Federal Jurisdiction on Motion to Confirm or Vacate

The United States Court of Appeals for the Fifth Circuit recently issued a salient reminder regarding the precise contours of federal subject matter jurisdiction in actions to vacate arbitration awards.  In Wheatfall v. HEB Grocery Company, L.P., No. 24-20257 (5th Cir. June 18, 2025), the court unanimously vacated a district court's dismissal, holding that the lower court lacked subject matter jurisdiction to hear a petition to vacate an arbitration award, despite the underlying dispute's federal character.  This decision underscores the continuing impact of Badgerow v. Walters, 596 U.S. 1 (2022), and provides critical guidance for practitioners navigating the interplay between the Federal Arbitration Act (FAA) and federal question jurisdiction.

Factual and Procedural Background

The appellant, Sharon Wheatfall, initiated an arbitration against HEB Grocery Company, L.P., alleging employment discrimination under the Americans with Disabilities Act (ADA) and the Texas Labor Code.  The arbitrator ultimately dismissed Wheatfall's claims as time-barred.

Subsequently, Wheatfall filed a petition in Texas state court seeking to vacate the arbitration award.  HEB removed the case to federal district court, asserting federal question jurisdiction on the basis that Wheatfall's original claims (under the ADA) arose under federal law.  The district court accepted jurisdiction and, finding a procedural deficiency in Wheatfall's service of process, dismissed the case.  Wheatfall appealed.

The Fifth Circuit's Jurisdictional Analysis: A Reinforcement of Badgerow

The Fifth Circuit's opinion, issued on June 18, 2025, meticulously dissected the jurisdictional basis for the district court's action.  Central to its analysis was the Supreme Court's pronouncement in Badgerow v. Walters.  In Badgerow, the Supreme Court clarified that the "look through" approach to determining federal jurisdiction, which examines the nature of the underlying dispute, applies only to motions to compel arbitration under FAA Sections 3 and 4. Critically, this "look through" exception does not extend to petitions to confirm or vacate arbitration awards under FAA Sections 9 and 10.

Applying Badgerow, the Fifth Circuit concluded that the district court erred in asserting federal question jurisdiction.  Wheatfall's state-court petition sought to vacate an arbitration award, thereby falling squarely within the ambit of FAA Section 10.  For such an action, federal question jurisdiction cannot be predicated on the federal nature of the original, underlying dispute that led to arbitration.  Instead, the petition to vacate the award must, on its face, present a federal question or establish an independent basis for federal jurisdiction, such as diversity of citizenship.

The court found no such independent basis.  Wheatfall's petition to vacate invoked grounds typically associated with the FAA, such as arbitrator partiality or exceeding powers, none of which, standing alone, generate a federal question.  The Fifth Circuit also reiterated its prior precedent that "manifest disregard of the law" no longer constitutes an independent ground for vacating an arbitration award within the circuit.

Consequently, the Fifth Circuit vacated the district court's judgment and remanded the case with instructions to remand it to state court for want of federal subject matter jurisdiction.

Implications for Practice

Wheatfall v. HEB Grocery Company, L.P. serves as a critical reminder of several fundamental principles for attorneys practicing in the realm of arbitration and federal jurisdiction:

1. Strict Construction of Federal Jurisdiction: The decision highlights the imperative of scrupulous attention to federal subject matter jurisdiction.  Federal courts are courts of limited jurisdiction, and their authority must be affirmatively established.  This principle is particularly acute in removal contexts, where the removing party bears the burden of proving jurisdiction.

2. The Enduring Impact of Badgerow: Practitioners must fully internalize the Badgerow distinction.  Motions to compel arbitration may permit a "look through" to an underlying federal question; petitions to confirm or vacate awards generally do not.  This distinction fundamentally alters the calculus for determining the appropriate forum for post-arbitration award litigation.

3. No Implied Federal Question from FAA: The FAA itself does not, by its own force, create federal question jurisdiction.  Absent an independent federal question presented by the petition to vacate or confirm, or a basis in diversity jurisdiction, such actions belong in state court.

In sum, Wheatfall v. HEB Grocery Company, L.P. reaffirms the carefully delineated boundaries of federal jurisdiction concerning arbitration awards.  Legal professionals must exercise precise jurisdictional prudence to avoid procedural missteps and ensure that their clients' post-arbitration remedies are pursued in the proper forum.  This decision reinforces that the path to vacating an award must itself be federally viable, independent of the genesis of the underlying dispute.