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1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

ANDREW M. LEARNED,

Plaintiff, No. CIV S-04-1834 WBS DAD PS

vs.

MBNA AMERICA BANK, N.A.,

Defendant. FINDINGS AND RECOMMENDATIONS

 /

Plaintiff, proceeding pro se, initiated this action by filing a notice of motion and

motion to vacate arbitration award pursuant to the provisions of the Federal Arbitration Act, 9

U.S.C. § 1 et seq. By order filed November 10, 2004, plaintiff was ordered to show cause why

this action should not be dismissed for lack of subject matter jurisdiction. On December 14,

2004, defendant filed a motion to dismiss for lack of subject matter jurisdiction. On March 14,

2005, defendant renewed its motion to dismiss for lack of subject matter jurisdiction and noticed

it for hearing on April 14, 2005. Plaintiff filed a response to the order to show cause and also

filed an opposition to the motion to dismiss.

Defendant’s motions to dismiss for lack of subject matter jurisdiction came on

regularly for hearing on April 14, 2005 before the Honorable John F. Moulds. Plaintiff did not

appear. Victor Patenaude appeared telephonically for defendant. Judge Moulds noted on the

record that he holds a credit card issued by defendant MBNA America Bank, N.A. and would

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1

 Plaintiff does not assert diversity jurisdiction under 28 U.S.C. § 1332, nor would the

$8,713.16 at issue meet that statute's amount-in-controversy requirement.

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need to address the possibility of recusal under 28 U.S.C. § 455. Judge Moulds subsequently

recused himself by order filed April 15, 2005, and this action was reassigned to the undersigned.

A. Background

Plaintiff seeks to vacate an arbitration award in the amount of $8,713.16 obtained

by defendant through the National Arbitration Forum. It appears plaintiff and defendant entered

into a contract ("credit agreement") granting plaintiff a credit card account. Plaintiff contends

the original credit agreement did not contain any provision requiring arbitration of claims arising

out of the contract. While defendant claims plaintiff agreed to an amendment to the credit

agreement requiring arbitration, plaintiff claims he did not receive notice of an amendment and

denies that the credit agreement allowed for such an amendment.

Defendant filed a claim against plaintiff in the National Arbitration Forum 

("Forum") alleging plaintiff had breached the credit agreement. Plaintiff objected to arbitration,

arguing there was no agreement to arbitrate, and therefore did not participate in the arbitration. 

Notwithstanding plaintiff's objections and refusal to arbitrate, the Forum entered an award

against plaintiff and in favor of defendant in the amount of $8,713.16. Plaintiff subsequently

filed this action and moved to vacate the arbitration award.

B. Analysis

Plaintiff’s motion alleges jurisdiction under 9 U.S.C. §§ 10 and 12, the Federal

Arbitration Act (“FAA”). However, the FAA does not create an independent basis for federal

jurisdiction. Carter v. Health Net of California, Inc., 374 F.3d 830, 833 (9th Cir. 2004)(citing

cases). Accordingly, "when a petition is brought under the [FAA], a petitioner seeking to

confirm or vacate an arbitration award in federal court must establish an independent basis for

federal jurisdiction." Carter, 374 F.3d at 833. 

Plaintiff asserts federal question jurisdiction1 exists because (1) the court has the

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2

 Plaintiff's initial filing does not expressly allege manifest disregard for the law or a due

process claim. Although it is well-settled that "a federal question for purposes of subject matter

jurisdiction must be presented in a well-pleaded petition," Luong v. Circuit City Stores, Inc., 368

F.3d 1109, 1111 (9th Cir. 2004), plaintiff seeks leave to file an amended pleading should the

court grant defendant’s motions to dismiss. Plaintiff's request is moot because, as set out below,

this claim would not provide a basis for federal question jurisdiction on the facts of this case.

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authority to vacate an arbitration award under the FAA when, as plaintiff alleges, the arbitrator

exhibited a manifest disregard of federal law; and (2) defendant's amendment of the credit

agreement violated plaintiff's right to due process under the Constitution.2

However, while a federal court may vacate an arbitration award on the basis of an

arbitrator's manifest disregard for federal law, the court may only do so if it has jurisdiction over

the suit on the underlying dispute. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 25 n. 32 (1983). This would be the case where, for example, a complaint alleged that

an arbitrator manifestly disregarded federal securities laws (Greenberg v. Bear, Stearns & Co.,

220 F.3d 22 (2d Cir. 2000)), the Americans with Disabilities Act (Luong v. Circuit City Stores,

Inc., 368 F.3d 1109 (9th Cir. 2004)), or the Foreign Sovereign Immunities Act (Banco de

Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d 255 (2d Cir. 2003)). In each of these

circumstances the claim for manifest disregard of federal law "so immerses the federal court in

questions of federal law and their proper application that federal question subject matter

jurisdiction is present." Luong, 368 F.3d at 1112.

In contrast, plaintiff's action does not raise an issue of federal law, but rather

involves questions of contract interpretation governed by state law -- specifically, whether the

credit agreement allowed defendant to modify that agreement to require arbitration of disputes

arising thereunder. See Opera Plaza Residential Parcel Homeowners Ass'n v. Hoang, 376 F.3d

831, 840 (9th Cir. 2004) (finding breach of contract cause of action "clearly a creature of state

law" not giving rise to federal question jurisdiction). The only federal law plaintiff claims the

arbitrator violated is the FAA. As noted above, however, the FAA does not provide an

independent basis for jurisdiction. See Baltin v. Alaron Trading Corp., 128 F.3d 1466, 1470-71

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3

 Plaintiff may raise his evidentiary concerns in the state court action in which defendant

moved to confirm its arbitration award on August 12, 2004. (See Deft.’s March 14, 2005 motion

at 4.)

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(11th Cir. 1997) (finding no federal question jurisdiction where plaintiff moved to vacate

arbitration award based on arbitrator's manifest disregard of the FAA).

Plaintiff further contends this case presents a federal question by asserting that

defendant's amendment of the credit agreement violated his right to due process under the

Constitution. However, not only does plaintiff's initial filing not allege a violation of due

process, but he could not state such a claim under any circumstances because neither the

arbitrator nor defendant is a state actor. Absent state action, plaintiff cannot state a due process

claim. See Federal Deposit Ins. Corp. v. Air Florida System, Inc., 822 F.2d 833, 842 n. 9 (9th

Cir. 1987) ("[W]e do not find in private arbitration proceedings the state action requisite for a

constitutional due process claim.").3

C. Conclusion

In accordance with the above, plaintiff has failed to identify any proper basis for

federal subject matter jurisdiction over this action. Accordingly, this court will recommend that

defendant’s motions to dismiss be granted, plaintiff's motion to vacate be denied and this action

be dismissed. 

Accordingly, IT IS HEREBY RECOMMENDED that:

1. Defendant’s December 14, 2004 and March 14, 2005 motions to dismiss be

granted;

2. Plaintiff’s September 1, 2004 motion to vacate arbitration award be denied;

and 

3. This action be dismissed for lack of subject matter jurisdiction.

These findings and recommendations are submitted to the United States District

Judge assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). Within ten

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days after being served with these findings and recommendations, any party may file written

objections with the court and serve a copy on all parties. Such a document should be captioned

"Objections to Magistrate Judge's Findings and Recommendations." The parties are advised that

failure to file objections within the specified time may waive the right to appeal the District

Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

DATED: May 3, 2005.

DAD:th

Ddadl\orders.prose\learned1834.f&r

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