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Hermes of Paris, Inc. v. Swain

United States Court of Appeals, Second Circuit

August 14, 2017

Hermes of Paris, Inc., Petitioner-Appellee,
v.
Matthew Swain, Respondent-Appellant [*]

          Argued: May 3, 2017

         Respondent-appellant Matthew Swain appeals from a judgment of the United States District Court for the Southern District of New York (Colleen McMahon, Chief Judge). He contends that the district court lacked subject matter jurisdiction over a petition to compel arbitration brought by petitioner-appellee Hermès of Paris, Inc. We conclude that the district court had diversity jurisdiction and accordingly AFFIRM its judgment.

          Lawrence R. Sandak (Edna D. Guerrasio, on the brief), Proskauer Rose LLP, Newark, NJ, for Petitioner- Appellee.

          Christopher W. Hager (Peter J. Heck, on the brief), Niedweske Barber Hager, LLC, Morristown, NJ, for Respondent- Appellant.

          Before: Walker, Livingston and Lynch, Circuit Judges.

          Gerard E. Lynch, Circuit Judge:

         Respondent-appellant Matthew Swain appeals from a judgment of the United States District Court for the Southern District of New York (Colleen McMahon, Chief Judge). On appeal, Swain argues that the district court lacked subject matter jurisdiction over a petition to compel arbitration brought by petitioner-appellee Hermès of Paris, Inc. ("Hermès") under § 4 of the Federal Arbitration Act ("FAA"). For the reasons set forth below, we conclude that the district court had diversity jurisdiction and accordingly AFFIRM its judgment.

         BACKGROUND

         In November 2015, Swain was fired from his job with Hermès managing the company's boutique at the Mall at Short Hills in New Jersey. In July 2016, Swain, a New Jersey resident, sued Hermès in New Jersey state court, asserting claims under New Jersey state law for discrimination and hostile work environment on the basis of sexual orientation, retaliation, and breach of contract. Swain named as defendants in that suit Hermès, and Lorenzo Bautista, who worked with Swain at the Short Hills Hermès store.

         Thereafter, asserting federal jurisdiction based on diversity of citizenship, Hermès filed a petition in the district court to compel arbitration pursuant to § 4 of the FAA, naming Swain as the only respondent and citing a dispute resolution protocol that he had allegedly signed in August 2015.[1] The dispute resolution protocol states that "either you or [Hermès] may initiate final and binding arbitration" for "all legal and equitable claims . . . of whatever nature or kind . . . between you and [Hermès], its corporate parent . . ., their affiliates and subsidiaries and its and their owners, directors, officers, executives and employees." A. 25, 28. The district court granted the petition in relevant part, [2]and this timely appeal followed.

         DISCUSSION

         On appeal, Swain does not contest the arbitrability of his dispute with Hermès, arguing instead that the district court lacked subject matter jurisdiction due to a lack of complete diversity of citizenship. He does not dispute that the parties to the petition to compel arbitration (Hermès and Swain) are citizens of different states, but nevertheless argues that we should "look through" the petition to the underlying dispute, as defined in Swain's New Jersey lawsuit, and conclude that complete diversity is lacking because Swain and Bautista, who is adverse to Swain in his state court litigation in New Jersey, are both citizens of that state.[3]

         Swain's argument is foreclosed by our decision in Doctor's Associates, Inc. v. Distajo, 66 F.3d 438 (2d Cir. 1995). In Distajo, we held that in evaluating whether the requirement of complete diversity is satisfied, a court assessing its jurisdiction over an FAA petition is to "look[] only to the citizenship of the parties in the action before it" - that is, the "parties to the petition to compel" as well as any indispensable parties who must be joined pursuant to Federal Rule of Civil Procedure 19.[4] 66 F.3d at 445, 446.

         In so holding, we rejected the "look-through" approach that Swain urges here, reasoning that § 4 of the FAA provides for jurisdiction over a suit arising out of a controversy between "the parties, " which "most sensibly refers to those persons who are parties to the arbitration agreement - and who therefore can be named in the petition to compel arbitration." Id. at 445 (internal quotation marks omitted). Adopting the argument made by the petitioner in Distajo, we reasoned that requiring that the parties to the underlying dispute be completely diverse would "fatally undermine[]" the FAA because it would allow "a party resisting arbitration [to] defeat federal jurisdiction simply by suing someone from the same state, plus the party seeking to compel arbitration, in a separate lawsuit." Id. All of our sister Circuits to have addressed the issue have ...


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