Supreme Court Holds That Trial-Level Proceedings Must Be Stayed Pending Certain Arbitration Appeals

KEY TAKEAWAYS

• The Court held that district courts must stay litigation in cases where a party appeals from an order denying a motion to compel arbitration under the Federal Arbitration Act.
• Parties who appeal the denial of arbitration will not incur the costs and discovery burdens that would otherwise result from having to litigate in district court while the appeal is resolved.
• The Court's opinion may reduce settlement pressure on parties seeking arbitration and prompt more requests for expedited treatment of arbitration appeals.

In enacting the Federal Arbitration Act, Congress allowed for immediate appeal from orders denying motions to arbitrate. The statute is silent as to whether the litigation in the trial court can proceed while the appeal is pending. Circuits have split on the issue, which has increased litigation burdens and settlement pressures on parties in those jurisdictions that did not recognize an automatic stay.