Today, the Supreme Court justices ruled unanimously in Smith v. Spizzirri, No. 22-1218, that cases involving arbitrable disputes subject to the Federal Arbitration Act (FAA) must be stayed rather than dismissed outright. As a matter of statutory interpretation, the Court reasoned that the words “shall” and “stay” in Section 3 of the FAA had plain meanings requiring that a Court hold a matter pending arbitration and that dismissal would not meet the call of the statutory language. The Court further reasoned that requiring a case to survive pending arbitration promotes judicial efficiency, as FAA Sections 5, 7 and 9 prescribe specific supervisory roles for courts.

Employers can expect that cases brought despite arbitration agreements subject to the FAA will persist, albeit on pause pending the results of arbitration. Given the Court’s reliance on specific statutory language, the Court’s opinion likely does not apply to arbitrable disputes pursuant to a collective bargaining agreement, which are governed by the Labor Management Relations Act, a statute that does not have a provision similar to Section 3 of the FAA.