A federal appeals court has ruled that U.S. courts have jurisdiction over a dispute involving a failed KPMG tax shelter that cost a California businessman $52 million in taxes.
Thursday's ruling by a three-judge panel of the U.S. 9th Circuit Court of Appeals is a victory for the accounting firm, which had sought to have a federal judge appoint an arbitrator rather than have the case be handled in California state court.
Judge Ferdinand Fernandez wrote that federal courts did not give up jurisdiction when the original arbitrator in the case, the NASD (formerly the National Assn. of Securities Dealers), declined to hear the matter.
The case involves a tax shelter used by J. Paul Reddam on the advice of KPMG and its law firm, now known as Sidley Austin.