After a Lull in 2021, a Busy Year Ahead Arbitration-wise for SCOTUS

This article first appeared on Securities Arbitration Alert, here.

We entered 2021 with SCOTUS poised to again rule on delegation after hearing an oral argument late in 2020.[1] Later in the year, the Court agreed to hear two more arbitration-centric cases. The result for these three cases? Two oral arguments were held, but there was a “never mind” from the Court after one of them.[2] And the third case? Another “never mind” right before argument, but from the parties this time.[3] As we head into 2022, we find ourselves: 1) awaiting a decision in the one live case that was argued;[4] and 2) looking forward to oral arguments in four cases where SCOTUS granted Certiorari in the fall.[5] To tie this all together, we’ve consolidated in this feature article our past coverage[6] in the Alert. Read on….

2021 “Never Mind” #1: SCOTUS Walks Back Henry Schein II Cert. Grant

One of the late Gilda Radner’s many characters was Emily Litella, who would give misguided editorial replies that were inevitably based on her misunderstanding of the facts. When the error was pointed out, she would exclaim, “Oh, that’s very different. Never mind!” Channeling Ms. Litella, after hearing oral argument in December 2020, SCOTUS walked back its decision to hear the arbitration-centric Henry Schein, Inc. v. Archer and White Sales, Inc., No. 19-963 (Henry Schein II).

A Succinct Review

We refer readers to SAA 2020-47 (Dec. 17) for our analysis of the oral argument (ed: see the transcript and audio recording.) As we reported in SAA 2020-23 (Jun. 17), the Supreme Court in June 2019 agreed to review an open issue from its ruling in Henry Schein, Inc. v. Archer and White Sales, Inc.,139 S. Ct. 524 (2019), where the Court held unanimously that there is no delegation carveout under the Federal Arbitration Act (“FAA”) for “wholly groundless” assertions of arbitrability. The predispute arbitration agreement (“PDAA”) provided for AAA arbitration of: “Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes relating to trademarks, trade secrets or other intellectual property of [the manufacturing company]) ….” (brackets in original). Left unresolved after the first trip to SCOTUS was whether this PDAA constituted clear and unmistakable delegation of all issues of arbitrability or carved out injunctive relief. The issue for review in Schein’s granted Petition for Certiorari was: “Whether a provision in an arbitration agreement that exempts certain claims from arbitration negates an otherwise clear and unmistakable delegation of questions of arbitrability to an arbitrator.”

SCOTUS Validates our Uncertainty

Our take after the oral argument was: “To us, a very obvious common theme was the sense that members of the Court realized that, in retrospect, they might have taken up the related issue of whether incorporating the AAA’s Rules constitutes clear and unmistakable evidence of delegation. While we usually make bold predictions on where the Court may land, this one is murky at best. If forced, we would say the odds favor Schein, but we’re not betting on it.” SCOTUS evidently also harbored second-thoughts, because in a one-line per curiam Order, the Court decided: “The writ of certiorari is dismissed as improvidently granted.” Or, as Ms. Litella would say, “Never mind!”

What it Means

We endorse the views expressed in the January 25 CPR Blog: “The immediate effect is that respondent Archer and White Sales sees a big win: It will get the determination of whether its long-running case over a medical equipment contract dispute is to be arbitrated made by a judge, not an arbitrator. A Fifth U.S. Circuit Court of Appeals decision now stands. See Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274 (5th Cir. 2019) ….”

Our commentary: *Dismissals by the Court after oral argument are relatively rare, but they happen. See, for example, And After All That Work!: The Dreaded U.S. Supreme Court “DIG,” The Washington Legal Foundation’s WLF Legal Pulse (Jan. 31, 2013). **We can’t recall SCOTUS ever taking similar action in an arbitration-related case. If anyone has contrary recollections, email us at ***An Alert h/t to CPR’s Russ Bleemer for quickly blogging on this one.

2021 “Never Mind” #2: on the Eve of Argument, Servotronics Withdraws Certiorari Petition

Once again reminiscent of Ms. Litella, with oral argument having been set for October 5, counsel for Servotronics walked back its Petition for Certiorari in Servotronics, Inc. v. Rolls-Royce PLC and the Boeing Company, No. 20-794.

A Succinct Review

As reported in SAA 2021-11 (Mar. 25), the Court on March 22 agreed to resolve a major Circuit Court split on whether 28 U.S.C. § 1782 provides for discovery in aid of private, foreign, commercial arbitration or only covers cases administered by governmental arbitration forums (see Servotronics’ December 2020 Petition and page 1 of the Order List). We reported in SAA 2021-27 (Jul. 22) that: 1) the oral argument calendar for October showed that the case was set for Tuesday, October 5; and 2) on June 28, the Government filed an unopposed Motion for leave to participate in oral argument and for divided argument. The request was granted August 2 and on August 23 the Court issued an Order allocating the time for argument. Amicus briefs aplenty were filed, and all seemed to be in readiness for the October 5 oral argument.

