Court Opinion

ID: 3192052
Source: CourtListenerOpinion
Date Created: 2016-04-07 00:00:53.973245+00
Date Added: 2024-06-11T14:36:09.630518
License: Public Domain

Case: 15-30396         Document: 00513454089         Page: 1     Date Filed: 04/06/2016

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                        No. 15-30396
                                                                             United States Court of Appeals
                                                                                      Fifth Circuit

                                                                                    FILED
PERSHING, L.L.C.,                                                                April 6, 2016
                                                                               Lyle W. Cayce
                                     Plaintiff - Appellee                           Clerk

v.

THOMAS KIEBACH; MARCEL DUMESTRE; MARGARET DUMESTRE;
MAMIE HELEN BAUMANN, Through power of attorney Mamie C.
Sanchez; JOSEPH BECKER; ET AL,

                                     Defendants - Appellants

                     Appeal from the United States District Court
                        for the Eastern District of Louisiana

Before JOLLY and JONES, Circuit Judges, and MILLS ∗, District Judge.
EDITH H. JONES, Circuit Judge:
      This is an interlocutory appeal of the district court’s order denying
Appellants’ Fed. R. Civ. Pro. 12(b)(1) motion to dismiss, for lack of subject
matter jurisdiction, Appellee’s motion to confirm an arbitration award.
Adopting the better reasoned approach to the amount in controversy under
these circumstances, we AFFIRM the district court’s order and hold that the
monetary amount sought in the underlying arbitration is the amount in
controversy for purposes of diversity jurisdiction.

      ∗
          District Judge of the Northern District of Mississippi, sitting by designation.
     Case: 15-30396       Document: 00513454089         Page: 2    Date Filed: 04/06/2016

                                      No. 15-30396
                                             I.
      Appellants are investors who suffered financial losses as a result of
R. Allen Stanford’s Ponzi scheme. In their arbitration complaint, seeking $80
million in damages, Appellants alleged that Appellee (“Pershing”), a clearing
broker for Stanford Group Company, failed to disclose adverse financial
information.     After a two week hearing, a Financial Industry Regulatory
Authority (“FINRA”) panel rejected Appellants’ claims, but it awarded them
$10,000 in compensation for certain arbitration-related expenses.                        On
November 7, 2014, Pershing filed, pursuant to Section 9 of the Federal
Arbitration Act (“FAA”), 9 U.S.C. §1, et seq., a motion to confirm the arbitration
award.
     Because the arbitration award fell below the amount in controversy for
federal jurisdiction, 28 U.S.C. §1332(a), Appellants sought dismissal. 1 On
April 22, 2015, the district court denied Appellants’ motion, holding that the
$75,000 amount in controversy requirement was met.                     Pershing LLC v.
Kiebach, 101 F. Supp. 3d 568 (E.D. La. 2015).                 The district court noted,
however, that federal courts have disagreed about the proper standard for
determining the amount in controversy in the context of confirming an
arbitration award below $75,000, and proceeded to certify the issue for
interlocutory appeal pursuant to 28 U.S.C. § 1292(b). This court granted leave
to file an interlocutory appeal, and Appellants timely appealed.

       1 Appellants also filed a motion to vacate the arbitrator’s award in New York federal
court, before voluntarily dismissing that action and filing a similar motion to vacate in
Louisiana state court. That case was later removed to the Middle District of Louisiana, where
it has been stayed pending the resolution of the present matter.
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                                        No. 15-30396
                                               II.
       This court applies a de novo standard of review and uses the same
standard as the district court when reviewing a 12(b)(1) motion to dismiss.
LeClerc v. Webb, 419 F.3d 405, 413 (5th Cir. 2005). Issues of subject matter
jurisdiction are questions of law reviewed de novo. Am. Rice, Inc. v. Producers
Rice Mill, Inc., 518 F.3d 321, 327 (5th Cir. 2008). “It is to be presumed that a
cause lies outside [a federal court’s] limited jurisdiction, and the burden of
establishing the contrary rests upon the party asserting jurisdiction.”
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S. Ct. 1673,
128 L. Ed. 2d 391 (1994) (internal citations omitted).
                                              III.
       This court granted an interlocutory appeal to decide whether the amount
in controversy for establishing diversity jurisdiction over a petition to confirm
an arbitration award is the amount awarded by the arbitration panel or the
amount previously sought in the arbitration proceeding. 2
       Courts that have confronted this issue generally follow one of two
approaches—the award approach or the demand approach.                              Karsner v.
Lothian, 532 F.3d 876, 882 (D.C. Cir. 2008). “[U]nder the award approach, the
amount in controversy is determined by the amount of the underlying
arbitration award regardless of the amount sought.” Id.; Baltin v. Alaron
Trading Corp., 128 F.3d 1466, 1472 (11th Cir. 1997); Ford v. Hamilton Invs.,
Inc., 29 F.3d 255, 260 (6th Cir. 1994).               In contrast, “[under] the demand

