No Look-Through for FAA § 9: First Circuit Orders Without-Prejudice Dismissal and Avoids Standing Inquiry Post-Badgerow

Case: Puerto Rico Telephone Company, Inc. v. WorldNet Telecommunications, LLC (No. 22-1127)

Court: United States Court of Appeals for the First Circuit

Panel: Judges Gelpí, Lipez, and Rikelman

Date: October 21, 2025

Author: Judge Lipez

Introduction

This appeal presented a procedural crossroads familiar to federal courts after the Supreme Court’s decision in Badgerow v. Walters, 596 U.S. 1 (2022): whether a federal court may entertain an application to confirm an arbitration award under section 9 of the Federal Arbitration Act (FAA) by “looking through” to the underlying dispute to find a federal question. The First Circuit once said yes in Ortiz‑Espinosa v. BBVA Securities of P.R., Inc., 852 F.3d 36 (1st Cir. 2017). Badgerow said no.

Puerto Rico Telephone Company, Inc. (PRTC) filed in federal district court to confirm an arbitral award under FAA § 9, relying on Ortiz‑Espinosa’s “look-through” approach. The district court did not reach subject-matter jurisdiction; instead, it dismissed on Article III standing grounds, finding that PRTC had not shown injury-in-fact. While the appeal was pending, the Supreme Court decided Badgerow, foreclosing look-through jurisdiction for § 9 (and § 10) applications, except in circumstances concededly not present here (such as independent diversity or other federal jurisdiction).

On appeal, PRTC asked the First Circuit to vacate and to direct a dismissal without prejudice for lack of subject-matter jurisdiction so it could pursue confirmation in Puerto Rico’s Commonwealth courts. WorldNet conceded Badgerow could resolve the case but urged the court to affirm on the district court’s standing rationale instead. The First Circuit declined that invitation, vacated the standing-based dismissal, and remanded with instructions to dismiss without prejudice for lack of subject-matter jurisdiction.

Summary of the Opinion

The First Circuit held that Badgerow governs this case, even though Badgerow post-dated the district court’s ruling, because subject-matter jurisdiction can be raised at any time and cannot be waived (citing Arbaugh v. Y&H Corp.).
Under Badgerow, there is no “look-through” jurisdiction for FAA § 9 (or § 10) applications; federal courts must have an independent jurisdictional basis, which both parties agree is absent here.
Exercising traditional avoidance principles, the court declined to reach the Article III standing question (and the parties’ debate over Stafford v. IBM Corp.) because the simpler and dispositive threshold ground—lack of subject-matter jurisdiction—resolved the appeal.
The court vacated the district court’s judgment and remanded with instructions to dismiss the § 9 application without prejudice for lack of subject-matter jurisdiction (citing Torres‑Fuentes v. Motorambar, Inc.).
The court underscored the “normal and sensible” division of labor post‑Badgerow: state courts are the ordinary forum for confirmation or vacatur applications between non‑diverse parties, as such applications typically concern contractual rights governed by state law.
Costs were taxed in favor of the appellant (PRTC).

Analysis

Precedents Cited and Their Influence

The opinion sits at the intersection of several jurisdictional precedents:

