United States Court of Appeals For the First Circuit
No. 22-1127
PUERTO RICO TELEPHONE COMPANY, INC.,
Claimant, Appellant,
v.
WORLDNET TELECOMMUNICATIONS, LLC,
Respondent, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
[Hon. Raúl M. Arias-Marxuach, U.S. District Judge]
Before
Gelpí, Lipez, and Rikelman, Circuit Judges.
Eliezer A. Aldarondo-López, with whom Aldarondo & López-Bras, LLC was on brief, for claimant-appellant.
Miguel J. Rodríguez-Marxuach, with whom María Celeste Colberg-Guerra and Rodríguez Marxuach, PSC were on brief, for respondent-appellee.
October 21, 2025 LIPEZ, Circuit Judge. Relying on our then-applicable
precedent on subject-matter jurisdiction for claims brought under
the Federal Arbitration Act ("FAA"), see Ortiz-Espinosa v. BBVA
Secs. of P.R., Inc., 852 F.3d 36 (1st Cir. 2017), appellant Puerto
Rico Telephone Company ("PRTC") sought confirmation of an
arbitration award in federal district court pursuant to section 9
of the FAA, 9 U.S.C. § 9.1 The district court dismissed the action
on standing grounds, concluding that PRTC had not demonstrated the
requisite injury-in-fact for Article III jurisdiction. See P.R.
Tel. Co. v. WorldNet Telecomms., LLC, No. 21-MC-386, 2022 WL
255362, at *1-2 (D.P.R. Jan. 27, 2022). Roughly a month after
PRTC filed its notice of appeal, the United States Supreme Court
rejected the approach for determining subject-matter jurisdiction
over applications to confirm or vacate arbitration awards that we
adopted in Ortiz-Espinosa. See Badgerow v. Walters, 596 U.S. 1
(2022). The Court held that federal courts lack subject-matter
jurisdiction over such applications, brought under FAA sections 9
1In Ortiz-Espinosa, we held that federal courts had subject-matter jurisdiction under sections 9, 10, and 11 of the FAA to consider applications seeking to confirm, vacate, or modify arbitration awards when a so-called "look-through test" showed that the underlying substantive dispute between the parties involved a federal question. 852 F.3d at 40, 47.
- 2 - and 10, except in circumstances that both parties agree do not
exist here.2 See id. at 5, 9.
Following the decision in Badgerow, PRTC asked us to
vacate the district court's opinion and direct the district court
to dismiss the case without prejudice for lack of subject-matter
jurisdiction, thereby freeing PRTC to seek confirmation of the
award in the Commonwealth courts.3 Appellee WorldNet
Telecommunications ("WorldNet") acknowledges that this case could
be dismissed based on Badgerow,4 but it urges us instead to review,
and uphold, the district court's determination on PRTC's lack of
Article III standing. That is, WorldNet asserts that we can, and
should, view this appeal as focused solely on the district court's
2 The Supreme Court had previously endorsed the "'look- through' approach to jurisdiction" for petitions to compel arbitration under section 4 of the FAA based on "[s]ection 4's distinctive language directing a look-through." Badgerow, 596 U.S. at 4-5 (describing the holding in Vaden v. Discover Bank, 556 U.S. 49 (2009)). In rejecting that approach to federal jurisdiction for applications to confirm or vacate arbitral awards -- resolving a circuit split -- the Court emphasized that "[s]ections 9 and 10 . . . contain none of the statutory language on which Vaden relied." Id. at 11; see also id. at 7 & n.1 (noting the division in the courts and citing Ortiz-Espinosa among other cases).
3 PRTC sought summary disposition of the appeal based on Badgerow, but we denied that motion.
4 When asked at oral argument if this court could vacate the district court's judgment and order dismissal of the action based on Badgerow, WorldNet's counsel responded: "I think that's an alternative" and acknowledged "that is the court's prerogative."
- 3 - "threshold determination" "on the foundational, constitutional
issue of PRTC's standing."
The parties, however, have sharply different views on
whether PRTC would be at risk of sufficient injury to establish
Article III standing if the arbitration award is not confirmed.
They debate, among other points, the relevance to the facts here
of the Second Circuit's analysis in Stafford v. IBM Corp., 78 F.4th
62 (2d Cir. 2023), cert. denied, 144 S. Ct. 1011 (2024), where the
court found an absence of an Article III case or controversy for
a party seeking confirmation of an arbitration award. See id. at
66-69.