       2 “Although the FAA constitutes federal law, ‘the Supreme Court has interpreted the
statute as not itself bestowing jurisdiction on the federal district courts.’” Karsner v. Lothian,
532 F.3d 876, 882 (D.C. Cir. 2008) (quoting Kasap v. Folger Nolan Fleming & Douglas, Inc.,
166 F.3d 1243, 1245-46 (D.C. Cir. 1999); see also Southland Corp. v. Keating, 465 U.S. 1, 16
n.9, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984) (the FAA “creates federal substantive law requiring
the parties to honor arbitration agreements, [but] . . . does not create any independent
federal-question jurisdiction under 28 U.S.C. § 1331 (1976) or otherwise.”).

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approach, the amount in controversy is the amount sought in the underlying
arbitration rather than the amount awarded.” 3 Id.; Bull HN Info Sys., Inc. v.
Hutson, 229 F.3d 321, 329 (1st Cir. 2000); Am. Guar. Co. v. Caldwell, 72 F.2d
209, 211 (9th Cir. 1934).
       In its order denying Appellants’ motion to dismiss, the district court
concluded that the demand approach was the correct one: “[e]ach approach has
strengths and weaknesses, and the issue is one that will be resolved by the
Fifth Circuit. However, having considered . . . [the cited authority] the Court
finds that the demand approach is more appropriate.” Pershing, 101 F. Supp.
3d at 573.
       We agree. Based on Appellants’ arbitration demand of $80 million, the
district court correctly concluded that the $75,000 amount in controversy
requirement was met. First, the demand approach recognizes the true scope
of the controversy between the parties. The only logical assumption about
Appellants’ efforts to prevent confirmation of this arbitration award is that
they want a second chance to pursue their claims. The $10,000 award “is but
the last stage of litigation” that began with an $80 million controversy.
Pershing, 101 F. Supp. 3d at 573. Therefore, the amount at stake is the $80
million that Appellants initially sought in arbitration, not the minimal award
for arbitration-related costs. 4
       Second, the demand approach avoids the application of two conflicting
jurisdictional tests for the same controversy. The federal district court has

       3 There is a third approach, known as the “remand approach,” which has been held to
apply if the petition includes a request to remand and reopen the arbitration proceeding. Id.
That is not the case here.

       4See Pershing’s motion to confirm arbitration at ¶ 9 (“In their claims, Defendants
sought to recover as damages their losses in the R. Allen Stanford Ponzi scheme in the
amount of $80,000,000.”).

