[25-83] Jules v. Andre Balazs Properties

Mr. Chief Justice and may it please the court.

“In Badgero vs. Walters, this court held that federal courts lack jurisdiction over”

applications under section 9 and 10 of the Federal Arbitration Act unless an independent jurisdictional basis appears on the face of the application. In this case, the courts should hold that Badgero's rule applies to all section 9 and 10 applications, regardless of whether a pre-existing suit is on file. Nothing in the FAA distinguishes between those section 9 and 10 applications that are associated with a pre-existing suit and those that are not. Moreover, section 8

of the FAA contains explicit jurisdictional anchor language that sections 9 and 10 lack. The court should

infer that this textual disparity is intentional, much as the court relied on a similar

inference in Badgero. The court should resolve this case based on the text of the FAA rather than based on section 1367's related to standard. But if the court reaches that issue, it should hold that there is no common nucleus of operative fact between the underlying suit and the section 9 and 10 applications, which concern an arbitration award that did not exist at the time of the original Federal suit. As Badgero put it, the underlying dispute is not

now at issue. In Coconut, this court held that a settlement dispute is insufficiently related to the underlying dispute to warrant the exercise of angstlerage jurisdiction and the court should rely

on similar reasoning here in rejecting jurisdiction. I welcome the court's questions.

Was there a pending Federal case in Badgero? There is no pending Federal case in Badgero. You think that's a difference? That is indeed a factual distinction between this case and Badgero. Your client brings the Federal case. The court then enters a state so that the arbitration can take place. That's correct. The arbitration then is decided and the parties come back to that very same court to confirm the arbitral award. That's correct. And you're saying now that the jurisdiction

of the court that you invoke is inadequate to decide this. That's correct, Your Honor. There is, I'm sorry. Don't you think there's something odd about that? I don't think so. I think our position falls pretty clean. You think that that's consistent with Badgero? Yes, I think that the Badgero rule admittedly in the Badgero case. There was no original lawsuit in this case there is.

“And that's why this is a separate case from Badgero. But ultimately, I think the same rule should”

apply. So in Badgero there was no jurisdiction. That's so the court said that there's no independent jurisdiction. And here you have a pending case in which the district court stayed. It's suit, it's action pending the arbitration. And you say that's similar to Badgero where there was no case. No, it's a different case, Your Honor. But I think the same rule should still apply. Whether or not you start with the text of the FAA or whether you start with section 1367

as response would advocate. So maybe it's helpful if I start with the latter point before turning to what's the purpose of the stay. The purpose of the stay is for if the case comes back and is not resolved in arbitration. So if you look at the text of section three, section three says that if it turns out that the parties are in default of the arbitration, so the arbitration doesn't resolve the dispute, then the parties can come back to the federal court

and the federal court can adjudicate the dispute. Or in the spesary case, the court offered the example of the case where the arbitration breaks down. And so the case is stayed and the case might have to be reactivated in federal court. But here there's an arbitration war. The arbitration has wrapped up and so under rule A of the Federal Rules of Civil Procedure, the court should dismiss the federal suit. It's quite similar to the fact. So it doesn't rule a C1 say that an arbitration

has to be pled as an affirmative defense. So why aren't we thinking of it that way? Meaning

“rule A says in a litigation where an arbitration is sought and that's what the federal action here”

was. It was a federal suit. The defense was arbitration controls. Why isn't this just a motion to confirm that the claim can't go forward? So I think that this missile would be appropriate and because at the start of the lawsuit. No, but you're arguing something else. You're arguing that not dismissal is appropriate, but confirming the arbitration award. So it is final and settles the matter is not. Because that's what you're arguing. We're arguing that the court

doesn't have jurisdiction to confirm the award as opposed to dismiss the federal case because

will be sustained? Confirmed. The vast majority of arbitration awards are never subject to confirm

“or vacate proceedings. Well, but the point still remains, how does a court know that it's a defense”

to the action until it has decided that it's a valid award? No, because the award itself is the defense. It functions like a release. So if a plane defiles a lawsuit and the defense- Well, you can't claim an arbitration award that has been vacated, correct? That's correct. So what a court could do, so the court might not know if the arbitration award is going to be later subject to confirm or vacate proceedings in state court. That could take several years. And so what a

or would ordinarily do is dismiss the case theoretically if the award is vacated, they would typically re-arbitrate it. They wouldn't necessarily go back to the federal district court. In it, I'm sorry

you're on that yet. And then no, Council, I'm having trouble understanding your lawsuit because I thought

to spit a serene answer to it already. And spit serene what we said went was where a court does have proper jurisdiction over a section 9 or 10 application in a pre-existing lawsuit. And there was under section 3, a pre-existing federal claim so they had proper jurisdiction. The court that stayed the action can and should for efficiency's sake, adjudicate those applications as