We decline to enter the debate. Because Badgerow is
indisputably applicable to this case,5 we think it inadvisable to
engage in the more complex standing inquiry -- or, indeed, to
consider the propriety of even performing that inquiry if we lack
5 Although Badgerow was decided after the district court issued its judgment, it governs this case because "subject-matter jurisdiction 'can never be forfeited or waived.'" Stafford, 78 F.4th at 68 (quoting Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006)); see also Arbaugh, 546 U.S. at 506 ("The objection that a federal court lacks subject-matter jurisdiction may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment." (citation omitted)); id. at 514 ("Moreover, courts, including this Court, have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party."); Am. Fiber & Finishing, Inc. v. Tyco Healthcare Grp., LP, 362 F.3d 136, 138-39 (1st Cir. 2004) ("[I]t is firmly settled that challenges to federal subject matter jurisdiction may be raised for the first time on appeal.").
- 4 - subject-matter jurisdiction over the parties' dispute. See, e.g.,
Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998)
("Jurisdiction is power to declare the law, and when it ceases to
exist, the only function remaining to the court is that of
announcing the fact and dismissing the cause." (quoting Ex parte
McCardle, 74 U.S. (7 Wall.) 506, 514 (1868))); Fed. R. Civ. P.
12(h)(3) ("If the court determines at any time that it lacks
subject-matter jurisdiction, the court must dismiss the action.").
We may affirm the district court's dismissal of the action "on any
independently sufficient ground supported by the record," Ward v.
Schaefer, 91 F.4th 538, 544 n.3 (1st Cir. 2024) (quoting United
States v. Nivica, 887 F.2d 1110, 1127 (1st Cir. 1989)), and courts
appropriately bypass contentious constitutional questions when the
case can be resolved based on "a simpler statutory subject matter
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United States Court of Appeals For the First Circuit
No. 22-1127
PUERTO RICO TELEPHONE COMPANY, INC.,
Claimant, Appellant,
v.
WORLDNET TELECOMMUNICATIONS, LLC,
Respondent, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
[Hon. Raúl M. Arias-Marxuach, U.S. District Judge]
Before
Gelpí, Lipez, and Rikelman, Circuit Judges.
Eliezer A. Aldarondo-López, with whom Aldarondo & López-Bras, LLC was on brief, for claimant-appellant.
Miguel J. Rodríguez-Marxuach, with whom María Celeste Colberg-Guerra and Rodríguez Marxuach, PSC were on brief, for respondent-appellee.
October 21, 2025 LIPEZ, Circuit Judge. Relying on our then-applicable
precedent on subject-matter jurisdiction for claims brought under
the Federal Arbitration Act ("FAA"), see Ortiz-Espinosa v. BBVA
Secs. of P.R., Inc., 852 F.3d 36 (1st Cir. 2017), appellant Puerto
Rico Telephone Company ("PRTC") sought confirmation of an
arbitration award in federal district court pursuant to section 9
of the FAA, 9 U.S.C. § 9.1 The district court dismissed the action
on standing grounds, concluding that PRTC had not demonstrated the
requisite injury-in-fact for Article III jurisdiction. See P.R.
Tel. Co. v. WorldNet Telecomms., LLC, No. 21-MC-386, 2022 WL
255362, at *1-2 (D.P.R. Jan. 27, 2022). Roughly a month after
PRTC filed its notice of appeal, the United States Supreme Court
rejected the approach for determining subject-matter jurisdiction
over applications to confirm or vacate arbitration awards that we
adopted in Ortiz-Espinosa. See Badgerow v. Walters, 596 U.S. 1
(2022). The Court held that federal courts lack subject-matter
jurisdiction over such applications, brought under FAA sections 9
1In Ortiz-Espinosa, we held that federal courts had subject-matter jurisdiction under sections 9, 10, and 11 of the FAA to consider applications seeking to confirm, vacate, or modify arbitration awards when a so-called "look-through test" showed that the underlying substantive dispute between the parties involved a federal question. 852 F.3d at 40, 47.
- 2 - and 10, except in circumstances that both parties agree do not
exist here.2 See id. at 5, 9.
Following the decision in Badgerow, PRTC asked us to
vacate the district court's opinion and direct the district court
to dismiss the case without prejudice for lack of subject-matter
jurisdiction, thereby freeing PRTC to seek confirmation of the
award in the Commonwealth courts.3 Appellee WorldNet
Telecommunications ("WorldNet") acknowledges that this case could
be dismissed based on Badgerow,4 but it urges us instead to review,
and uphold, the district court's determination on PRTC's lack of
Article III standing. That is, WorldNet asserts that we can, and
should, view this appeal as focused solely on the district court's
2 The Supreme Court had previously endorsed the "'look- through' approach to jurisdiction" for petitions to compel arbitration under section 4 of the FAA based on "[s]ection 4's distinctive language directing a look-through." Badgerow, 596 U.S. at 4-5 (describing the holding in Vaden v. Discover Bank, 556 U.S. 49 (2009)). In rejecting that approach to federal jurisdiction for applications to confirm or vacate arbitral awards -- resolving a circuit split -- the Court emphasized that "[s]ections 9 and 10 . . . contain none of the statutory language on which Vaden relied." Id. at 11; see also id. at 7 & n.1 (noting the division in the courts and citing Ortiz-Espinosa among other cases).
