Smith v. Spizzirri
601 U.S. 472
| SCOTUS | 2024Background
- Petitioners (delivery drivers) sued respondents in Arizona state court for misclassification and wage violations under federal and state law.
- Respondents removed the case to federal court and moved to compel arbitration and dismiss the suit.
- Petitioners conceded their claims were arbitrable but argued that §3 of the Federal Arbitration Act (FAA) required a stay rather than a dismissal.
- The District Court compelled arbitration and dismissed the case without prejudice, relying on Ninth Circuit precedent that allowed such discretion.
- The Ninth Circuit affirmed, despite acknowledging the FAA’s plain text appeared to mandate a stay; a circuit split existed on the issue.
- The Supreme Court granted certiorari to resolve whether §3 of the FAA compels a stay or allows dismissal if a party requests a stay pending arbitration.
Issues
| Issue | Smith's Argument | Spizzirri's Argument | Held |
|---|---|---|---|
| Whether §3 of the FAA requires a stay of proceedings (not dismissal) when a dispute is subject to arbitration and a party requests a stay | §3's mandatory language (“shall stay”) obligates courts to pause proceedings, not dismiss them | "Stay" can include dismissal if all claims are arbitrable; courts retain discretion to dismiss | §3’s text is mandatory; courts must stay, not dismiss, proceedings when a stay is requested |
| Whether district courts retain inherent authority to dismiss proceedings despite §3 | Statute overrides any inherent judicial authority in this context | Courts retain inherent power to dismiss suits | Any inherent authority is overridden by the clear statutory directive of §3 |
| Whether interpretation affects parties’ ability to return to court if arbitration fails | Staying ensures easy return to court if arbitration breaks down | Dismissal is sufficient—parties can refile if needed | Only a stay guarantees a “return ticket”; dismissal may cause unnecessary hurdle |
| Consistency with FAA appeal procedures and court’s supervisory role | Dismissal disrupts statutory appeal scheme and court's role in aiding arbitration | Dismissal does not significantly impact FAA’s structure | Stay aligns with FAA's structure, limits immediate appeals, and preserves court oversight |
Key Cases Cited
- United States v. Detroit Timber & Lumber Co., 200 U.S. 321 (syllabus is not part of the opinion)
- Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (the word “shall” creates an imperative obligation)
- Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213 (FAA mandates courts must compel arbitration and stay proceedings)
- Degen v. United States, 517 U.S. 820 (inherent judicial powers may be overridden by statute)
- Maine Community Health Options v. United States, 590 U.S. 296 ("shall" is mandatory statutory language)
- Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1 (FAA’s purpose to move parties efficiently to arbitration)