On May 14, 2026, the Supreme Court held in Jules v. Andre Balazs Properties (No. 25-83) that a federal court that stays a case pending arbitration under § 3 of the Federal Arbitration Act (FAA) retains jurisdiction to confirm or vacate the resulting arbitration award, even if the post-arbitration motions would not independently satisfy federal subject matter jurisdiction. Justice Sotomayor authored the Court’s unanimous opinion. The decision clarifies that a stay under § 3 suspends—rather than terminates—the federal action, allowing the district court to supervise the arbitration through its conclusion.

As summarized in Dykema’s April 2026 edition, Petitioner Adrian Jules worked at the Chateau Marmont Hotel in Los Angeles, California. After he was terminated, he sued his employer for wrongful termination. Because his employment agreement contained an arbitration provision, the district court stayed the litigation under § 3 of the FAA while the parties proceeded to arbitration. The arbitrator ruled against Jules. The employer moved to confirm the award, while Jules opposed and moved to vacate the award. He argued that under Badgerow v. Walters, 596 U.S. 1 (2022),the district court lacked subject matter jurisdiction over those motions. Both the district court and the Second Circuit rejected that argument.

The Supreme Court unanimously affirmed. Writing for the Court, Justice Sotomayor explained that the jurisdictional question turned on the procedural posture of the case. Unlike Badgerow, where the parties commenced separate federal proceedings to confirm or vacate an arbitration award after arbitration had concluded, Jules involved motions filed within an already-pending federal action that had been stayed—not dismissed—under § 3. Because the original lawsuit remained pending throughout the arbitration, the district court’s jurisdiction likewise continued.

The Court emphasized that § 9 and § 10 motions filed after a § 3 stay are ordinary motions in an existing federal case, not new civil actions requiring an independent jurisdictional basis. The Court, therefore, rejected Jules’s argument that every motion to confirm or vacate an arbitration award should be treated as commencing a new lawsuit for jurisdictional purposes. That approach, the Court explained, would be inconsistent with § 3’s mandatory stay provision, which contemplates that the district court will retain supervisory authority while the arbitration proceeds.

Jules also argued that § 8 of the FAA demonstrates that Congress knew how to preserve jurisdiction when it wished to do so because that provision expressly addresses maritime arbitration. The Court rejected that argument, concluding that § 8 serves a different function by establishing procedural rules unique to admiralty proceedings rather than conferring continuing jurisdiction. Jules hypothesized that recognizing continuing jurisdiction would incentivize parties to manufacture federal jurisdiction by filing federal lawsuits solely to create a “jurisdictional anchor” before arbitration. The Court found those concerns speculative, observing that nothing in the record suggested such practices are likely to become widespread. Moreover, the Court reasoned that Jules’s rule would undermine the FAA’s statutory framework by requiring parties to initiate separate proceedings to confirm or vacate awards even though the underlying federal action remained pending.

The opinion is noteworthy for the distinction it draws between jurisdiction over an existing federal case and jurisdiction over a new federal case. Rather than expanding subject matter jurisdiction, the Court held only that a district court does not lose jurisdiction it already possesses merely because the parties proceed to arbitration pursuant to a mandatory stay under § 3. The Court left Badgerow undisturbed. So, parties initiating standalone confirmation or vacatur proceedings must still establish an independent basis for federal court jurisdiction.

Takeaway

Jules provides important procedural clarity for parties litigating arbitrable disputes in federal court. When a district court stays, rather than dismisses, a case under § 3 of the FAA, it retains jurisdiction to resolve subsequent motions to confirm or vacate the arbitration award without requiring an independent jurisdictional basis. The decision, therefore, reinforces the distinction between post-arbitration motions filed in an existing federal action and standalone proceedings filed after arbitration has concluded, while preserving the jurisdictional limitations recognized in Badgerow.

For more information, please contact Chantel Febus, James Azadian, Monika Harris, or David Ter-Petrosyan.