Amicus Curiae Brief — Wendy Smith, et al., Petitioners v. Keith Spizzirri, et al.

Supreme Court briefApr 1, 2024

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No. 22-1218

IN THE

Supreme Court of the United States

WENDY SMITH, ET AL.,

Petitioners,

KEITH SPIZZIRRI, ET AL.,

Respondents.

ON A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF OF AMICUS CURIAE

NEW ENGLAND LEGAL FOUNDATION

IN SUPPORT OF RESPONDENTS

Counsel for Amicus Curiae

Benjamin G. Robbins

Counsel of Record

Daniel B. Winslow, President

New England Legal Foundation

333 Washington Street, Suite 850

Boston, MA 02108

(617) 695-3660

brobbins@newenglandlegal.org

April 1, 2024

BATEMAN & SLADE, INC.

STONEHAM, MASSACHUSETTS

TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................iii

INTEREST OF AMICUS CURIAE ............................ 1

SUMMARY OF ARGUMENT..................................... 2

ARGUMENT ............................................................... 5

WHEN THE PARTIES’ ARBITRATION

AGREEMENT HAS DELEGATED ALL

ISSUES

SUIT

ARBITRATION, A COURT SHOULD

DISMISS THE SUIT AND COMPEL

ARBITRATION. ............................................... 5

Section 3 Of The Federal

Arbitration Act Applies Only

When An Arbitration Agreement

Is Partial In Scope And,

Therefore, Bifurcates The Issues

In A Suit Between Arbitration

And The Court. ...................................... 5

Section 3 Apparently Reflects

The Limited Scope Of Arbitration

As It Was Practiced At The Time

Of The FAA’s Enactment, When

NonLawyer Merchants Would

Resolve

Ordinary

Business

Disputes

Between

Fellow

Merchants. ........................................... 11

II.

A Federal Court’s Stay Of A Suit That

The Court Has Submitted Entirely To

Arbitration

Cannot

Provide

The

Necessary “Independent Jurisdictional

Basis” That Would Allow The Court To

Entertain An “FAA-Created Arbitration

Action.” ............................................................ 16

CONCLUSION .......................................................... 21

TABLE OF AUTHORITIES

CASES

Alexander v. Gardner-Denver Co.,

415 U.S. 36 (1974) .......................................... 13, 14

Am. Express Co. v. Italian Colors Rest.,

570 U.S. 228 (2013) .............................................. 14

Badgerow v. Walters,

596 U.S. 1 (2022) ............... 4, 8, 9, 16, 17-18, 19, 20

Barrentine v. Arkansas-Best Freight Sys., Inc.,

450 U.S. 728 (1981) .............................................. 13

Circuit City Stores, Inc. v. Adams,

532 U.S. 105 (2001) .............................................. 14

Corley v. United States,

556 U.S. 303 (2009) ................................................ 7

Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co.,

529 U.S. 193 (2000) .............................................. 16

EEOC v. Waffle House, Inc.,

534 U.S. 279 (2002) ................................................ 6

Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20 (1991) ................................................ 14

Hall St. Assocs., L.L.C. v. Mattel, Inc.,

552 U.S. 576 (2008) .............................................. 13

Henry Schein, Inc. v. Archer & White Sales, Inc.,

586 U.S.__, 139 S. Ct. 524 (2019) ........................... 9

iii

Kokkonen v. Guardian Life Ins. Co. of America,

511 U.S. 375 (1994) ........................................ 16, 20

Lamps Plus, Inc. v. Varela,

587 U.S. 176 (2019) ............................................ 7, 9

M/S Bremen v. Zapata Off-Shore Co.,

407 U.S. 1 (1972) .................................................. 10

Marine Transit Corp. v. Dreyfus,

284 U.S. 263 (1932) ........................................ 16, 20

Merrill Lynch, Pierce, Fenner & Smith, Inc.

v. Bradley,

756 F.2d 1048 (4th Cir. 1985) ............................. 6-7

Mitsubishi Motors Corp.

v. Soler Chrysler-Plymouth, Inc.,

473 U.S. 614 (1985) .............................................. 14

Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1 (1983) .................................. 6, 7-8

