                             In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 03-1628
AMERICA’S MONEYLINE, INCORPORATED,
                                               Plaintiff-Appellant,
                                v.

JOSEPHINE COLEMAN,
                                             Respondent-Appellee.

                          __________
            Appeal from the United States District Court
               for the Southern District of Illinois.
             No. 02 C 1267—William D. Stiehl, Judge.
                          __________
    ARGUED SEPTEMBER 25, 2003—DECIDED MARCH 15, 2004
                          __________

  Before CUDAHY, RIPPLE and KANNE, Circuit Judges.
  RIPPLE, Circuit Judge. America’s MoneyLine, Inc. appeals
the district court’s dismissal of its petition to compel
arbitration. The district court based its dismissal on the lack
of subject matter jurisdiction because the requisite jurisdic-
tional amount was not alleged. For the reasons set forth in
this opinion, we affirm the judgment of the district court.
2                                                No. 03-1628

                              I
                     BACKGROUND
A. Facts
   Josephine Coleman filed a class action complaint in
Illinois state court against America’s MoneyLine, Inc. She
alleged consumer fraud and unjust enrichment against
MoneyLine, the lender in Ms. Coleman’s residential mort-
gage loan. She alleged that MoneyLine had charged a $30
courier fee at closing, allegedly to reimburse it for the
amount that it had to pay to deliver by courier loan docu-
ments to the title company. The complaint alleges that only
a portion of the $30 actually went to a courier and that the
rest was secretly kept by MoneyLine.
   The contract between the parties had an “Arbitration
Rider”; it stated that “all disputes, claims, or controversies
arising from or related to the loan . . . shall be resolved by
binding arbitration, and not by court action.” Joint App. at
7 (Arbitration Rider). The Arbitration Rider also required
that all arbitrations be conducted individually, thus prevent-
ing “class arbitrations.” Id. Based on the Arbitration Rider,
MoneyLine filed a petition to compel arbitration in the
United States District Court for the Southern District of
Illinois. The petition alleged that the district court had
diversity jurisdiction. See 28 U.S.C. § 1332. Ms. Coleman
responded by filing a motion to dismiss for lack of subject
matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). She submit-
ted that the amount in controversy did not exceed $75,000.
The district court granted the motion and dismissed
MoneyLine’s petition. MoneyLine then timely appealed to
this court. The state court then granted MoneyLine’s motion
to stay the state court proceedings pending resolution of this
appeal.
No. 03-1628                                                 3

B. District Court Proceedings
  This case was before the district court on Ms. Coleman’s
motion to dismiss for want of jurisdiction. There is no
question about the parties’ diversity of citizenship.
MoneyLine is a Virginia corporation with its principal place
of business in Virginia. Ms. Coleman is a citizen of Illinois.
The only dispute before the district court was whether the
amount-in-controversy requirement, as stated in 28 U.S.C.
§ 1332(a), was met.
  With respect to the amount in controversy, the district
court denied two alternative arguments by MoneyLine that
the amount in controversy exceeded $75,000. First, the court
rejected MoneyLine’s claim that the amount in controversy
in the underlying dispute exceeded $75,000 because of
attorney’s fees and punitive damages. The court held that
punitive damages could not be 2,500 times the compensa-
tory damages ($30). It further ruled that attorney’s fees only
count toward the amount in controversy requirement if they
were incurred before the filing of the lawsuit, and
MoneyLine did not claim that its fees prior to the suit were
so extensive as to meet the jurisdictional amount. This
ruling is not before us on appeal.
  Next, the district court also addressed MoneyLine’s
alternative amount-in-controversy argument: that the
amount in controversy ought to be measured by the value
to MoneyLine of enforcing the Arbitration Rider. In rejecting
this submission, the court held that, under Section 4 of the
Federal Arbitration Act (“FAA”), courts have held consis-
tently that the amount in controversy is determined by the
amount at stake in the underlying dispute, whether it be the
potential state court award or the amount an arbitrator
could award in an arbitration. The district court further
rejected MoneyLine’s argument that this rule ought not
apply when the defendant in the underlying action files a
4                                                  No. 03-1628