A Bolt from the Blue

Servotronics’ counsel on September 8 filed a letter with the Court, stating: “I am writing to report that Servotronics anticipates filing a dismissal motion pursuant to Rule 46 of the Rules of the Court within the next few days.” The parties on September 22 filed a Joint Stipulation to Dismiss, stating: “Pursuant to Rule 46.1 of the Rules of this Court, all parties stipulate that this case be dismissed…. The parties accordingly respectfully request that the Clerk enter an order of dismissal pursuant to Rule 46.1.” No reason was given, but we noted that the underlying arbitration in London had been concluded during the summer of 2021. The SCOTUS docket eventually bore a September 29 entry noting that the case was dismissed. Or, as Ms. Litella would say, “Never mind!”

What it Meant: the Split Remained (But Not for Long)

The bottom line at the time was that the split in the Circuits remained (ed: not for long; see below). What split? To review, we covered in SAA 2020-13 (Apr. 8) Servotronics, Inc. v. The Boeing Co. and Rolls-Royce PLC, 954 F.3d 209 (4th Cir. Mar. 30, 2020), where, in a case involving a private commercial arbitration being held in England under Chartered Institute of Arbitrators Rules, the Court upheld a District Court decision ordering discovery from three Boeing employees residing in South Carolina. The more recent entry in the “no” camp was the Seventh Circuit, which in Servotronics, Inc. v. Rolls-Royce PLC, No. 19-1847, 2020 WL 5640466 (Sept. 22, 2020) – a dispute arising out of the same arbitration – held that section 1782 does not extend to private international commercial arbitration. As described in SAA 2020-37 (Oct. 7), the District Court had barred Servotronics from obtaining discovery documents located in Illinois for use in the same private arbitration pending in London, and the Seventh Circuit (ed: then-Judge Amy Coney Barrett was not on the Panel deciding the case) affirmed unanimously. Among the Court’s rationales was a perceived conflict between section 1782 and the FAA:

“The discovery assistance authorized by § 1782(a) is notably broader than that authorized by the FAA…. If § 1782(a) were construed to permit federal courts to provide discovery assistance in private foreign arbitrations, then litigants in foreign arbitrations would have access to much more expansive discovery than litigants in domestic arbitrations. It’s hard to conjure a rationale for giving parties to private foreign arbitrations such broad access to federal-court discovery assistance in the United States while precluding such discovery assistance for litigants in domestic arbitrations. In sum, what the text and context of § 1782(a) strongly suggest is confirmed by the principle of avoiding a collision with another statute: a ‘foreign or international tribunal’ within the meaning of § 1782(a) is a state-sponsored, public, or quasi-governmental tribunal.”

Our commentary*We were really curious as to why Servotronics was suddenly withdrawn. Mootness may have been the cause, given last summer’s conclusion of the underlying arbitration. **The September 8 CPR Blog had an excellent analysis of the dismissal.

The 2021 Survivor: We’ll Always have Badgerow

The only arbitration-centric case remaining on the Court’s 2021 oral docket, Badgerow v. WaltersNo. 20-1143, was heard November 2. As reported in SAA 2021-19 (May 20), the Supreme Court on May 17 granted Certiorari in this case involving application of the “look through” standard (described below). Specifically, the Court agreed to review Badgerow v. Walters975 F.3d 469 (5th Cir. 2020), a case we analyzed in SAA 2020-36 (Sep. 23). In the underlying case, the Fifth Circuit held that the District Court was correct when it applied the “look through” standard to determine that it could remove a state court action to vacate an Award.

The Case Below

A FINRA Panel rendered an Award denying AP Badgerow’s claims against Ameriprise and three “franchise advisors,” triggering a petition to vacate by Badgerow in a Louisiana trial court. The Respondents then removed the case to federal court. Thereafter, the District Court confirmed the Award, finding no fraud in its procurement as Badgerow had alleged. Before the Fifth Circuit was whether the District Court acted properly in determining it had federal jurisdiction to support removal.