“motions in the existing lawsuit. So this is a motion in an existing lawsuit. That's what”

section 9 and 10 are. Over a claim that had jurisdiction aged discrimination, why isn't this just a motion to confirm that? Well, you're on and so in, in Badgero the court addressed the language in section 6 about motions that you're on or just referred to. The court said that it's not a motion it says that the court's going to treat the application as a motion for efficiency's sake. So I don't think that the language in section 6 carries the day. But what Badgero also said is said

something like jurisdiction to decide a case includes jurisdiction to decide a motion in a case. And isn't that what we have here? And Badgero distinguished that from using the look through method, it's just saying if you have jurisdiction over a case, you have jurisdiction over the motions in the case. That seems pretty, you know, just a truism and isn't that what's involved here? I don't think so because the court has jurisdiction to decide motions are just not necessarily

every single motion that would result in the court entering a judgment that exceeds its jurisdiction. Because the judgment that respondents are asked in the court to enter is not merely a judgment of dismissal which of course the court can do. It's essentially transforming the arbitration award into a judgment which would allow respondents to enlist the court to execute the judgment again. Well, so it explains that what category of motions should not be included in the statement of

if you have jurisdiction over a case, you have jurisdiction over the motions in a case. What category of motions is excluded from that? Motion that would cause the court to enter a judgment that the court doesn't have jurisdiction to enter because in this case the court undoubtedly had jurisdiction to dismiss petitioner suit based on the fact that an arbitration award existed. What the court didn't have jurisdiction to do

is enter an award in what was essentially a breach of contract suit that was beyond the court's jurisdiction. So absolutely the court could have dismissed the claim, but we think there's a difference between dismissal of a claim and transforming what is fundamentally a contract dispute into a judgment when the court lacks jurisdiction over that case.

“But the question that's begging the question I think because isn't the purpose of section nine”

to give the court the ability to do that to say that that's exactly what is supposed to happen? I mean, I've been a little confused by some of the representations that you made, you suggested that the vast number of arbitrations are not subject to quote-unquote confirm and vacate proceedings. And I guess to the extent that you're suggesting that there won't be a dispute about whether or not the award is to be confirmed. That's true. But in most cases, when you have an arbitration,

isn't there a circumstance in which some court, whether the federal court or the state court,

is asked to convert the award into a judgment so that it can ultimately be enforced?

No, that's actually quite rare, Your Honor. The vast majority of arbitration awards do not result in subsequent judicial proceedings because it's so hard to vacate an arbitration award that in almost every case, the parties adhere to the award. Usually when the defendant wins the arbitration, usually the defendant doesn't come to court to confirm because the arbitration award itself generally has rest you'd have better.

All right, but in a situation, this goes back to Justice Thomas's initial question in which we already have a pre-existing lawsuit related to these parties related to an underlying dispute

Congress set these rules up to insist that another court be involved in confirming that award

“so as to close out the initial case. I mean that the circumstances, you would, I think,”

have to agree that when we have a existing lawsuit that was stayed for the purpose of arbitration, it can't be one of the situations in which the arbitration can happen and everybody goes off into the sunset and the original court doesn't know what happened. So there has to be some closure to this and I think under your rule, the closure you're positing comes from another court

confirming the award and that just seems very odd. I don't think so, Your Honor. So first of all,

I think that the closure happens when the award occurs and the parties come back to the federal court and say, "Look, we were able to resolve our dispute in arbitration. There's no more pending claims. There's no partial subset of claims that were stayed. The entire case is over." But you do agree they have to come back to the federal court and get to the federal court. All right, but somehow you're saying that having exercised jurisdiction over this matter

“from day one at your request, just as Thomas reminds us, the only way it gets resolved from the”

standpoint of wrapping this up is if the parties are just coming back to notify that another court has been engaged to do some sort of confirmation. Are you saying the confirmation doesn't

have to happen at all? It doesn't have to happen at all. There's a four-year statute of limitations

at least in California on the confirmation proceedings. The court's not just going to sit there for four years to wait if to see whether someone's right. But if the parties want it to happen, you're saying they cannot ask the court that took original jurisdiction over it to be the one to confirm. That's correct. They wish to go to the state court and the court is free to stay the dismissal of the case if it knows that there's an ongoing confirmation or vacator proceedings

in the court. But all the court cannot do is transform what is fundamentally breach of contracts into a judgment. Mr. Unicous, you why? Wouldn't there be ancillary, just ancillary enforcement jurisdiction to be specific? Of the kind that the court talked about in Cocona. It seems to me that if the parties come back, Cocona envisioned a situation in which the district court could under 41, make it part of the terms of the settlement agreement that the district court could

retain authority to enforce the agreement. And that that wouldn't have been a problem. There would be no separate basis of jurisdiction there, right? It's a distinct action. It's a contract action in essence. That's distinct from the underlying suit. Wouldn't be 1331 or 1332, for example.

Why couldn't something like that theory apply here? So first of all, that's not responded to

argument and that's not what the court did in this case. The section three ordered did not purport to retain jurisdiction to confirm a follow-up arbitration award. It just said, "For soon, to section three, that the case will be stayed until arbitration has been had." I also don't think a court could do that. I don't think a court could circumvent the limitations in section three by entering an order that's broader than section three, especially given that

you have section eight, which explicitly authorizes the retention of jurisdiction in maritime cases, and section nine does not have similar language. I also think that a court doesn't have unlimited authority

“to retain jurisdiction under Rule 41. I think the analysis is somewhat similar to the analysis”

in cases involving consent degrees. In certain cases, a court can take a settlement and embody it in a judgment, but the court can just rub or stamp it. The court has to make an independent assessment of things like whether or not the settlement advances the objectives underlying the statute, and only then can it really give the settlement the imprimiter of the courts authority. And so we think that a similar analysis would have to happen here except if it can't,

because in an arbitration award, the court really isn't considering on its own the viability of the award, it's just assessing whether the arbitrator exceeded its powers. So in a nutshell, I don't think the court did that in the section three stay. I don't think the court could have done that either in the section three stay. When it comes back, if the case were a federal question case to begin with, and it comes back, there's no federal question, therefore it goes to

state court, correct? So what happens is the court? Yes, so there was a federal question at the outset. Right. And so the arbitration award functions like a release or residue to cut it. It's a defense saying this case has been resolved in a different form. Got. So the confirm or vacate, though, goes to state court in those cases. Yes. If you come back and the original jurisdiction was based on diversity, if citizenship, you still have the diversity when you come back. Correct. The face of the application

