By John B. Lewis
In two prior blogs, we have focused on a dispute over federal court jurisdiction to confirm or vacate an arbitration award under Section 9 and Section 10 of the Federal Arbitration Act (FAA). The dispute resulted in a Fifth Circuit opinion that ultimately made its way to the U.S. Supreme Court. See our blog post on Nov. 9, 2021. Now the Fifth Circuit has taken on a new FAA issue – who are the “parties” to the controversy for purposes of determining federal court jurisdiction? Does it include state-court pleadings or only “the parties to the petition to compel arbitration”? See ADT L.L.C. v. Richmond, No. 21-10023 (5th Cir. Nov. 10, 2021).
Telesforo Aviles was employed by ADT to install home security systems. At some point, Aviles began spying on customers with cameras he set up. Upon discovering this, ADT terminated Aviles, but only after over 200 customers were impacted. Kamala Richmond believed she and her family were victims. They sued ADT and Aviles in a Texas court seeking over $1 million in damages. The Richmonds’ contract with ADT, however, contained an arbitration provision. ADT then filed an action under Section 4 of the FAA in federal court based on complete diversity between the Richmonds and ADT, a citizen of Florida and Delaware.