IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 16-50317

LOWER COLORADO RIVER AUTHORITY, 

 Plaintiff - Appellee

v.

PAPALOTE CREEK II, L.L.C., formerly known as Papalote Creek Wind 

Farm II, L.L.C., 

 Defendant - Appellant

Appeal from the United States District Court

for the Western District of Texas

Before KING, JOLLY, and PRADO, Circuit Judges.

KING, Circuit Judge:

This appeal concerns the district court’s grant of a petition to compel 

arbitration. Defendant–Appellant Papalote Creek II, L.L.C. argues that that 

the district court did not have jurisdiction to compel arbitration because the 

underlying dispute between the parties was not ripe, and even if the district 

court did have jurisdiction, the underlying dispute was outside the scope of the 

arbitration provision. Because we conclude that the district court lacked 

jurisdiction to compel arbitration, we VACATE and REMAND.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Power Purchase Agreement

Plaintiff–Appellee Lower Colorado River Authority (LCRA) is a 

United States Court of Appeals

Fifth Circuit

FILED

May 31, 2017

Lyle W. Cayce

Clerk

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2

conservation and reclamation district based in Austin, Texas, and a political 

subdivision of the State of Texas. LCRA sells wholesale electric power to 

municipal-owned utilities and electric cooperatives in Texas. In December 

2009, LCRA entered into a Power Purchase Agreement (PPA) with Defendant–

Appellant Papalote Creek II, L.L.C. (Papalote), a Delaware limited liability 

company that builds and operates wind farms. Papalote planned to build an 

87-turbine wind farm in Texas (the Project), and under the PPA, LCRA agreed 

to purchase all of the energy generated by the Project at a fixed price for an 18-

year term. 

Relevant to this appeal are four sections of the PPA: § 4.3, § 9.3, § 13.1, 

and § 13.2. First, § 4.3, which is entitled “Liquidated Damages Due to 

[LCRA’s] Failure to Take,” provides a formula for how to calculate the 

liquidated damages that LCRA would owe to Papalote in the event that LCRA 

failed to take all of the Project’s energy. As noted above, LCRA is required to 

take all of the energy generated by the Project. However, should LCRA fail to

do so, § 4.3 details how to calculate Papalote’s “exclusive remedy” of liquidated 

damages. This liquidated damages calculation would depend in part on the 

difference between the PPA’s fixed price and the price that Papalote is 

otherwise able to obtain in selling the energy. 

Second, § 9.3, which is entitled “Limitation on Damages for Certain 

Types of Failures,” provides the following:

Notwithstanding anything to the contrary in [the PPA], 

[Papalote’s] aggregate liability for (i) failure of [Papalote] to 

construct the Project and/or (ii) failure of one hundred percent 

(100%) of the Project’s Turbines to achieve the Commercial 

Operation Date on the Scheduled COD and/or (iii) failure of one 

hundred percent (100%) of the Project’s Turbines to achieve the 

Commercial Operation Date on June 1, 2011 and/or (iv) a 

Termination Payment, shall be limited in the aggregate to sixty 

million dollars ($60,000,000). [LCRA’s] damages for failure to 

perform its material obligations under [the PPA] shall likewise be 

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limited in the aggregate to sixty million dollars ($60,000,000).

(Emphasis added.) Notably, § 9.3 refers to Papalote’s “liability” and LCRA’s 

“damages,” and the parties’ underlying dispute is based, in part, on this word 

choice. 

Finally, § 13.1 and § 13.2 provide a two-step arbitration procedure. The 

first step, as dictated in § 13.1, requires, inter alia, that “[i]f any dispute arises 

with respect to either Party’s performance hereunder,” the senior officers of 

LCRA and Papalote meet in an attempt to resolve the dispute. Under the 

second step, as outlined in § 13.2, if the dispute is not resolved through the 

first step within a certain timeframe, either party may submit that dispute “to 

binding arbitration in accordance with the Commercial Arbitration Rules of 

the American Arbitration Association . . . effective at the time of the dispute.” 