Ortiz‑Espinosa v. BBVA Securities of P.R., Inc., 852 F.3d 36 (1st Cir. 2017): The First Circuit had previously permitted federal jurisdiction over FAA §§ 9, 10, and 11 applications by “looking through” to the underlying dispute to see if it raised a federal question. That approach controlled when PRTC filed. The opinion acknowledges Ortiz‑Espinosa and recognizes that its look‑through rationale is no longer viable post‑Badgerow.
Badgerow v. Walters, 596 U.S. 1 (2022): The Supreme Court rejected look-through jurisdiction for FAA §§ 9 and 10 applications, distinguishing Vaden and focusing on statutory text: §§ 9 and 10 lack the “distinctive” look-through language found in § 4. Badgerow resolved a circuit split, expressly citing decisions like Ortiz‑Espinosa as contrary approaches. Badgerow is the dispositive authority here.
Vaden v. Discover Bank, 556 U.S. 49 (2009): Vaden endorsed look‑through jurisdiction for FAA § 4 petitions to compel arbitration, but the reasoning was tethered to § 4’s textual command. Badgerow limits Vaden’s reach, confining look‑through to § 4 alone.
Arbaugh v. Y&H Corp., 546 U.S. 500 (2006): Subject-matter jurisdiction cannot be waived and can be raised at any time; courts have an independent obligation to confirm jurisdiction. This principle allows Badgerow to apply here, even though it came down after the district court’s decision.
Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (1998), and Fed. R. Civ. P. 12(h)(3): Courts must ensure jurisdiction before proceeding to other issues; when jurisdiction is lacking, the only remaining function is to announce the lack of jurisdiction and dismiss.
Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (1999): Federal courts may choose among threshold grounds for denying audience to the merits. This supports the court’s election to resolve the appeal on subject-matter jurisdiction rather than the constitutional standing question.
Ashwander v. TVA, 297 U.S. 288 (1936) (Brandeis, J., concurring); Greenless v. Almond, 277 F.3d 601 (1st Cir. 2002); U.S.I. Properties Corp. v. M.D. Construction Co., 230 F.3d 489 (1st Cir. 2000): Canon of constitutional avoidance—courts avoid constitutional questions when a case can be resolved on non‑constitutional grounds. That principle guided the court’s refusal to decide standing once Badgerow mandated dismissal for lack of jurisdiction.
Ward v. Schaefer, 91 F.4th 538 (1st Cir. 2024) and United States v. Nivica, 887 F.2d 1110 (1st Cir. 1989): Appellate courts may affirm on any independently sufficient ground supported by the record. While the First Circuit references this flexibility, it uses it to justify choosing a threshold jurisdictional ground rather than adopting the district court’s standing analysis.
Stafford v. IBM Corp., 78 F.4th 62 (2d Cir. 2023), cert. denied, 144 S. Ct. 1011 (2024): The parties debated Stafford’s standing analysis for confirmation petitions, but the First Circuit expressly declined to wade into that debate, leaving the question open in this circuit.
Torres‑Fuentes v. Motorambar, Inc., 396 F.3d 474 (1st Cir. 2005): Dismissals for lack of jurisdiction should generally be without prejudice. This principle controls the remedy: the court vacates and remands with instructions to dismiss without prejudice, preserving PRTC’s ability to refile in Commonwealth court.

Legal Reasoning

The court’s reasoning is methodical and firmly grounded in jurisdictional first principles:

Badgerow controls the jurisdictional inquiry. Because FAA §§ 9 and 10 lack § 4’s “look-through” language, federal courts lack subject‑matter jurisdiction to confirm or vacate arbitral awards unless there is an independent jurisdictional basis (e.g., diversity jurisdiction). Both parties agreed such circumstances were absent.
Jurisdiction comes before standing. Even though the district court dismissed for lack of Article III standing, the appellate court emphasized the hierarchy of threshold questions. Per Steel Co. and Rule 12(h)(3), when subject‑matter jurisdiction is lacking, the court has no power to decide anything else—including constitutional standing. The court therefore declined to resolve a “more complex standing inquiry” or to opine on whether it would be proper to reach standing when subject‑matter jurisdiction is absent.
Constitutional avoidance and prudent docket management. Echoing Ashwander and related First Circuit precedents, the court observed that it is appropriate to bypass contentious constitutional questions (standing) in favor of a simpler statutory subject‑matter jurisdiction question dictated by Badgerow.
Remedial posture: vacatur and without-prejudice dismissal. Because the district court dismissed with prejudice on standing grounds, and because that disposition could cloud PRTC’s ability to refile in Commonwealth court, the First Circuit vacated and directed dismissal without prejudice for lack of jurisdiction (citing Torres‑Fuentes). The panel flagged, but did not decide, appellee’s suggestion that an affirmance on standing might foreclose state-court refiling; its disposition renders that issue moot.
“Normal and sensible” division of labor. Echoing Badgerow, the court noted that § 9 and § 10 applications typically concern contractual rights under arbitration agreements, generally governed by state law—even if the underlying dispute involved federal questions. That underscores why state courts are ordinarily the proper forum when no independent federal jurisdiction exists.

