Jurisdiction(s):
United Kingdom

US District Court dismisses petition to vacate AAA award; AI-use allegations not reached—FAA does not confer jurisdiction, Badgerow blocks look-through, and diversity threshold unmet (Lapaglia v Valve)

Published on: 17 February 2026

Published by a LexisNexis Arbitration expert

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Article summary

John Lapaglia v Valve Corporation Case No: 3:25-cv-00833-RBM-DDL

What are the practical implications of this case?

In the US, parties attempting to overturn an arbitration award must first establish an independent basis for federal jurisdiction—either the existence of a federal question or satisfaction of diversity jurisdiction requirements. Jurisdiction is a threshold issue; unless one of these grounds is shown, the court will not hear the case. Allegations about artificial intelligence (AI), even when cast as excess of authority or manifest disregard of law under the Federal Arbitration Act (FAA), will not be reached until that jurisdictional hurdle is cleared. In this dispute, even had the court found it could hear the matter, vacatur under the FAA would still be far from a ‘slam-dunk’. The parties must, inter alia, prove that the deployment of AI amounted to a manifest disregard of the law, or that AI led the arbitrator to act ultra vires by exceeding the authority conferred in the arbitration agreement. To avoid ‘surprises’ regarding potential FAA vacatur, arbitral institutions that have yet to do so should implement proactive guidance addressing, inter alia, disclosure requirements and record‑keeping obligations connected to AI use...

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