Supreme Court: FAA Requires Cases to be Stayed Pending Arbitration and May Not Be Dismissed

This morning, a unanimous Supreme Court held that a court may not dismiss (even without prejudice) a case which is subject to mandatory arbitration under the Federal Arbitration Act.  Smith v. Spizzirri, No. 22-1218 (5-16-24).   Rather, the FAA provides that such proceedings shall be “stayed” -- or held in abeyance -- pending arbitration.   Therefore, when a party (in this case an employer) moves to compel arbitration of the underlying employment claims and stay the proceedings, it was an error for the court to compel arbitration and then dismiss the case without prejudice.  The court’s inherent authority to dismiss a case is subject to the FAA’s statutory requirement to stay the proceedings.