Impact

The opinion clarifies and cements post‑Badgerow practice in the First Circuit for FAA § 9 and § 10 applications:

No look-through jurisdiction. Litigants can no longer rely on the underlying federal nature of a dispute to access federal court for confirmation or vacatur of awards. They must plead and establish an independent basis for subject‑matter jurisdiction, typically diversity under 28 U.S.C. § 1332.
Standing issues remain unresolved in the First Circuit. The panel deliberately avoided adopting or rejecting the Second Circuit’s approach in Stafford to Article III standing for award confirmation. As a result, there is no new First Circuit precedent on whether, and when, a prevailing party has sufficient injury-in-fact to seek confirmation. That question remains open for a case where subject‑matter jurisdiction is secure.
Remedial guidance to district courts. District courts should assess subject‑matter jurisdiction sua sponte in FAA enforcement actions and, if absent, dismiss without prejudice rather than reach constitutional standing or merits questions. The appellate remedy here—vacatur and remand with instructions to dismiss for lack of jurisdiction—signals the correct approach.
Forum selection recalibrated. Parties in Puerto Rico and throughout the First Circuit must plan to pursue confirmation or vacatur in state (or Commonwealth) courts unless they can satisfy independent federal jurisdiction. This aligns with the Supreme Court’s articulation of the “normal and sensible” division of labor post‑Badgerow.
Preclusion concerns mitigated. By avoiding a standing ruling and directing dismissal without prejudice, the court minimized potential claim-preclusion or issue-preclusion risks that might have followed a judgment “with prejudice” on standing, thereby safeguarding a pathway to state‑court confirmation proceedings.
Transitional cases get a clear path. For cases filed in reliance on Ortiz‑Espinosa before Badgerow, this opinion indicates that the correct corrective action is dismissal for lack of subject‑matter jurisdiction without prejudice—allowing litigants to refile in state court.

Complex Concepts Simplified

FAA § 4 vs. §§ 9 and 10: Section 4 deals with petitions to compel arbitration and contains special “look-through” language allowing courts to ask whether the underlying dispute raises a federal question. Sections 9 (confirming awards) and 10 (vacating awards) lack that language. After Badgerow, “look‑through” is limited to § 4 and not available for §§ 9 or 10.
Subject-Matter Jurisdiction vs. Standing: Subject-matter jurisdiction concerns the court’s power to hear a type of case (e.g., federal question, diversity). Standing is a constitutional requirement that the party bringing the case must show a concrete injury caused by the other side and likely redressable by the court. Courts must ensure subject‑matter jurisdiction before adjudicating standing.
Dismissal “without prejudice”: This means the case is dismissed not on the merits, and the plaintiff may refile in a court that has jurisdiction. Here, that court is ordinarily a state or Commonwealth court.
Constitutional avoidance: Courts avoid deciding constitutional questions (like Article III standing) when a case can be resolved on simpler, non‑constitutional grounds (like lack of statutory jurisdiction).
“Normal division of labor”: Post‑Badgerow, state courts are the primary forum for confirming or vacating arbitration awards when no independent federal jurisdiction exists, because those applications typically involve state-law contract issues related to the arbitration agreement.

Practical Guidance for Litigants

Before filing a § 9 (confirmation) or § 10 (vacatur) application in federal court, verify an independent basis for jurisdiction:
- Diversity jurisdiction under 28 U.S.C. § 1332 (complete diversity and amount in controversy); or
- A federal question apparent on the face of the confirmation/vacatur application itself (rare, because the application usually seeks state‑law contractual remedies under the FAA framework).
Do not assume that the federal nature of the arbitrated claims supplies jurisdiction; look‑through is not available for §§ 9 and 10.
If federal jurisdiction is uncertain, consider filing in state court from the outset to avoid delay, or be prepared for a federal dismissal without prejudice post‑Badgerow.
Be cautious about inviting federal courts to decide standing or other constitutional issues when subject‑matter jurisdiction is dubious; Steel Co. and Rule 12(h)(3) direct dismissal.

Conclusion

The First Circuit’s decision in PRTC v. WorldNet faithfully implements Badgerow’s jurisdictional command: there is no “look-through” jurisdiction for FAA § 9 and § 10 applications. Where—like here—no independent basis for federal jurisdiction exists, federal courts must dismiss without prejudice. The panel declined to weigh in on Article III standing for confirmation petitions, leaving that still-open question for another day when subject‑matter jurisdiction is secure. In doing so, the court reinforces the hierarchical sequencing of threshold issues, the canon of constitutional avoidance, and the “normal and sensible” forum allocation between federal and state courts in the arbitration enforcement context. Litigants in the First Circuit should treat this opinion as a roadmap: verify jurisdiction first, or proceed in state court.