and then you go to federal court. You can, because there's an independent jurisdiction, which just strikes me as odd that if the original case to Justice Thomas's question was based on federal question jurisdiction, you'd end up in state court to confirm or vacate whereas if the original jurisdiction was based on diversity and that still exists at the end, you would end up in federal court. It seems like an odd result. I don't think it's so odd because the follow-up dispute

claims. That's been resolved by the arbitrator. All the parties are addressed. Still pending federal case based on federal question jurisdiction. That's true, but once the arbitration is over and there is an arbitration award and we're at the stage where the court is considering a section nine or ten application, the issue is not whether or not the federal claims have merit or not. That's already been resolved by the arbitrator. The issue is whether the arbitrator committed fraud,

exceeded its powers, things that have nothing to do with the federal claims and badger us insight

“from our perspective as if that adpor is a contractual dispute. What's your excuse?”

Sorry, please. Good. That was my question too. I'm struggling to come up with a reason why Congress in the federal arbitration act might have wanted diversity cases to remain in federal court for confirmation proceedings, but federal question cases to go to state court. You're very clever fellow. What might you imagine Congress policy judgment been in that for that? I think it's a similar policy judgment that underlay badger out and I do recognize that in badger

there is no pre-existing federal suit, but nonetheless, in badger out, the underlying question was federal. The question was whether the arbitrator's resolution of federal claims complied with the federal arbitration act and the court said that at court that's a contract dispute and courts only have jurisdiction over contract disputes when the requirements

for diversity of citizenship are satisfied. And so that's ultimately the distinction.

And as a policy matter, what's happening in this case is ultimately the court is entering a judgment. The reason people typically seek to confirm arbitration awards is because they want

“a judgment they can execute on. That's why most confirmed rebaked proceedings are when the”

plaintiff wins and they have a judgment and they want to use the authority of the court. And so, you know, state courts are very good at entering judgments and enforcing them. That's why Congress made a different decision in section eight cases where the court sees a ship because in that case it makes perfect sense for the federal court enter a judgment because it's already in the has possession of the ship. So I think that's a sensible

reason Congress would have said that we want the federal court to enter the judgment. Thank you. Thank you. I think justice will have more. Am I right, Mr. Yuna Kowsky, that you are understanding of where section five and seven would continue to apply truly only in these diversity suits again? I think so, but I think there's a argument possibly the other way that wouldn't apply in this case.

So I think the correct answer, like my ultimate bottom line position is that yes, there has to be an independent jurisdictional basis in sections five and seven. You know, section four has looked through jurisdiction. Section eight has the anchor and if such language isn't present there needs to be an independent

“jurisdictional basis. Now, I think there's a reasonable contrary argument that wouldn't apply here”

under that the second head as coconut puts it of ancillary jurisdiction. There is an argument

theoretically available that if the court compels arbitration, but there's no arbitrator, appointing an arbitrator as a way of enforcing the order of compelling arbitration. So I think a court could reach that conclusion, which wouldn't apply here because the arbitration is over, like the order compelling arbitration has been carried out. So I think the court can reserve this question until the next time it has the opportunity to decide whether a particular

type of-- >> Here the court did not arbitration because it thought it didn't have the power to. >> That's correct. >> It stayed. But sorry. >> So during the year theory, your answer to Justice Cagan is, it doesn't have any-- >> No, but I think arguably even in a case where the court stays pending arbitration like this one, the premise of the state order is that the arbitration will happen, otherwise the arbitration will last forever. And so court, this is not my bottom line answer,

but I think a court could say that the court is in a sense enforcing the order staying arbitration. By appointing an arbitrator to make sure the arbitration happens. That's just a way a court might

avoid that result. But ultimately, I think that the FAA says what it says, the court, you know, Congress

included jurisdiction language. >> Thank you, Council. >> Yes. So no one-- >> Go ahead. >> No one, I think, dispute the court's jurisdiction to enter a consent decree. So why isn't a confirmation of an arbitral award analogists since both involve taking a private resolution and making it a judgment of the court? >> Because consent decrees require a degree of judicial involvement that doesn't exist when the court confirms an arbitration award. There's a rich body

of law from this court about when a court can enter a consent decree. And the court has made clear that the court has to undertake an independent assessment of considerations such as whether or not the terms of the consent decree advance the objectives underlying the law, additional complaint, and whether there's a sufficient nexus between the terms of the degree and the complaint. Obviously, there's a lot of discretion to the parties, but still precisely because it's a judgment

of the court, the court has to undertake an independent assessment at the terms. That doesn't really

to the arbitrator and sometimes even at the court's direction? >> I don't think so. When the court confirms an arbitration award, the court isn't independently assessing, for example, whether the arbitrators award furthers the goals of Title VII or the ADA or whatever federal statutory claims are being

advanced. The court isn't sort of taking a second look at the merits. All the court is doing is

assessing whether the arbitrator exceeded its authority under the arbitration agreement and engage in certain specified types of misconduct. So I think that the degree of judicial involvement under the Section 9 and 10 is much less than what this court has said is necessary to justify

