Rutherford, and a companion case, were vacated on
May 19. An U.S. Supreme Court case that came down recently held that a
federal court may only enforce an arbitration agreement under the FAA if
the court would have jurisdiction over the underlying substantive case.
Under the U.S. Supreme Courtâ€™s decision in Vaden v. Discover Bank, if the
underlying case did not involve a federal question or if there were not
complete diversity of citizenship between the parties, the federal court did
not have jurisdiction to hear the case and therefore could not order
arbitration. Judge Hendren made clear in at least one of his orders to
vacate that parties could still seek arbitration under the FAA in the state
courts, so he was not repudiating the entirety of his order. In light of
that U.S. Sup. Court case, Judge Hendren vacated his orders in the two
Northport cases for lack of jurisdiction.
Shared by Elizabeth Andreoli, Hardin, Jesson & Terru, AR