United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT March 3, 2004
Charles R. Fulbruge III
Clerk
No. 03-50897
Summary Calendar
COLE SMITH,
Plaintiff - Counter-Defendant - Appellant,
versus
RUSH RETAIL CENTERS, INC.,
Defendant - Counter-Claimant - Appellee.
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Appeals from the United States District Court
for the Western District of Texas
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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.
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
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
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
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
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
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
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.
10
9 U.S.C. § 1.
5