Tender of Damages Can Moot Class Action Claim

• Pages: 24-25
• Date: 01 July 2021
• Author: Josephine M. Bahn
• Subject Matter: Civil Law

Published in Litigation News Volume 46, Number 4, Summer 20 21. © 2021 by the American Bar A ssociation. Repro duced with permissi on. All rights reser ved. This informati on or any portion the reof may not be copie d or disseminated in any

form or by any means or sto red in an electronic da tabase or retrieval sy stem without the ex press writt en consent of the Amer ican Bar Associatio n.

“The court ’s role is to apply tra-

ditional maxims of statutory con-

struction, l egislative intent, and basic

notions of fairn ess and due process

in assessing whether new boundar-

ies are appropri ate without legislative

action,” oe rs Zucker. “There is no

limit to what creative attor neys can

argue, within the b ounds of ethics and

Rule 11 or its state co urt equivalent.”

Fifth Circuit Adopts

"Look Through"

Test for Arbitration

Awards

By Katherine G . Vazquez, Litigation

News Contributing Editor

The U.S. Co urt of Appeals for the

Fifth Circuit has j oined the First,

Second, and Fourth Circuits in adopt-

ing the “look thro ugh” test for peti-

tions to conf‌irm, va cate, or modify

arbitration awards , which allows

federal cour ts to look to the underly-

ing claim in arbitration to determine

whether subject matter jurisdic-

tion exists. By con trast, the Third,

Seventh, Ninth, a nd D.C. Circuits

have rejected the “lo ok through” test.

While state cour t post-arbitral relief is

available, the str ategy for preserving

federal question jurisdiction for such

relief varies by circu it.

In Quezada v. Bechte l OG &

C Construction Se rvices, Inc., an

employee and employer submitted

an employment di spute to arbitra-

tion. The empl oyee claimed that th e

employer engaged in discrimination,

failure to accommo date, and retalia-

tion in violation of th e Americans with

Disabilities Ac t (ADA). The arbitrator

issued a f‌inal awar d for the employee.

The employer sought modif‌ication

of the award in the U.S . District Court

for the Souther n District of Texas. The

district cour t held that it had subject

matter jurisdic tion over the action,

since it arose unde r federal law, and

denied the employer’s motion.

The Fifth Circuit armed. It joined

several other circuit s and adopted the

“look through ” analysis from the U.S.

Supreme Cour t’s opinion in Vade n v.

Discover Bank. In Vaden, the Supreme

Court rejec ted the well-pleaded

complaint rule u sed to analyze fed-

eral question jurisdiction. Instead,

the Court hel d that when a federal

court is faced w ith a petition to com-

pel arbitration u nder section 4 of the

Federal Arbitra tion Act (FAA), it “may

‘look through ’ a §4 petition to deter-

mine whether it is p redicated on an

action that ‘arise s under’ federal law.”

The Fifth Circuit f ound that the

underlying di spute arose under the

ADA, a federal s tatute. The arbitra-

tion claims would b e subject to fed-

eral question jurisdiction absent the

arbitration agreement. Therefore, the

district cour t had authority to resolve

the parties’ m otions under the FAA.

The Fifth Circuit r easoned that the

“look through ” permitted a petitioner

“to ask a federa l court to compel

arbitration witho ut f‌irst taking the

formal step of initia ting or removing

a federal-q uestion suit—that is, with-

out seeking fe deral adjudication of

the very questi ons it wants to arbi-

trate rather than litig ate.” The court

further fou nd that rejecting the “look

through” analysis would create an

“inecient a nd formalistic” process

where a litigant woul d be forced to

“preserve fed eral jurisdiction over a

motion to vacate, mod ify, or conf‌irm

an arbitration award by f‌i rst f‌iling a

motion to compel ar bitration under

section 4, whi ch benef‌its from the

look-through approach.”

A circuit split “real ly shouldn’t

have much practical inf‌luence or

signif‌icance unless federal enforce-

ment jurisdic tion is vitally important,

as otherwise st ate courts remain

available for post-arb itral relief,”

explains John H . Mathias Jr., Chicago,

IL, cochair of th e ABA Litigation

Section’s International Litigation &

Dispute Resolution Committee.

If federal juri sdiction is impor-

tant to a practition er in one of the

circuits that has n ot adopted the

“look through ” analysis, then “the

case highlight s two potential stra-

tegic points that co uld come up in

some situations ,” opines Henry L.

Parr, Greenville, SC , cochair of the

Litigation Section’s International

Litigation & Dispute Resolution

Committee. “ First, if a party knows

well ahead of time th at it will be

important to h ave federal jurisd ic-

tion for a motion to conf‌i rm, vacate, or

modify arbi tration awards under FAA

sections 9, 10 , and 11, respectively, then

it might be advisa ble to consider f‌il-

ing an action in fe deral court and then

moving to compel arb itration and stay

the federal ac tion pending the arbitra-

tion, if that is poss ible,” counsels Parr.

“Second, u ntil the Supreme Court

resolves the circuit sp lit over the ‘look

through’ approach to jurisdiction for

these motions , proceeding in state court

might be the safes t route, especially

since there is a time d eadline to make

some of the motions ,” Parr concludes.

Tender of Damages

Can Moot Class

Action Claim

By Josephine M . Bahn, Litigation

News Associa te Editor

A court must dis miss a putative class

action lawsuit if the d efendant makes

an eective tend er before the named

plainti f‌iles a class certif‌ication

motion, a state sup reme court held.

A defendant ’s admission of liability

and tender to the pl ainti of all the

requested reli ef satisf‌ies the named

plainti’s ind ividual claim and moots

its interest in the liti gation. Thus, no

controversy exists, a nd the trial court

must dismiss th e case if no other plain-

ti represents the class.

In Joiner v. SVM Management, LLC,

two former tenan ts sued their landlord

for violation of severa l state laws by,

inter alia, the la ndlord’s failure to pay

any interest on their s ecurity deposit.

The day after the la ndlord was served

with the complaint , it tendered the full

amount of the tena nts’ maximum individ-

ual recovery, all cour t costs, and attorney

fees. The tena nts rejected the tender.

The landlord moved to dismiss,

arguing that even tho ugh the ten-

ants rejected th e tender, it mooted

the class actio n claim under Illinois

law providing that if a tend er is made

to the named plain ti before the f‌il-

ing of a motion for clas s certif‌ication,

the claims are moo ted because the

interests of the other class members

are not before the tria l court. The trial

court dismis sed the tenants’ suit with

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