By Howard S. Suskin

The Fifth Circuit held that the monetary amount sought in the underlying arbitration, not the amount of the arbitration award, determines the amount in controversy for purposes of diversity jurisdiction to confirm an award under the Federal Arbitration Act (FAA).  Pershing LLC v. Kiebach, No. 15-30396 (5^th Cir. April 6, 2016).    Investors in an alleged Ponzi scheme brought an arbitration against their broker seeking $80 million in damages, but the arbitration panel awarded only $10,000.   The broker then moved to confirm the award under the FAA.  The investors moved to dismiss, arguing that the federal court lacked diversity jurisdiction because the amount of the award was below the $75,000 threshold for diversity jurisdiction.   The district court denied the motion to dismiss and the Fifth Circuit affirmed, concluding that measuring the amount in controversy by the amount of the arbitration demand recognizes the true scope of the dispute between the parties and measures the amount in controversy in the same way as if the dispute were being litigated.