petition to compel arbitration as a separate and independent
federal lawsuit. Relying on our decision in We Care Hair
Dev., Inc. v. Engen, 180 F.3d 838, 841 (7th Cir. 1999), the court
held that, although a petition to compel arbitration is a
separate lawsuit, the amount in controversy must be
determined by the stakes of the potential arbitration. The
court then concluded that, in this case, an arbitrator could
not award in excess of $75,000. Thus, the court concluded,
the statutory amount in controversy was lacking, and no
diversity jurisdiction existed.


                               II
                        DISCUSSION
  We review de novo a district court’s decision regarding
subject matter jurisdiction. See Johnson v. Apna Ghar, Inc., 330
F.3d 999, 1001 (7th Cir. 2003). We begin that inquiry by
reading the text of the statute. Section 4 of the FAA
provides:
    A party aggrieved by the alleged failure, neglect, or
    refusal of another to arbitrate under a written agreement
    for arbitration may petition any United States district
    court which, save for such agreement, would have
    jurisdiction under Title 28, in a civil action or in admi-
    ralty of the subject matter of a suit arising out of the
    controversy between the parties, for an order directing
    that such arbitration proceed in the manner provided
    for in such agreement.
9 U.S.C. § 4.
  By its plain wording, then, Section 4 permits a party to file
a petition to compel arbitration in the district court. See
Kasap v. Folger, Nolan, Fleming & Douglas, Inc., 166 F.3d 1243,
1245 (D.C. Cir. 1999). However, as the Supreme Court has
No. 03-1628                                                     5

noted, the “save for such agreement” language of Section 4
does not itself grant jurisdiction to federal courts, nor does
it permit federal jurisdiction to be invoked under the
general federal question jurisdiction statute, 28 U.S.C.
§ 1331. See Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 26 n.32 (1983), superseded on other grounds
as stated in Bradford-Scott Data Corp., Inc. v. Physician Com-
puter Network, Inc., 128 F.3d 504, 506 (7th Cir. 1997) (noting
that “[9 U.S.C.] § 16(b)(1) upsets the principal holding of
Moses Cone”). Rather, to assert a cause of action under
Section 4, “there must be diversity of citizenship or some
other independent basis for federal jurisdiction.” Id. As the
Supreme Court explained in Moses H. Cone:
    The Arbitration Act is something of an anomaly in the
    field of federal-court jurisdiction. It creates a body of
    federal substantive law establishing and regulating the
    duty to honor an agreement to arbitrate, yet it does not
    create any independent federal-question jurisdiction
    under 28 U.S.C. § 1331 (1976 ed., Supp. V) or otherwise.
    Section 4 provides for an order compelling arbitration
    only when the federal district court would have jurisdic-
    tion over a suit on the underlying dispute; hence, there
    must be diversity of citizenship or some other independent
    basis for federal jurisdiction before the order can issue.
Id. (emphasis added).
  Our colleagues in the Fifth Circuit have placed succinctly
this approach in historical context. Writing for that bench in
Prudential-Bache Securities, Inc. v. Fitch, 966 F.2d 981 (5th Cir.
1992), Judge Davis noted that, before the FAA was enacted,
federal courts would not enforce a claim for specific perfor-
mance of an agreement to arbitrate. Id. at 987. In those days,
the courts employed the rationale of the arcane English
common-law rule that arbitration provisions were unen-
forceable because the effect of the arbitration provision was
6                                                     No. 03-1628

