Opinion ID: 729698
Heading Depth: 2
Heading Rank: 1

Heading: The Text of the Federal Arbitration Act.

Text: 17 The text of FAA § 4 appears to confer jurisdiction on federal courts to issue motions to compel arbitration in cases where the court would have jurisdiction over the underlying claims. 5 A number of courts, however, have concluded that they lack federal question jurisdiction over an action brought under § 4, even though the underlying arbitration claim raised a federal question over which the court would have had subject matter jurisdiction if the claim had originally been brought in federal court. See, e.g., Prudential-Bache Sec., Inc. v. Fitch, 966 F.2d 981, 986-88 (5th Cir.1992); Kaplan v. Dean Witter Reynolds, Inc., 896 F.Supp. 1219, 1219-20 (S.D.Fla.1995); Giangrande v. Shearson Lehman/E.F. Hutton, 803 F.Supp. 464, 469-73 (D.Mass.1992); In re Prudential Sec., Inc., 795 F.Supp. 657, 660-62 (S.D.N.Y.1992); Klein v. Drexel Burnham Lambert, Inc., 737 F.Supp. 319, 322-24 (E.D.Pa.1990); Drexel Burnham Lambert, Inc. v. Valenzuela Bock, 696 F.Supp. 957 (S.D.N.Y.1988); cf. Minor v. Prudential Sec., Inc., 94 F.3d 1103 (7th Cir.1996) (same finding with respect to FAA § 10); City of Detroit Pension Fund v. Prudential Sec., Inc., 91 F.3d 26, 29 (6th Cir.1996) (same). 18 We are persuaded by Judge Leval's opinion in Valenzuela Bock, which found, in a case in which the underlying claims were based on federal securities laws, that the text of § 4 does not confer federal question jurisdiction where the claim of federal jurisdiction is not based on the petition itself, but rather on the federal character of the underlying dispute [in arbitration]. 696 F.Supp. at 965. After carefully analyzing the legislative history and purposes of the FAA, Judge Leval found that the language of FAA § 4 is not intended to confer jurisdiction, but should instead be read as a response to the antiquated common law principle that an agreement to arbitrate would oust the federal courts of jurisdiction. Id. at 961-62. 6 19 Additionally, although a number of provisions in the FAA refer to the United States court in a manner that suggests a bestowal of jurisdiction (e.g., FAA §§ 7, 9, 10, 11), these provisions have not been interpreted to confer jurisdiction on the federal courts. See Valenzuela Bock, 696 F.Supp. at 960-61 (collecting cases). If the language of FAA § 4 were interpreted to give federal courts jurisdiction to compel arbitration whenever the underlying claim involves a federal question, this would produce an odd distinction: 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. 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. Valenzuela Bock, 696 F.Supp. at 963 (internal citations and quotation marks omitted). 20 In sum, we find that the text of FAA § 4 should not be interpreted to mean that a federal court has subject matter jurisdiction over an action to compel or stay arbitration merely because the underlying claim raises a federal question. A petition under FAA § 4 to compel or stay arbitration must be brought in state court unless some other basis for federal jurisdiction exists, such as diversity of citizenship or assertion of a claim in admiralty. 21