New Prime Inc. v. Oliveira,

586 U.S. __, 139 S. Ct. 532 (2019) ........................ 11

Perry v. Thomas,

482 U.S. 483 (1987) .............................................. 14

Quijas v. Shearson/Am. Express, Inc.,

490 U.S. 477 (1989) .............................................. 14

Sea-Land Serv., Inc. v. Sea-Land of Puerto Rico, Inc.,

636 F. Supp. 750 (D.P.R. 1986) ............................ 10

Shearson/Am. Express, Inc. v. McMahon,

482 U.S. 220 (1987) .............................................. 14

SmartSky Networks, LLC v. DAG Wireless, LTD.,

93 F.4th 175 (4th Cir. 2024) ................................. 18

Sturgeon v. Frost,

577 U.S. 424 (2016) ................................................ 8

The Anaconda v. Am. Sugar Refining Co.,

322 U.S. 42 (1944) ................................................ 16

Vaden v. Discover Bank,

556 U.S. 49 (2009) .................................................. 9

Viking River Cruises, Inc. v. Moriana,

596 U.S. 639 (2022) .............................................. 10

West Virginia v. EPA,

597 U.S. 697 (2022) .............................................. 10

Wilko v. Swan,

346 U.S. 427 (1953) ........................................ 13, 14

STATUTES

9 U.S.C. §§ 1-16 .......................................................... 5

9 U.S.C. § 1 ............................................................... 11

9 U.S.C. § 2 ............................................................... 10

9 U.S.C. § 3 ......... 1, 2, 3, 5-6, 7, 8, 9, 11, 15-16, 19, 20

9 U.S.C. § 4 ..........................................2, 4, 8, 9, 17, 18

9 U.S.C. § 7 ............................................................... 16

9 U.S.C. § 8 ................................................5, 16, 19, 20

9 U.S.C. § 9 ................................................... 16, 18, 19

9 U.S.C. § 10 ................................................. 16, 18, 19

9 U.S.C. § 11 ............................................................. 16

9 U.S.C. § 16(a)(3) ...................................................... 9

OTHER AUTHORITIES

Edward Brunet,

Seeking Optimal Dispute Resolution Clauses

in High Stakes Employment Contracts,

23 Berkeley J. Emp. & Lab. L. 107 (2002) .......... 11

Julius Henry Cohen & Kenneth Dayton,

The New Federal Arbitration Law,

12 Va. L. Rev. 265 (1926) ......................... 12, 13, 15

Osmond K. Fraenkel,

The New York Arbitration Law,

32 Colum. L. Rev. 623 (1932) ............................... 14

Thomas H. Oehmke with Joan M. Brovins,

3 Commercial Arbitration § 65:14 (2023) .............. 7

Harlan F. Stone,

The Scope and Limitation of

Commercial Arbitration,

10 Proc. Acad. Pol. Sci.

N.Y. 195 (1923) ..................................... 11-12, 14-15

Katherine Van Wezel Stone,

Rustic Justice: Community And Coercion

Under The Federal Arbitration Act,

77 N.C. L. Rev. 931 (1999) ................................... 12

vii

INTEREST OF AMICUS CURIAE

Amicus

curiae

New

England

Legal

Foundation (NELF) is a nonprofit, public interest

law firm, incorporated in Massachusetts in 1977 and

headquartered in Boston.1 NELF’s membership

consists of corporations, law firms, individuals, and

others who believe in its mission of promoting

inclusive economic growth in New England,

protecting the free enterprise system, and defending

economic rights. NELF’s members and supporters

include a cross-section of large and small businesses

and other organizations from all parts of the

Commonwealth, New England, and the United

States.

NELF is committed to the use of arbitration

as a private contractual alternative to litigation for

the resolution of disputes. To that end, NELF seeks

to uphold the mandate of the Federal Arbitration Act

(FAA) that arbitration agreements should be

enforced according to their terms. Therefore, when

the parties’ agreement has delegated all of the issues

in a lawsuit to arbitration, a court should dismiss

the suit and compel arbitration.

For these and other reasons discussed below,

NELF believes that its brief will assist the Court in

deciding whether Section 3 of the FAA requires a

1 Pursuant to Supreme Court Rule 37.6, NELF states that no

counsel for a party authored NELF’s amicus brief, in whole or

in part, and that no person or entity, other than amicus, made

a monetary contribution to the preparation or submission of the

brief.

federal court to stay a suit when all of its claims

belong in arbitration.

SUMMARY OF ARGUMENT

When, as here, the parties’ arbitration

agreement delegates all issues in a suit to

arbitration, a court should dismiss the suit and

compel arbitration.

Section 3 of the Federal

Arbitration Act (FAA) applies only when an

arbitration agreement is partial in scope and,

therefore, bifurcates the issues between arbitration

and a “trial of the action” in court.

In particular, when the agreement refers some

issues to arbitration but leaves other issues in court,

and a party files an application for a stay, Section 3

provides that the court “shall stay the trial of the

action until such arbitration has been had.” This

language clearly indicates that a court will

adjudicate the merits of the parties’ nonarbitrable

claims after the parties have resolved their

arbitrable claims. Section 3 ensures the orderly

resolution of arbitrable and nonarbitrable claims in

a bifurcated suit.

When, however, the parties have referred all

issues in a lawsuit to arbitration, as in this case,

Section 3 does not apply. In such a case, no issues

remain in court for a “trial of the action.” To

conclude otherwise would render this key statutory

language superfluous.

