United States District Court, D. Arizona
ORDER
Honorable Cindy K. Jorgenson United States District Judge
Pending
before the Court is Petitioner Dental Village's: Petition
to Confirm Arbitration Award (Doc. 1) and Motion to Confirm
Arbitration Award Following Default (Doc. 17). Although this
matter is currently referred to Magistrate Judge Eric J.
Markovich, the Court finds that a withdrawal of the reference
(Doc. 12) is appropriate.
1.
Factual and Procedural Background
Respondent
Robert A. Rodriguez (“Rodriguez”) was hired by
Petitioner Dental Village Limited (“Dental
Village”) in September 2013, to serve as a
“Senior Executive.” Rodriguez represented to
Dental Village that he had a Master's level degree in
Business or Finance from Florida Atlantic University and that
he also had more than ten years of senior management
experience. In the summer of 2014, Dental Village suspected
that Rodriguez was untruthful about his educational and
professional experience and terminated Rodriguez on August
11, 2014.
In
connection with that termination, Dental Village and
Rodriguez entered into a Separation Agreement whereby Dental
Village would pay Rodriguez approximately $35, 000.00 between
August and October 2014 provided Rodriguez returned Dental
Village's confidential business records and information.
Shortly after his termination, Rodriguez began disclosing
confidential information pertaining to an upcoming
acquisition involving Dental Village. On November 3, 2014,
Dental Village filed a Demand for Arbitration against
Rodriguez. Bruce E. Meyerson (“Mr. Meyerson”) was
selected to arbitrate the dispute. Mr. Meyerson held a series
of management conferences in 2015 and 2016. Rodriguez was
given notice of the management conferences but failed to
participate. Mr. Meyerson issued subpoenas to Pace University
and Florida Atlantic University, where Rodriguez allegedly
obtained degrees. Mr. Meyerson also issued subpoenas to three
of Rodriguez's alleged former employers to verify his
employment history.
An
evidentiary hearing was held on July 15, 2016. Like the prior
conferences, Rodriguez was given notice of the hearing but
failed to appear. At the hearing, Dental Village demonstrated
that Rodriguez's representations regarding both his
education and employment history were fabricated. Dental
Village presented evidence that Rodriguez never attended Pace
University or Florida Atlantic University. Dental Village
also presented documentation from Rodriguez's former
employers that he misrepresented his job titles and duties.
Mr. Meyerson determined that Rodriguez's
misrepresentations were material and caused Dental Village to
grossly overcompensate Rodriguez based upon his fabricated
experience and education. Mr. Meyerson also determined that
Rodriguez improperly obtained and disseminated Dental
Village's confidential business records and information,
breaching his fiduciary duties. Mr. Meyerson entered a final
award on October 10, 2016. (Doc. 1, pg. 25-26).
Subsequently,
Dental Village filed the pending Petition to Confirm
Arbitration Award on October 9, 2017. (Doc. 1). Rodriguez was
served on December 6, 2017. (Doc. 14). To date, Rodriguez has
failed to file a responsive pleading. The parties'
Separation Agreement provides that “the award rendered
by the arbitrator(s) may be entered in any court having
jurisdiction.” (Doc. 1, pg. 8).
Furthermore,
§ 9 of the Federal Arbitration Act provides, in
pertinent part:
If the parties in their agreement have agreed that a judgment
of the court shall be entered upon the award made pursuant to
the arbitration, and shall specify the court, then at any
time within one year after the award is made any party to the
arbitration may apply to the court so specified for an order
confirming the award, and thereupon the court must grant such
an order unless the award is vacated, modified, or corrected
as prescribed in sections 10 and 11 of this title. If no
court is specified in the agreement of the parties, then such
application may be made to the United States court in and for
the district within which such award was made.
Since
the parties' Separation Agreement permits the award
rendered by Meyerson to be entered in any court having
jurisdiction pursuant to the Federal Arbitration Act, the
only remaining inquiry is whether this Court has
jurisdiction. It should be noted that § 9 of the Federal
Arbitration Act is not an independent basis for the
Court's jurisdiction. See Gen. Atomic Co. v. United
Nuclear Corp., 655 F.2d 968, 969 (9th Cir. 1981)
(“We hold that applicants who, in federal district
court, seek confirmation of an arbitration award under 9
U.S.C. s 9, must demonstrate independent grounds of federal
subject matter jurisdiction. The provisions of 9 U.S.C. s 9
do not in themselves confer subject matter jurisdiction on a
federal district court”).
In its
Petition to Confirm Arbitration Award (Doc. 1), Dental
Village asserts that this Court has jurisdiction over the
parties pursuant to 28 U.S.C. § 1332(a)(1). It appears
to be established that Dental Village is an Arizona
corporation with its principal place of business in Arizona
and Rodriguez is domiciled in Florida. As a result, the
parties are diverse. However, it is unclear whether the
amount in controversy is sufficient. Although Dental Village
states that “the amount in controversy exceeds $75,
000.00, ” it provides no evidentiary support for that
assertion. (Doc. 1, pg. 2). In this case, the relevant amount
in controversy is “the amount at stake in the
underlying litigation, not the amount of the arbitration
award [that] is the amount in controversy for purposes of
diversity jurisdiction.” Theis Research, Inc. v.
Brown & Bain, 386 F.3d 1180, 1181 (9th Cir. 2004).
Although
the final award amount was in excess of $75, 000.00, the
relevant amount for jurisdictional purposes is the amount at
stake in the underlying litigation. In Mr. Meyerson's
Interim Award, he writes: “In its demand, Dental
Village alleged that Mr. Rodriguez had materially
misrepresented his educational and employment history when
seeking employment with Dental Village . . . Among other
relief, Dental Village sought compensatory and punitive
damages...” (Doc. 1, pg. 13-14). Before the Court can
take further action, it must ensure that it properly has
jurisdiction over the case and will direct Dental Village to
furnish a copy of its demand provided to Mr. Meyerson. The
Court further notes that although Dental Village's Civil
Cover Sheet (Doc. 1-1, pg. 1-2) states that the dollar demand
is $84, 288.51, that figure represents the amount awarded by
Mr. Meyerson in the Final Arbitration Award and is
insufficient to satisfy the amount in controversy.
Accordingly,
IT IS ORDERED:
1. The referral to Magistrate Judge Eric J. Markovich is
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