“the court transforming a pure settlement into a consent decree. So that's why I don't think that”

analogy carries over. >> The second circuit in the district court, both thought that our statement court has made this simple because there we said we have however previously held at the court with the power to stay the action under Section 3 as the further power to confirm any ensuing arbitration award. So I know you're going to say that was out of context, but that statement on its own would resolve this, wouldn't it? >> On its own, that statement is favorable to respondents

and I'm going to say what you said I was going to say, which is that if you read that whole paragraph,

it's actually making a very different point, which I think ultimately supports our position,

which is that Congress wouldn't have intended the court's ability to decide a Section 9 or 10 application to turn on whether there was a pre-existing suit on file. So the question in court has heard was when a venue, whether venue existed only in the jurisdiction in which the arbitration occurred or was broader than that, and the proponent of narrow venue conceded in that case that if there was a Section 3 stay, that court could exercise jurisdiction over the Section 9

and 10 application, but argued for a different result if there was no Section 3 stay. >> Different question, section 10 in state court. Thoughts? >> Yeah, so I mean we view that Section 9 and 10 has joined at the hip, like Section 9 refers to confirming the award on last Thursday's Section. >> With the standard set forth in section 10. >> Oh, the court reserved that question in fact. >> Yeah, one of your thoughts. >> My thoughts are that it doesn't have to be exactly

identical to the federal standard, but if-- >> The staff have to be close. >> Pretty close.

Like if the court authorized-- >> Pretty close. >> Yeah, basically pretty close. I mean the court

has to address this. Look if the state court authorizes a novel review of an arbitration award. >> The state court theoretically could have very different standards than the arbitration awards thrown out, but then the new suit, again, back to Justice Thomas's first question, not the new suit. The suit comes back to federal court then after the state courts thrown out the arbitration award. >> So typically that's not a strange system. >> I don't think it would

come back to federal court. Typically what would happen is they would arbitrate the claim again. Like the effect of-- >> For instance, depends what the state court said in tossing the arbitration award, right? >> Well, not really, because if the federal court, if the case is arbitrable, then the state court says there's some defect in the arbitration proceeding, but the case is still arbitrable. You presumably go back and re-arbitrate. Theoretically, the parties, for

example, might stipulate that if the award is vacated, there's going to give up on arbitration. And then they could go back to federal court, either file a rule 60 motion, or the federal court could opt to wait to dismiss the case until the state courts proceedings are done,

“and it could be reactivated in federal court. >> Do states have pretty close standards?”

>> They do. I don't think that's-- I don't not aware of any state that diverges significantly, like there's like minor wording difference in sometimes. I think there'd be an obvious preemption problem, as I said, the state authorized a novel review of an arbitration award that would be contrary to section two substantive standard that arbitration agreements should be enforced. But if there's like very small distinctions or differences and things like the statues and the mutations,

I don't think that those types of differences would necessarily-- >> If another question also just about practice here, are most of these nine and ten applications brought as free-standing applications, or are they connected to a federal student in the way that this one was? >> I mean, I've read a lot of cases. I'm not sure of the empirics there. I think they're mostly brought independently, because usually there's not that much dispute over whether parties have

to arbitrate, but I've seen on both sides. I don't know what a specific number is. >> And is there a way in which your theory or Mr. Geiser's theory would push the practice in one direction or another in a way that either made sense or didn't make sense? >> So, yes, I appreciate the opportunity to say that. So, one of the concerns about response position is that it'll create an incentive every case to file a free-standing motion to

“compile arbitration or do something else that gets a federal court if you want to have that anchor.”

And this court remarked on this in both of Aden, and as well as Justice Breyer's descent in Vajro, Aden said it would be a totally artificial distinction between-- to distinguish between section nine and ten applications associated with pre-existing suits and not so associated.

anchor would create that totally artificial distinction.

“>> Thank you, Council. Justice Thomas, anything further?”

>> Justice Alito? >> Well, just out of curiosity, and do you think we should ask Claude to decide this case? >> [LAUGH] >> No, I adhere to the wise judgment of this court. [LAUGH]

>> Justice Sotomayor. >> You're suggesting to me that people who have stays in place, typically don't move that court

for motions to confirm the award that they usually go to somewhere else for that?

>> No, I'm suggesting that usually motions to confirm the award aren't necessary, especially when >> No, I understand that, but when there is a stay, what's the number of cases that go to another court? >> Well, there's a circuit conflict on this issue, and it's true that most of the courts have gone with response position, but most of those opinions are sort of not very, there's not a lot of reason. >> It doesn't matter, but the vast majority, I'm not aware of a section three stay case,

where the other side has come to a different court to confirm the award. >> Well, I mean, there's a circuit conflict on this issue. >> So, we're not permitted, that's what drew us to take this case, we're not permitted to, they can't. >> Right. >> But the point is, when they are permitted, they stay in the court with the stay is guaranteed, right? >> Right, it's likely that if the court rules for respondents, people don't want

to pay a second filing, so they'll pay a second.

>> You talk about your fear of people choosing litigation, choosing a venue, and not arbitrating, in order to get a venue? >> Yes. >> You have to be Houdini, and I'm not Houdini,

“you have to have magical powers to know whether you're going to win or lose, right?”

>> No, you can just bring a free standing section for motion to compel arbitration, which this court held you could do invading. >> Well, you didn't bring it. >> No. >> You had to have the foresight, you went to New York, a jurisdiction that had no connection to the dispute, where the dispute happened, and only because you've lost in New York, are you wanting to get out of New York? >> You're under the facts of this specific case,

don't present the practical concern. >> Well, but they present the practical concern that your fear requires a lot of predictions that parties are unlikely to engage in, because right now, most of them don't fight where they're going. They just do arbitration, and most of them don't fight awards. They accept them. >> Right, but the point is, look, if I'm advising a client, and the client says we're about to arbitrate, and we might need down the road to file an application

to confirm or vacate the award. And the client says, "I'd rather be in federal court." In every case, I would say, "Let's go to federal court." >> You know, I practice a lot of arbitration, well, I don't have to know a client who ever said that to me. I want to file it in this court, in case my, I win the award. I want to be in federal court. Thank you, Council. >> Discain, just as courts, it's discount, this is fair. >> This doesn't practical matter.

