The End of Arbitration + Dismissal Appeals?
In Smith v. Spizzirri, the Supreme Court held that district courts must stay—not dismiss—an action if the district court orders arbitration and a party requests a stay. The decision resolves a long-standing split over the ability to dismiss actions after ordering arbitration.
The decision also has implications for appellate jurisdiction. As I’ve explained on this site before, parties can appeal from an order that directs arbitration and dismisses an action. But if the district court stays the action, there is normally no immediate appeal from the decision ordering arbitration. With stays now required at a party’s request, we will likely see fewer appeals from decisions ordering arbitration.
One thing Smith didn’t expressly address, however, is what to do if no one asks for a stay.
The Stays-Required Decision
The Supreme Court found support for its holding in the text, structure, and purpose of the Federal Arbitration Act, as well as in the role the Act envisions for district courts.
Text
As for text, the relevant statutory provision (9 U.S.C. § 3) says that the district court “shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement.” Shall, the Court explained, “creates an obligation impervious to judicial discretion.” So under § 3, the district court must stay an action at a party’s request.
Structure & Purpose
As for structure and purpose, stays are necessary to avoid immediate appeals from decisions ordering arbitration.
Although the Federal Arbitration Act permits many appeals from decisions refusing to order arbitration, Congress prohibited most appeals from decisions ordering arbitration. But the Supreme Court has held that a decision directing arbitration and then dismissing the action is an appealable final decision. Given Congress’s intention to rapidly move arbitrable disputes to arbitration, stays are necessary to avoid delay from immediate appeals.
The District Court’s Role
The Supreme Court added that its holding also comported with the supervisory role that the Federal Arbitration Act envisions for district courts. With the action stayed, the parties can return to the district court should the need arise (to, for example, select an arbitrator or enforce an award). They don’t need to file a new action, which a dismissal would require.
Thoughts on Smith
A few thoughts on Smith.
First, long time readers won’t be surprised that I think the Supreme Court got this one right. I argued for the stay-required rule back in 2019 after the Supreme Court decided Lamps Plus, Inc. v. Varela. As I said then, dismissing actions undermines the appellate scheme for arbitration. The stay-required rule avoids that problem.
Second, Smith will probably require reconsideration in some pending cases. For example, in Diaz v. Macys West Stores, Inc.—a Ninth Circuit decision from a couple weeks ago—there was some uncertainty over whether the district court stayed or dismissed an action after ordering arbitration. But the district court had closed the action and said that there were no claims remaining before it. That led the Ninth Circuit to conclude that the district court had dismissed the action. Smith might require reconsideration of that conclusion.
Third and finally is an issue that Smith might have left unresolved: what if no one asks for a stay? The statutory text speaks of a party asking the district court for a stay. And the Supreme Court said that a stay is required when a district court orders arbitration “and a party requests a stay pending arbitration.”
If a district court orders arbitration and no one has asked for a stay, can a district court then dismiss the action? I think not, given the Federal Arbitration Act’s appellate scheme. But Smith doesn’t expressly answer that question.
Smith v. Spizzirri, 2024 WL 2193872 (May 16, 2024), available at the Supreme Court and Westlaw
Final Decisions PLLC is an appellate boutique and consultancy that focuses on federal appellate jurisdiction. We partner with lawyers facing appellate-jurisdiction issues, working as consultants or co-counsel to achieve positive outcomes on appeal. Contact us to learn how we can work together.
Learn More ContactRelated Posts
In Ashley v. Clay County, the Fifth Circuit held that a municipal defendant could appeal a district court’s refusal to resolve an immunity defense despite the district court’s ordering arbitration.
Continue reading....
In Hines v. Stamos (no PDF currently available), the Fifth Circuit spoke at length about its jurisdiction to review a personal-jurisdiction defense as part of an arbitration appeal. But the discussion was entirely unnecessary. The district court had never ruled on the personal-jurisdiction defense, meaning that there was no order to review. And the panel […]
Continue reading....
Courts have held that when an “order” is appealable—say, via a certified appeal under 28 U.S.C. § 1292(b) or an exception to 28 U.S.C. § 1447(d)’s bar on remand appeals—the entirety of the district court’s order is within the scope of appeal. So when a district court certifies an order for an immediate appeal under § 1292(b), the […]
Continue reading....
In Coinbase, Inc., v. Bielski, the Supreme Court held that district courts must stay proceedings on the merits once a party appeals from the denial of arbitration. The Court determined that 9 U.S.C. § 16—which authorizes these appeals—was enacted against Griggs v. Provident Consumer Discount Co.’s background principal that a district court loses control over all […]
Continue reading....
In Fraga v. Premium Retail Services, Inc., the First Circuit reviewed what was nominally the denial of a motion to dismiss, as that motion effectively sought to compel arbitration.
Continue reading....Recent Posts
In Diaz v. FCA US LLC, the Third Circuit split over whether a district court had resolved distinct claims for purposes of Federal Rule of Civil Procedure 54(b). The majority concluded that the district court had resolved only a distinct theory of recovery, not a distinct claim. Dissenting, Judge Phipps argued that claims are defined […]
Continue reading....
In Grippa v. Rubin, the Eleventh Circuit addressed the immediate appealability of Florida’s absolute and qualified litigation privileges. The court determined that the absolute privilege was immediately appealable via the collateral-order doctrine. But the qualified litigation privilege was not.
Continue reading....
Last month featured a Sixth Circuit debate over jurisdiction to review Brady issues in appeals from the denial of qualified immunity. There was also an especially odd Second Circuit decision in which the court exercised pendent appellate jurisdiction over a normally non-appealable issue even though the court lacked jurisdiction over any other issue. And there […]
Continue reading....
In two appeals—Clark v. Louisville-Jefferson County Metro Government and Salter v. City of Detroit, the Sixth Circuit spoke at length about its jurisdiction to review certain Brady issues as part of qualified-immunity appeals. The cases produced a total of six opinions, several of which dove into this jurisdictional issue.
Continue reading....
In Rossy v. City of Buffalo, the Second Circuit appeared to both dismiss a qualified-immunity appeal for a lack of jurisdiction and exercise pendent appellate jurisdiction over a plaintiff’s cross-appeal. This is odd. Pendent appellate jurisdiction allows normally non-appealable issues to tag along with appealable ones. But if the denial of qualified immunity was not […]
Continue reading....