SCOTUS Unanimous: Order Compelling Arbitration Requires Court To Stay, Not Dismiss Case

On May 16, 2024, the Supreme Court unanimously held that when a district court compels claims to arbitration and a party has requested a stay under section 3 of the Federal Arbitration Act (FAA), the district court is required to stay the case, and lacks the discretion to dismiss the suit outright. This decision is important for parties who seek to compel arbitration as oftentimes, parties likewise seek an outright dismissal of the case when their claims are arbitrable.

Case Background: Smith v. Spizzirri

Smith v. Spizzirri involved claims that the respondents had violated various federal and state employment laws. Specifically, the petitioners argued that they had been misclassified as independent contractors and were not paid the required minimum and overtime wages as a result. The respondents removed the lawsuit to federal court and, upon removal, sought to compel arbitration and dismiss the lawsuit. In turn, petitioners conceded their claims were arbitrable