On Tuesday May 16th, the U.S. Supreme Court ruled that a federal district court does not have discretion to dismiss a case where all claims are subject to arbitration and a party has requested a stay. This resolves a long-standing circuit split. 

The case, Smith et al. v Spizzirri et al., involves federal and state employment law claims brought by on-demand delivery service drivers.  No. 22-1218, slip. op. (U.S. May 16, 2024).  The U.S. District Court of Arizona compelled arbitration of all claims and dismissed without prejudice.  The Ninth Circuit affirmed.  Forrest v. Spizzirri, 62 F.4th 1201, 1205 (9th Cir. 2023).  In a brief decision, the Court reversed and ruled that “[w]hen a federal court finds that a dispute is subject to arbitration, and a party has requested a stay of the court proceeding pending arbitration, the court does not have discretion to dismiss the suit on the basis that all the claims are subject to arbi­tration.”  Slip. Op. at 3. 

The Court based its ruling on the text, structure, and purpose of Section 3 of the Federal Arbitration Act (“FAA”).  The Court held that the plain text of the FAA mandates a stay (“the court shall. . . stay the trial”) and that the long-standing legal meaning of a “stay” is a “temporary suspension.”  Slip. Op. at 2.  The Court also found support in the surrounding text of the FAA.  For the Court, words like “until” (“stay the trial of the action until [arbitration is concluded]”) contemplate that parties may return to federal court if arbitration breaks down or does not bring resolution.  The Court also explained that the FAA’s structure and purpose counseled this result.  While the FAA allows for interlocutory appeals when arbitration is denied, it does not grant appeals when arbitration is compelled.  Allowing a district court to dismiss a case compelled to arbitration would trigger an appeal right not intended by the FAA.  Finally, in the eyes of the Court, allowing a district court to dismiss cases would eliminate the district court’s “supervisory role” over arbitration.  Slip. Op. at 2. 

This decision will require many district courts to change course and order stays where they may have exercised discretion to dismiss in the past.  The Court’s ruling, however, was based entirely on an interpretation of Section 3 of the FAA and applies only when a party has requested a stay.  This leaves open the question of whether a district court has the inherent authority to dismiss a case when the moving party does not directly invoke Section 3 or does not request a stay. 

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Photo of Kathryn Cahoy Kathryn Cahoy

Kate Cahoy uses her substantial class action experience to help clients develop strategic and innovative solutions to their most challenging litigation matters. She specializes in defending clients in complex, high-stakes class action disputes involving privacy, antitrust, and consumer protection claims and has achieved…

Kate Cahoy uses her substantial class action experience to help clients develop strategic and innovative solutions to their most challenging litigation matters. She specializes in defending clients in complex, high-stakes class action disputes involving privacy, antitrust, and consumer protection claims and has achieved significant victories for clients in the technology, entertainment, consumer product, and financial services industries. In addition, Kate has substantial experience litigating cases brought under California’s Section 17200 and other consumer protection, competition, and privacy laws, including the Sherman Act, California Consumer Privacy Act (CCPA), California Invasion of Privacy Act (CIPA), Wiretap Act, Stored Communications Act, Children’s Online Privacy Protection Act (COPPA), Video Privacy Protection Act (VPPA), and common law and constitutional rights of privacy, among others.

Photo of Isaac Chaput Isaac Chaput

Isaac Chaput is a commercial litigator who handles complex civil disputes including class action cases, arbitrations, and investigations. They have experience in trademark, trade secret, patent, antitrust, False Claims Act, breach of contract, and other commercial matters.

Isaac works with clients across a…

Isaac Chaput is a commercial litigator who handles complex civil disputes including class action cases, arbitrations, and investigations. They have experience in trademark, trade secret, patent, antitrust, False Claims Act, breach of contract, and other commercial matters.

Isaac works with clients across a range of industries including technology, consumer products, pharmaceuticals, and payments, using their substantive experience in all stages of litigation, including trial and appeals in both federal and state court. In addition, Isaac maintains an active pro bono practice, including representing a leading national organization dedicated to reducing gun violence.

Earlier in their career, Isaac was the Legal Intern to Nina Totenberg at NPR, assisting Ms. Totenberg in her reporting on the Supreme Court of the United States.