Calculating Amount in Controversy Under the FAA – Vaden Controls
In CMH Homes, Inc. v. Goodner, 2013 WL 4749906 (8th Cir, Sept. 5, 2013), the Eighth Circuit confronted the unresolved question of how district court calculate amount in controversy where a party seeks compelled arbitration under Section 4 of the Federal Arbitration Act: should it follow Advance America Servicing of Arkansas, Inc. v. McGinnis, 526 F.3d 1170 (8th Cir. 2008), and evaluate the amount at stake in the arbitration, or does the U. S. Supreme Court’s directive from Vaden v. Discover Bank, 556 U.S. 49 (2009) to look through the arbitration petition to the underlying controversy control?
Writing for the panel, Judge Colloton agreed with the district court’s decision to follow Vaden, even though Vaden involved federal question jurisdiction rather than diversity jurisdiction. In doing so, the Court concluded that nothing in either the text of Section 4 of the FAA or the rationale of Vaden suggests that a court should determine jurisdiction differently depending on the source of the claimed jurisdiction.
The Court did reverse and remand the case for further proceedings consistent with Standard Fire Ins. v. Knowles, however, because the district court had based its decision to remand on the class representatives’ stipulation that the amount in controversy would not exceed $5,000,000.00, which is clearly ineffective post-Knowles.