The United States Law Week

AOL Can’t Avoid Federal Challenge to Favorable Arbitration Order

Nov. 30, 2018, 4:50 PM

America Online Inc. will be in federal court to face a motion to vacate or modify an arbitration dispute it won, the U.S. Court of Appeals for the Fourth Circuit said Nov. 29.

The U.S. Supreme Court previously ruled that federal subject matter jurisdiction for motions to compel arbitration are based on the nature of the underlying claims, the opinion by Judge Paul V. Niemeyer said. There is no reason to have a different approach for motions to vacate or modify an award, it said.

There is a circuit split on the issue, with the Fourth Circuit joining the First and Second Circuits. The Seventh Circuit, however, distinguished the Federal Arbitration Act language the Supreme Court analyzed for motions to compel arbitration from the statutes that apply to motions to vacate or modify an order, the court said.

Alvin Moore sought damages from AOL claiming it violated the Electronic Communications Privacy Act by giving his personal information to police without a warrant. An arbitrator ruled for AOL.

The district court said it couldn’t hear Moore’s motion to vacate or modify the arbitration order, because his damages didn’t meet the statutory minimum for diversity jurisdiction. The district court should have heard the case because Moore’s damages claim arose under a federal statute, the appellate court said.

Judges Robert B. King and James A. Wynn Jr. joined the opinion.

Miller Johnson represented Moore’s estate. McGuireWoods LLP rerpesented AOL.

The case is McCormick v. Am. Online, Inc., 2018 BL 439560, 4th Cir., No. 17-1542, 11/29/18.

To contact the reporter on this story: Bernie Pazanowski in Washington at bpazanowski@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Molly Ward at mward@bloomberglaw.com

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