Section 13.2 also provides additional details on the arbitration, including that 

the arbitrator shall use a “baseball” procedure (in which each party puts forth 

an offer and the arbitrator is limited to choosing one of the two offers). 

B. Negotiations and Petition to Compel Arbitration

Papalote completed construction of the Project in 2010, and in the 

ensuing years, LCRA complied with its obligations under the PPA by 

purchasing all of the energy generated by the Project. In April 2015, however, 

LCRA initiated discussions with Papalote regarding the PPA. Although the

parties dispute the precise nature of these discussions,1 neither party appears 

to have threatened to breach the PPA. Ultimately, in June 2015, LCRA sent 

Papalote a letter stating that, pursuant to § 13.2, LCRA was “initiat[ing] the 

arbitration process to resolve the dispute between LCRA and Papalote 

regarding LCRA’s limitation of liability under the PPA and its impact on 

 

1 LCRA claims that these discussions centered on whether § 9.3 capped its aggregate 

liability at $60 million. Conversely, Papalote claims that these discussions were on a more 

general level, such as exploring alternative pricing options. 

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LCRA’s performance obligations.” LCRA also noted that it “intends to continue 

to fully perform its obligations under the PPA during this arbitration process.” 

After Papalote requested more information about the purported dispute, LCRA 

sent another letter explaining that the dispute was “whether LCRA’s liability 

is limited to $60,000,000 under the PPA.” Papalote rejected LCRA’s request to 

proceed to arbitration, reasoning that “[a]n academic question about the 

damages LCRA might owe for a hypothetical breach simply does not constitute 

a ‘dispute’ that is proper for arbitration under the PPA.” Papalote also argued 

that a dispute over LCRA’s potential liability limitation was not covered by the 

arbitration provision in the PPA, which was limited to disputes regarding 

performance obligations. 

Following Papalote’s refusal to arbitrate, LCRA filed a petition to compel 

arbitration in Texas state court on June 30, 2015. Papalote timely removed 

the petition to federal district court on the basis of diversity jurisdiction. In 

the district court, Papalote opposed the petition to compel by arguing that the 

dispute at issue did not fall within the scope of the arbitration provision. 

According to Papalote, the arbitration provision only includes disputes related 

to the parties’ performance obligations, and LCRA’s dispute regarding whether 

its liability is capped under § 9.3 is not a performance obligation. Papalote also 

challenged the ripeness of the dispute in passing, arguing that, “if the Court 

would prefer to deny the [petition to compel] based on the lack of a ripe dispute, 

it may do so consistent with the facts presented and without running afoul of 

any binding authority.” 

In February 2016, the district court granted LCRA’s petition to compel 

arbitration. As an initial matter, the district court noted that both parties 

agreed that the PPA’s arbitration provision was valid and enforceable, and 

thus, the only question was whether the dispute fell within the scope of the 

arbitration provision. The district court then rejected LCRA’s argument that 

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the arbitration provision covered any dispute arising under the PPA. Instead, 

the district court found that, under § 13.1, the parties had agreed to arbitrate 

only disputes that “arise[] with respect to either Party’s performance.” 

(Alteration in original.) Thus, the district court framed the question as 

“whether the dispute LCRA seeks to arbitrate—whether or not LCRA’s 

liability would be capped at $60 million in the event it elected to purchase from 