And under your theory, the stay is in place, you have the award, you want to confirm it.

“Do you have to go, do you file a motion to dismiss first in the district court before you go to the”

state court to try to get the arbitra award confirmed or vacated? >> No, I don't think you necessarily have to do that. I don't think there's a specific order of operations, because we view this as a non, like the arbitration award is a non-geristic, no, the fence akin to residue de Cata or release. I think the federal court could opt if it knows that there is an ongoing vacator confirmed proceeding, it could opt to just wait to dismiss the federal suit until those proceedings wrap up.

I don't think there's necessarily an order of operations that's required. >> Okay, thanks. >> Justice Jackson? >> Just take you back to the original questions that I think Justice Sotomayor and Justice Cagan asked about treatment of this as a motion. >> Yes. >> And section six, and I know that you referenced Badgero's statement that applications will get streamlined treatment as a motion. But Badgero cited a case called Hall Street Associates for that proposition. It quoted from Hall Street,

and that entire quote says, will get streamlined treatment as a motion, obviating the separate contract action that would usually be necessary to enforce or tinker with an arbitral award in court. So it appears at least as of Hall Street, the court understood the way that this worked, that the reason why you're treating this as a motion is that it would mean that you wouldn't need another contract action in another court in order to enforce the award.

language in Hall and Badgero differently. Section six does not distinguish between applications

in a pre-standing case and applications that are associated with the pre-existing case. It's just a single rule that covers all FAA applications that says that they'll be treated like a motion. And what the court said in Badgero was, what that means is not that it is a motion in a case in which there's jurisdiction. It'll just be treated like one. >> I understand, but in Hall it says the reason why it's treated as a motion is because it will obviate

the separate contract action. And what I'm confused about is how that could be consistent with your

“vision, which would require a separate contract. >> Well, I think there has to be jurisdiction over”

the contract action. If there isn't jurisdiction, the court shouldn't hear it. And if there is jurisdiction, then yes, the court can hear us a motion. And it would save a lot of time and effort. And Section 9 and 10 has been a very specific service of process provisions. And if the defendant is within the district, it's sort of easier to serve process than it is normally. I think Section 6 is similar with that streamlined procedure, but that doesn't mean there is

jurisdiction. It simply talks about what happens if there is jurisdiction. >> Thank you. >> Thank you, Council. Mr. Guiser? >> Thank you, Mr. Chief Justice and may it please the court. Consisting with decades of established doctrine, federal courts with pre-existing jurisdiction may resolve related claims in the same pending case. And nothing in the FAA or Badgero overrides the ordinary jurisdiction rules in this setting. A federal court already vested with original jurisdiction

has obvious power to hear FAA motions in that pending action. There is no need to ask if there is redundant basis for original jurisdiction because jurisdiction already exists. And any FAA motion of false squarely within the court's supplemental jurisdiction. This follows under the plain text of Title 28. It dehears to ordinary jurisdictional principles and it promotes the FAA's purpose and objectives, including facilitating the judiciary's supervisory rule and enforcing awards.

Petitioner's contrary approach contravene section 1367, it is at odds with Badgero, and it invites unworkable and untenable results. Respondents are simply asking to go back to the same court to enter judgment and dismiss petitioners' case. Without having to bifurcate these proceedings, file knee-state law litigation and endure a parallel federal appeal and chase down petitioner to

finally bring this case to a close. I welcome the court's questions. How exactly does 1367 apply

to a section 9 application? Where there are no parent claims? Where the claims in a section

“in an application under section 9? Well, I think it applies exactly under section 1367.”

You have an existing federal case, which has a original jurisdiction. The section 9 claim, if you look at it as a state law analog, as a contractual resolution of claim as Badgero did, then there would be supplemental jurisdiction over that state law claim. But it's not a state law claim. It isn't, which I think is all the more reason that there clearly is jurisdiction under 1367. 1367 is a limited-to-state law action. It's any claim that's so related to the original

claim that a form is a part of the same case or controversy. Well, but it's the same nucleus of operative facts. That's the test. How is this the same nucleus of operative fact? It seems to me completely two different sets of facts. I don't think so, Your Honor. It's a contractual resolution of the pending claim in the same case. Well, but Mr. Guys, what I mean, what the, I think Mr.

Unicaus case said this, what the, the second case is going to be about is something like

did the arbitrator commit fraud? It's going to have nothing to do with the actual claims in the case. You're not allowed to re-litigate those. You're not, but I don't think that matters. I don't think the test is, are the elements co-terminus. They are the claims so related, they form part of the same case or controversy. The arbitration award is an affirmative defense in the case. It's hard to see how something can be an affirmative defense to the claim in the case

“without being related to that case. Yeah, I think that that's just not 1367's focus. 1367”

says we're not going to look sort of as an abstract matter as to whether two claims were brought by the same parties or have certain features or connected with each other in a certain way other than one particular way, which is are the facts the same in these two claims. And the facts are not going to be the same in these two claims. Well, not all the facts, but you're still asking that this is a contractual resolution of the claim that is pending. It's like saying that the

judgment in a case is somewhat unrelated to the original claim that produced the judgment. I think it doesn't have to be the same. We, we absolutely, I agree with my friend that these claims will not overlap often. They have nothing to do with each other. Yeah, but common nucleus of operative facts and often they have nothing to do with each other.

a common nucleus of operative facts? Well, it doesn't, it's not that every fact has to share the same, you know, original atom. It's the easier a common nucleus of operative facts. It's a great, great grandchild of the original claim kind of tenuated on. I mean, what is it claim? I mean, you, you characterize it as an affirmative defense, not a counter claim, not a subsidiary

“claim. It doesn't seem like it's a claim. Well, it's, it's resolving, I think it is resolving”

the claim and the sense that it is, it is contractually, you know, disposing of the claim that it's been brought. Now, I will say that there's an entirely different way to look at this.

