual

clause is dispositive regarding jurisdiction, then, for most of the

Act’s provisions, federal‐question jurisdiction under § 1331 lies

(or not) on the face of the petition. In other words, the

“ordinary” § 1331 inquiry—i.e., the one conducted absent any

special textual clause—requires examining the face of the

petition. For § 4 petitions, however, a court’s federal‐question

jurisdiction lies (or not) on the basis of the underlying

substantive dispute.  

The inconsistency here is evident: if “§ 4 of the FAA does

not enlarge federal‐court jurisdiction,” e.g., Vaden, 556 U.S. at 66,

how can a federal court’s jurisdiction under the same

jurisdictional statute differ between § 4 and all other remedies

under the Act? Post‐Vaden, there is no question that a federal

court’s § 1331 jurisdiction extends to § 4 petitions that it would

have been unable to entertain applying a face‐of‐the‐petition

approach. A district court’s jurisdiction over disputes in which a

party seeks a § 4 remedy is, therefore, broader than its

jurisdiction over disputes in which a party seeks one of the other

remedies provided by the Act.15 Put differently, the necessary

 

contract provision may be brought in federal court, see 28 U.S.C.

§ 1333, and thus, a petition to compel arbitration pursuant to a

contractual provision is essentially identical to such an enforcement

action. But with respect to § 10 cases, the federal court is not enforcing

the contract but applying a federal remedy, and it is hard to see why

the nature of the underlying dispute, absent a look‐through approach,

changes between admiralty and a federal question.

15 A possible counterargument would say that § 4 does not actually

enlarge federal‐question jurisdiction under § 1331, it merely applies

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24

result of limiting the look‐through approach solely to § 4

petitions is to conclude that the same dispute between the

parties would be sufficient to confer § 1331 jurisdiction for the

purposes of § 4 petitions but insufficient to confer § 1331

jurisdiction for the purposes of any of the Act’s other remedies.

That is simply not logically possible without construing § 4 to

expand federal jurisdiction—a conclusion the Supreme Court

has expressly forbidden us to draw.

Thus, there is some tension between two controlling

principles in Vaden: the first emphasizing § 4’s text in concluding

that a court has federal‐question jurisdiction over § 4 petitions

based on the underlying substantive dispute, see 556 U.S. at 62,

and the second emphasizing that the provisions of the Act do

not affect a federal court’s jurisdiction, see id. at 59, 66 (“[Section]

4 of the FAA does not enlarge federal‐court jurisdiction . . . .”

(emphasis added)).16 If we apply the first principle to conclude

 

those rules to one dispute, instead of another. We think this argument

is a distinction without a difference. While the standards for pleading

jurisdiction may remain the same, construing § 4—but not § 10—to

reach the substantive “dispute” for purposes of ascertaining § 1331

jurisdiction is functionally identical to extending § 1331’s reach over

the class of disputes over which it has cognizance. A court’s

“jurisdiction”—also called its competence—is its “power to decide a

case or issue a decree.” Jurisdiction, BLACK’S LAW DICTIONARY (10th ed.

2014); see also Rhode Island v. Massachusetts, 37 U.S. (12 Pet.) 657, 714

(1838) (“Jurisdiction is the power to hear and determine the subject

matter in controversy between parties to a suit; to adjudicate or

exercise any judicial power over them.”). Thus, a statute that

permits—even requires—a court to hear more cases through one

jurisdictional inquiry than through another is the epitome of an

expansion of that court’s jurisdiction.