The FAA and Federal Jurisdiction

Because the FAA does not confer federal jurisdiction, another basis must be present. As reported in SAA 2021-39 (Oct. 21), a wonderful primer on the FAA and federal jurisdiction was provided by the unanimous Connecticut Supreme Court decision in A Better Way Wholesale Autos, Inc. v. Saint PaulNo. SC20386 (Conn. Oct. 12, 2021). The case dealt with whether the shorter time to vacate an award under state law – Connecticut General Statutes § 52-420 (b) – was preempted by the FAA. The Court held it was not, because the State’s law: “… does not stand as an obstacle to the accomplishment of the federal policy to enforce arbitration agreements.”[7]

The “Look Through” Standard Under FAA Section 4 Motions to Compel

The Supreme Court in Vaden v. Discover Bank, 556 U.S. 49 (2009), held that jurisdiction over a petition to compel arbitration under FAA section 4 is determined by the nature of the underlying dispute. This was based on section 4 language providing that a motion to compel arbitration can be brought in “any United States district court 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.” The Vaden standard became known as the “look through” standard.

Majority of Circuits Extend the Standard to Award Confirmation

Over the years, a majority of Circuits considering the question (First, Second, Fourth, and Fifth) have extended the “look through” standard to post-award motions to confirm or vacate/modify. See, for example, Doscher v. Sea Port Group Securities, LLC, 832 F.3d 372 (2d Cir. 2016), where the Second Circuit extended Vaden’s “look through” jurisdictional test to motions to confirm (FAA section 10) or modify (FAA section 11) awards under the FAA. The Third and the Seventh Circuits have adopted a contrary view, limiting the “look through” standard to actions to enforce arbitration agreements. See, for example, Goldman v. Citigroup Global Markets Inc., 834 F.3d 242 (3d Cir. 2016).

Applying the “Look Through” Standard Here

Applying the “look through” test to the underlying FINRA arbitration, the Fifth Circuit in Badgerow held that the District Court had federal subject matter jurisdiction to support removal of the vacatur action filed in state court. Said the unanimous Opinion:

“Applying the look-through analysis, we have held, first, that the district court correctly found that Badgerow’s Title VII declaratory judgment claim against Ameriprise in the FINRA arbitration was a federal-law claim. We have held, second, that all of Badgerow’s claims against the Principals and Ameriprise in the FINRA arbitration arose from the same common nucleus of operative fact, and that under the principle of supplemental jurisdiction, federal jurisdiction obtains over Badgerow’s state-law tortious interference and whistleblower claims. The district court therefore properly held that Badgerow’s federal claim against Ameriprise in the FINRA arbitration invested federal jurisdiction over Badgerow’s Louisiana petition to vacate the FINRA arbitration award as to the Principals.”

Issue Before SCOTUS and Amicus Briefs

The issue identified for review in the granted Petition for Certiorari: “Whether federal courts have subject-matter jurisdiction to confirm or vacate an arbitration award under Sections 9 and 10 of the FAA where the only basis for jurisdiction is that the underlying dispute involved a federal question.” Only three Amicus Briefs were filed, with these two in support of Respondent: 1) the Chamber of Commerce of the United States of America; and 2) the Securities Industry and Financial Markets Association.

Our Take on the Oral Argument

We provided in #41 some overall reactions that we repeat here. It seems to us that the Court will be tasked with reconciling two core countervailing arguments: 1) does it matter that only FAA section 4 (compelling arbitration) has express language supporting the look through doctrine (providing that a motion to compel arbitration can be brought in “any United States district court 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”), while sections 9 and 10 (confirming/challenging awards) do not?; and 2) the imagined Justice Scalia question we identified in our editorial note in # 41: “So let me get this straight: it’s OK to apply ‘look through’ to enforcing the arbitration agreement, but not the eventual award??”

Some First-Class Analyses

We read several blog posts analyzing the oral argument and pass along in alpha order of author name information on and a snippet from six of our favorites. These articles cover the interactions between the Justices and counsel in different ways, but collectively convey the tenor of the argument:

