Amicus Brief: FAA's Section 3 Doesn’t ‘Apply’ When Whole Suit Belongs in Arbitration

When the parties’ arbitration agreement delegates all issues in a lawsuit to arbitration, a court should dismiss the suit and compel arbitration, said the New England Legal Foundation in a U.S. Supreme Court amicus brief Monday (docket 22-1218). The brief supports respondent IntelliQuick Delivery CEO Keith Spizzirri’s bid to 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 (see 2403280019). The petitioners are current and former IntelliQuick 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). Section 3 applies “only when an arbitration agreement is partial in scope and, therefore, “bifurcates the issues” between arbitration and a trial of the action in court, said the foundation’s amicus brief. In particular, when the agreement refers some issues to arbitration but leaves other issues in court, and a party files an application for a stay, Section 3 provides that the court shall stay the trial of the action until such arbitration has been held, it said. That language “clearly indicates that a court will adjudicate the merits of the parties’ nonarbitrable claims after the parties have resolved their arbitrable claims,” it said. Section 3 “ensures the orderly resolution of arbitrable and nonarbitrable claims in a bifurcated suit,” it said. But when the parties “have referred all issues in a lawsuit to arbitration, as in this case, Section 3 does not apply,” it said. In such a case, no issues remain in court for a trial of the action, it said: “To conclude otherwise would render this key statutory language superfluous.” Section 3 doesn’t apply when the whole suit belongs in arbitration, so the FAA “leaves undisturbed a federal court’s power to dismiss the suit and compel arbitration,” it said. Dismissal is appropriate because the court “has declined to exercise its jurisdiction to decide the underlying arbitrable controversy, in order to enforce the parties’ arbitration agreement and the FAA’s mandate,” the brief said.