3 PRTC sought summary disposition of the appeal based on Badgerow, but we denied that motion.
4 When asked at oral argument if this court could vacate the district court's judgment and order dismissal of the action based on Badgerow, WorldNet's counsel responded: "I think that's an alternative" and acknowledged "that is the court's prerogative."
- 3 - "threshold determination" "on the foundational, constitutional
issue of PRTC's standing."
The parties, however, have sharply different views on
whether PRTC would be at risk of sufficient injury to establish
Article III standing if the arbitration award is not confirmed.
They debate, among other points, the relevance to the facts here
of the Second Circuit's analysis in Stafford v. IBM Corp., 78 F.4th
62 (2d Cir. 2023), cert. denied, 144 S. Ct. 1011 (2024), where the
court found an absence of an Article III case or controversy for
a party seeking confirmation of an arbitration award. See id. at
66-69.
We decline to enter the debate. Because Badgerow is
indisputably applicable to this case,5 we think it inadvisable to
engage in the more complex standing inquiry -- or, indeed, to
consider the propriety of even performing that inquiry if we lack
5 Although Badgerow was decided after the district court issued its judgment, it governs this case because "subject-matter jurisdiction 'can never be forfeited or waived.'" Stafford, 78 F.4th at 68 (quoting Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006)); see also Arbaugh, 546 U.S. at 506 ("The objection that a federal court lacks subject-matter jurisdiction may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment." (citation omitted)); id. at 514 ("Moreover, courts, including this Court, have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party."); Am. Fiber & Finishing, Inc. v. Tyco Healthcare Grp., LP, 362 F.3d 136, 138-39 (1st Cir. 2004) ("[I]t is firmly settled that challenges to federal subject matter jurisdiction may be raised for the first time on appeal.").
- 4 - subject-matter jurisdiction over the parties' dispute. See, e.g.,
Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998)
("Jurisdiction is power to declare the law, and when it ceases to
exist, the only function remaining to the court is that of
announcing the fact and dismissing the cause." (quoting Ex parte
McCardle, 74 U.S. (7 Wall.) 506, 514 (1868))); Fed. R. Civ. P.
12(h)(3) ("If the court determines at any time that it lacks
subject-matter jurisdiction, the court must dismiss the action.").
We may affirm the district court's dismissal of the action "on any
independently sufficient ground supported by the record," Ward v.
Schaefer, 91 F.4th 538, 544 n.3 (1st Cir. 2024) (quoting United
States v. Nivica, 887 F.2d 1110, 1127 (1st Cir. 1989)), and courts
appropriately bypass contentious constitutional questions when the
case can be resolved based on "a simpler statutory subject matter
jurisdiction question," Greenless v. Almond, 277 F.3d 601, 607
(1st Cir. 2002) (describing approach taken in U.S.I. Props. Corp.
v. M.D. Constr. Co., 230 F.3d 489, 495 (1st Cir. 2000)); see also
Ashwander v. Tenn. Valley Auth., 297 U.S. 288, 347 (1936)
(Brandeis, J., concurring) ("The Court will not pass upon a
constitutional question although properly presented by the record,
if there is also present some other ground upon which the case may
be disposed of."). Moreover, "[i]t is hardly novel for a federal
court to choose among threshold grounds for denying audience to a
- 5 - case on the merits." Ruhrgas AG v. Marathon Oil Co., 526 U.S.
574, 585 (1999).
We note, in addition, the Supreme Court's observation in
Badgerow that applications seeking confirmation or vacatur of an
arbitration award ordinarily "concern[] the contractual rights
provided in the arbitration agreement, generally governed by state
law," even when the substance of the underlying claims may have
involved "a federal-law dispute." Badgerow, 596 U.S. at 18. As
PRTC points out, dismissing this case for lack of subject-matter
jurisdiction, leaving the company to seek relief in the
Commonwealth courts, is thus consistent with what the Supreme Court
described as "the normal -- and sensible -- judicial division of
labor: The [section 9 and 10] applications go to state, rather
than federal, courts when they raise claims between non-diverse
parties involving state law." Id.6
Accordingly, based on Badgerow, we vacate the judgment
of the district court and remand to that court with instructions
to dismiss without prejudice, for lack of subject-matter
jurisdiction, PRTC's application under section 9 of the FAA for
confirmation of the arbitration award. See Torres-Fuentes v.
6WorldNet appears to assume that, if we affirmed the district court's standing determination, PRTC would not have the option to refile in Commonwealth court, perhaps because the district court dismissed the case with prejudice. Our disposition makes it unnecessary to examine the correctness of that assumption.
- 6 - Motorambar, Inc., 396 F.3d 474, 475 (1st Cir. 2005) ("Dismissals
for lack of jurisdiction should generally be without prejudice.").
Costs are taxed in favor of the appellant.
So ordered.
- 7 -