to “oust” the court of jurisdiction over the claim. Id. Con-
gress, in enacting the FAA, intended “to overturn this rule
and to require the courts to treat agreements to arbitrate like
any other contract. The statute simply ‘make[s] valid and
enforceable agreements for arbitration contained in con-
tracts involving interstate commerce . . . or which may be
the subject of litigation in the federal courts.’ ” Id. (quoting
H.R. Rep. No. 96, 68th Cong., 1st Sess. 1 (1924)). In short,
concluded Judge Davis, Congress simply said that, if the
federal court would exercise jurisdiction over the dispute in
the absence of the arbitration clause, the statute now gives
it the authority, and the obligation, to enforce that arbitra-
             1
tion clause. Section 4 simply instructed the district courts
not to refuse to enforce arbitration clauses in cases otherwise
properly before them.
  Notably, this legislative mandate did not instruct the
district courts to take a different approach to assessing
jurisdiction in Section 4 cases than they undertake in any
other case. More precisely, there is no basis for concluding
that the district court should look to any source other than
the petition in order to determine whether the requisite
jurisdictional amount has been met. See Gully v. First Nat’l


1
  The Prudential-Bache analysis was largely drawn from Drexel
Burnham Lambert, Inc. v. Valenzuela Bock, 696 F. Supp. 957
(S.D.N.Y. 1988). Drexel also explained two other reasons why it is
doubtful that Section 4 was intended to confer federal court
jurisdiction or establish the kind of federal right that entails
federal jurisdiction under 28 U.S.C. § 1331: (1) there is no reason
why Congress would have such a jurisdictional principle in
Section 4, but not apply the same principle to other sections of the
FAA, like Section 7 (authorizing the “United States court” to
compel the attendance of witnesses), and (2) there is no evidence
Congress intended to carve out an exception to the well-pleaded
complaint rule. See id. at 962-65.
No. 03-1628                                                  7

Bank, 299 U.S. 109, 113 (1936) (A “complaint itself will not
avail as a basis of jurisdiction in so far as it goes beyond a
statement of the plaintiff’s cause of action and anticipates or
replies to a probable defense.”). It is not appropriate to look
beyond the petition to determine whether the “underlying
dispute” meets the jurisdictional amount. Indeed, in We Care
Hair, we held that “controversy between the parties” in
Section 4 meant the controversy between the parties to the
petition to compel arbitration, not the controversy between
the parties to the state court action. 180 F.3d at 842. The
relevant inquiry is the petition to compel arbitration itself,
not the underlying controversy. We perceived no indication
that Section 4 had altered in any way the rule that federal
courts look only to the well-pleaded complaint before them
in determining their jurisdiction. We therefore turn to an
examination of the petition to ascertain whether it reveals
that the requisite amount is at stake and that the jurisdiction
of the district court therefore is invoked properly.
   MoneyLine takes the view that the real controversy
presented by its petition is, in essence, the issue of where,
when and how Ms. Coleman’s claim will be adjudicated:
Will it be decided in a class action in state court or in an
arbitration with Ms. Coleman? MoneyLine submits that its
request to the district court is that the court order Ms.
Coleman to submit to arbitration rather than proceed with
her suit in state court. This request, MoneyLine submits, is
a request for equitable relief because it seeks the “equitable
remedy” of enforcing a contractual right—the right to
arbitrate. Thus, it is in substance no different from any other
request for an injunction or declaratory judgment. In suits
seeking the equitable remedies of an injunction or a declara-
tory judgment, the amount in controversy is determined by
the value to the plaintiff (or petitioner) of the object of the
litigation. See Hunt v. Washington State Apple Adver. Comm’n,
432 U.S. 333, 347 (1977). MoneyLine contends that the object
8                                                   No. 03-1628

