SCOTUS Stays Arbitrations

Last month, SCOTUS issued another ruling interpreting the FAA.  In Smith v. Spizzirri, (Docket 22-1218) the Court ruled that, in court cases where the dispute has gone to arbitration, a stay must be issued and that the court is devoid of jurisdiction to dismiss the case.

 This case involved delivery drivers who were allegedly misclassified as independent contractors rather than employees.  The drivers sued in state court.  The employers removed the case to district court and filed a motion to (1) compel arbitration and (2) dismiss the case.  The court granted both, dismissing the case without prejudice.

Upon appeal, the 9th Circuit affirmed that decision, holding that the decision whether or not to dismiss was within the discretion of the trial court. 

SCOTUS did not agree, reversing the 9th Circuit, unanimously.  In its decision, the Court noted that “if a district court dismisses a suit subject to arbitration even when a party requests a stay, that dismissal triggers the right to an immediate appeal where Congress sought to forbid such an appeal.”  As a result, and as logic would dictate, the appropriate step for a trial court to take would be staying the case, not dismissing it.