PTA-FLA, Inc. v. ZTE USA, Inc.
2016 U.S. App. LEXIS 22237
| 11th Cir. | 2016Background
- PTA-FLA and ZTE USA entered an MSA requiring arbitration in Jacksonville, Florida; three related ClearTalk affiliates (Daredevil, NTCH-WA, NTCH-West Tenn.) had nearly identical contracts.
- PTA-FLA sued in Florida state court; ZTE USA removed to federal court (Middle Dist. Fla.) on diversity grounds and the court compelled arbitration.
- Multiple related suits around the country were consolidated into one AAA arbitration, which produced a single, zero-dollar award disposing of claims involving the ClearTalk entities and ZTE USA.
- After the award, ZTE USA moved in the Middle District of Florida to reopen the original case, join the other ClearTalk entities, and confirm the arbitration award against all parties.
- PTA-FLA voluntarily dismissed its federal suit while the motion to confirm and JPML transfer were pending; the district court nonetheless reopened the matter, joined the three affiliates, and confirmed the award.
- The three joined parties appealed, arguing lack of subject-matter and supplemental jurisdiction; the Eleventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court had subject-matter jurisdiction to confirm the arbitration award (original parties) | PTA-FLA conceded district court had jurisdiction; alternatively, argued procedural defects as to scope | ZTE USA: diversity at removal supported the court’s power to compel arbitration and thus to confirm the award | Court: Diversity at removal conferred jurisdiction; a district court that compels arbitration may confirm the award (affirmed) |
| Whether the reduction in amount in controversy (zero-dollar award) destroyed jurisdiction | Joined Parties: zero award means no longer meets amount-in-controversy | ZTE USA: jurisdiction is measured at removal/filing; subsequent reduction does not defeat jurisdiction | Court: Jurisdiction measured at time of removal; subsequent reduction (zero award) does not oust jurisdiction |
| Effect of PTA-FLA’s voluntary dismissal on ZTE USA’s pending motion to confirm | Joined Parties: voluntary dismissal by PTA-FLA extinguished the federal action and the motion to confirm | ZTE USA: motion to confirm survives as a collateral proceeding tied to the prior federal action that compelled arbitration | Court: PTA-FLA validly dismissed its claims but the court retained jurisdiction over the motion to confirm as a collateral/ancillary proceeding arising from the same controversy |
| Whether district court could exercise supplemental jurisdiction over Joined Parties under 28 U.S.C. §1367(b) | Joined Parties: §1367(b) exception applies because ZTE USA acted as a plaintiff seeking relief against nondiverse parties | ZTE USA: ZTE is a defendant in the original action and a third-party-like movant; §1367(b) limits original plaintiffs only, so it does not apply | Court: §1367(a) authorizes supplemental jurisdiction here; §1367(b) exception applies to original plaintiffs only and therefore does not bar jurisdiction over the Joined Parties |
Key Cases Cited
- Peebles v. Merrill Lynch, Pierce, Fenner & Smith Inc., 431 F.3d 1320 (11th Cir.) (standard of review for subject-matter jurisdiction)
- Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (federal arbitration law creates federal substantive law but not federal-question jurisdiction)
- Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (FAA does not itself create independent federal-question jurisdiction)
- TranSouth Fin. Corp. v. Bell, 149 F.3d 1292 (11th Cir.) (court that compels arbitration retains jurisdiction to confirm/vacate award)
- Marine Transit Corp. v. Dreyfus, 284 U.S. 263 (confirms court authority to confirm or set aside arbitral awards when it compels arbitration)
- Grupo Dataflux v. Atlas Global Group, LP, 541 U.S. 567 (jurisdictional facts measured at time of filing/removal)
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (post-removal reduction of claim does not divest jurisdiction)
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (federal courts may decide collateral issues after main action is no longer pending)
- Peacock v. Thomas, 516 U.S. 349 (ancillary claims must have factual and logical dependence on primary lawsuit)
- Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (§1367(a) is a broad grant of supplemental jurisdiction)