Denise Badgerow worked as a financial advisor for REJ properties, run in part by the respondent Greg Walters, in Louisiana. As a condition of her employment, she agreed to arbitration for any disputes with the three principals of her employer (including Walters), but not her employer itself.
Eventually, after a couple years, she was fired. She claims it’s because she was a woman, which is kinda odd, since they presumably knew this when they hired her. But she also claims they were engaging in securities fraud, and she blew the whistle on that shit.
Badgerow was persistent as hell, going to the EEOC to complain about their gender discrimination, the Financial Industry Regulatory Authority to complain about their business practices, and a federal district court.
All three of them found Badgerow to be out of line, and a bit burdensome, dismissing all her claims entirely and ordering her to arbitration as she agreed to. Her employer asked the federal court to confirm the decisions. While that was going on, Badgerow sued the three principals of the company in state court, saying the decision they got was obtained by fraud.
This has to be the most confusing, and boring case I’ve ever read, bar none. But essentially, SCOTUS is being asked if the federal courts have jurisdiction to rule on an arbitration award, just because a federal question was in play. The question being, in the Federal Arbitration Act (FAA), it gives federal courts jurisdiction to hear a case if the matter at hand is a federal issue, which this isn’t. However, if they’re merely confirming, vacating, or modifying a previous ruling, no such jurisdictional issue is mentioned.
In an older SCOTUS case, Vaden v. Discover Bank, the court ruled that a federal court may “look through” an arbitration petition, to see if the beef the two parties have, is even their jurisdiction. So that’s what the federal court did. They “looked through” this case, and decided they did have jurisdiction, despite the fact that the issue was not a confirm/vacate/modify (CVM) issue.
See, pretty fucking boring, right?
In an 8:1 decision, where only justice Breyer dissented, SCOTUS determined the federal courts do not have jurisdiction because the jurisdictional rule isn’t in the section of the FAA regarding CVM issues.
Justice Breyer, the retiring curmudgeon, felt that going so literal with the FAA’s wording, is overly complex and confusing, apparently being a big friend of the federal courts.
Hear oral arguments or read about the case here