  • Barker, High Court Weighs Jurisdiction Over Federal Arbitration Awards, Bloomberg (Nov. 2, 2021): “The U.S. Supreme Court’s justices seemed skeptical about a proposed rule that would often deprive federal courts of jurisdiction over certain arbitration awards, as it weighed a circuit split over when such courts have jurisdiction to confirm or vacate an award under the Federal Arbitration Act, Tuesday.[] Depending on how the court rules in Badgerow v. Walters, the decision could have significant implications for state-court involvement in resolving disputes over FAA awards.”
  • Bleemer, Supreme Court Hears Badgerow, and Leans to Allowing Federal Courts to Broadly Decide on Arbitration Awards and Challenges, CPR Blog (Nov. 2, 2021): “The U.S. Supreme Court expressed skepticism this morning about a petitioner’s argument that federal court jurisdiction over an arbitration matter under Federal Arbitration Act Sec. 4 on enforcing the submission to the ADR process does not also carry federal jurisdiction over to later FAA sections on confirming and overturning awards.[] Today’s arguments in Badgerow v. Walters, No. 20-1143, the sole arbitration case on the current term’s docket, appeared to support the Court affirming a Fifth U.S. Circuit Court of Appeals decision confirming an arbitration award, rather than sending the case back to state court.”
  • Born, Of Rats and Lions….or, The Importance of Agreements to Arbitrate, Kluwer Arbitration Blog (Nov. 8, 2021): “During oral argument before the Supreme Court, however, things moved from technical issues of federal subject matter jurisdiction to a more universal theme…. “John Steinbeck’s classic novella, ‘Of Mice and Men,’ took a modern day form in the U.S. Supreme Court earlier this week – appropriately enough, for purposes of this blog, in an arbitration matter. As others have commented on social media, during oral argument in Badgerow v. Walters, Case No. 20-1143 (U.S. S. Ct.), the Supreme Court considered the fairly technical question ‘[w]hether federal courts have subject-matter jurisdiction to confirm or vacate an arbitration award under Sections 9 and 10 of the Federal Arbitration Act when the only basis for jurisdiction is that the underlying dispute involved a federal question.’ A transcript of the oral argument can be accessedhere…. During oral argument before the Supreme Court, however, things moved from technical issues of federal subject matter jurisdiction to a more universal theme ….”
  • Lewis, The Supreme Court Argument Only Underscored the Complexities of Federal Court Jurisdiction Over Arbitration Awards, Baker Hostetler Employment Class Action Blog (Nov. 9, 2021): “So, coming full circle, the gulf remained between the petitioner’s position that the language of Section 4 drove the result, while the respondents relied, in part, on an argument that the narrow statutory construction advocated by Badgerow would lead to the questionable result of only diversity cases presenting federal courts with jurisdiction under Sections 9 and 10 but not those raising federal questions.[]Bottom Line: Oral argument in Badgerow revealed the lack of any easy answers. If a pure textual approach is followed, some federal arbitral awards could be left in state court, where federal standards are not necessarily followed.”
  • Mann, Justices Balance Policy and Text to Guide Jurisdiction Over Motions to Vacate Arbitration Awards, SCOTUSBlog (Nov.4): “You might have expected the justices to take a breather the day after hearing the weighty arguments in United States v. Texas and Whole Woman’s Health v. Jackson. Especially for an argument about the details of federal jurisdiction over efforts to confirm or vacate an arbitration award. But in Badgerow v. Walters on Tuesday, the bench was engaged as the justices struggled to find a way to match the text of the Federal Arbitration Act with a palatable jurisdictional framework…. As I’ve tried to suggest, several of the justices came to the bench well-prepared for discussion – Kavanaugh had a lengthy interchange with [Badgerow’s counsel] Geyser about the significance of a law review article from the 1920s – and none of them expressed a lot of certainty about the outcome. So, although practical concerns with Geyser’s position trouble some of them, it is far from obvious how this one will land when they get down to parsing the statute.”
  • Rozen, Arbitration “Rat” Shows Up at Supreme Court Hearing for Broker’s CaseAdvisorHub (Nov. 4, 2021): “During a hearing on Tuesday, Supreme Court justices tried to parse the maze of jurisdictional questions in a case brought by a Louisiana broker about when litigants may ask a state versus a federal judge to vacate an arbitration award. The nearly 60 minutes of oral arguments signaled no easy predictions about how the nine justices would rule. But the justices did manage to squeeze in some fun, referring to a hypothetical ‘arbitration rat’ who seeks to avoid arbitration proceedings, and with Associate Justice Stephen Breyer detailing how that ‘ratitude’ might manifest itself…. During the hearing, after Breyer introduced the ‘rat’, Chief Justice John Roberts followed suit and also articulated the difficulties of navigating through the various applicable, but contradicting jurisdictional rules. ‘So you could call them an arbitration rat or a judicial lion, I suppose,’ Roberts told Geyser, prompting laughter.”

Our commentary: *Although a lopsided decision seems unlikely, our money is on the Respondents. **The audio transcript and recording were posted later that day. We recommend the Oyez recording, which highlights the corresponding part of the transcript along with the audio, and a photo of the Justice speaking. ***Only the jurisdictional issue was before the Fifth Circuit, “not in any instance, the merits of the confirmation of the FINRA arbitration dismissal award.”

2022: With the Decks Cleared, SCOTUS Takes on Another Arbitration-centric Case

Having just heard argument in this term’s only arbitration-related case, and with no other such cases remaining on the “Certiorari granted” docket, the Court on November 15 agreed to review Morgan v. Sundance Inc., 992 F.3d 711 (8th Cir. Mar. 30, 2021).

