Eighth Circuit Rules for Beck Redden Clients in a Significant Appeal Concerning Federal Jurisdiction

  • September 6, 2013

In the United States Court of Appeals for the Eighth Circuit, Beck Redden prevailed for its clients in an important appeal about federal jurisdiction over arbitration matters. Beck Redden’s individual clients filed a class action against several companies in Arkansas state court, but before certification occurred, the companies shifted the battleground to federal court with a petition to compel arbitration of the clients’ dispute. The individuals successfully convinced the district court to dismiss the petition for lack of the necessary amount in controversy, and when the companies appealed to the Eighth Circuit, the individuals engaged Beck Redden partner Russell Post to argue the cause.

With an opinion from Judge Steven Colloton, the Eighth Circuit ruled in favor of the individuals by resolving an unsettled question about the amount-in-controversy requirement. To support their claim of diversity jurisdiction, the companies had relied on a 2008 Eighth Circuit precedent that instructed district courts to determine the amount in controversy by valuing the petition to compel arbitration itself, as opposed to the underlying suit in state court. The individuals sought to remain in state court with a focus on the state action, not the federal petition, citing recent Supreme Court authority in the related context of federal-question jurisdiction, Vaden v. Discover Bank, 556 U.S. 49 (2009).  With oral argument and supplemental briefing, Beck Redden and its co-counsel convinced the Eighth Circuit to depart from its prior precedent’s reasoning and determine the amount in controversy under the Vaden paradigm by “looking through” the petition to the suit in state court. 

The case is CMH Homes, Inc. v. Goodner, No. 12-3381 (8th Cir. Sept. 5, 2013). Beck Redden partner Russell Post handled the argument and supplemental briefing with assistance from Beck Redden associate Chad Flores. Attorneys from Crowley Norman LLP and Keil & Goodson, P.A. represented the individuals in the trial courts and authored the primary appellate brief.