In a victory for parties seeking to compel arbitration, the
A
The district court declined to stay its proceedings. The Ninth Circuit also declined to stay the district court proceedings, following its precedent under which an appeal from the denial of a motion to compel arbitration does not automatically stay district court proceedings - in contrast to the majority of the federal appellate courts.
Justice
While the amendment does not say whether the district court proceedings must be stayed,
This principle resolved the case, the majority said.
"If the district court could move forward with pretrial and trial proceedings while the appeal on arbitrability was ongoing, then many of the asserted benefits of arbitration (efficiency, less expense, less intrusive discovery, and the like) would be irretrievably lost - even if the court of appeals later concluded that the case actually had belonged in arbitration all along," Justice Kavanaughwrote. "Absent a stay, parties also could be forced to settle to avoid the district court proceedings (including discovery and trial) that they contracted to avoid through arbitration."
The "potential for coercion" is especially pronounced in class actions,
"A right to interlocutory appeal of the arbitrability issue without an automatic stay of the district court proceedings is therefore like a lock without a key, a bat without a ball, a computer without a keyboard - in other words, not especially sensible," he said.
None of Bielski's arguments to the contrary found traction with the majority.
An automatic stay would not encourage frivolous appeals that would improperly delay district court proceedings, as the courts possess "robust tools" to prevent unwarranted delay; nor does requiring an automatic stay create a special, arbitration-preferring procedural rule,
The rule "simply subjects arbitrability appeals to the same stay principles that courts apply in other analogous contexts where an interlocutory appeal is authorized," he wrote.
Justice
The "mandatory-general-stay rule for interlocutory arbitrability appeals comes out of nowhere," with no basis in statute or prior decision of the Court, she wrote. "I see no basis here for wresting away the discretion traditionally entrusted to the judge closest to a case."
To read the opinion in
Along with the
Why it matters
The Court handed defendants seeking to compel arbitration a victory with the decision, which established a mandatory stay of district court proceedings pending appeal of a denial of a motion to compel arbitration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
20005
© Mondaq Ltd, 2023 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source