The Trustees of the New York State Nurses Association Pension Plan v. White Oak…

Background

On March 17, 2022, the court granted the Trustees’ petition to confirm an arbitration award and denied White Oak’s motion to vacate that award. The court entered judgment the same day. The award stated that White Oak had breached fiduciary duties under the Employee Retirement Income Security Act (ERISA), violated ERISA Section 406(b)(1), and engaged in prohibited transactions while acting as a fiduciary.

White Oak then moved to vacate the judgment for lack of subject-matter jurisdiction. Subject-matter jurisdiction means the court’s legal authority to decide a case. White Oak relied on the Supreme Court’s decision in Badgerow v. Walters, which held that federal courts generally cannot determine jurisdiction over applications to confirm or vacate arbitration awards by examining the claims underlying the arbitration. Instead, jurisdiction must ordinarily appear from the application itself.

Federal-question jurisdiction

The Federal Arbitration Act (FAA) authorizes applications to confirm or vacate arbitration awards, but Sections 9 and 10 of the FAA do not themselves provide federal subject-matter jurisdiction. The court therefore considered whether the Trustees’ petition had an independent basis for federal jurisdiction.

The Trustees argued that federal-question jurisdiction existed because the investment management agreement containing the arbitration clause was governed by ERISA and because White Oak had challenged the award based on an alleged disregard of federal law. The court rejected the idea that the underlying claims alone could establish jurisdiction, explaining that Badgerow made the substance of the arbitrated claims generally immaterial to jurisdiction over a confirmation or vacatur application.

The court nevertheless distinguished this case from Badgerow. It held that the contractual rights at issue related to an ERISA plan and were governed exclusively by federal statutory and federal common law. The petition alleged that the Trustees and White Oak were ERISA fiduciaries, that the agreement created White Oak’s ERISA fiduciary obligations, and that White Oak agreed to serve as an ERISA fiduciary and investment manager. Because the petition sought relief under federal law, the court concluded that it established federal-question jurisdiction under 28 U.S.C. § 1331.

ERISA jurisdiction

The court also identified an additional jurisdictional basis under ERISA Section 502. Section 502(a)(3) permits an ERISA participant, beneficiary, or fiduciary to seek an injunction or other appropriate equitable relief to address violations of ERISA or enforce plan terms. Section 502(e)(1) gives federal district courts exclusive jurisdiction over those actions.

The court concluded that the Trustees’ request to confirm the arbitration award could qualify as appropriate equitable relief. The Trustees were ERISA fiduciaries, and the relief sought enforced a contractual obligation to resolve disputes through arbitration. The court reasoned that enforcing such a settlement-related contractual obligation falls within the traditional powers of courts of equity. It therefore held that ERISA itself also supplied subject-matter jurisdiction, even though the Trustees had not expressly relied on that provision.

The court did not decide the Trustees’ additional argument that jurisdiction existed because of White Oak’s cross-petition to vacate the award. The court stated that jurisdiction existed under both 28 U.S.C. § 1331 and ERISA Section 502.

Disposition

The court denied White Oak’s motion to vacate the March 17, 2022 judgment for lack of subject-matter jurisdiction “in all respects.”