On June 23, 2023, the United States Supreme Court ruled that federal trial courts, after denying a motion to compel arbitration, must stay (i.e., pause) their pre-trial and trial proceedings while an appeal from that denial is ongoing.
In Coinbase, Inc. v. Bielski, 599 U.S. 736, 143 S. Ct. 1915, 216 L.Ed.2d 671 (2023), defendant Coinbase moved to compel arbitration. The motion was denied, and Coinbase appealed. Coinbase then filed a motion with the trial court to stay the proceeding while its appeal was pending. After that motion was denied, Coinbase applied to the Ninth Circuit for a motion to stay, but was again denied.
Because there was conflict between the various Courts of Appeals—the Ninth Circuit had ruled that a stay is discretionary and the Seventh Circuit had ruled that a stay is mandatory—the Supreme Court decided to resolve the conflict and held that stays are mandatory after an order denying a motion to compel arbitration.
In reaching this conclusion, the Court relied on the “Griggs principle,” which states that “[a]n appeal, including an interlocutory appeal, ‘divests the district court of its control over those aspects of the case involved in the appeal.’” Id. at 1919 (quoting Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982)). The Court also relied on logic and efficiency: if the case should be resolved in arbitration instead of court, it is illogical and wasteful to continue the case in court only to repeat the process later in arbitration. Id. at 1920.
This is a strong win for pro-arbitration parties. Many companies have binding arbitration agreements in their consumer (or other) contracts. If their arbitration provisions are legally sound but nevertheless not enforced by the trial court, those companies can feel confident that they won’t have to waste resources litigating their disputes in court while the appellate court decides whether the dispute should instead be resolved via arbitration.
Josiah Contarino is a senior associate at Dhillon Law Group Inc. where he practices commercial litigation, First Amendment, Second Amendment, defamation, and election law matters in state and federal courts.