Case Below: Waiver of Arbitration Rights

Cases involving whether a party has waived its right to compel arbitration typically involve whether that party participated in litigation and waited too long, thereby injuring the other party. The basic elements are whether the offending party: 1) had knowledge of its right to demand arbitration; 2) acted inconsistently with that right; and 3) thereby prejudiced the other party. The case below focused on the third element, with the Eighth Circuit majority holding that Sundance did not wait so long to press its arbitration rights such that its conduct prejudiced Morgan:

“The district court found Morgan was prejudiced by having to respond to Sundance’s motion to dismiss over the eight-month span of litigation. We disagree. Four months of the delay entailed the parties waiting for disposition of Sundance’s motion to dismiss. No discovery was conducted. And, the record lacks any evidence that Morgan would have to duplicate her efforts during arbitration. Instead, most of Morgan’s work focused on the quasi-jurisdictional issue, not the merits of the case. For these reasons, we hold Morgan was not prejudiced by Sundance’s litigation strategy.[]In the absence of a showing of prejudice to Morgan, we conclude Sundance did not waive its contractual right to invoke arbitration….”

Judge Steven M. Colloton dissented:

“Morgan showed sufficient prejudice to support the district court’s determination of waiver. We concluded in a prior decision that nearly identical conduct by a defendant — waiting eight months to mention arbitration while forcing a plaintiff to defend against a motion to transfer venue to another judicial district — supported a finding of prejudice. Sundance also led Morgan to waste time and money engaging in a fruitless mediation based on an inaccurate premise that the case would be litigated in federal court. These impositions on the plaintiff are enough to satisfy the modest prejudice requirement employed in this circuit” (citation omitted).

A Question of Prejudice

The question presented in the August 27 Petition for Certiorari in Morgan v. Sundance, Inc., No. 21-328, is: “Does the arbitration-specific requirement that the proponent of a contractual waiver defense prove prejudice violate this Court’s instruction that lower courts must ‘place arbitration agreements on an equal footing with other contracts?’ [in] AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011).” The Petition notes that there is a multi-faceted split on the issue:

“This Court should grant certiorari to resolve a longstanding circuit split on the question whether a party asserting waiver of the right to arbitrate through inconsistent litigation conduct must prove prejudice, and if so, how much. This question not only divides the federal courts of appeals, but divides federal courts from geographically co-located state courts of last resort …”

Our commentary: *The case is listed on page 1 of the Order List. **The Court also granted the “Motion of Law Professors” for leave to file an Amicus Brief. ***Oral argument is not yet scheduled; we’ll track it. ****The November 15 CPR Blog covers the case in U.S. Supreme Court Adds an Arbitration Issue: Is Proof of Prejudice Needed to Defeat a Motion to Compel?

2022: Servotronics Redux, as SCOTUS Again Decides to Review

Foreign Arbitration Discovery.

The Supreme Court on December 10 granted Certiorari in two cases that will resolve a split on the extent of discovery available in foreign arbitrations. The Court in a Miscellaneous Order granted Certiorari Petitions in two cases, ZF Automotive US, Inc. v. Luxshare, Ltd.No. 21-401, and AlixPartners LLP v. The Fund for Protection of Investors’ Rights in Foreign States, No. 21-518, and ordered them consolidated. The Court also granted the Motion of the International Institute for Conflict Prevention & Resolution, Inc. (“CPR”) for leave to file an Amicus Brief.

A Little Review

We reported in SAA 2021-34 (Sep. 9) that, just a month out from the scheduled October 5 oral argument, Servotronics notified the Supreme Court that it was dismissing its Petition for Certiorari in Servotronics, Inc. v. Rolls-Royce PLC and the Boeing Company, No. 20-794. As reported in SAA 2021-11 (Mar. 25), and discussed above, the Court on March 22 had agreed to resolve a major Circuit Court split on whether 28 U.S.C. § 1782 provides for discovery in aid of private, foreign, commercial arbitration or only covers cases administered by governmental arbitration forums. But does section 1782 cover foreign, private arbitration proceedings? The answer is “Yes or No,” depending on the Circuit.

Two More Bites at the Apple: ZF Automotive …

As reported in SAA 2021-41 (Nov. 4), a September 10 Petition for Certiorari was filed in ZF Automotive. The question presented: “is substantively identical to the question presented in Servotronics, Inc. v. Rolls-Royce PLC, No. 20-794 (oral argument originally scheduled for Oct. 5, 2021; case removed from oral argument calendar Sept. 8, 2021): Whether 28 U.S.C. § 1782(a), which permits litigants to invoke the authority of United States courts to render assistance in gathering evidence for use in ‘a foreign or international tribunal,’ encompasses private commercial arbitral tribunals, as the U.S. Courts of Appeals for the Fourth and Sixth Circuits have held, or excludes such tribunals, as the U.S. Courts of Appeals for the Second, Fifth, and Seventh Circuits have held.”