Papalote less than the total amount of energy it contracted to buy—qualifies 

as a dispute ‘with respect to either Party’s performance’ under the PPA.” In 

answering that question, the district court recognized that, “in a certain sense, 

one could understand ‘performance’ to concern only those promises which were 

the essence of the PPA—the sale and production of wind energy—and 

conceptualize the buyer’s obligation to pay for failing to take as compensation 

for its failure to perform, rather than as an independent performance 

obligation.” The district court reasoned, however, that “the better view 

here . . . is that LCRA’s bargained-for obligation to pay Papalote a specified 

sum if LCRA takes less than all of the energy produced is itself a performance 

obligation under the PPA.” According to the district court, LCRA’s failure to 

take all of the Project’s energy was not necessarily itself a breach giving 

Papalote the right to terminate the PPA. Instead, the PPA allows the parties’ 

obligations to continue so long as LCRA pays liquidated damages, and if LCRA 

fails to make the necessary liquidated damages payment, only then would 

“that failure . . . constitute an ‘Event of Default’ permitting Papalote to 

suspend its performance and terminate the [PPA].” As for Papalote’s ripeness 

argument, the district court recognized that “ripeness questions plainly loom.” 

However, the district court declined to further address whether ripeness 

should be decided by the arbitrator or the court because the parties had failed 

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to adequately brief the issue. Papalote timely appealed.2 

C. Arbitration and Subsequent Developments

Following the district court’s order compelling arbitration, the parties 

proceeded through arbitration. Besides its arguments on the merits, Papalote 

also argued that the arbitrator should dismiss the claim because it was not 

ripe. On June 28, 2016, the arbitrator issued a decision in favor of LCRA. 

Specifically, the arbitrator found that, “[u]nder [§] 9.3 of the . . . [PPA], LCRA’s 

liability for liquidated damages and/or a Termination Payment for its failure 

to take power under the agreement is limited to $60,000,000.” The arbitrator 

did not directly address Papalote’s ripeness argument.

On October 10, 2016, LCRA notified Papalote that it would cease taking 

energy under the PPA beginning on October 12, 2016, and that its resulting 

liquidated damages would be capped at $60 million per § 9.3. 

II. RIPENESS

Papalote argues that the district court erred in compelling arbitration 

because the issue was not ripe, and thus, the district court lacked jurisdiction 

to compel arbitration. We first address whether the underlying dispute 

between the parties must be ripe in order for the district court to have 

jurisdiction to compel arbitration. Finding that the answer is yes, we next turn 

 

2 Papalote also filed a motion to stay arbitration pending appeal, arguing that it was 

likely to prevail on appeal because the dispute was not ripe. In opposition, LCRA contended 

that Papalote’s appeal was not likely to succeed because ripeness was an issue for the 

arbitrator to decide. Moreover, LCRA contended that Papalote had failed to show that it 

would suffer an irreparable injury, in part, because the effect of any arbitration award would 

ultimately depend on “a myriad of uncertainties,” including whether LCRA would decide to 

stop taking energy under the PPA. The district court denied the motion to stay, reasoning, 

inter alia, that Papalote had not shown that it was likely to succeed on its ripeness argument 

because “the weight of authority on the topic states ripeness is a question for the arbitrator 

to decide.” However, the district court noted that there was “ample room for disagreement 

on the question [of] whether courts or arbitrators should decide ripeness issues,” but it 

concluded that the potential for disagreement “does not affect the Court’s conclusion that a 

stay is not warranted in this case.” 

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to whether the underlying dispute was ripe. We review the jurisdictional issue 

of ripeness de novo. See Choice Inc. of Tex. v. Greenstein, 691 F.3d 710, 714 

(5th Cir. 2012). “As the party asserting federal jurisdiction,” LCRA has “the 

burden of demonstrating that jurisdiction is proper.” See Stockman v. FEC, 

138 F.3d 144, 151 (5th Cir. 1998). 

A. Jurisdiction to Compel Arbitration 

Although the district court recognized that “ripeness questions plainly 

loom,” the district court declined to address whether the underlying dispute 

was ripe because the parties had failed to adequately brief whether ripeness 

should be determined by the district court or the arbitrator. Papalote’s 

purported failure to adequately brief the ripeness issue, however, does not 

result in waiver here. Even assuming that Papalote had failed to adequately 

raise the ripeness issue in the district court, we still must consider whether 

the district court had jurisdiction to compel arbitration: “[E]very federal 

appellate court has a special obligation to ‘satisfy itself not only of its own

jurisdiction, but also that of the lower courts in a cause under review,’ even 

though the parties are prepared to concede it.” United Transp. Union v. Foster, 

205 F.3d 851, 857 (5th Cir. 2000) (alteration in original) (quoting Steel Co. v. 

Citizens for a Better Env’t, 523 U.S. 83, 95 (1998)). Under Article III of the 

Constitution, federal courts are confined to adjudicating “cases” and 

“controversies.” Id. And to be a case or controversy for Article III jurisdictional 

