“Stay Awhile”: Supreme Court Tells District Courts Not to Dismiss Claims Pending Arbitration

In Smith v. Spizzirri, the Supreme Court unanimously held that federal district courts lack the power to dismiss a case sent to arbitration. Instead, under the Federal Arbitration Act, if a party moves to compel arbitration and requests a stay, the district court must stay the case. This client alert provides an overview of the case and how it affects cases moving forward.

Smith v. Spizzirri

Until Thursday, federal circuits have been split on whether a district court can dismiss a case sent to arbitration. Section 3 of the Federal Arbitration Act (“FAA”) states that when a case must be arbitrated, district courts “shall on application of one of the parties stay the trial of the action until [the] arbitration” is finished. Several circuits—including the Second, Third, Sixth, Seventh, Tenth, and Eleventh—have held that this language means a district court may only stay the case pending arbitration. Other circuits—the First, Fifth, Eighth, and Ninth—have held that courts still have the inherent power to dismiss suits….

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