16 See also Vaden, 556 U.S. at 79 (Roberts, C.J., concurring in part and

dissenting in part) (“To the extent § 4 brings some issues into federal

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25

that the absence of the “save for” clause in § 10 requires us to

maintain the rule of Greenberg, we have, in essence, converted

§ 4’s “save for” clause into an expansion of jurisdiction—which

violates the second principle. The only way to avoid this

contradictory result is to reject the premise that produced it—i.e.,

to conclude that the “ordinary” jurisdictional inquiry under

§ 1331 looks to the underlying substantive dispute with respect

to all remedies under the Act, not just § 4.17

This tension is further resolved when we examine the

nature and function of the “save for” clause in § 4 and the

language of the Act’s other remedies. To some degree, each of

the Act’s sections contains some language identifying which

courts are authorized to issue which remedies. The most

consistent statutory interpretation is to read the “save for” clause

as defining the availability of the remedy, rather than a court’s

jurisdiction. Because Congress intended to ensure the broadest

availability possible for compulsion of arbitration, § 4 authorizes

it in the context of every dispute over which Title 28 confers

jurisdiction. The lack of the “save for” clause and the presence of

other text narrowing the availability of the remedies in the Act’s

 

court in a particular case that may not be brought in through other

procedural mechanisms, it does so by enlarging the range of remedies

available in the federal courts, not extending their jurisdiction.”

(alterations and internal quotation marks omitted)); Hall St. Assocs.,

552 U.S. at 581 (“As for jurisdiction over controversies touching

arbitration, the Act does nothing . . . .” (emphasis added)).

17 This is effectively an argument reductio ad absurdum, demonstrating

that the result of rejecting the look‐through approach is incompatible

with a controlling Supreme Court rule. See, e.g., Corley v. United States,

556 U.S. 303, 316–17 (2009) (articulating an example of such an

argument); see generally Reductio ad absurdum, BLACK’S LAW

DICTIONARY (10th ed. 2014).

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26

other sections similarly authorize particular remedies to issue in

particular courts to serve important congressional interests.

Specifically, the Act’s other sections largely ground their

authorizing language by reference to geography, not the

jurisdiction of the issuing court.

For example, the remedy permitting a federal court to

compel the attendance of witnesses limits its authorization to

“the United States district court for the district in which such

arbitrators, or a majority of them, are sitting.” 9 U.S.C. § 7.18

Section 9 uses the same geographical hook, only linked to the

district “within which such award was made” and also expressly

establishes personal jurisdiction over the parties; §§ 10–11 are

similarly geographically connected to the location of the

arbitration. The identification of district courts by geography in

§§ 7 and 9–11 performs functions more analogous to venue or

personal jurisdiction than to subject matter jurisdiction.19 These

sections signal nothing about jurisdiction, suggesting—

consistent with Vaden—that they do not affect the ordinary

jurisdictional inquiry, which is focused on the underlying

dispute. There is thus no reason to construe the “save for”

 

18 This geographical limitation would have made particular sense at

the time of the Act’s passing. Prior to the 2013 amendments to the

Federal Rules of Civil Procedure, a federal district court’s subpoena

power was generally limited to within the district or within 100 miles

of the place of compliance. See Fed. R. Civ. P. 45(b)(2) (2007) (amended

2013).

19 One remedial provision contains no identifiers as to a particular

court’s jurisdiction and simply refers to “the court.” 9 U.S.C. § 5.

However, in context, this omission also makes sense: § 5 operates as a

kind of “add‐on” remedy to a § 4 petition to compel arbitration and

merely provides default rules for appointing an arbitrator in the event

an arbitration agreement is silent.

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27

clause—or its absence from the other remedies—as governing

the predicate question of whether a federal court possesses

jurisdiction over the dispute at all.20 Construing the language of

these sections as authorizing the availability of the remedies,

rather than controlling jurisdiction over the dispute, is therefore

a more consistent interpretation of the statute as a whole, see

King, 502 U.S. at 221 (“[A] statute is to be read as a whole, since

the meaning of statutory language, plain or not, depends on

context.” (citation omitted))—not to mention being in full

accordance with the Supreme Court’s characterization of the Act

as having a “nonjurisdictional cast,” Vaden, 556 U.S. at 59; see also

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25

n.32 (1983).