purposes, the litigation “must be ripe for decision, meaning that it must not be 

premature or speculative.” See Shields v. Norton, 289 F.3d 832, 835 (5th Cir. 

2002); see also Choice Inc. of Tex., 691 F.3d at 715 (“The justiciability doctrines 

of standing, mootness, political question, and ripeness ‘all originate in Article 

III’s case or controversy language . . . .’” (omission in original) (quoting 

DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006))). In other words, 

“ripeness is a constitutional prerequisite to the exercise of jurisdiction.” 

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Shields, 289 F.3d at 835.

Thus, we must confront the question that the district court declined to 

address: Was there a ripe controversy between LCRA and Papalote such that 

the district court had jurisdiction over the petition to compel arbitration? But

this question raises another question that must be answered first: Which 

dispute matters for the purpose of determining whether there is a ripe 

controversy? In this context, there are effectively two potential disputes that 

a court could consider in determining whether there is a sufficiently ripe 

controversy. On the one hand, LCRA argues that the dispute should be viewed 

as whether arbitration should be compelled under the Federal Arbitration Act 

(FAA). In this sense, the dispute was almost certainly a ripe controversy 

because LCRA was seeking to compel arbitration immediately, not at some 

hypothetical future date. On the other hand, Papalote contends that the

dispute should be viewed as whether the underlying dispute presents a ripe 

controversy. Put another way, Papalote’s position is that a court must “look 

through” the petition to compel arbitration in order to determine whether the 

underlying dispute—in this case, the contractual disagreement over whether 

§ 9.3 caps LCRA’s liability at $60 million—presents a sufficiently ripe 

controversy.

Under the Supreme Court’s decision in Vaden v. Discover Bank, 556 U.S. 

49 (2009), we must follow the second approach—i.e., we must “look through” 

the petition to compel arbitration in order to determine whether the underlying 

dispute presents a sufficiently ripe controversy to establish federal 

jurisdiction. At issue in Vaden, as in this case, was § 4 of the FAA, which 

“provides for United States district court enforcement of arbitration 

agreements.” Id. at 58. Under § 4, a petition to compel arbitration may be 

brought before “any United States district court which, save for [the 

arbitration] agreement, would have jurisdiction under Title 28 . . . of the 

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subject matter of a suit arising out of the controversy between the parties.” 9 

U.S.C. § 4; see also Vaden, 556 U.S. at 58. In Vaden, the Supreme Court 

addressed how a district court should determine if it has jurisdiction over a § 4 

petition to compel arbitration. Vaden, 556 U.S. at 53, 62–65; see also Volvo 

Trucks N. Am., Inc. v. Crescent Ford Truck Sales, Inc., 666 F.3d 932, 936 (5th 

Cir. 2012). In answering this question, the Supreme Court first emphasized 

that the FAA is “‘something of an anomaly’ in the realm of federal legislation: 

It ‘bestow[s] no federal jurisdiction but rather requir[es] [for access to a federal 

forum] an independent jurisdictional basis’ over the parties’ dispute.” Vaden,

556 U.S. at 59 (alterations in original) (quoting Hall Street Assocs., L.L.C. v. 

Mattel, Inc., 552 U.S. 576, 581–82 (2008)). Turning to the statutory language

of § 4, the Supreme Court reasoned that “[t]he 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.” Id. at 62 (second alteration in original). And the 

Supreme Court held that § 4’s reference to “the controversy between the 

parties” means the underlying substantive conflict between the parties. Id. In 

other words, the Supreme Court held that a district court must “look through” 

a § 4 petition to determine whether the district court would have jurisdiction 

over the underlying substantive controversy. See id. at 53, 62. 

