The U.S. Supreme Court recently agreed to hear a case that will determine whether federal district courts must stay a lawsuit pending arbitration, or if they have the option to dismiss the case when all claims are subject to arbitration.
In Smith v. Spizzirri, delivery drivers sued IntelliQuick Delivery, an on-demand delivery company based in Phoenix, alleging the company misclassified them as independent contractors, failed to pay them minimum wage and overtime, and failed to provide paid sick leave, according to court documents.
The plaintiffs argued that the federal district court that dismissed their case should have stayed the case pending arbitration. In March 2023, the 9th U.S. Circuit Court of Appeals ruled that the lower court properly dismissed the case because all parties agreed that all the claims were subject to arbitration.
Six federal circuit courts have required a stay in this situation, while four of them have not. Companies that operate in many different states are left unsure about how to handle lawsuits and arbitration they may be facing.
“This is welcome news to a lot of employers that the Supreme Court is going to resolve the circuit split,” said Marissa Mastroianni, an attorney with Cole Schotz in Hackensack, N.J. “It will make it easier for the multi-jurisdictional employers to understand what the lay of the land is.”
The ruling could impact how much time and money employers will have to spend on enforcing their arbitration agreements.
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