And part of the problem is that the FA is this court is acknowledged. It is unique. We have an

unusual situation where we have a federal right under federal statute that doesn't give rise to federal jurisdiction. And one analog is to say that the arbitration award is like a contractual settlement. So then confirming the award under the FA, even though it's a federal statute, is like resolving a state law contract dispute sort of like cocoon. Another analog, though, is just to say this is the federal directive on how court decides what to do when the claim that's

pending before it is now settled. So in the same way that Congress can provide rules of decision rule 23 to say if you're going to settle a class action, do you accept the settlement or not or attach conditions rule 41 or do you exactly with the court contemplating could have happened

in cocoon? And if that's the way you're looking at it, are you drawing on a original jurisdiction

then? Yes. I mean, that's not, that's not a supplemental jurisdiction idea. Then we don't need supplemental jurisdiction. So why we offered two competing paths and our brief that lead to effectively the same result? It's not ancillary jurisdiction just to clarify. You're saying that the original

“jurisdiction, the 1331 hook, is carrying you all the way through. I think that is one way I think”

in a sensible way to look at it. I think it's actually the way that the court has bird was contemplating, saying of course, once you have an original case and you've stated under section three, then of course you have jurisdiction to resolve what's a motion in the pending case. Just as just as Kagan just as Jackson pointed out to decide what to do with that contractual resolution of the single pending claim. You heard his response on Cortesburg, do you want to be your friend? You

want to react to that? Sure. So I think I think my friend is correct that Cortesburg was citing marine transit, which is a section eight case, but Cortesburg was not a section eight case. So the way I record this bird, and I think the way the Cortesburg had Cortesburg, is the court was importing this common sense intuitive proposition that happened to rise in the section eight context and putting it into the section nine through 11 contexts. And Cortesburg,

by the way, was a 2002 decision. It's been decades on the books. Cortes have constructed exactly the same way. It was only until the foresight. The court's have gone that way, right? Well, I think the court's of appeals. I think every court has gone that way. The only one that hasn't was the foresight, which with all due respect to the foresight, I think it's just profoundly misread badger.

“That's why I said most. Yeah. And in fact, when we say most, that is effectively as far as”

where the only court, that has gone the other way. I'm not aware of a single court before Badger. That's gone the other way. Mr. Guys, you've laid out two paths for us. One, the supplemental

jurisdiction path reliant on a statute that could never be accused of being overly precise.

The other would be the original jurisdiction path. I know what your answer is going to be, and it's going to be both great, your honor. But which one do you think it forced to choose the safer route and why? I mean, I really do think that they're both great and I knew that they would work. So any lawyer who doesn't say that isn't worth his salt, wish to win, and I understand that. But I think that, and it really is, it's half in one hand, half in the other. I would say that

you could say it's part of the original jurisdiction. That's just a very easy way to resolve it, we're in the same pending case, we're trying to dispose of the original client. If I read your brief, your brief is a supplemental jurisdiction brief. What we did make both arguments, and we did supplementary you made one in a couple of paragraphs, and you made the other in 50 pages. Well, we thought that might be a slight exaggeration. Well, no, we thought one was so obvious that we were trying to help the court if it decided to go the other way.

But I do think, though, that the reason why we were fronting 1367 is because of the analogy that the court drew in Badgero is that if you do think of this as a contractual resolution of the claim, and then you think of it as a dispute over that contractual settlement, then it does look like it's a little bit different. And I do think that they clearly rise out of the same ultimate common nucleus of operative fact,

controversy before the case, which is why if you looked at how courts typically dispose of these actions,

if they do retain jurisdiction as every court outside the forecircuit does, is that they say we're going to if we confirm the arbitration award, you enter judgment on the arbitration award and judgment on the underlying claim. You do it in one fell swoop, because it is effectively the same action. Can you respond to your friends comments of picking up on Justice Breyer's dissent and Badgero about incentives? I think that it's really hard to see how there's an incentive to follow an

accuracy for any number of reasons, including that courts, just parties aren't doing that. Again, courtesburg's language, and my friend can quibble whether it was overstated or improper, but courtesburg's language was unequivocal. If you imported that sentence into this decision, you could write a one-page opinion with a holding that says we've resolved this in courtesburg. That was in 2002, and there hasn't been a single identified case of someone filing an anchorsuit.

And I think it's for a similar reason to Justice Sotomayor pointed out. It's a very odd litigant who is choosing an original venue, not to litigate the case, and not to compel your-- not to compel arbitration, which is sometimes heavily contested,

“and that's what you'd be worried about. But thinking months or years down the road,”

what is this going to look like once we get that award? Do I want to confirm it or vacate it? And I'd rather be in federal court, so I'm going to file this preemptive federal action. And for some parties, not even an option. If you're a plaintiff, and you file the original lawsuit to litigate, then it's not even clear.

