The question of whether a court should stay or dismiss a trial that’s referred to arbitration is sitting at the heart of a key legal debate. The options available for a trial judge under such circumstances have been spotlighted in the recent case of Smith v. Spizziri.
In this scenario, Wendy Smith, belonging to a growing contingent of delivery drivers, asserts that their employers, including Keith Spizzirri, contravened various state and federal employment legislations. Following their lawsuit, the employers requested, and subsequently ensured, the case be forwarded to arbitration. The court approved this motion but rather than merely granting a stay; it dismissed the case outright.
For those, like Smith and her fellow drivers, who find themselves caught in such a legal maelstrom, the governing statute text is apparent: the court must stay the trial. They highlight the fact that this reading is obligatory and offers no room for exceptions. There is also the matter of various practical complications that dismissal can present. If arbitration fails to entirely resolve the case, parties are inclined to bring their fight back to the court, demanding further administrative services such as the appointment of arbitrators, the generation of witness testimony, and perhaps most crucially, the reassessment of post-arbitration awards. In these circumstances, dismissals could leave parties lost within the system.
However, employers view this statutory arrangement through a different lens. They stress that Section 3 was incepted to negate a trend prevalent in both England and the United States, where a case could advance in the court despite a pending arbitration. Employers also argue that because Section 3 does not explicitly address dismissals, it shouldn’t bind the court’s docket management, especially when such dismissal isn’t prejudiced and drivers may return to the district court if they find themselves needing relief in the future.
The courts’ decision in the 2022’s case Badgerow v. Walters, in which it repudiated the idea that the FAA instates a federal jurisdiction covering all the relief it describes, forms an essential part of the employers’ argument in Smith v. Spizziri. Specifically, Badgerow discounts the federal jurisdiction overseeing suits that enforce arbitration results. Consequently, if a dispute lacked a basis for federal jurisdiction, a suit enforcing the judgment would often be confined to state courts. This means that the dismissal potentially leaves parties with only a state-court remedy for enforcing or challenging the arbitrator’s judgment, thereby allowing employers to impede employees from circumventing the Badgerow ruling.
While the Supreme Court’s verdict in Smith would likely be dictated by the practical ramifications of the decision to stay or dismiss, it certainly stands to intensify the debate surrounding proper court conduct while awaiting arbitration.