of this Section 4 litigation is to compel arbitration; the value
of this litigation is the value of enforcing the Arbitration
Rider and avoiding class litigation in the state court. As a
practical matter, obtaining such an order would permit
MoneyLine to avoid financing an expensive class action in
state court and, instead, to arbitrate individually Ms.
Coleman’s claim. It points out that proceeding with the
arbitration would save it significant costs, including lost
productivity and compensation for employees assisting
counsel. This amount, submits MoneyLine, has the potential
to exceed $75,000.
   In urging us to accept its theory on the appropriate
measure of a possible recovery, MoneyLine asks us to reject
the settled law of this circuit and of the other circuits. We
have adhered to the rule that the value of the object of the
litigation is the “pecuniary result” that would flow to the
plaintiff (or defendant) from the court’s granting the
injunction or declaratory judgment. See McCarty v. Amoco
Pipeline Co., 595 F.2d 389, 393 (7th Cir. 1979). In the context
of actions to compel arbitration, we have adhered to the rule
that, in order to ascertain whether the jurisdictional amount
for the diversity statute has been met, the appropriate focus
is the stakes of the underlying arbitration dispute. American
Bankers Life Assurance Co. v. Evans, 319 F.3d 907 (7th Cir.
2003), is illustrative of the approach that we have taken. In
that case, Evans, alleging violations of Illinois state law,
sued American, among others, in an Illinois state court.
American responded by filing a petition to compel arbitra-
tion in the United States District Court for the Southern
District of Illinois. It asked that the court order the parties to
submit to arbitration as required by the agreement between
the parties. Id. at 908. The parties were completely diverse;
the only question therefore was the amount in controversy.
The court said the amount in controversy was the amount
that would be at stake in the arbitration of the underlying
No. 03-1628                                                  9

dispute; thus, the question was whether “the stakes of an
arbitration of Evans’s claim would exceed $75,000.” Id. The
court then set out to determine the maximum award that the
arbitrator could award Evans. Finding there was no possible
way by which the arbitrator could award $75,000, the court
found jurisdiction lacking. Id. at 909-10. We reached the
same result in We Care Hair. 180 F.3d at 841 (“[S]ince the
present suit is . . . an independent federal suit, it is the
stakes of the arbitration . . . that control[s].”). Indeed, in
Barbers, Hairstyling for Men & Women, Inc. v. Bishop, 132 F.3d
1203 (7th Cir. 1997), we assumed without further discussion
that the stakes of the arbitration was the proper measure. Id.
at 1205-06. Moreover, the approach that we have taken in
this matter is the approach followed by the other federal
courts. See 13B Charles Alan Wright et al., Federal Practice &
Procedure: Jurisdiction § 3569, at 172-73 (2d ed. 1984) (“[T]he
amount is measured by the possible award that might
reasonably result from an arbitration.”).
  MoneyLine attempts to deal with this settled rule by
suggesting that, even though the “stakes of the arbitration”
test is one test, even the most common one, for valuing the
amount in controversy, it is not the only test. As MoneyLine
points out, we have said that, in determining the amount in
controversy in an equitable action, we may look at the
stakes either from the point of view of the plaintiff or the
defendant. See BEM I, L.L.C. v. Anthropologie, Inc., 301 F.3d
548, 553 (7th Cir. 2002) (The amount in controversy “is the
amount at stake to either party to the suit.”).
  To accept MoneyLine’s view, it is necessary to accept as
well its premise that this federal action has the singular
procedural perspective of seeking simply to determine
where, when and how the dispute will be adjudicated. We
cannot accept this position. As our colleagues in the Second
Circuit have explained, “ ’the petition to compel arbitration
10                                                 No. 03-1628

is only the initial step in a litigation which seeks as its goal
a judgment affirming the award.’ ” Doctor’s Assocs., Inc. v.
Hamilton, 150 F.3d 157, 160 (2d Cir. 1998) (quoting Davenport
v. Procter & Gamble Mfg. Co., 241 F.2d 511, 514 (2d Cir.
1957)). Therefore, the stakes of the arbitration are the
ultimate amount in controversy.
  It is clear that an arbitrator could not award an amount in
excess of $75,000 to reimburse Ms. Coleman for the $30
courier fee that she incurred at closing. Accordingly, the
jurisdictional amount is not in controversy, and the district
court correctly determined that it was without jurisdiction
in this matter.


                         Conclusion
  Accordingly, the judgment of the district court is
affirmed.
                                                     AFFIRMED

A true Copy:
        Teste:

                            _____________________________
                            Clerk of the United States Court of
                              Appeals for the Seventh Circuit



                     USCA-02-C-0072—3-15-04