It is worth pausing briefly to consider the purposes for

which Congress passed the Act. The Supreme Court has

repeatedly stated that the Act, particularly § 2, “is a

congressional declaration of a liberal federal policy favoring

arbitration agreements” whose effect “is to create a body of

federal substantive law of arbitrability, applicable to any

arbitration agreement within the coverage of the Act.” Moses H.

Cone Mem. Hosp., 460 U.S. at 24. The first two sections of the Act

make clear its intent to reach maritime contracts “which, if the

subject of controversy, would be embraced within admiralty

jurisdiction” and contracts “evidencing a transaction involving”

interstate or foreign commerce, with limited exceptions. 9 U.S.C.

 

20 That is not to say § 4’s “save for” clause had no role at all in Vaden’s

jurisdictional analysis. If anything, it indicated that Congress

understood and intended for § 1331 jurisdiction to be considered on

the basis of the underlying dispute. But there is also no indication that

Congress intended something else to govern jurisdiction in petitions

under the rest of the Act, and—to the contrary—Supreme Court

precedent precludes us from so holding.

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28

§§ 1–2. Congress’s ability to legislate substantive rules in these

areas derives from “‘the incontestable federal foundations of

control over interstate commerce and over admiralty.’” Southland

Corp. v. Keating, 465 U.S. 1, 11 (1984) (quoting Prima Paint Corp. v.

Flood & Conklin Mfg. Co., 388 U.S. 395, 405 (1967)). Of course, if

Congress cared only about enforcing arbitration or its results, it

could have ended the Act after § 9. Instead, it also provided

remedies of vacatur and modification in §§ 10 and 11, albeit on

exclusive and narrow grounds sounding in basic fairness and

due process—a fact which, the Supreme Court has said, suggests

Congress intended to “substantiat[e] a national policy favoring

arbitration with just the limited review needed to maintain

arbitration’s essential virtue of resolving disputes straightaway.”

Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 588 (2008).

A construction of the Act’s provisions as lacking

jurisdictional impact is not only consistent with but also well

suited to these congressional purposes. Under this approach, if a

federal court would possess federal‐question jurisdiction over

the dispute when pleaded in a complaint, the federal courts are

also able to enforce Congress’s narrow and defined remedies in

the same controversy. The Act thus favors arbitration by

constraining the role of the federal courts where arbitration

agreements exist, without displacing their ability to enforce the

remedies Congress created in disputes in which they would

otherwise be the determinative forum. See Moses H. Cone, 460

U.S. at 25 n.32 (“[A]lthough enforcement of the Act is left in

large part to the state courts, it nevertheless represents federal

policy to be vindicated by the federal courts where otherwise

appropriate.”). The authorizing language of the Act with respect

to particular remedies maps onto congressional interests well:

the remedy of compulsion may be obtained in “any United

States district court” possessing subject matter jurisdiction, § 4,

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but where the federal courts must engage with an ongoing or

concluded arbitration, a geographical nexus is required, see §§ 7,

9–11.

Finally, we note that applying a look‐through approach to

the entire Act also prevents absurd and illogical discrepancies,

the final animating principle we identified in Vaden. As detailed

above, absurd or bizarre inconsistencies in jurisdiction among

the Act’s provisions were a central concern in both our prior

decisions. See Greenberg, 220 F.3d at 26; Westmoreland, 100 F.3d at

268; see also Valenzuela Bock, 696 F. Supp. at 963. Vaden’s

discussion of the practical consequences confirms that our desire

to achieve consistent results was not misplaced, even if the Court

disagreed with our interpretation of § 4. See Vaden, 556 U.S. at 65.

The Vaden Court identified a principal “curious practical

consequence[]”: that a face‐of‐the‐petition “approach would not

accommodate a § 4 petitioner who could file a federal‐question

suit in (or remove such a suit to) federal court, but who has not

done so.” 556 U.S. at 65. Yet the same kind of absurd result

would occur here if we reject a look‐through approach for § 10.  

