United States Court of Appeals

Fifth Circuit

FILED

March 3, 2004

Charles R. Fulbruge III

Clerk

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 03-50897

Summary Calendar

 

COLE SMITH,

Plaintiff - Counter-Defendant - Appellant,

versus

RUSH RETAIL CENTERS, INC.,

Defendant - Counter-Claimant - Appellee.

--------------------

Appeals from the United States District Court

for the Western District of Texas

--------------------

Before HIGGINBOTHAM, DAVIS, and PRADO, Circuit Judges.

PER CURIAM:

Cole Smith filed suit in the district court seeking to vacate

an arbitration award entered in favor of Smith’s former employer,

Rush Retail Centers, Inc. (Rush). Although Rush did not object to

the district court’s jurisdiction, a magistrate judge determined

that there was no basis for federal jurisdiction because the

parties were not diverse and the complaint did not allege a federal

question. Over Smith’s objections, the district court concurred

with the magistrate judge’s determination and dismissed for lack of

jurisdiction both Smith’s complaint and Rush’s counterclaim for

attorneys’ fees. The court denied Smith’s timely motion to amend

the judgment or, alternatively, for rehearing. 
1 Rutherford v. Harris County, Tex., 197 F.3d 173, 189-90 (5th

Cir. 1999).

2 9 U.S.C. § 10(a)(3) (1999).

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

1, 25 n.32 (1983). 

2

Smith appeals arguing that under the Federal Arbitration Act

(FAA), 9 U.S.C. § 10, the district court has jurisdiction to

consider his petition to vacate the arbitration award. 

Our review of the district court’s determination of subject

matter jurisdiction is plenary.1 In relevant part, § 10 provides

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

[arbitration] award was made may make an order vacating the award

upon the application of any party to the arbitration . . . where

the arbitrators were guilty of misconduct . . . .”2 Smith’s

district court complaint alleged that the arbitrators engaged in

“misconduct” within the meaning of § 10(a) by revising the

agreement, by refusing to apply Texas law as required by the

arbitration agreement and by refusing to allow Smith to introduce

impeachment evidence. 

The Supreme Court has held that § 4 of the FAA, which

authorizes the filing of a petition to compel arbitration in the

district court, does not create an independent basis for federal

jurisdiction.3 Section 4 provides:

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
4 9 U.S.C. § 4 (1999).

5 Moses Cone, 460 U.S. at 25 n.32; see also Prudential-Bache

Sec., Inc. v. Fitch, 966 F.2d 981, 987 (5th Cir. 1992) (explaining

that “Moses Cone establishes definitively that the FAA does not

provide an independent basis for federal jurisdiction”).

6 See Greenberg v. Bear, Stearns & Co., 220 F.3d 22, 25 (2d

Cir. 2000); Kasap v. Folger Nolan Fleming & Douglas, Inc., 166 F.3d

1243, 1245-47 (D.C. Cir. 1999); Baltin v. Alaron Trading Corp., 128

F.3d 1466, 1469 (11th Cir. 1997); Minor v. Prudential Sec., Inc.,

3

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.4

In short, for a federal court to enter an order to compel

arbitration under § 4, “there must be diversity of citizenship or

some other independent basis for federal jurisdiction before the

order can issue.”5

Although Moses Cone arose in the context of § 4, this

conclusion applies with equal force to § 10. It is well

established that the FAA is not an independent grant of federal

jurisdiction. Although we have not addressed whether this rule

applies in the § 10 context, other circuits have. The Second,

Sixth, Seventh, Ninth, Eleventh, and District of Columbia Circuits

have held that § 10 of the FAA does not confer federal jurisdiction

and that there must be an independent basis for federal

jurisdiction before a district court may entertain a petition to

vacate an arbitration award.6 The Second Circuit reasoned that “it
94 F.3d 1103, 1104 (7th Cir. 1996); Ford v. Hamilton Invs., Inc.,

29 F.3d 255, 257 (6th Cir. 1994); Garrett v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 7 F.3d 882, 883-84 (9th Cir. 1993). 

7 Baltin, 128 F.3d at 1471 (quoting Harry Hoffman Printing,

Inc. v. Graphic Communications Int’l Union, Local 261, 912 F.2d

608, 611 (2d Cir. 1990)).

8 Id. (internal footnotes omitted).

9 532 U.S. 105 (2001).

4

would be anomalous to conclude . . . that section 4 confers no

jurisdiction to compel arbitration, but that section 10 confers

jurisdiction to vacate an award once arbitration takes place.”7 If

§ 10 conferred jurisdiction, “then any contract that involved

commerce and contained a valid arbitration clause could give rise

to a federal court action for the confirmation, vacatur, or

modification of an arbitration award.”8 This reasoning is

consistent with the limited nature of federal subject matter

jurisdiction. We join our sister circuits in holding that FAA § 10

does not create federal subject matter jurisdiction. 

We reject Smith’s argument that Circuit City Stores, Inc. v.

Adams9 dictates that the arbitration of employment contracts always

involves a federal question. Federal jurisdiction was not at issue

in Circuit City. Jurisdiction was based on diversity. At issue

was whether FAA § 1, which exempts from coverage under the FAA

“‘contracts of employment of seamen, railroad employees, or any

other class of workers engaged in foreign or interstate
10 9 U.S.C. § 1.

5

commerce,’”10 removes all employment contracts from the scope of the

FAA or whether it merely provides that the FAA does not apply to

employment contracts involving transportation workers. The Supreme

Court’s application of the exemption employment contracts involving

the transportation industry from FAA coverage is irrelevant to the

existence of federal subject matter jurisdiction under the FAA. 

We conclude that the complaint did not allege a federal

question or that under the facts alleged there is another basis for

federal jurisdiction. We affirm the judgment dismissing the

complaint.