High Court Hears Debate on
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Federal Question Jurisdiction
he U.S. Supreme Court BY JUSTIN KELLY
heard oral argument on Oct.
6 in Betty E. Vaden v. Discover Chief Justice John Roberts called this
Bank (No. 07-773, review granted argument a “tough sell,” although he
March 17, 2008). The Court is ex- agreed that the “save for” language in
pected to decide an important juris- Section 4 seemed to direct the court
dictional question: whether a district to decide if, without the arbitration
court may “look through” to the un- agreement, the case could be brought
derlying complaint in a case in order in federal court.
to decide whether it has “federal Associate Justice Ruth Bader Gins-
question” jurisdiction to hear a mo- burg asked Ortiz whether Section 2
tion to compel arbitration under the of the FAA took care of the ouster
Federal Arbitration Act (FAA). Also doctrine. He responded that Section
before the Court is “whether a com- 2 was insufficient to declare the
pletely preempted state-law counter- ouster doctrine dead, so Congress
claim can supply subject matter juris- “took the extra step in Section 4” to
make sure that the ouster doctrine Roberts pointed out that the issue
diction” to a federal court. (The DRJ could be framed to avoid federal law,
previously reported on this case in the would not be a problem.
Ortiz also argued that allowing which would put the case in state
August-October 2008 issue.) court. Both Ginsburg and Associate
The parties construe Section 4 of courts to look through to the un-
derlying complaint would undermine Justice David Souter observed that a
the FAA differently. Discover Bank state court is competent to apply fed-
argued that the FAA clearly autho- getting the parties into arbitration
rapidly so arbitrators could decide the eral law.
rizes the “look through” approach But Phillips expressed a preference
because Section 4 says that a district issues.
Discover Bank’s counsel, Carter for federal court, saying, “We have
court is authorized to compel arbitra- serious doubts as to whether or not in
tion when, “but for” the arbitration Phillips, an attorney with Sidley
Austin in Washington, D.C., argued fact we will