We have just recently held that § 3’s mandatory “shall”

language requires a federal court to stay, rather than dismiss, a

case if it is referred to arbitration and a stay is requested by a

party. See Katz v. Cellco P’ship, 794 F.3d 341, 347 (2d Cir. 2015). If

such a case were stayed, it could provide, as Vaden describes, an

independent jurisdictional basis sufficient to permit the federal

court to entertain, for example, petitions under §§ 7 and 9–11. See

556 U.S. at 65. But absent a look‐through approach, no

jurisdiction would exist over these petitions if filed as

freestanding petitions in the same court, involving the same

parties, and concerning the same underlying controversy. This

result is the same “‘totally artificial distinction’” on the basis of

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30

pending federal action that Vaden rejected. Id. (quoting 1

MACNEIL § 9.2.3.3, p. 9:21).21  

Likewise, there is a certain absurdity to an interpretation

that permits parties to file motions to compel arbitration in any

case where the underlying dispute raises a federal question but

precludes them from seeking the same federal court’s aid under

the Act’s other remedial provisions related to the same dispute.

Our sister circuit has posited an argument why there may be a

disparity between congressional interests in § 4 and in § 10—

specifically, that “[t]he central federal interest was enforcement

of agreements to arbitrate, not review of arbitration decisions”

and therefore “once the arbitration agreement is enforced, there

exists no compelling need for the federal courts to be involved.”

Minor v. Prudential Sec., Inc., 94 F.3d 1103, 1107 (7th Cir. 1996).  

If enforcement were Congress’s only goal, however, it

would have had no need to pass §§ 10 or 11 at all. Merely

enacting §§ 2 and 3—declaring arbitration agreements

enforceable and providing for a stay and referral to arbitration of

disputes in federal court governed by such an agreement—

would suffice to ensure that federal courts did not sidestep

arbitration agreements. See Hall St. Assocs., 552 U.S. at 581–82;

Southland, 465 U.S. at 13–14. The fact that Congress decided to

enact substantive rules governing vacatur and modification

 

21 Like we do here, the United States District Court for the Eastern

District of Virginia expressly noted this discrepancy and identified it

as the same artificial distinction rejected in Vaden. See Crews, 848 F.

Supp. 2d at 600. Nonetheless, the district court concluded that such a

result was “necessitated by the fact that § 10 does not have § 4’s

unique jurisdictional hook.” Id. But, as we noted supra, characterizing

§ 4’s text as a jurisdictional hook does precisely what the other

principle of Vaden prohibits: it treats § 4 as “enlarg[ing] federal‐

question jurisdiction,” 556 U.S. at 66.

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makes as clear as one can imagine that Congress intended a

substantive—albeit limited—review of certain arbitration

awards. See Hall St. Assocs., 552 U.S. at 588. Considering that

Congress did authorize freestanding petitions to compel

arbitration, compel witness attendance, and confirm, vacate, or

modify awards, neither Minor nor the parties give us any reason

why Congress would create a set of remedies yet make some

more enforceable than others. See Moses H. Cone, 460 U.S. at 25

n.32 (explaining that the Act as a whole “represents federal

policy to be vindicated by the federal courts where otherwise

appropriate”).

The bizarre jurisdictional tangle resulting from a look‐

through approach to § 4 and a face‐of‐the‐petition approach to

the other remedies will produce the exact opposite of the Act’s

goals. Intelligent practitioners who wish to preserve access to

federal courts for later disputes over arbitrators, subpoenas, or

final awards will attempt to “lock in” jurisdiction by filing a

federal suit first, followed by motions to compel and a stay of

proceedings. In other words, it will increase the number of

parties “seeking federal adjudication of the very questions [they]

want[] to arbitrate rather than litigate”—again, the same

perverse incentive and procedural incongruity identified by the

Vaden Court. 556 U.S. at 65. Construing the Act in a way that

encourages the protective filing of federal suits would be the

height of absurdity in light of Congress’s desire to cabin federal

involvement in disputes subject to arbitration—before, during,

and after the proceeding. See Hall St. Assocs., 552 U.S. at 588;

Moses H. Cone, 460 U.S. at 25 n.32.