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                                     No. 15-30396
diversity jurisdiction over a motion to compel arbitration based on the amount
demanded in the petition.          Webb v. Investacorp, Inc., 89 F.3d 252, 256
(5th Cir. 1996). Under the award approach, however, the federal court would
lack jurisdiction over a later petition to confirm or vacate the arbitration award
in the same case if the award falls below the jurisdictional threshold. See
Karsner, at 883-84. “The award approach would promote needless litigation
and gamesmanship” because “litigants may file potentially frivolous, or
unnecessary motions to compel arbitration in order to preserve their right to a
federal forum for review of the eventual award.” Pershing, 101 F. Supp. 3d
at 574. This they could do by filing a motion to compel arbitration and, once it
is granted, by seeking a stay of further court proceedings pending motions to
confirm or vacate the final award. Conversely, under the demand approach,
purely tactical and meritless litigation will likely be avoided. In these ways,
the demand approach effectively acknowledges “the close connection between
arbitration and subsequent enforcement proceedings” and helps “to carry out
the federal policies in favor of arbitration.” Bull HN Info. Sys., 229 F.3d at 329;
see also Smith v. Tele-Town Hall, LLC, 798 F. Supp. 2d 748, 755
(E.D. Va. 2011) (recognizing “Congress’s careful tailoring of the relationship
between district courts and arbitration panels.”).
      Third, the demand approach allows “the district court to exercise
jurisdiction coextensive with the diversity jurisdiction that would have
otherwise been present if the case had been litigated rather than arbitrated.”
Id. at 884 (internal quotation marks and citation omitted); see also Luong v.
Circuit City Stores, Inc., 356 F.3d 1188, 1197-98 (9th Cir. 2004) (Kozinski, J.,
dissenting), opinion withdrawn, 368 F.3d 1113 (9th Cir. 2004). 5 In essence,

      5  “The absurdity of the [award approach] can be demonstrated by considering the
following example: X claims Y owes him $100,000 in a contract dispute. The case is ordered
to arbitration, and the arbitrator comes up with an award of $80,000. X claims he was
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                                        No. 15-30396
the amount in controversy is measured the same way in federal court for
litigation and for matters submitted on petitions to compel arbitration: the
plaintiff’s pleading, not the ultimate result in the case, governs jurisdiction.
       For these reasons, we conclude that “the award approach has the least
appeal,” while “the demand approach is soundest because it avoids anomalous
and    unwarranted        inconsistencies       in   a    federal    court’s    jurisdiction.”
Karsner, 532 F.3d at 883; Tele-Town Hall, LLC, 798 F. Supp. 2d at 753.
Accordingly, we AFFIRM the district court’s order. 6

entitled to more and petitions to have the award vacated. Under the [award] approach, the
district court would have jurisdiction. But if the arbitrator happens to award only $30,000—
or nothing at all—because of the same claimed legal error, the district court would lack
jurisdiction. There is no principled distinction between the two cases; if the petitioner
prevails in either case, the award will be vacated and petitioner will be back in arbitration
seeking his full $100,000. I can see no logic at all in letting the very award that is the fruit
of the claimed error govern the amount in controversy.”

       6 The concurrence advocates using a case-by-case approach, as opposed to adopting a
general approach (i.e., the demand approach) to determine the jurisdictional amount. The
concurrence relies on Theis Research, Inc. v. Brown & Bain, 400 F.3d 659 (9th Cir. 2005), and
interprets the case’s revised opinion as one that adopts a fact-specific analysis and rejects the
demand approach adopted in the original opinion. Interestingly, the concurrence’s narrow
interpretation of Theis, which neither party proposes in this case, clashes with a more recent
Ninth Circuit opinion. See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Moore, 171 F. App’x
545, 546 (9th Cir. 2006) (quoting Theis, 400 F.3d at 662) (“‘[T]he amount at stake in the
underlying litigation, not the amount of the arbitration award, is the amount of controversy
for the purposes of diversity jurisdiction . . . .’”).
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                                 No. 15-30396
MICHAEL P. MILLS, District Judge, concurring in result only:
      I agree with the majority that the district court correctly concluded,
based on the facts of this case, that the amount in controversy should be
decided based on the $20 million demand in arbitration. I write separately
because I believe that the parties to this appeal have framed the issues in an
overbroad manner which has led the majority to make a holding which is
broader than is necessary in this case. I also write to make clear my view that
many of the legal assumptions underlying this interlocutory appeal are
erroneous, based largely upon inaccurate descriptions of the state of federal
precedent set forth in the D.C. Circuit’s opinion in Karsner v. Lothian, 532 F.3d
876, 882 (D.C. Cir. 2008).
      I understand the majority’s inclination to simply answer the question as
certified; indeed, that was also my initial inclination. However, in cases where
an interlocutory appeal is based upon a suspect legal assumption, I feel it is
incumbent upon us to correct it. This court granted interlocutory appeal to
resolve the controlling issue of law as to “the proper method of determining the
amount in controversy for the purpose of establishing diversity jurisdiction
over a petition to confirm an arbitration award.” The parties to this litigation
clearly anticipated that, in deciding this issue, this court would choose between
two alleged “approaches” in this context, namely the “demand approach” and
the “award approach.”        The parties seem to agree that a third alleged
“approach,” namely the “remand approach,” is inapplicable here.
      Certainly, providing clarification to district courts is a laudable goal,
and, if either the “award approach” or the “demand approach” provided what I
felt to be reliable standards for assessing amount in controversy issues in
motions to confirm arbitration awards, I would be only too happy to support
the adoption of such a rule. However, upon closer review of federal appellate

