Thinking more about this question, got me to wonder how I would answer the question if I were involved in this case, and of course, in order to answer the question one has to look to the allegations of the complaint.
In this case, subject matter jurisdiction is actually quite simple: It's based on
1. "Federal question" jurisdiction based on the due process and Constitutinoal issues raised in the amended complaint, in this case, see Paragraph 5, which clearly alleges: "This court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331 because it is a matter that arises under the Constitution and laws of the United States." These same due process claims raised in the First, Third and Fouth Counts of the Amended Complaint filed by Armstrong are the same claims that Judge Sparks referred to today as troubling him, i.e., his comments regarding the lack of details in the USADA charging document and the process being followed by USADA in charging a conspiracy which may exceed the authority of the agency. Assuming USADA is obligated to afford at least a modicum of due process to athletes accused of doping violations, there would seem to be little doubt that the court has subject matter jurisdiction to address the due process issues as alleged.
2. Diversity Jurisdiction-- This is the second basis for federal subject matter jurisdiction alleged in the Amended Complaint. Diversity simply requires that plaintiff and all defendants be residents of different states. In this case, Armstrong is a resident of Texas, and USADA and Tygart are residents of different states. Thus, at Paragraph 6 of the FAC it is alleged "This Court also has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a)(1) because it is an action between citizens of different states and the matter in controversy exceeds the sum or value of $75,000." As far as the damages, the FAC alleges that Armstrong has and will continue to sustain monetary damages in excess of the jurisdictional limit as a result of the sanctions that USADA is attempting to impose, although there really are no factual details of this damaage alleged. Still, this is usually not a difficult issue for the court where the anticipated damages are fairly obvious, as they would be here.
3. Finally, the FAC also alleges a third, and completely separate basis for subject matter jurisidiction (which really would apply only to the Second Count for "Tortious Interference with Contract", a claim that is based entirely on state law and not on any federal statute or constitutional question), and that is pendant or ancillary jurisdiction. Such jurisdiction is a construct of federal statutory procedure, and it allows claims over which the court would not otherwise have any independent basis for subject matter jurisdiction, but which are based on the same facts and circumstances, to be dragged along and decided in the same suit as the federal questions. Think of this as a sort of "judicial economy" exercise of subject matter jurisdiction, and federal courts routinely use it to avoid a multiplicity of proceedings, for example one in federal court and another in state court, which could result in conflicting decisions. In this case, the FAC alleges, again at Paragraph 6 "This court has subject matter jurisdiction over the state law claims asserted by Mr. Armstrong based on principles of ancillary and pendent jurisdiction and supplemental jurisdiction pursuant to 28 U.S.C. § 1367 because those claims form part of the same case or controversy under Article III of the United States Constitution."
In any event, a re-reading of the First Amended Complaint makes clear the answer to Judge Spark's question re: why the federal court has jurisdiction to address the claims set forth in the Complaint and why they are not the proper subject of the USADA's proposed procedures.
The more interesting aspect of this will be how USADA and Tygart's attorneys will answer the same question in their subsequent filings. The primary thrust of their answer, as I understand it, has been that the federal court's jurisdiction has been preempted by the Stevens Sports Act, and that questions of due process in the context of an arbitration are themselves arbitrable issues. From the reports I've read, Judge Sparks is troubled by this position (because it fails to insure that due process has been afforded and provides no assurance that it will be in the future).
In any event, I would anticipate that the papers to be filed next week will address these issues more directly.