The Fifth Circuit Bar Association’s summary reports:
“Appellants were investors who suffered financial losses as a result of R. Allen Stanford’s Ponzi scheme. In their arbitration complaint, they sought $80 million in damages. After a two week hearing, a Financial Industry Regulatory Authority panel rejected Appellants’ claims, but it awarded them $10,000 in compensation for certain arbitration-related expenses.
“On November 7, 2014, Appellee filed, pursuant to Section 9 of the Federal Arbitration Act, a motion to confirm the arbitration award. Because the arbitration award fell below the amount in controversy for Federal jurisdiction, 28 U.S.C. §1332(a), Appellants sought dismissal. In holding that the $75,000 amount in controversy requirement was met, the District Court noted, however, that Federal Courts have disagreed about the proper standard for determining the amount in controversy in the context of confirming an arbitration award below $75,000, and proceeded to certify the issue for interlocutory appeal pursuant to 28 U.S.C. § 1292(b).
“Whereas the “award” approach contemplates that the amount in controversy is determined by the amount of the underlying arbitration award regardless of the amount sought, the “demand” approach theorizes that the amount in controversy is the amount sought in the underlying arbitration rather than the amount awarded. Affirming the District Court, the Fifth Circuit agrees that the demand approach is the correct one.”
Pershing, L.L.C. v. Kiebach, No. 15-30396 (5th Cir. Apr. 6, 2016).
The opinion is here.
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