Do federal courts have the discretion to dismiss lawsuits once it is determined that all underlying claims are covered by mandatory arbitration agreements?
The answer is “no,†according to the outcome of the unanimous decision from the US Supreme Court in Smith v. Spizzirri.
Specifically, the decision, authored by Justice Sonia Sotomayor, held that Section 3 of the Federal Arbitration Act (FAA) requires a district court to stay a case that it refers to arbitration, if a party so requests.
The decision resolves a Circuit split existing since at least 2000 regarding whether district courts have the discretion to dismiss, rather than stay, an action upon finding it arbitrable.