… And AlixPartners

The “Quick Takes” in SAA 2021-28 (Jul. 29) covered Application of the Fund for the Protection of Investor Rights v. AlixPartners, No. 20-2653 (2nd Cir. Jul. 15, 2021), where the Court held: “… because the arbitration is between an investor and foreign State party to a bilateral investment treaty [between Lithuania and the Russian Federation], and because the arbitration takes place before an arbitral panel established by that same treaty, we hold that this arbitration is a ‘proceeding in a foreign or international tribunal.’” As reported in SAA 2021-43 (Nov. 18), AlixPartners on October 5 filed a Petition for Certiorari stating: “Whereas the arbitration in Servotronics was between two private parties, the arbitration here is between a private party and a foreign state — an application of Section 1782 upon which the United States has expressed ‘particular concern.’ The question presented is: Whether an ad hoc arbitration to resolve a commercial dispute between two parties is a ‘foreign or international tribunal’ under 28 U.S.C. § 1782(a) where the arbitral panel does not exercise any governmental or quasi-governmental authority.”

More on the Relisting Question

Recall that we noted in SAA 2021-56 (Dec. 9) that these cases had been set for consideration at the Court’s December 3 conference, but both cases had been relisted for consideration at the December 10 conference. At that time, we said: “Hard to discern what happened, and conjecture is pointless.” For those readers like us who can’t let it go, SCOTUSBlog offers some answers to the question: “It is almost impossible to know exactly what is happening when a particular case is relisted, but a few different things could be going on. One justice could be trying to pick up a fourth vote to grant review, one or more justices may want to look more closely at the case, a justice could be writing an opinion about the court’s decision to deny review, or the court could be writing an opinion to summarily reverse (that is, without briefing or oral argument on the merits) the decision below. In 2014, the court appears to have adopted a general practice of granting review only after it has relisted a case at least once; although we don’t know for sure, presumably the court uses the extra time resulting from a relist to make sure that the case is a suitable one for its review.”

Our commentary: *The cases are listed on page 1 of the Order. One hour is allotted for oral argument. The controlling case number will be 21-401. **Not to brag, but we called this one. Our past editorial comment was: “We think at least one of these cases has a good shot, since SCOTUS obviously has an interest in this issue.” ***Kudos to CPR, which on November 5 filed a Motion for leave to file an Amicus brief stating: “CPR takes no position on the merits of the question presented by the petition of AlixPartners, LLP for a writ of certiorari. Rather, CPR submits this amicus brief solely to support the petitioner’s request that the Court take up the case and grant certiorari to resolve definitively and promptly the interpretation of the Phrase ‘foreign or international tribunal’ in Section 1782.”

2022: And Then There Were Four: SCOTUS Takes on Fourth Arbitration-Related Case in a Month

In about a month, the Supreme Court has gone from no arbitration-centric cases set for review to four (five if you double count a consolidated case). Just a month ago, we were reporting in SAA 2021-43 (Nov. 18) that, having just heard argument in this Term’s only arbitration-related case then on the oral argument docket (Badgerow v. WaltersNo. 20-1143), SCOTUS on November 15 agreed to review Morgan v. Sundance Inc., No. 21-328. Then, as reported directly above, the Court in a December 10 Miscellaneous Order granted Certiorari in two cases, ZF Automotive US, Inc. v. Luxshare, Ltd., No. 21-401, and AlixPartners LLP v. The Fund for Protection of Investors’ Rights in Foreign States, No. 21-518, and immediately consolidated them. The same Miscellaneous Order also grants Certiorari in Southwest Airlines Co. v. Saxon, No. 21-309 (ed: to be honest, we missed this case at both the District Court and Court of Appeals levels). And, just as we went to press, the Court issued a December 15 Miscellaneous Order granting Certiorari in Viking River Cruises, Inc. v. Moriana, No. 20-1573. We discuss that latter two cases below.

Southwest: Split on Transportation Worker Definition

Federal Arbitration Act (“FAA”) section 1 exempts from the Act: “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” In New Prime, Inc. v. Oliveira, 139 S. Ct. 532 (2019), SCOTUS held unanimously that the FAA exempts from coverage independent contractors – i.e., not just “employees” – engaged in interstate commerce. As we have reported many times, though, there is a clear Circuit Court split on whether the section 1 exemption embraces only workers actually moving goods or people in interstate commerce (Fifth, Seventh, and Eleventh Circuits) or is to be construed more broadly to cover those who are part of the “flow” or “stream” of interstate commerce (First and Ninth Circuits). See, for example, Waithaka v., Inc., 966 F.3d (1st Cir. 2020), Cert. den. (Jun. 21, 2021), reconsideration den. (Aug. 2, 2021). Compare to then-Judge Coney Barrett’s Opinion in Wallace v. Grubhub Holdings, Inc., 970 F.3d 798 (7th Cir. 2020), covered in SAA 2020-31 (Aug. 19): “But to fall within the exemption, the workers must be connected not simply to the goods, but to the act of moving those goods across state or national borders.”

