Background
David Pitlor petitioned the U.S. District Court for the District of Nebraska to vacate an arbitration award involving TD Ameritrade, Inc. and Charles Schwab & Co., Inc. The district court dismissed the petition for lack of subject-matter jurisdiction.
Pitlor appealed. The appellees also moved the Eighth Circuit to take judicial notice of Pitlor’s prior lawsuits.
The Court’s Holding
The Eighth Circuit held that the district court lacked subject-matter jurisdiction because Pitlor’s petition did not identify a jurisdictional basis independent of the underlying dispute. Under Badgerow v. Walters, a federal court considering a petition to vacate an arbitration award may examine only the face of the petition for a jurisdictional basis and may not look through to the underlying substantive dispute.
The court granted the appellees’ motion to take judicial notice of Pitlor’s prior lawsuits and affirmed the dismissal. Because a dismissal for lack of subject-matter jurisdiction must be without prejudice, however, the court modified the judgment accordingly.
Key Takeaways
- A petition to vacate an arbitration award must establish an independent basis for federal subject-matter jurisdiction on its face.
- A court may not look through a vacatur petition to the underlying dispute to establish federal jurisdiction.
- A dismissal for lack of subject-matter jurisdiction must be without prejudice.
Why It Matters
The decision reinforces that the Federal Arbitration Act does not itself supply federal jurisdiction over a petition to vacate an arbitration award. Parties seeking federal review must plead a separate jurisdictional basis, such as diversity jurisdiction or a federal question appearing on the face of the petition.
It also confirms that jurisdictional dismissals do not adjudicate the merits and therefore should be entered without prejudice.