You might have-- first under Morgan versus Sundance. You might have forfeited your arbitration,

right? It's because you're trying to litigate. And if the defendant doesn't move to compel arbitration, you're then out of luck. You showed up there. It's your lawsuit. So I don't think that those incentives actually play out. And if you're concerned about the practical consequences, I would look at the practical consequences of where my friends' position would lead courts and litigants. It would create this odd situation where our party finishes in federal

court after this day. Now, apparently, they have to-- the federal court will either dismiss the case without knowing whether those claims are actually resolved or not, or they stay the case to wait, as my friend said, potentially several years for the post arbitration motion to play out in state court. Now, if the court-- if the federal court does dismiss the case,

now we have an even worse situation. Now, we have parallel proceedings. You have a federal appeal

potentially contesting the pre-arbitration motion to compel arbitration. Because you can't take that until you have a final judgment in federal court. And then you have the same litigants going to state court to challenge what happened in the arbitration itself. So instead of having one proceeding up and running, where parties have already paid a filing fee, they've found the defendant, they've effectuated service, they've maybe thought about venue, they thought about personal jurisdiction.

Everything is up and running where you can resolve it in one proceeding, take one appeal. It's nice, neat, and tidy. Instead, you have now competing litigation and separate tracks

“in different court systems. I think-- I don't think that's what Congress intended. I think that would”

create what court has burdened described as attributing to Congress a taste for the bizarre, and I do think that would be a bizarre situation. I agree with you that it seems more practical and tidy to do it the way that you just described. I'm wondering if you fronted the 1367 argument because in some ways it provides-- I mean, I still struggle with the common nucleus of operative fact and exactly where is the claim issues, but it provides the theoretical grounding.

When I'm trying to think about 1331, just by itself, trying to figure out what in 1331, if I'm blinded, I'm taking 1367 out of it, justifies the adjudication of the separate contract dispute. I think you would be exactly the same way that when a court invokes a rule 23e, it doesn't say do I have separate jurisdiction to decide whether to accept the settlement or not? Or whether in the rule 41 context, do I have jurisdiction to decide whether to retain

jurisdiction over the settlement to police that are to put it in the decree? I think it is part of the original power to dispose of the claim. And so, under that formulation, we're thinking of it more as a motion than a claim, which would be inconsistent with the 1367 theory, right? Debatable. I think a 1367 I think has been described as quite broad. I think it's

pretty capacious. I think it can cover lots of things, but luckily for us, section six, under the

“FA, it says treat these as motions. So if you want to treat the this is a motion covered by”

original jurisdiction, you have a very easy path to do it. It's consistent with court as bird. It's consistent with the fact that section six has treat this as a motion. I think it's even consistent with cocoon. And again, to be clear, cocoon was dealing with a far more aggressive assertion of ancillary jurisdiction. That was a dismissed case. And the parties were trying to get the court to re-invoke jurisdiction to decide something.

cocoon says, well it would be different if the court had reserved in the dismissal of the

“authority to enforce the terms of the settlement. You didn't push that particularly hard. Why?”

Well, we did, and I'm sorry if it wasn't clear that we did. Here, it's even better. You don't have a dismissal. You have existing pending claims in a pending case. So cocoon, and again, is a much harder case. There, the court saying, I'm going to dismiss this action. And I'm going to retain jurisdiction. Just in case something happens down the road. Here we have pending federal claims. And if you, and you don't even know what to do with

these crimes. So I think with all this due respect to my friend, I think he's incorrect

to dismiss the case without knowing whether the arbitration award will ultimately stand,

doesn't make any sense. If the award is ultimately vacated, the parties could very well say, you know what? That was a waste of time. Let's just litigate and court. So it's ancillary jurisdiction of the sort, ancillary enforcement jurisdiction of the sort that cocoon and talks about applicable here is that a coherent way to think about this.

“I think you could now. I do think that this raises a slight complexity about to the extent”

1367 has displaced or captured ancillary jurisdiction. But I think the very fact that cocoon and contemplated that a court could retain jurisdiction to decide the subsequent settlement disputes suggested this would be covered them by 1367. Well that's the way I said enforcement jurisdiction.

I think that's different because nobody really disputes that a court could exercise enforcement

jurisdiction, or ancillary enforcement jurisdiction over say a contempt proceeding. So that would be different. It wouldn't be subsumed by 1367. We think that works perfectly well and I think it's a sensible way to look at this. I do want to address this very quickly of the section eight argument about it. It does the text of section eight somehow preclude jurisdiction under 1331 or 1332 or 1367. And I think

it quite clearly doesn't section eight is a maritime provision. And it starts off by saying notwithstanding anything else going on. So this is Congress's attempt to say we're creating a self-contained unit that you'll specifically with the Admiralty. And we're going to provide specific rules for

that context. In order for that to preclude the assertion of jurisdiction elsewhere because again,

we're not relying on the FA for jurisdiction relying on Title 28. It would have to show that Congress in section eight was thinking I'm going to foreclose jurisdiction for every non-maritime case. The overwhelming swath of cases that arise under the FA, simply by creating a specific rule of decision for that narrow context. Mr. Guys, I'm just going back to this, oh, it's just a motion in a case. If you have jurisdiction in a case, of course, you have jurisdiction

over this, too. I mean, this is a very unusual kind of motion, right? It's a motion which could have been brought as a freestanding suit, which is essentially a freestanding suit and a freestanding suit in which they would have been down jurisdiction. So notwithstanding that there's this sort of like unusual posture in which it appears as like a motion in another suit, we all know that it's a different suit and a different suit in which there is no jurisdiction. So why do you, why does that carry you home?