Although Vaden concerned whether there was federal question 

jurisdiction, we see no reason that the holding is limited to only that specific 

jurisdictional issue. For example, the Supreme Court summed up its holding 

by stating that “§ 4 of the FAA does not enlarge federal-court jurisdiction; 

rather, it confines federal courts to the jurisdiction they would have ‘save for 

[the arbitration] agreement,’” and “[m]indful of that limitation, we read § 4 to 

convey that a party seeking to compel arbitration may gain a federal court’s 

assistance only if, ‘save for’ the agreement, the entire, actual ‘controversy 

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between the parties,’ as they have framed it, could be litigated in federal court.” 

Id. at 66 (first alteration in original). Accordingly, Vaden’s holding necessarily 

implies that any of the reasons that a federal court may lack subject matter 

jurisdiction over the underlying dispute—e.g., ripeness—would similarly 

prevent a district court from having jurisdiction to compel arbitration. Put 

another way, given Vaden’s holding that the district court should assume the 

absence of an arbitration agreement in determining whether there is

jurisdiction over the underlying dispute, it necessarily follows that, if the 

underlying dispute is not ripe, then the district court would not have 

jurisdiction to compel arbitration.

In response, LCRA largely fails to address Papalote’s jurisdictional 

argument, and indeed, LCRA (appellee here) does not address Vaden at all in 

its brief. Instead, LCRA makes a series of arguments that skip the threshold 

question of whether the district court had jurisdiction to compel arbitration. 

For example, LCRA contends that whether an arbitration provision requires a 

claim to be ripe is a question for the arbitrator, not the district court. 

Specifically, LCRA contends that, under Howsam v. Dean Witter Reynolds, 

Inc., 537 U.S. 79 (2002), ripeness is a question of procedural arbitrability to be 

resolved by the arbitrator, and even if ripeness is a question of substantive 

arbitrability, there is clear and unmistakable evidence here that the parties 

agreed to delegate the issue to the arbitrator. But we need not reach that issue

because it does not change the fact that the district court must have 

jurisdiction in the first instance to compel arbitration, and a ripe controversy 

is a necessary component of subject matter jurisdiction.3 See, e.g., Lopez v. City 

 

3 LCRA points to district court cases holding that ripeness is a question for the 

arbitrator, not the district court. However, many of these cases predate Vaden. See, e.g., 

Albritton v. W.S. Badcock Corp., No. 1:02-CV378, 2003 WL 21018636, at *4 (N.D. Miss. Apr. 

7, 2003) (citing Howsam for the proposition that “procedural questions such as ripeness are 

for an arbitrator, not the court, to decide”). Regarding the district court cases decided after 

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of Houston, 617 F.3d 336, 341 (5th Cir. 2010) (“Ripeness is a component of 

subject matter jurisdiction, because a court has no power to decide disputes 

that are not yet justiciable.”). Additionally, LCRA argues that the arbitration 

provision does not require a dispute to be ripe. Once again, however, whether 

an arbitration provision requires a ripe dispute does not change the fact that 

the district court still must have jurisdiction to compel arbitration.

B. Ripeness of the Underlying Dispute

Having established that the district court should have determined 

whether the underlying dispute was ripe, we now turn to the merits of the 

ripeness issue. As discussed above, a claim must be ripe for a federal court to 

have jurisdiction, see, e.g., Shields, 289 F.3d at 835, and “[a] court should 

dismiss a case for lack of ‘ripeness’ when the case is abstract or hypothetical,” 

Orix Credit All., Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000) (quoting New 

Orleans Pub. Serv., Inc. v. Council of New Orleans, 833 F.2d 583, 586 (5th Cir. 

1987)). In determining whether a case is ripe, there are two key 

considerations: “the fitness of the issues for judicial decision and the hardship 

to the parties of withholding court consideration.” Id. (quoting New Orleans 

Pub. Serv., 833 F.2d at 896). 

