Supreme Court Holds that District Courts Must Stay – Not Dismiss – Actions Brought by Parties Subject to Binding Arbitration Agreements

On May 16, 2024, the United States Supreme Court unanimously held that, when enforcing an arbitration clause subject to the Federal Arbitration Act (FAA), if any party requests a stay, the district court lacks discretion to dismiss the underlying lawsuit. The high court’s ruling reverses the decision of the Ninth Circuit upholding dismissal, and resolves a long-simmering circuit split. Notwithstanding the FAA’s language appearing to mandate a stay, in which several circuits held that district courts have discretion to dismiss cases (without prejudice) pending arbitration. 

Plaintiffs in Smith v. Spizzirri, 601 U.S. ___, 144 S. Ct. 680 (2024), were current and former delivery drivers for an on-demand delivery service who sued their employer in a putative class action in Arizona state court. After removing the case to federal court, the defendant moved to compel arbitration and dismiss the…