The Federal Arbitration Act (FAA) provides the legal framework to render international and interstate arbitration agreements judicially enforceable in the United States. In furtherance of that goal, it provides that, if a party initiates litigation rather than arbitration of an arbitrable dispute, either party may request that the court stay the litigation pending resolution in an arbitration proceeding. The U.S. courts of appeals are currently split as to whether § 3 of the FAA requires a court under these circumstances to stay the action or whether the court has the discretion to dismiss the action altogether.
In Katz v. Cellco Partnership, the U.S. Court of Appeals for the Second Circuit—a leading U.S. court in creating and shaping domestic and international arbitration law—recently sided with the majority of other circuits in holding that § 3 requires a court to stay the litigation pending arbitration. This Note supports the Second Circuit’s decision, argues that the proper interpretation of FAA § 3 requires a stay, and proposes that the Supreme Court adopt the Second Circuit’s reasoning. Further, this Note argues that the Second Circuit’s “mandatory-stay” approach is consistent with the plain meaning of the statute and important policy objectives: (1) providing the pro-arbitration framework Congress intended when passing the FAA, as the Supreme Court has repeatedly underscored; (2) foreclosing interlocutory appeals of dismissals that stall arbitrations; (3) rejecting docket management as a grounds for dismissal; and (4) avoiding the general uncertainty and unpredictability of dismissals.