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case law in this context, I do not believe that it is either necessary or advisable
to adopt any such general “approach” in this context.
      I believe that, when one carefully reads the various federal appellate
decisions in this context and considers the factual scenarios presented, one
inevitably comes to the conclusion that the vast majority of these decisions are
quite reasonable.    This is true whether the federal appellate decision in
question considered the amount of the demand, the amount of the award, or
whether a remand to arbitration is sought to be the most important factor in
determining the amount in controversy. Karsner instructs us that the federal
courts are sharply divided into various “approaches” in this context, yet such
was not true when the D.C. Circuit’s opinion was written. To the extent such
is true now, this appears to be largely the result of Karsner’s outsized influence.
Unfortunately, Karsner has become something of a self-fulfilling prophecy,
since many federal courts, including a number of district courts in this circuit
(and the one in this case) have accepted Karsner’s premise that the law in this
context is one in which federal courts must choose a single “approach” when
determining amount in controversy issues. The majority has likewise accepted
the Karsner premise in its opinion in this case.
      Like the majority, I initially accepted Karsner’s premise at face value
and believed that this court was required to choose from the two “approaches”
which are arguably relevant in this case, namely the “demand approach” and
the “award approach.” I have since determined, however, that Karsner’s basic
paradigm is faulty.       There is nothing in the U.S. Supreme Court’s
jurisprudence suggesting that it is either necessary or advisable for circuit
courts to choose a single factor to be used to determine the amount in
controversy in all motions to confirm arbitration awards, no matter the
circumstances. The current version of § 9 of the FAA was enacted in 1947, and
it seems likely that, if the U.S. Supreme Court intended for the amount in
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                                   No. 15-30396
controversy issues in this context to be determined based upon a single factor,
then it would have so indicated by now.           In my view, a federal court’s
overriding duty is to determine whether the amount in controversy is met in a
particular case, and I fail to see how any single approach could possibly yield
the correct result in all cases.
      In Karsner, the D.C. Circuit conducted a review of nationwide authority
in this context and, in so doing, it classified various circuits as following the
“award approach,” “demand approach” or “remand approach.”               Karsner’s
classifications in this regard, even at this late stage in the law, appear to be
suspect. I note that certain circuit court decisions which were described by
Karsner as following the “award approach” were actually quite narrow
decisions which included no language adopting any rule of general
applicability. In Baltin v. Alaron Trading Corp., 128 F.3d 1466 (11th Cir.
1997), for example, the Eleventh Circuit’s analysis of whether diversity
jurisdiction existed was simply as follows:
      Finally, we must determine whether the district court had
      diversity jurisdiction over this case. See 28 U.S.C. § 1332(a). The
      maximum remedy sought by the Baltins was the vacatur of the
      arbitration award of $36,284.69.16. Diversity jurisdiction did not
      exist because it was a “legal certainty” that the amount in
      controversy was less than $50,000, the amount required for federal
      diversity jurisdiction at the time the Baltins filed suit.

Baltin, 128 F.3d at 1472.
      Similarly, in Ford v. Hamilton Inv., Inc., 29 F.3d 255 (6th Cir. 1994), the
Sixth Circuit, in finding that the amount in controversy requirement was met
in that case, wrote that:
      Mr. Ford's complaint alleges that the arbitration panel awarded
      Hamilton Investments $26,666.63, plus $3,857.53 in interest. The
      total of these figures obviously does not exceed $50,000. In the
      arbitration proceedings Mr. Ford claimed more than $50,000
      against Hamilton Investments, but he never asked the district
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                                       No. 15-30396
       court to order that the arbitrators reopen his claim against
       Hamilton Investments; all he sought from the district court was
       the vacation of an award that fell short of the jurisdictional amount
       by almost $20,000.