At the outset, it is helpful to frame the underlying dispute. Although 

neither party was in breach of the PPA, the parties disagreed about whether 

§ 9.3 capped LCRA’s aggregate liability at $60 million. Thus, the underlying 

claim that LCRA sought to arbitrate is effectively one for a declaratory 

 

Vaden, we disagree with their holdings. See, e.g., Transp. Workers Union of Am. v. Veolia 

Transp. Servs., Inc., 24 F. Supp. 3d 223, 229–30 (E.D.N.Y. 2014) (holding that ripeness 

argument was a question for the arbitrator). Indeed, none of the district court cases relied 

on by LCRA for this proposition even cites Vaden. See id.; Grant v. Brown, No. 4:14CV01395, 

2014 WL 6389577, at *2 (E.D. Mo. Nov. 14, 2014); Local Union No. 13417 of the United Steel 

Workers v. Kan. Gas Serv. Co., No. 12-1003, 2012 WL 1435305, at *7 n.3 (D. Kan. Apr. 25, 

2012); Milliman, Inc. v. Health Medicare Ultra, Inc., 641 F. Supp. 2d 113, 119 (D.P.R. 2009). 

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judgment that its interpretation of § 9.3 is correct. “In the declaratory 

judgment context, whether a particular dispute is ripe for adjudication turns 

on whether a substantial controversy of sufficient immediacy and reality exists 

between parties having adverse legal interests.” Venator Grp. Specialty, Inc. 

v. Matthew/Muniot Family, LLC, 322 F.3d 835, 838 (5th Cir. 2003). “Whether 

particular facts are sufficiently immediate to establish an actual controversy

is a question that must be addressed on a case-by-case basis.” Orix, 212 F.3d 

at 896. Notably, “[t]he threat of litigation, if specific and concrete, can indeed 

establish a controversy upon which declaratory judgment can be based.” Id. at 

897. The fact that future litigation may be contingent upon certain factors 

occurring does not necessarily defeat jurisdiction over a declaratory judgment 

action, but “a district court must take into account the likelihood that these 

contingencies will occur.” See id. Accordingly, we have described the ripeness 

inquiry as “focus[ing] on whether an injury that has not yet occurred is 

sufficiently likely to happen to justify judicial intervention.” See id. (quoting 

Chevron U.S.A., Inc. v. Traillour Oil Co., 987 F.2d 1138, 1153 (5th Cir. 1993)); 

see also Shields, 289 F.3d at 835 (“We look to the practical likelihood that a 

controversy will become real.”). 

Here, LCRA has failed to show that its claim was ripe at the time the 

district court compelled arbitration. The sole dispute between the parties 

centered on their differing interpretations of whether § 9.3 capped LCRA’s 

liability at $60 million, but as relevant to this appeal, the differing 

interpretations of § 9.3 would not need to be resolved unless LCRA first decided 

to stop taking energy. LCRA argues that this dispute was sufficiently ripe 

because it was a purely legal issue and LCRA “had a direct and immediate 

dilemma” because it could not determine, without knowing if its liquidated 

damages would be capped by § 9.3, whether it should continue to take all of the 

Project’s energy or opt instead to pay liquidated damages. We disagree. LCRA 

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was fully performing under the PPA at the time the district court compelled 

arbitration. Although it is not an absolute prerequisite for ripeness for there 

to be a contractual breach, there is no evidence that LCRA threatened to stop 

taking energy or that such a decision was even likely. To the contrary, LCRA 

appears to have consistently maintained that, even if it received a favorable 

ruling, there was only a possibility that it would opt to stop taking energy. See 

