SCOTUS Decision Requires Reversing Dismissal of Arbitration Case, Says SiriusXM

The U.S. Supreme Court’s May 16 decision in Smith v. Spizzirri, holding that Section 3 of the Federal Arbitration Act compels district courts to stay, rather than dismiss, cases pending the outcome of arbitration (see 2405160028), “has no effect on the maintenance” of three plaintiffs' appeal against SiriusXM, said the plaintiffs' position statement in a joint status report Thursday (docket 23-4018) in the 9th U.S. Circuit Appeals Court.

The 9th Circuit stayed the appeal and SiriusXM’s cross-appeal in February, pending the SCOTUS decision in Smith v. Spizzirri (see 2402200002). It ordered the parties to submit a joint status report within seven days of the decision, assessing the decision’s impact on the appeal and cross-appeal.

Plaintiffs Ayana Stevenson, David Ambrose and Lisa Ramirez allege that SiriusXM falsely advertised its music plans at lower prices than it charged. Their appeal challenges the district court’s granting of SiriusXM's motion to compel their claims to arbitration. SiriusXM’s cross-appeal challenges the district court’s dismissal of the case without prejudice, rather than staying the case to await the outcome of the arbitration. SiriusXM argued in Thursday’s joint status report that the decision in Smith v. Spizzirri now requires the 9th Circuit to reverse the U.S. District Court for Northern California’s dismissal of the case.

The 9th Circuit “possesses appellate jurisdiction of this appeal,” said the plaintiffs’ position statement in the joint status report. The decision in Smith v. Spizzirri didn’t “alter or abrogate” that jurisdiction, it said. The district court’s order compelling arbitration and dismissing all claims “remains an appealable final order,” it said. The plaintiffs suggest that the 9th Circuit adopt a briefing schedule that would have their opening brief due July 30, and SiriusXM’s reply due Aug. 29, it said.

It’s SiriusXM position that the decision in Smith v. Spizzirri “makes clear” that the 9th Circuit “must reverse the district court’s decision to dismiss this case without prejudice rather than enter a stay,” said the joint status report. That’s exactly what the Supreme Court did in Smith v. Spizzirri, “in indistinguishable circumstances,” it said.

In both cases, the plaintiffs filed substantive state-law claims against the defendants, said the joint status report. The defendants also successfully moved to compel arbitration under Section 3 of the FAA, which instructs district courts to stay cases pending the outcome of the arbitration, it said.

And in both, the district court instead dismissed the litigation without prejudice, said the joint status report. The party aggrieved by that decision -- the plaintiffs in Smith v. Spizzirri, and Sirius XM in its cross-appeal here -- appealed that decision to the 9th Circuit, it said. The 9th Circuit held that the district court had authority to dismiss rather than stay Smith v. Spizzirri, but the Supreme Court disagreed, it said.

The plaintiffs don’t attempt to explain why their case case against SiriusXM, which followed the “path” of Smith v. Spizzirri “in all material respects,” is somehow different, said the joint status report. “They would be hard pressed to do so,” it said.

The parties successfully asked the 9th Circuit to enter a stay while the appropriateness of the district court’s dismissal was under Supreme Court review, said the joint status report. “That review has come and gone,” and the Supreme Court has now made clear that the district court’s dismissal wasn’t in fact appropriate, it said.

The plaintiffs don’t appear to disagree, said the joint status report. They argue instead that Smith v. Spizzirri didn’t alter or abrogate the 9th Circuit’s jurisdiction to hear the plaintiffs’ appeal, it said. “No one disputes that,” because the district court decided to dismiss rather than stay the litigation, the 9th Circuit has appellate jurisdiction over the plaintiffs’ appeal, it said. Indeed, that “jurisdictional consequence” is one of the reasons why the Supreme Court prohibited district courts from ignoring Section 3's “command to stay rather than dismiss,” it said.

So the plaintiffs are correct that the 9th Circuit possesses jurisdiction over the plaintiffs’ appeal “in light of the district court’s error,” said the joint status report. But exercising that jurisdiction, alongside jurisdiction over SiriusXM’s cross-appeal, “can lead to only one outcome here,” it said.

The 9th Circuit must reverse the district court’s judgment and instruct it to stay the litigation pending the completion of arbitration, without reaching the merits of the plaintiffs’ appeal, said the joint status report. The plaintiffs can’t use the district court’s “unlawful decision to dismiss rather than stay as a trigger to secure immediate appellate review of the merits of the district court’s decision to compel,” it said.