Commercial Litigation and Arbitration

Should a Litigation That Is Referred to Arbitration Be Stayed or Dismissed under the Federal Arbitration Act? Circuit Split

Bookins v. Superior Mgmt. Grp., Inc., 2013 U.S. Dist. LEXIS 154629 (D. Kan. Oct. 29, 2013):

The final issue to decide is whether to stay the proceedings or dismiss Brookins' lawsuit. Superior contends that the  lawsuit should be dismissed because all the issues raised must be submitted to arbitration, citing to appellate cases from other jurisdictions that have affirmed dismissals. [N. 35.  See, e.g., Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992).] But Section 3 of the Federal Arbitration Act [9 U.S.C. § 3] expressly provides that the court must stay the trial of the action on application of one of the parties if suit is filed "upon any issue referable to arbitration" under an arbitration agreement. There is a circuit split about whether a district court has discretion to dismiss rather than stay an action subject to arbitration.    [N. 37.  See Noohi v. Toll Bros., Inc., 708 F.3d 599, 605 n.2 (4th Cir. 2013) (noting conflicting holdings); Parrish v.  Valero Retail Holdings, Inc., 727 F. Supp. 2d 1266, 1281 (D.N.M. 2010) (same).]  The Tenth Circuit has noted that courts are obligated to stay litigation, rather than dismiss the action, under Section 3 if at least one of the parties applies for a stay. [N. 38.   Hill, 603 F.3d at 771; Adair Bus Sales, Inc. v. Blue Bird Corp., 25 F.3d 953, 955 (10th Cir. 1994).]  Here, Brookins has requested that the proceeding be stayed rather than dismissed. Accordingly, this Court declines Superior's request for dismissal but grants its Motion to Stay Proceedings under the authority of Section 3.


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