Ford, 29 F.3d at 260. 1
       In my experience, circuit courts which seek to adopt particular standards
as binding in future cases generally do so after considering a wide variety of
factors applicable not only to the case at bar, but also to other cases as well.
There is no such analysis contained in these two decisions, nor do either of
them cite another decision from their circuit as dictating a specific factor which
they must consider in determining the amount in controversy. It thus seems
clear to me that the circuit courts in Baltin and Ford simply concluded that,
based on the facts before them, the amount in controversy issue should be
decided based on the amount of the award in those cases, with no attempt to
adopt a general “approach” in this context. 2
       While I agree with the district court that the amount of the demand is
most relevant in this case, I believe that the results reached in Baltin and Ford
were quite reasonable, based upon the facts presented in those cases. Without
delving too deeply into the facts of Baltin and Ford, I note that they each
involved factual scenarios where it was clear, at the time of the filing of the
federal action, that no party was continuing to seek recovery in excess of the
jurisdictional amount.        Baltin and Ford each involved motions to vacate

       1Inote that, in a decision written after Karsner, the Second Circuit similarly
considered the amount of the award most relevant, without adopting any “approach” in this
regard. See Fernicola v. Toyota Motor Corp., 313 Fed. App’x. 408, 409 (2d Cir. 2009).

       2This  is made even clearer in the case of the Eleventh Circuit which, as discussed
below, later found a plaintiff’s request for a remand to arbitration to be dispositive, while
emphasizing that this result was consistent with Baltin. See Peebles v. Merrill Lynch, Pierce,
Fenner & Smith Inc., 431 F.3d 1320, 1325–26 (11th Cir. 2005).

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arbitration awards which were filed by parties who had received adverse
financial judgments against them in arbitration, in an amount below the
federal jurisdictional amount. 3 As noted in the aforementioned quotations,
each of the petitioners in those cases sought to have the arbitration verdicts
against them reduced to zero, and the circuit courts in those decisions thus
found that the arbitration awards represented the upper limit of any financial
award which might result from the motions to vacate. That strikes me as being
a quite reasonable conclusion based upon the facts of those cases.
       In this case, by contrast, appellee is only too happy to pay the $10,000
arbitration award entered against it; indeed, it has tendered that amount to
appellants. Moreover, appellee filed its motion to confirm under circumstances
where it had every good faith reason to believe, as was confirmed by
subsequent events, that appellants would oppose the arbitrator’s award, with
a clear goal of obtaining recovery in excess of the jurisdictional amount. Thus,
in this case, unlike in Baltin and Ford, the arbitrator’s award represents the
lower, not the upper, range of possible results from litigation relating to the
validity of the arbitrator’s award. Accordingly, the amount of the award in
arbitration constitutes a far less reliable basis for evaluating the amount in
controversy here than in Baltin and Ford. This illustrates the quite simple
point that different cases are different and that different factors may be
relevant in resolving them.
       I also note that some of the decisions which Karsner described as
following a particular approach purported to be consistent with decisions
which ostensibly follow a different approach. Indeed, Karsner described the

       3In my view, the fact that Baltin and Ford involved motions to vacate, rather than
confirm, arbitration awards does not remove their relevance in this case. Indeed, both sides
to this appeal have relied upon authorities relating to both motions to confirm and vacate
arbitration awards, and it seems to me that similar principles should apply to each.