Well, I think it's not quite just an entirely different suit because again, it's a motion with a different nature of claim to resolve the original pending claim. So I do think, again, just like rule 23 E is not a different suit. The party settle class. And then what I mean as a different suit is it's a bunch of contract claims. Let's say it's about like the arbitrator committed fraud and so my contract is invalid. That's what this suit is. That's what this motion is. Call it whatever you

want. That's what this thing is. And that has nothing to do with the employment action that's kicked off this whole thing. Except for the fact that it is resolving the employment action that

“kicked off this whole thing. So again, that's why I think it's really hard to say that resolving a claim”

is unrelated to the claim. Even if the reason you resolved it, maybe you settled because it gives you, they offer you a lot of money or they gave you something that you wanted. That has nothing to do with the underlying factual allegations. It's still resolving the claim. And that I think that shows why it's part of the same case or controversy. I mean it is literally resolving the case or controversy. And again, I think a contrary view on that would say that an affirmative defense

who claim in a case doesn't arise or relate to that same case, which it's hard to even articulate the concept because it just doesn't make much sense. But again, I think that's why we tried to offer two different paths in the brief because depending on which way you look at it, we're dealing with this odd hybrid that the FAA set up. Again, no one has ever reported Congress for creating the world's cleanest statute. It's five pages of the US code. I think this court is burdened with

two or three cases a year. It seems under the statute going back, I don't know how many years.

still holds. Of course, if you have jurisdiction to stay the case under section three, you have jurisdiction to process it at the end of the day. Thank you, Council. I'd just as Thomas anything further, this is Toledo. Thank you, Council. Thank you. For bottled, Mr. Nianakowski.

Thank you, Your Honor. I'd like to first begin with the discussion of section 1331,

which didn't occupy much of the briefing, but did occupy much of the discussion this morning. I don't think that confirming the arbitration award can be justified under section 331, because that judgment is not the resolution of the original claim. The original claim was a federal employment claim, and the resolution of that claim is that the claim cannot proceed in federal court, because the parties agreed to arbitrate that claim. So just as a court dismisses a claim based on

resjudicada or release when it turns out that the parties have adjudicated the case in a different form, the appropriate resolution of the federal claim is to dismiss it because the federal court can't hear it when it's being decided elsewhere. But confirming the arbitration award is different, it's transforming the arbitration award into a judgment, and the practical difference there is that it allows respondents to execute a money judgment against petitioner. So what happened

here is that the parties agreed to arbitrate, and then this arbitrator entered the sanctions award, which is a money judgment against petitioner, and then confirming the award transforms that contractual resolution of the claim into a federal judgment. And that's not a federal judgment, the money judgment against petitioner, which is the real practical effect of confirming this award, is not resolution of the original claim, it's transforming the party's agreement

“to adjudicate this in a contractual method into a federal judgment. That's why I think”

a extra jurisdiction is needed, section 1331, doesn't do the trick. And so then you get to section 1367, and as some of the questions from the bench today made clear, there is no common nucleus effect. I think coconut is directly on point on this issue. I understand in coconut

and there is a dismissal rather than a stay, but as to the first head as coconut called it

of ant slurgerous fiction, the court said it quotes, "Disposition by a single court of claims that are in varying respects and degrees factually interdependent, which is very similar to the 1367 analysis, and then the court held that the facts underlying respondents dismissed claim for breach of agency agreement, and those underlying its claim for breach of settlement agreement have nothing to do with each other. It would neither be necessary nor even particularly

efficient that they would be adjudicated together." And that reasoning is right on point here because at core the arbitration award is similar to a breach of settlement agreement claim. It's a contractual way of resolving and dispute. And the core insight from coconut is parties that agree to resolve and dispute the contract, who later dispute that contractual resolution, are adjudicating a different dispute from the underlying federal dispute. I'd

like to say a few words about Cortes Bird. You know, the court has said that the court has cautioned

“against, you know, giving too much credit to drive by jurisdictional rulings. And I think this”

is just the canonical case of a drive by jurisdictional ruling. So, first of all, jurisdiction was

conceded in that case under diverse state jurisdiction. Also, there was no section three stay at all. So, the jurisdictional anchor issue was doubly not presented. Meanwhile, the court was talking about what it had previously held in this case, Noreen Transit, that everyone agrees is irrelevant. The court was also talking about a venue issue, which was also conceded by one side in that discussion. And all of this in service of making an argument that's ultimately

the argument we're making in this very case, which is that Congress would not have intended for a courts authority to hear a section nine or ten stay application to depend on whether or not there's a pre-existing suit on file. So, I do understand that lots of law courts have followed that statement from court as Bird which makes sense. I think when a law court sees a sentence like that in the US reports, much like in the Royal Cainin case, which presented a

very similar scenario, the courts will often go along with it. That's essentially what happened here,

“but I think that this court has the authority to check as it did in Royal Cainin, whether”

that one sentence really establishes a holding. And I think it just doesn't when you look at the posture of that case as compared to this one. Finally, in terms of the practical effects that respondents identify, I don't think that that's significant. I mean, what happens is after there's an arbitration award, you go to the federal court and if a party says, "Look, we're planned to go to state court to confirm the award or vacated." The federal court can

say, "Look, OK, I'll wait to see whether or not the case ever comes back." And I'll just delay the dismissal a little bit longer. And we'll go to state court and litigate there. I mean, you know, parallel federal and state litigation happens every day in our system in our federal system. And I don't think that the practical concerns here are any greater than they would be in any other case. When you have parallel litigation across the federal and state systems,

there's no further questions. We'd ask the court to reverse the judge envelope. Thank you, Council, the case is submitted.