Finally, we note that, in a twist of irony, a post‐Vaden

conclusion that § 10 requires a federal question on the face of the

petition seems oddly to mimic the kind of “ouster” that

concerned the Westmoreland and Greenberg panels and, to a lesser

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degree, the Vaden Court. In other words, if the substantive

dispute between the parties is otherwise cognizable before a

federal district court, the limitation to the face of the petition

seems to restrict the federal courts not on the basis of principles

like res judicata or enforceability of arbitration agreements—

which are rules of decision—but on the basis of a lack of

jurisdiction. Thus, federal courts have been “ousted” of

jurisdiction over a substantive dispute between the parties that

they would otherwise be empowered under § 1331 to hear,

merely because of the presence of an arbitration agreement. By

contrast, if we conclude that federal‐question jurisdiction arises

from the underlying dispute, the arbitration agreement limits the

remedies a federal court may employ but does not affect the

court’s jurisdiction. This result seems to us the more internally

consistent approach, given the current state of Supreme Court

precedent.

Returning to where we began, we have confronted the

difficult task of reconciling the guiding principles that the

Supreme Court has handed down—principles which are

admittedly in some tension. To read Vaden’s text‐driven analysis

as a jurisdictional inquiry would, on the surface, lead us to reject

the look‐through approach. But that result would require us, as a

matter of internal consistency, to conclude that § 4 did exactly

what the Supreme Court says it does not do: enlarge a federal

court’s jurisdiction. Further, it would produce anomalous

discrepancies in the administration of the Act that both we and

the Supreme Court have consistently rejected as impermissible

results. We think the only way to reconcile this tension is to

adopt the following principles:

First, the existence of federal‐question jurisdiction over an

FAA petition turns on whether the district court would possess

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jurisdiction over the underlying dispute under the standards of

§ 1331;  

Second, the “save for” clause in § 4 evinces congressional

authorization for the remedy of compulsion of arbitration in any

district court with jurisdiction; and  

Third, the Act’s other sections similarly authorize

particular courts with jurisdiction to issue particular remedies

but do not affect the jurisdictional inquiry.

Having conducted this analysis, we must now conclude

that Vaden, as an intervening Supreme Court decision, has

rendered Greenberg’s result fundamentally inconsistent with the

Act’s statutory context and judicial interpretations. We are

therefore obliged to overrule it and adopt the rule that a federal

district court faced with a § 10 petition may “look through” the

petition to the underlying dispute, applying to it the ordinary

rules of federal‐question jurisdiction and the principles laid out

by the majority in Vaden. Because the District Court concluded

below that a look‐through approach was foreclosed by

Greenberg, it did not conduct an analysis of the underlying

dispute. We think the proper disposition is therefore to vacate

the order and the judgment and remand for consideration of that

question in the first instance. See Schonfeld v. Hilliard, 218 F.3d

164, 184 (2d Cir. 2000).

CONCLUSION

In summary, we reject Doscher’s argument that his § 10

petition alleges, on its face, a manifest disregard of federal law,

because the petition does not necessarily present a substantial

question of any violation of a federal duty or obligation. Thus,

squarely faced with the question of Greenberg’s continuing

validity, we conclude that Vaden not only cast doubt on our

precedent but rendered its holding fundamentally inconsistent

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with the Supreme Court’s analysis of jurisdictional inquiries

under the Act. Accordingly, we overrule Greenberg and conclude

that federal courts may “look through” § 10 petitions, applying

the ordinary principles of federal‐question jurisdiction to the

underlying dispute as defined by Vaden. The order and the

judgment of the District Court are VACATED, and the case is

REMANDED for further proceedings consistent with this

opinion.

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