Orix, 212 F.3d at 896 (“Such unasserted, unthreatened, and unknown claims 

do not present an immediate or real threat to [the plaintiff] such that 

declaratory relief is proper.”). For example, in opposing Papalote’s motion to 

stay arbitration pending appeal, LCRA argued that any harm to Papalote 

absent a stay was only a “mere possibilit[y]” that depended on “a myriad of 

uncertainties,” one of which was whether LCRA would decide to stop taking 

energy. LCRA may have been able to establish that the issue was ripe, but on 

this record, it has failed to do so.4 LCRA simply points to no other evidence or 

allegations that would support the idea that it was sufficiently likely to decide 

to stop taking energy, nor does it point to anything that would contradict its

own statements to the contrary. See id. at 897 (“[The plaintiff] simply fails to 

allege facts that show that these contingencies are likely to occur.”); see also 

Texas v. United States, 523 U.S. 296, 300 (1998) (“A claim is not ripe for 

adjudication if it rests upon ‘contingent future events that may not occur as 

anticipated, or indeed may not occur at all.’” (quoting Thomas v. Union Carbide 

Agric. Prods. Co., 473 U.S. 568, 580–81 (1985))).5

LCRA’s reliance on Venator Group Specialty is misplaced. In Venator 

 

4 Presumably the prices of other sources of energy were among the primary factors

affecting whether LCRA would decide to stop taking the Project’s energy in the event that it 

received a favorable ruling. 5 LCRA’s hardship argument is also unavailing. LCRA claims that it faced the 

difficult decision of continuing to take all of the Project’s energy or opting instead to breach 

the PPA and risk a damages award exceeding $60 million. Moreover, according to LCRA, the 

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Group Specialty, we held that a declaratory judgment action was ripe even 

though it sought a ruling on the effect of terms in a commercial lease that had 

not yet been triggered. 322 F.3d at 839–40. Whether one of the terms would 

ever be triggered depended on a specific contingency occurring in the future—

the lessor invoking a certain right in the lease. Id. Despite this contingency, 

we found that, based on the facts of that case, the lessor was “very likely” to 

invoke the right at issue, and thus, the dispute was ripe. Id. Unlike the 

circumstances in Venator Group Specialty, however, the circumstances in this 

case, on the record before us, do not demonstrate that the contingency at 

issue—i.e., LCRA deciding to stop taking energy from the Project and paying 

liquidated damages instead—was likely to occur at the time the district court 

compelled arbitration. As discussed above, LCRA itself described this decision 

as merely an uncertainty. 

However, this case presents a unique circumstance: LCRA prevailed in 

arbitration and, several months later, decided to cease taking energy under the 

PPA. If the district court were deciding the ripeness issue today, the 

underlying dispute would be ripe given that LCRA has, in fact, stopped taking 

energy. The contingency at the time the district court compelled arbitration—

i.e., whether LCRA would ultimately decide to stop taking energy—has 

occurred. Thus, LCRA argues that, in light of the recent developments, this 

court should affirm the order compelling arbitration because the underlying 

dispute is now ripe. LCRA’s argument has some initial appeal. Indeed, there 

are a number of cases discussing how, “[i]n weighing a ripeness claim, an 

appellate court may properly consider events occurring after the trial court’s 

 

PPA required it to continue performing while the dispute was being resolved. But this 

overstates the steps that LCRA was required to take in order to make the underlying dispute 

ripe. As highlighted above, LCRA was not required to breach the PPA to make the dispute 

ripe. 

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decision.” New Orleans Pub. Serv., 833 F.2d at 586 n.2; see also, e.g., Blanchette 

v. Conn. Gen. Ins., 419 U.S. 102, 140 (1974) (“[S]ince ripeness is peculiarly a 

question of timing, it is the situation now rather than the situation at the time 

of the District Court’s decision that must govern.”).

But the fact that an appellate court may consider subsequent events 

when assessing ripeness does not necessarily dictate the result in this case. 

