AltaCorp. Capital Inc. v. Financial Industry Regulatory Authority, Inc.

Background

The case concerns whether a dispute between AltaCorp Capital Inc., identified in the opinion as a Canadian investment firm, and its former employee, John C.T. Cloghesy, must be arbitrated. Cloghesy filed a motion to compel arbitration and related counterclaims. AltaCorp moved to dismiss those counterclaims.

Jurisdiction issue

Before reaching arbitrability, the court examined whether it had subject-matter jurisdiction, meaning legal authority to hear the dispute. AltaCorp argued that the Federal Arbitration Act does not itself grant subject-matter jurisdiction and that the dispute involved only state-law claims between Canadian citizens. Cloghesy largely conceded those points but argued that the court could exercise supplemental jurisdiction, which can allow a federal court to hear related claims connected to claims already within its jurisdiction.

The court identified a possible basis for original federal jurisdiction under chapter 2 of the Federal Arbitration Act, which implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly called the New York Convention. The court explained that the Convention grants federal district courts original jurisdiction over qualifying arbitration proceedings. It noted that Cloghesy is a Canadian citizen and AltaCorp is a Canadian corporation, so the New York Convention might provide original jurisdiction over at least Cloghesy’s motion to compel arbitration.

Order

The court did not decide whether the New York Convention provides jurisdiction or whether Cloghesy’s motion to compel arbitration and counterclaims should be granted or dismissed. Instead, it ordered supplemental briefing on the Convention’s possible effect on the court’s authority. Cloghesy had to file his memorandum by January 8, 2021, and AltaCorp had to respond by January 15, 2021. The court authorized no reply and limited each memorandum to 10 double-spaced pages.