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Ninth Circuit’s decision in Theis Research, Inc. v. Brown & Bain, 400 F.3d 659,
664–65 (9th Cir. 2005) as adopting the “demand approach,” but Theis cited,
with apparent approval, the Baltin and Ford decisions, which, once again, have
been cited as following the “award approach.” In harmonizing its result with
that in Baltin, for example, the Ninth Circuit in Theis noted that the Eleventh
Circuit had stressed that the plaintiffs in Baltin “did not request an award
modification that would provide[them] with money. Instead, [they] sought
merely to reduce or eliminate the arbitration award against them.” Theis, 400
F.3d at 664, citing Baltin, 128 F.3d at 1472, n. 16.
      If what Karsner described as leading circuit court decisions in favor of
the “demand approach” and the “award approach” are actually in substantial
agreement with each other, then I must wonder how real these alleged
“approaches” actually are. In so stating, I note that Karsner described the First
Circuit’s decision in Bull HN Info. Sys., Inc. v. Hutson, 229 F.3d 321 (1st Cir.
2000) as “applying” the “demand approach,” but this characterization clearly
seems inaccurate. Indeed, the First Circuit specifically reserved judgment on
this issue, writing that:
      Hidden in the issue is another issue which we note but do not
      resolve. That is whether the amount requirement is met where
      the sums at issue before the arbitrator at the start of the
      arbitration exceed $75,000, the final (non-partial) award is for less
      than $75,000, and the federal judicial relief sought is merely
      vacating and dismissing or merely confirming the award.

Bull, 229 F.3d at 329.      The First Circuit instead decided the amount in
controversy issues in that case based upon factors specific to bifurcated
arbitration proceedings, see id., and it thus seems quite clear that Bull neither
adopted nor followed any general “demand approach.”
      Giving Karsner the benefit of the doubt, it could be argued that the term
“approach” is itself ambiguous and that the reference to a court following a
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particular “approach” does not necessarily mean that it would never follow a
different approach. At a bare minimum, however, the Karsner approach is
confusing, and district courts in this circuit have interpreted the decision as
requiring courts to single out one factor to elevate above all others. See, e.g.
Busby v. Bruce Massey Const., LLC, 2015 WL 7015349, at *1 (S.D. Miss. Nov.
12, 2015); Curbelo v. Hita, 2009 WL 2191084, at *4 (W.D. Tex. July 22, 2009).
Removing confusion in this regard seems reason enough to distance ourselves
from Karsner.
        In deciding whether to adopt a general approach in this regard, I
consider it quite significant that one federal circuit which initially appeared to
adopt such an approach quickly thought better of the idea. Indeed, on motion
for rehearing, the Ninth Circuit in Theis modified its opinion to replace
generalized language consistent with an “approach” to one which merely made
a case-specific finding that the amount of the demand in arbitration was most
relevant in that case. In other words, the Ninth Circuit modified its opinion to
do exactly what this concurrence recommends. Specifically, the Ninth Circuit
in Theis deleted a sentence including the language:
        Our conclusion that we measure the amount in controversy by the
        amount at stake in the underlying litigation is consistent not only
        with American Guaranty from this circuit, but with decisions from
        other circuits as well.

Theis, 400 F.3d at 661. The deleted sentence was replaced with the following
sentence:
        Our decision to measure the amount in controversy in this case by
        the amount at stake in the underlying litigation is consistent not
        only with American Guaranty from this circuit, but with decisions
        from other circuits as well.

Id.

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      Thus, the Ninth Circuit deleted generalized language stating that “we
measure the amount in controversy by the amount at stake in the underlying
litigation” and replaced it with far more limited language stating that the court
was merely finding “in this case” that the amount in controversy should be
measured on that basis. In its revised opinion, the Ninth Circuit specifically
noted the modifications to its opinion, writing that:
      With the foregoing amendments, the panel has voted unanimously to deny
      the petition for rehearing. Judge Trott has also voted to deny the petition for
      rehearing en banc, and Judges Thompson and Weiner recommend denial of
      that petition.

