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In dismissing a petition to vacate an arbitration award, a federal district court in Wisconsin applied the rule that the Federal Arbitration Act (FAA) does not provide federal question jurisdiction.
In Gertrude M. Meyer Revocable Trust v. Edward D. Jones & Co., No. 06C0491, 2006 WL 2861097 (E.D. Wis. Oct. 5, 2006), Edward D. Jones & Co. sold stock for the Gertrude M. Meyer Revocable Trust, which subsequently initiated arbitration before the NASD, claiming a loss of $23,436.
After the arbitrator dismissed its claim, the Trust filed suit in federal court seeking an order vacating the order. The Court concluded that it lacked subject matter jurisdiction and dismissed the suit. As the Court observed, the FAA does not provide federal question jurisdiction. Moreover, it made no difference that at arbitration, the Trust alleged a violation of the Securities Exchange Act because “[w]hen a plaintiff seeks federal court review of an arbitration award, federal statutory issues in the underlying arbitration dispute are ‘irrelevant for purposes of subject matter jurisdiction.’”
Since there was no federal question jurisdiction, the Court turned to the question of diversity jurisdiction, which requires an amount in controversy in excess of $75,000. In addressing this issue, the Court concluded that “it appears to a legal certainty that [the Trust] could not recover an amount equal to the jurisdictional threshold.”
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