Instead, the unique procedural context here is fundamentally different from

the typical situation in which an appellate court considers subsequent events 

when assessing ripeness. In the typical situation in which subsequent events 

support a ripeness finding, the underlying merits are part of the case, and the 

appellate court (or the district court on remand) can evaluate the merits in 

light of the fact that the case is now ripe. See, e.g., Skull Valley Band of 

Goshute Indians v. Nielson, 376 F.3d 1223, 1238 & n.2 (10th Cir. 2004); Syron 

v. ReliaStar Life Ins., 506 F. App’x 500, 503–05 (6th Cir. 2012). Here, however, 

the underlying merits are not part of this appeal. Instead, the “merits” of this 

case are unique in that they concern whether the district court properly 

compelled arbitration (whereas the underlying merits were addressed in the 

actual arbitration). This distinction is key because the order compelling 

arbitration has already completed its intended effect in a way that a typical 

merits ruling would not—arbitration has already occurred. This case would be 

similar to the typical ripeness cases addressing subsequent events if we (or the 

district court) compelled arbitration now in light of the fact that the underlying 

dispute is now ripe, but that is not the situation given that arbitration has 

already occurred. And if we (or the district court) were to compel arbitration 

now, it does not necessarily have the same effect as affirming the district 

court’s order compelling arbitration because a new arbitration could 

conceivably result in a different outcome. 

To frame the issue more concretely, we must decide whether we can 

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affirm the prior order compelling arbitration, which was made without 

jurisdiction at the time, because the dispute has since become ripe or whether 

we must vacate the prior order compelling arbitration and reconsider the 

petition to compel now. This question hinges on whether the subsequent 

developments here can somehow retroactively bestow jurisdiction on the

district court’s prior order compelling arbitration. We hold that they cannot. 

Although this appears to be a matter of first impression, we find most 

applicable the general rule that judgments made by a district court without 

subject matter jurisdiction are void. See, e.g., Brumfield v. La. State Bd. of 

Educ., 806 F.3d 289, 298 (5th Cir. 2015) (“An order ‘is void only if the court 

that rendered it lacked jurisdiction of the subject matter, or of the parties . . . .’” 

(quoting Williams v. New Orleans Pub. Serv., Inc., 728 F.2d 730, 735 (5th Cir. 

1984))); Hill v. McDermott, Inc., 827 F.2d 1040, 1043 (5th Cir. 1987) (“A 

judgment is void on jurisdictional grounds if the [district] court lacked 

jurisdiction over the subject matter or over the parties.”); cf. United Student 

Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 270 (2010) (“A void judgment is a 

legal nullity.”). Under this reasoning, although subsequent events have made 

it such that the district court would now have jurisdiction to compel 

arbitration, these events do not retroactively cure the void order compelling 

Papalote to an arbitration that it should not have been forced to attend at the

time. We recognize that the parties have already fully arbitrated the 

underlying dispute once while this appeal was pending. However, we cannot 

evade the fact that the district court lacked jurisdiction when it compelled 

arbitration, and the fact that a court would have jurisdiction now to compel 

arbitration does not retroactively bestow jurisdiction on the prior order.

III. CONCLUSION

In sum, we have made clear that a district court must have subject 

matter jurisdiction over the underlying dispute in order to compel arbitration 

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under 9 U.S.C. § 4. Because the matter was not ripe—i.e., there was no Article 

III “case” or “controversy”—at the time the district court entered judgment in 

this case, the district court’s judgment is void for lack of subject matter 

jurisdiction and is vacated.6 Even though subsequent intervening events have 

created a controversy that is now ripe, we cannot retroactively resurrect the 

district court’s void judgment under the facts of this case. Nevertheless, 

because the basic underlying controversy, originally raised and pursued by 

these same parties, is now ripe, we remand the case to the district court for 

such orders and proceedings as the district court deems necessary and 

appropriate. We leave to the discretion of the district court whether it should 

consider anew the petition to compel arbitration or conduct other proceedings. 

For the foregoing reasons, we VACATE the judgment of the district court 

and REMAND the case for further proceedings consistent with this opinion. 

 

6 We therefore do not reach Papalote’s argument that the underlying dispute was 

outside the scope of the arbitration provision.

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