Respondent: Lawsuits Shouldn’t ‘Sit Indefinitely’ in Federal Dockets Awaiting Arbitration

The U.S. Supreme Court should uphold the 9th U.S. Circuit Appeals Court decision affirming the district court’s dismissal of the case brought by petitioners Wendy Smith, Michelle Martinez and Kenneth Turner after the court compelled their claims to arbitration, said respondent Keith Spizzirri’s brief Wednesday (docket 22-1218).

The petitioners are current and former IntelliQuick delivery drivers who sued in Arizona for multiple violations of federal and state employment laws. Notwithstanding the petitioners’ “affirmative stay request,” the district court compelled their claims to arbitration and dismissed the case, and the 9th Circuit affirmed.

The case is being watched closely to determine whether the Federal Arbitration Act's Section 3 requires district courts to stay a lawsuit pending arbitration, or whether they have discretion to dismiss when all claims are subject to arbitration (see 2403010007).

The three plaintiff-appellants in the 9th Circuit false-advertising appeal against SiriusXM joined with SiriusXM to ask the court Feb. 16 to stay that appeal, pending the outcome of the SCOTUS case (see 2402200002). The plaintiff-appellants are challenging the district court decision compelling their claims to arbitration. SiriusXM's cross-appeal is challenging the district court's ruling to dismiss, rather than stay the case pending the outcome of the arbitration.

If ever there were a lawsuit that shouldn’t “sit indefinitely on the docket of a federal court,” this is it, said respondent Spizzirri’s brief. Both sides agreed to resolve claims through binding arbitration instead of filing a lawsuit in court, it said. The petitioners “explicitly conceded” that their entire dispute must be arbitrated, and they agreed to stop litigating in court, it said.

The petitioners concede that ordinarily a court confronting this situation would have the default choice to stay or dismiss, said the brief. Yet the petitioners maintain that Congress “categorically, with no exceptions, stripped district courts of their traditional authority to dismiss arbitrable claims when appropriate without saying a word about dismissals at all,” it said.

The petitioners don’t acknowledge that SCOTUS won’t “interpretate” a statute to intrude on a court’s traditional authority “unless Congress communicated that intention in the clearest of terms,” said the brief. Far from satisfying that standard, the text, structure and purpose of Section 3 of the FAA “point strongly in the other direction,” it said.

Section 3's text says only that when a case in court contains arbitrable claims, courts on application of one of the parties shall stay the trial until such arbitration is complete, said the brief. As dictionaries and cases from the time of the FAA’s enactment confirm, “all that means is that the court must stop the litigation, not that a court must maintain jurisdiction when the case is pointlessly occupying a place on the docket,” it said.

By contrast, when Congress wanted to require courts to retain jurisdiction under the FAA, “it did so explicitly,” requiring that courts retain jurisdiction pending arbitration for certain “admiralty” cases, said the brief. Reading Section 3 this way “fully realizes” Congress’ objective of promoting arbitration “by preventing courts from allowing parties to continue litigating in court in parallel with ongoing arbitration, without intruding on courts’ traditional powers,” it said.

The petitioners “offer not the slightest indication” that Congress wanted to promote arbitration “with a radical rule stripping courts of their traditional authority to dismiss cases,” said the brief. To justify their reading, the petitioners invoke “structural arguments” that defy SCOTUS precedents “and turn the FAA upside down,” it said. The petitioners’ dominant theme is that Congress enacted Section 3 “to preserve a federal forum for any relief relating to an arbitration,” but SCOTUS has said the opposite, it said.