Southwest: Case Below

This is precisely the question presented in the August 23 Petition in Southwest Airlines: “Whether workers who load or unload goods from vehicles that travel in interstate commerce, but do not physically transport such goods themselves, are interstate ‘transportation workers’ exempt from the Federal Arbitration Act.” In the case below, Saxon v. Southwest Airlines Co., 993 F.3d 492 (7th Cir. Mar. 31, 2021), motion to stay mandate den. (Apr. 23, 2021), a unanimous Seventh Circuit held: “Latrice Saxon is a ramp supervisor who manages and assists workers loading and unloading airplane cargo for Southwest Airlines Company. After she brought a lawsuit against her employer, Southwest invoked the Arbitration Act. Saxon asserted that she was an exempt transportation worker, but the district court found her work too removed from interstate commerce and dismissed the case.[] We reverse. The act of loading cargo onto a vehicle to be transported interstate is itself commerce, as that term was understood at the time of the Arbitration Act’s enactment in 1925. Airplane cargo loaders, as a class, are engaged in that commerce, in much the way that seamen and railroad employees were, and Saxon and the ramp supervisors are members of that class. It therefore follows that they are transportation workers whose contracts of employment are exempted from the Arbitration Act.”

Viking River: California’s PAGA in the Spotlight

We have reported many times on Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348, 327 P.3d 129 (Calif. 2014), cert. den., 135 S.Ct. 1155 (2015), where a divided 4-3 California Supreme Court – complete with partial concurrences and dissents – held that an employee could pursue claims against his employer under the California Private Attorneys General Act (“PAGA”), despite the existence of an arbitration agreement waiving such claims (see, for example, SAA 2015-01 and SAAs 2014-41 & -24).

No SCOTUS Review of Possible FAA Preemption …

But did the U.S. Supreme Court’s subsequent decision in Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018), holding that class or collective action waivers were enforceable under the Federal Arbitration Act, implicitly overrule Iskanian? The Supreme Court has up to now eschewed the opportunity to review whether PAGA is preempted by the FAA. For example, as reported in SAA 2021-49 (Oct. 21) the Court on October 12 declined to review Campbell v. DoorDash, Inc., No. A159296 (Cal. Ct. App. 2020), pet. for review den., No. S266497 (Cal. Mar. 10, 2021), where that Court held: “Iskanian is good law and California courts remain bound by it.” The August 9 Petition for Certiorari in DoorDash, Inc. v. CampbellNo. 21-220, had presented this question: “Whether agreements calling for individual arbitration are enforceable under the Federal Arbitration Act with respect to claims asserted under California’s Private Attorneys General Act, Cal. Lab. Code § 2698 et seq.”

… Until Now

The question presented in the granted May 10 Petition in Viking River is: “Whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under PAGA.” Petitioners sought review of Moriana v. Viking River Cruises, Inc., No. B297327 (Cal. Ct. App. 2020), pet. for review den., No. S265257 (Cal. 2020), where the Court of Appeal held: “…. Epic’s warning about impermissible devices to get around otherwise valid agreements to individually arbitrate claims notwithstanding, Iskanian remains good law. We therefore reject Viking’s characterization of PAGA claims as a transparent device to preclude individualized arbitration proceedings and follow Iskanian, which instead viewed predispute PAGA waivers precluding PAGA actions in any forum as attempts to exempt employers from responsibility for violations of the Labor Code” (footnote omitted).

… And Another Case is Still Pending

As reported in SAA 2021-37 (Oct. 7), still pending is a September 21 Petition for Certiorari seeking review of Gregg v. Uber Technologies, Inc., No. B302925 (Cal. Ct. App. 2 Apr. 21, 2021), petition for review denied, No. S269000 (Cal. June 30, 2021). The issue presented there is: “Whether agreements calling for individual arbitration are enforceable under the Federal Arbitration Act with respect to claims asserted under the California Labor Code Private Attorneys General Act.” The Petition relies heavily on intervening SCOTUS rulings, including Epic Systems. See Uber Technologies, Inc. v. Gregg, No. 21-453.