Id. at 661. The clear implication of the above is that, after initially releasing
an opinion which included generalized language adopting something like a
“demand approach,” the Ninth Circuit quickly realized that its holding gave
rise to conflicts with reasonable decisions from other circuits and accordingly
modified its opinion to make a case-specific holding and thereby avoid having
to rehear the case, either in panel or en banc.
      It seems clear from the manner in which the Ninth Circuit framed the
issues in Theis that it initially intended to adopt a broad holding setting forth
that circuit’s approach to amount in controversy issues in this context. I can
discern no reason why the Ninth Circuit would have modified its opinion in the
manner it did other than to greatly narrow its holding. The fact that it was
the Ninth Circuit’s intent, in modifying the language in question, to move away
from any “demand approach” is made even clearer by the fact that the modified
language immediately preceded the portion of the opinion where the court
wrote approvingly of the Baltin and Ford decisions. Clearly, an opinion can
not be said to have adopted the “demand approach” if it writes approvingly of,

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and claims to be consistent with, decisions which deem the amount of the
award most relevant. 4
       I do not wish to be cumulative or unnecessarily harsh in criticizing
Karsner, but since that decision’s logic undergirds the majority’s opinion, I will
note another instance in which the decision inaccurately characterized another
circuit’s precedent.      Specifically, the D.C. Circuit wrote that the Eleventh
Circuit, which it described as initially “follow[ing] the award approach” in
Baltin, “appear[ed] to have more recently adopted the remand approach.”
Karsner, 532 F.3d at 882-83, citing Peebles v. Merrill Lynch, Pierce, Fenner &
Smith Inc., 431 F.3d 1320, 1325–26 (11th Cir. 2005). I submit, however, that
both Baltin and Peebles represent entirely logical and correct determinations
of amount in controversy issues based on the facts of each case and that,
contrary to Karsner, neither decision adopted an “approach” inconsistent with
the other.
       Indeed, the Eleventh Circuit in Peebles made it clear that it regarded its
decision as consistent with Baltin, writing that:
       This issue is a matter of first impression for this court. Baltin does
       not speak to the issue raised here because “the maximum remedy
       sought” by the investors was the vacatur of the arbitration award
       against them that did not exceed the minimum required to satisfy
       28 U.S.C. § 1332. 128 F.3d at 1472. Here the maximum remedy
       Peebles sought was vacatur of a zero dollar arbitration award and

       4The  majority notes that, in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Moore, 171
F. App’x 545, 546 (9th Cir. 2006), the Ninth Circuit quoted certain language in Theis which
had not been modified in support of the application of a broad demand “approach.” In my
view, this simply reflects the fact that Theis was originally written to adopt the demand
approach, and it appears that the Ninth Circuit modified the bare minimum of language in
the opinion so as to assuage the concerns of judges who did not wish to adopt such a broad
approach. Once again, the intent of the Ninth Circuit in Theis seems clear in light of the fact
that the Court specifically praised, and claimed to be consistent with, Baltin and Ford. It
seems self-evident that, if the Ninth Circuit would regard the amount of the award as being
the determining factor in an appropriate case, then that circuit does not follow the “demand
approach” at all. I do not believe that this circuit should do so either.

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                                   No. 15-30396
      a new arbitration hearing at which he could urge his argument
      that he was entitled to up to $2,000,000 in damages. We hold that
      a federal court has subject matter jurisdiction where a party
      seeking to vacate an arbitration award is also seeking a new
      arbitration hearing at which he will demand a sum which exceeds
      the amount in controversy for diversity jurisdiction purposes. This
      approach is consistent with the approach taken by other circuits
      that have had occasion to address this question. See, e.g., Theis
      Research, Inc. v. Brown & Bain, 400 F.3d 659 (9th Cir. 2005); Bull
      *1326 HN Info. Sys., Inc. v. Hutson, 229 F.3d 321 (1st Cir. 2000).

Peebles, 431 F.3d at 1325–26. I find the logic of both Baltin and Peebles to be clear,
and I believe that Karsner was simply incorrect in its characterization of these
decisions.
      I submit that most of the federal appellate authority in this context may
be easily reconciled with each other and that such precedent may serve as
persuasive authority for district courts to consider. This is particularly true if
the decisions are analyzed from a paradigm of common sense, rather than
“approaches.” For example, I believe that a district court reviewing the facts
of this case and Theis would be able to readily understand why the amount of
the plaintiffs’ demand was deemed most relevant, as opposed to cases like
Baltin and Ford, where the amount of the award was considered dispositive.
By the same token, I think a district court would readily understand why the
Eleventh Circuit in Peebles, faced with a plaintiff seeking a remand to
arbitration, viewed that fact as trumping the amount of the award in
arbitration, thus rendering Baltin distinguishable. Indeed, as a simple matter
of common sense, it is illogical to consider the award in arbitration dispositive
if the plaintiff is seeking to return to arbitration, where he might seek an
amount greater than the award. Recognizing this fact does not require the
adoption of the “remand approach”; it merely requires the application of
common sense.

