{"id":901375,"date":"2023-07-06T15:13:37","date_gmt":"2023-07-06T21:13:37","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901375"},"modified":"2023-07-06T15:13:42","modified_gmt":"2023-07-06T21:13:42","slug":"arbitration-win-us-supreme-court","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/arbitration-win-us-supreme-court\/","title":{"rendered":"Another Win for Arbitration\u00a0at\u00a0U.S. Supreme Court"},"content":{"rendered":"\n

John S. Delikanakis | Snell & Wilmer<\/a><\/p>\n\n\n\n

On June 23, 2023, the U.S. Supreme Court held in\u00a0Coinbase v. Bielski\u00a0<\/em>that U.S. district court proceedings are automatically stayed during a non-frivolous appeal of a denied motion to compel arbitration<\/a>. The Court\u2019s decision can be read\u00a0here<\/a>.\u00a0<\/p>\n\n\n\n

Section 16(a) of the Federal Arbitration Act (FAA) authorizes the immediate appeal of a denied motion to compel arbitration. Stays pending such appeals were subject to the discretion of a district court judge, as the FAA does not specify whether a district court must stay litigation pending a denied motion to compel arbitration. The U.S. circuit courts of appeal and the literature on the topic were split as to whether an automatic stay rule should be created for Section 16(a) appeals. That split has been resolved.<\/p>\n\n\n\n

The Coinbase<\/em> Court\u2019s reasoning in creating an automatic stay is grounded in its rulings in Griggs v. Provident Consumer Discount Co.<\/em>, 459 U.S. 56 (1982), which noted that an appeal, including an interlocutory appeal, \u201cdivests the district court of its control over those aspects of the case involved in the appeal.\u201d The court reasoned in Coinbase<\/em> that because the purpose of any appeal of the denial of a motion to compel arbitration is to decide whether a case should be adjudicated in the district court or in arbitration, the entire case is \u201cinvolved in the appeal.\u201d Thus, the Court reasoned there are no aspects of the case that justify a district court\u2019s retention of jurisdiction over the case during appeal. Further policy considerations raised by the Court included that absent an automatic stay, many of the benefits bargained for in a contract\u2019s arbitration provision (efficiency and more limited discovery) would be lost absent an automatic stay, even if ultimately successful. The court also noted that absent an automatic stay, parties would be unfairly coerced to settle litigation, especially class-action litigation, that parties had agreed to avoid via an arbitration provision.<\/p>\n\n\n\n

The court\u2019s dissent criticized the creation of the new automatic stay rule as \u201ccoming out of nowhere,\u201d pointing to the FAA\u2019s silence on the subject. During oral argument, dissenting Justice Sotomayor said, \u201c[A]ll I know is that when Congress thinks about a stay, it either says yes, do it, or no, don\u2019t do it.  . . . When it\u2019s not thinking about a stay, it doesn\u2019t say anything.\u201d The dissenting justices also criticized the majority\u2019s decision in that it was unsupported by the historically significant discretion granted to courts to control their dockets and weigh the competing interests of parties before exercising the power to impose a stay.<\/p>\n\n\n\n

A few practical takeaways:<\/p>\n\n\n\n