To stay or dismiss a suit while waiting for arbitration?

CASE PREVIEW

It looks as if the justices can’t have a month-to-month argument session with out not less than one case beneath the Federal Arbitration Act. Monday’s argument in Smith v. Spizziri asks what the choices are for a trial choose who refers a pending go well with to arbitration. Part 3 of the Federal Arbitration Act says that if the courtroom refers the case to arbitration, it “shall on utility of one of many events keep the trial of the motion till such arbitration has been had.” The query is whether or not the trial courtroom, as an alternative of staying the motion, can go forward and dismiss it completely.

Wendy Smith is one in every of a gaggle of supply drivers who argue that their employers (together with Keith Spizziri) violated a wide range of federal and state employment legal guidelines. The drivers sued, however the employers eliminated the case to federal courtroom after which, predictably sufficient, urged the courtroom to refer the case to arbitration. The courtroom agreed to ship the case to arbitration, however didn’t merely grant a keep; relatively, it dismissed the go well with completely.

For the drivers, the statute says all of it: The courtroom “shall … keep the trial of the motion.” They level out that the language is “obligatory” and “doesn’t enable any exceptions.” Additionally they level to a number of sensible issues with dismissal. Amongst different issues, if the arbitration doesn’t resolve the matter completely, the events are prone to return to the courtroom for a wide range of administrative issues, all lined by the FAA itself – appointment of arbitrators, compelling witnesses, and, most significantly, reviewing post-arbitration awards. Dismissal would go away the events out of courtroom for these issues.

The employers, not surprisingly, see the statute fully in a different way. First, they emphasize the historical past behind Part 3, which was supposed to reject a beforehand widespread apply in England and the US of permitting a trial to proceed within the courtroom whereas the arbitration was pending. For the employers, that’s the solely level of Part 3, to make completely certain that after a case is shipped to arbitration it is not going to transfer ahead within the courtroom. As a result of Part 3 says nothing in any respect about dismissal, it shouldn’t tie the courtroom’s arms in managing its docket. As they level out, the dismissal right here was with out prejudice; the drivers are free to return to the district courtroom in the event that they discover themselves in want of reduction sooner or later. They emphasize the “conventional, inherent energy [of trial courts] to handle their dockets,” seeing no have to power a courtroom to maintain a stagnant case on its docket for a interval of months or years.

Maybe essentially the most telling level for the employers will depend on the courtroom’s 2022 choice in Badgerow v. Walters, wherein the courtroom rejected the concept the FAA creates federal jurisdiction for the entire reduction it describes. Particularly, and crucially for Smith, Badgerow rejects federal jurisdiction over fits to implement the results of the arbitration. If the underlying dispute didn’t have a foundation for federal jurisdiction, then an motion to implement the judgment typically wouldn’t have such a foundation both, and can be left to state courtroom. Utilized to this case, that signifies that the dismissal would go away the events, in lots of circumstances, solely a state-court treatment for enforcement or challenges to the arbitrator’s judgment. For the employers, a ruling forcing the district courtroom to maintain an empty case on its docket whereas the arbitration proceeds successfully provides their staff an end-run round Badgerow.

My robust sense is that the ideas of the justices in Smith will activate the sensible ramifications of the choice to remain or dismiss the motion. I count on that can be a serious focus of the argument on Monday.