A case involving a $34,500 arbitration award was the vehicle for the U.S. Supreme Court to resolve an issue that has divided the federal appeals courts: whether a federal court that has previously stayed claims in a pending action under § 3 of the Federal Arbitration Act (FAA) has jurisdiction to confirm or vacate a resulting arbitral award on those claims, even when the motion to confirm under § 9 of the FAA or the motion to vacate under § 10 does not independently present a basis for federal jurisdiction on its face.

In a unanimous decision in Jules v. Andre Balazs Properties, 2026 WL 1336216 (U.S. Sup. Ct. May 14, 2026), the Supreme Court said the answer to that question is “yes”:  a federal court that has previously stayed claims pending arbitration has jurisdiction to confirm or vacate a resulting arbitral award on those claims. The Court’s decision affirmed a decision by the United States Court of Appeals for the Second Circuit, which, like decisions in the Third and Seventh Circuits, had concluded that a federal court had jurisdiction to confirm or vacate arbitral awards in those circumstances.[1]  The decision was contrary to a ruling by the Fourth Circuit, which had held that a federal court would have jurisdiction in such circumstances only if there were an independent basis for federal jurisdiction over such a petition to confirm or vacate.[2]

Jules arose from a COVID-19-era employment dispute. The plaintiff, a hotel worker in Los Angeles, was fired by his employer, which cited staffing issues related to the pandemic. The plaintiff sued in federal district court in New York, alleging unlawful discrimination under federal and state law. The employer moved to stay the litigation pending arbitration, based on an arbitration agreement the plaintiff had signed before beginning work at the hotel. The court granted the motion and the parties commenced arbitration. The arbitrator issued a final award against the plaintiff on all claims, and awarded the employer $34,500 in sanctions based on misconduct by plaintiff and his counsel. The employer then moved to confirm the arbitration award before the same federal court in New York that had stayed the claims pending arbitration.

The plaintiff argued that the district court lacked jurisdiction to confirm the award under Badgerow v. Walters, 596 U.S. 1 (2022), because the motion to confirm the award did not present a federal question or satisfy the requirements for diversity jurisdiction. The district court disagreed and confirmed the award, and the Second Circuit affirmed.

The Supreme Court agreed with the district court and the Second Circuit, holding that Badgerow was inapplicable. In Badgerow, the Court noted, the first — and only — thing that had occurred in federal court was the motion to confirm or vacate the arbitration award; there had been no earlier suit and motion to stay. The Court had ruled in Badgerow that, in those circumstances, a motion to confirm or vacate an arbitration award required an independent basis for federal jurisdiction, such as diversity of citizenship. Here, in contrast, the district court had jurisdiction over the original claims, which it had stayed, so it retained jurisdiction to then confirm or vacate an arbitral award resolving those claims. The Court ruled that a federal court with jurisdiction to stay claims pending arbitration under § 3 of the FAA has the same jurisdiction to confirm or vacate a resulting arbitration award.

[1]  See Kinsella v. Baker Hughes Oilfield Operations, LLC, 66 F.4th 1099 (7th Cir. 2023); George v. Rushmore Serv. Center, LLC, 114 F.4th 226 (3d Cir. 2024).

[2]  SmartSky Networks, LLC v. DAG Wireless, LTD., 93 F.4th 175 (4th Cir. 2024).