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Hale v. Morgan Stanley Smith Barney LLC, No. 20-33412 (6th Cir. Dec. 15, 2020) [click for opinion]

Dissatisfied with several disciplinary actions taken against him at work, Plaintiff Richard Hale sought recourse against his employer, Defendant Morgan Stanley Smith Barney LLC (“Morgan Stanley”). Hale brought a case in arbitration, but the arbitrator awarded no damages. Hale then filed suit seeking to vacate the arbitration award pursuant to the Federal Arbitration Act (the “FAA“).

The FAA does not provide an independent basis for subject matter jurisdiction in the federal courts. Hale therefore argued that there was diversity jurisdiction and that the amount in controversy requirement was satisfied because he sought almost $15 million in damages in the arbitration. Morgan Stanley argued that there was no diversity because the amount in controversy was $0, the amount of the award. The district court sided with Morgan Stanley. On appeal, the Sixth Circuit reversed.

The Sixth Circuit explained that the key to determining the amount in controversy is the content of the complaint. “When a petitioner disputes an issued arbitration award—either through vacation or seeking to reopen arbitration—courts need only to review the relief requested in the complaint to determine the amount in controversy”. In his complaint in this case, Hale sought to vacate the $0 award, arguing that the arbitrator should have awarded him almost $15 million in damages—certainly more than the amount necessary to satisfy the requirements under the diversity statute, 28 U.S.C. § 1332(a). Therefore, the minimum amount in controversy was met and the district court had the subject-matter jurisdiction necessary to adjudicate Hale’s claims.

A version of this post originally appeared in the March 2021 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Jacob Kaplan.


David Zaslowsky has been practicing international litigation and international arbitration for almost 40 years. He has been Chambers-ranked in international arbitration and also sits as an arbitrator. He specializes in technology cases and is the editor of the Firm's Blockchain Blog and its International Litigation & Arbitration Newsletter.