The United States Supreme Court unanimously held that when a district court compels claims to arbitration, the district court must stay – rather than dismiss – the district court case. In Smith v. Spizzirri, the Supreme Court resolved a circuit split. It overruled precedent from the First, Fifth, Eighth, and Ninth Circuits and agreed with decisions from the Second, Third, Sixth, Seventh, Tenth, and Eleventh Circuits.
The decision is good news for employers who want to arbitrate. If an employer establishes in district court that a plaintiff’s claims must be arbitrated and the district court dismisses the case, the plaintiff can immediately appeal the dismissal. An employer that wants only to arbitrate could nevertheless be forced to litigate a potentially lengthy appeal. But if a plaintiff’s case is stayed in the district court while arbitration proceeds, the plaintiff typically has no immediate avenue of appeal. The dispute actually moves to arbitration.
The Spizzirri decision does not affect whether claims should be compelled to arbitration. But it provides uniformity across circuits about what happens in the district court after a case is compelled to arbitration. The decision allows employers who enter into arbitration agreements with their employees to get their disputes into arbitration more efficiently.