Our commentary: *Wow. An arbitration quartet is in the offing – a first. Up until now, the record was a trilogy of arbitration related cases in a single Term. **Notice that SCOTUS previously denied Cert. in Waithaka? We think the question presented in that case – whether the FAA section 1 exemption for classes of workers engaged in foreign or interstate commerce applied to Amazon “Last Mile” drivers – may have been too narrow, while that in Southwest is broader. ***Campbell is listed on page 5 of the October 12 Order List. ****There have been other recent California Court of Appeal cases to the same effect as Campbell: see Winns v. Postmates Inc., No. A155717 (Calif. Ct. App. Dist. 1 Jul. 20, 2021)Herrera v. Doctors Medical Center of Modesto, Inc., No. F080963 (Calif. Ct. App. 5 Aug. 5, 2021); and Williams v. RGIS, LLC, No. C091253 (Calif. Ct. App. 3 Oct. 18, 2021). *****As we’ve said before, stating the obvious, the Supreme Court’s composition has changed since SCOTUS declined to review the original Iskanian holding in 2015. ******We’re betting that Cert. will be granted in Gregg, and the case consolidated with Viking River.)


The last time SCOTUS agreed to hear several cases involving arbitration was the 2018-19 Term, when the Court accepted for review: Henry Schein, Inc. v. Archer & White Sales, Inc., No. 17-1272; Lamps Plus v. Varela, No. 17-988; and New Prime, Inc. v. Oliveira, No. 17-340. SCOTUS hadn’t before heard three arbitration cases during the same Term since 1960, when the Court decided three landmark arbitration cases involving the United Steelworkers Union. These decisions were later dubbed the “Steelworkers Trilogy.” So, a busy 2022 arbitration-wise is indeed on tap at SCOTUS. Hopefully Ms. Litella will remain in the wings next year!


*George H. Friedman, Publisher and Editor-in-Chief of the online Securities Arbitration Alert and an ADR consultant, retired in 2013 as FINRA’s Executive Vice President and Director of Arbitration, a position he held from 1998. He also serves as non-executive Chairman of the Board of Directors of Arbitration Resolution Services. In his extensive career, he previously held a variety of positions of responsibility at the American Arbitration Association, most recently as Senior Vice President.He isan Adjunct Professor of Law at Fordham Law School, and is also a member of the AAA’s national roster of arbitrators. He holds a B.A. from Queens College, a J.D. from Rutgers Law School, and is a Certified Regulatory and Compliance Professional. He is admitted to practice in New Jersey and New York, several U.S. District Courts, and the United States Supreme Court.


[1] See Henry Schein, Inc. v. Archer and White Sales, Inc., No. 19-963 (Henry Schein II), discussed infra.

[2] Id.

[3] See Servotronics, Inc. v. Rolls-Royce PLC and the Boeing Company, No. 20-794, discussed infra.

[4] Badgerow v. Walters, No. 20-1143, discussed infra.

[5] See: 1) Morgan v. Sundance, Inc., No. 21-328; 2) Southwest Airlines Co. v. Saxon, No. 21-309; Viking River Cruises, Inc. v. Moriana, No. 20-1573; and ZF Automotive US, Inc. v. Luxshare, Ltd., No. 21-401, and AlixPartners LLP v. The Fund for Protection of Investors’ Rights in Foreign States, No. 21-518 (ordered consolidated), all discussed infra.

[6] We’ve made changes required by intervening events.

[7] Footnote 6 explains: “The parties disagree as to whether the plaintiff could have brought the application to vacate in federal court rather than in state court. As we discussed, it is undisputed that the FAA does not create subject matter jurisdiction in federal courts. Therefore, a federal court must have an independent basis of subject matter jurisdiction over an FAA claim. See, e.g., Vaden v. Discover Bank, supra, 556 U.S. 59; Hall Street Associates, LLC v. Mattel, Inc., supra, 552 U.S. 581–82. An independent basis of jurisdiction may be established, among other ways, through (1) diversity of citizenship; see, e.g., Equitas Disability Advocates, LLC v. Daley, Debofsky & Bryant, P.C., supra, 177 F. Supp. 3d 204; Kiewit/Atkinson/Kenny v. International Brotherhood of Electrical Workers, Local 103, AFL-CIO, 43 F. Supp. 2d 132, 135 (D. Mass. 1999); or (2) federal question jurisdiction over the underlying dispute pursuant to 28 U.S.C. § 1331. See, e.g., Vaden v. Discover Bank, supra, 59–60; see also, e.g., id., 62 (approving ‘look through’ approach to determine whether federal court has federal question jurisdiction under FAA).”


George Friedman

George H. Friedman is the publisher and Editor-in-Chief of the Securities Arbitration Alert, a weekly online publication covering the latest developments in financial services arbitration and mediation. He is also the principal of George H. Friedman Consulting, LLC, providing expert advice on arbitration and mediation in general and the FINRA…

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