Denise Badgerow v. Greg Walters
975 F.3d 469
5th Cir.2020Background
- Denise Badgerow was an associate financial advisor at REJ; she signed an arbitration agreement covering disputes with Ameriprise and its affiliates (the REJ principals).
- Badgerow pursued FINRA arbitration against the three REJ principals for tortious interference and a Louisiana whistleblower claim, and later added a declaratory joint-employer claim against Ameriprise (seeking Title VII exposure).
- A FINRA panel dismissed all of Badgerow’s claims against both the principals and Ameriprise with prejudice.
- Badgerow filed a petition in Louisiana state court to vacate the FINRA award as to the principals only, alleging the principals committed fraud on the arbitrators; the principals removed the vacatur action to federal court.
- The district court denied remand, applied the FAA "look-through" analysis, ruled there was federal jurisdiction (based on the Title VII/joint-employer claim against Ameriprise), and denied vacatur; Badgerow appealed only the remand/jurisdiction ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a federal court has subject-matter jurisdiction over a state-filed petition to vacate an arbitration award under the FAA "look-through" when a federal-law claim in the underlying arbitration was asserted against a non-party to the vacatur action | Badgerow: Only claims against the parties to the vacatur action (the principals) may be considered; Ameriprise is not a defendant in the vacatur petition, so its federal claim cannot supply jurisdiction | Principals: The court must "look through" to the whole underlying controversy; the federal claim against Ameriprise in the arbitration supplies federal-question jurisdiction and, via supplemental jurisdiction, covers the related state claims against the principals | The court affirmed: applying Vaden/Quezada, the whole controversy includes the Ameriprise claim; that federal claim supplies jurisdiction over the removed vacatur petition, so remand denial was proper |
| Whether the joint-employer/declaratory claim against Ameriprise in the FINRA arbitration arises under federal law (so as to support federal jurisdiction) | Badgerow: Argued the joint-employer claim did not arise under federal law and therefore cannot confer federal jurisdiction | Principals/District: Badgerow sought declaratory relief tying Ameriprise to her Title VII federal claims; adjudication requires applying Title VII standards (Trevino factors), so it is a federal-law claim | The court held the joint-employer claim implicated Title VII and therefore was a federal-law claim that could confer federal jurisdiction |
Key Cases Cited
- Vaden v. Discover Bank, 556 U.S. 49 (2009) (adopts FAA "look-through" test for assessing federal jurisdiction over FAA actions)
- Quezada v. Bechtel OG & C Constr. Servs., Inc., 946 F.3d 837 (5th Cir. 2020) (applies Vaden look-through approach to FAA sections 9–11)
- Allen v. Walmart Stores, L.L.C., 907 F.3d 170 (5th Cir. 2018) (standard of review for denial of remand is de novo)
- Trevino v. Celanese Corp., 701 F.2d 397 (5th Cir. 1983) (sets factors for assessing joint-employer status under federal law)
- Hall St. Assocs. v. Mattel, Inc., 552 U.S. 576 (2008) (limits contractual displacement of FAA remedies)
- Ortiz-Espinosa v. BBVA Sec. of Puerto Rico, Inc., 852 F.3d 36 (1st Cir. 2017) (addresses when state arbitration law may be displaced by the FAA)