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                                 No. 15-30396
      Given that there are reasonable federal appellate decisions finding each
of the three factors relevant in this context, I can see no benefit to following
the Karsner approach of selecting a single factor to elevate above the other two.
Indeed, it appears to me that there may well be additional factors which are
relevant in this context. For example, consider a situation in which a plaintiff
makes a demand in arbitration which is completely unrealistic. Assume, for
example, a case in which a plaintiff sought $10 million in an arbitration action
in which his sole claim was for property damage to his vacuum cleaner.
Assume further that the arbitrator awarded only the $200 fair market value
of the vacuum cleaner and that a motion was filed in federal court to confirm
that award. In my view, a district court should have the discretion to take a
realistic look at the facts of that case and determine that, notwithstanding the
amount of the demand in arbitration, the amount in controversy requirement
was clearly not met. Such a finding would strike me as entirely reasonable,
even though it does not fit within one of the three alleged “approaches.” I
simply do not see the benefit of attempting to unduly limit the discretion of
district courts to decide amount in controversy issues in this context.
      As an additional point, I note that adopting the “demand approach” (or
any other approach) would also run counter to the approach this circuit has
taken in a closely analogous legal context, namely declaratory judgment
actions filed by liability insurers. Conceptually-speaking, motions to confirm
arbitration awards are quite similar to declaratory judgment actions, since
they essentially seek a judicial declaration that an arbitration award is a valid
one under the applicable legal standards. It is thus significant, in my view,
that this circuit has adopted quite broad and flexible standards for determining
the amount in controversy in declaratory judgment actions filed by insurers.
      In St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250 (5th Cir. 1998),
the plaintiff insurance company sought a declaration of liability arising from
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                                  No. 15-30396
its denial of the insured's claim. In this context, this court concluded that the
amount in controversy is “the value of the right to be protected or the extent of
the injury to be prevented.” Greenberg, 134 F.3d at 1253. Clearly, this is a
quite broad and flexible standard, and, while this court has frequently relied
upon the amount of the plaintiff’s demand in assessing the amount in
controversy in declaratory judgment actions, it has adopted no categorical rule
in this regard. In Hartford Ins. Group v. Lou–Con Inc., 293 F.3d 908 (5th Cir.
2002), for example, this court found that the amount in controversy
requirement was not met in that declaratory judgment action, based partly on
the limited nature of the insurance claims in that case. Hartford, 293 F.3d at
912. This court also noted, however, that we might consider different factors
in certain other insurance cases. For example, this court noted that “under
certain circumstances the policy limits will establish the amount in
controversy,” particularly in cases relating to the “validity of the entire
contract between the parties.” Id. at 911, citing 14B Charles Alan Wright,
Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure:
Jurisdiction 3d § 3710 (3d ed. 1998).
      Thus, this court has recognized that a categorical rule adopting a variant
of the “demand rule” in the declaratory judgment context would be unwise and
that greater flexibility in amount in controversy standards is required.           I
believe that such a flexible approach would serve this circuit well in the instant
context as well. In my view, the simple fact is that there is no “one size fits all”
solution in this context and that adopting an “approach” whereby all amount
in controversy issues are decided based upon a single factor simply does not
work. I believe that our circuit’s standards in the declaratory judgment context
demonstrate that we can offer district courts guidance on making amount in
controversy determinations without unduly tying their hands.

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                                 No. 15-30396
      In light of the foregoing, I agree with the majority that the district court
properly relied upon the plaintiffs’ demand in arbitration in deciding that the
amount in controversy requirement was met in this case, but I would decline
to adopt any categorical “approach” in this context.        While the “demand
approach” works well enough in this case, I believe it will lead to incorrect
results when this court is faced with a case involving facts such as those in
Baltin or Ford. I therefore respectfully concur in result only.

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