Section 3’s granular “any issue” language

differs from the expansive language of Section 4,

which allows a federal court to compel arbitration

when it would have jurisdiction to decide the parties’

entire controversy. This pointed textual difference

must mean that a Section 3 stay does not apply

when the parties’ entire dispute is arbitrable.

Since Section 3 does not apply when the whole

suit belongs in arbitration, the FAA leaves

undisturbed a federal court’s power to dismiss the

suit and compel arbitration.

Dismissal is

appropriate because the court has declined to

exercise its jurisdiction to decide the underlying

arbitrable controversy, in order to enforce the

parties’ arbitration agreement and the FAA’s

mandate.

When Congress enacted the FAA in 1925,

arbitration was generally limited to the resolution of

ordinary contract disputes between merchants,

decided by nonlawyer fellow merchants who applied

industry norms, not legal principles. Accordingly,

arbitration was deemed to be unsuitable for

resolving complex legal issues. Therefore, it would

have made sense at the time for parties to agree to

keep those legal issues in court, while agreeing to

arbitrate their standard business disputes.

Section 3 of the FAA apparently reflects the

limited scope of arbitration as it was then practiced.

In Section 3, Congress provided for the orderly

resolution of arbitrable and nonarbitrable issues in a

suit that was subject to a limited arbitration

agreement.

Contrary to the petitioners’ arguments, a

federal court’s stay of a suit that the court has sent

entirely to arbitration cannot provide the necessary

“independent jurisdictional basis” that would allow

the court to entertain an “FAA-created arbitration

action.” In Badgerow v. Walters, 596 U.S. 1 (2022),

the Court held that a party seeking to confirm or

vacate an arbitral award under the FAA must

establish a jurisdictional basis on “the face of the

application itself.” The Court made clear that only

the distinctive language of Section 4 (a petition to

compel arbitration) allows a court to “look through”

the petition to find a jurisdictional basis in the

underlying federal suit.

The Court’s holding in Badgerow should apply

regardless of whether the FAA application is a

freestanding action or whether the application is

filed in a pending suit that a court has stayed, while

sending all claims to arbitration. In neither case has

Congress authorized resort to “the controversy

between the parties” to establish jurisdiction over

the FAA application, as Congress has expressly done

in Section 4.

Moreover, when a court has stayed a suit but

has submitted the entire underlying controversy to

arbitration, the court has relinquished its

jurisdiction to decide that arbitrable controversy.

This differs markedly from the ordinary motion

arising out of an ordinary civil suit, in which the

court’s exercise of jurisdiction to decide the pending

suit anchors its jurisdiction to decide the motion.

Nor does the text of Section 3 provide that a

federal court may retain jurisdiction over a case that

it has sent entirely to arbitration. By contrast,

Section 8 of the FAA, which applies to arbitrable

admiralty disputes, provides that a federal court

“shall retain jurisdiction to enter its decree upon the

[arbitral] award,” after it has exercised its

“jurisdiction to direct the parties to proceed with the

arbitration” of their admiralty dispute. The absence

of any such jurisdictional language in Section 3 must

be a deliberate policy choice of Congress.

ARGUMENT

WHEN THE PARTIES’ ARBITRATION

AGREEMENT HAS DELEGATED ALL

ISSUES IN A SUIT TO ARBITRATION, A

COURT SHOULD DISMISS THE SUIT

AND COMPEL ARBITRATION.

Section

The

Federal

Arbitration Act Applies Only When

Arbitration

Agreement

Partial In Scope And, Therefore,

Bifurcates The Issues In A Suit

Between Arbitration And The

Court.

At issue is whether Section 3 of the Federal

Arbitration Act, 9 U.S.C. §§ 1-16 (FAA), requires a

federal court, upon a party’s application, to stay a

suit that belongs entirely in arbitration under the

parties’ agreement, or whether the court may,

instead, dismiss the suit and compel arbitration.

Section 3 provides, in relevant part:

If any suit or proceeding be brought in

any of the courts of the United States

upon any issue referable to arbitration

under an agreement in writing for such

arbitration, the court in which such suit

is pending, upon being satisfied that the

issue involved in such suit or proceeding

is referable to arbitration under such an

agreement, shall on application of one of

the parties stay the trial of the action

until such arbitration has been had in

accordance with the terms of the

agreement.

9 U.S.C. § 3 (emphasis added).

This distinctive statutory language tells us

that Section 3 applies only when an arbitration

agreement is partial in scope and, therefore,

bifurcates the “issues” in a federal suit between

arbitration and “a trial of the action” in court. “[T]he

relevant federal law requires piecemeal resolution

when necessary to give effect to an arbitration

agreement.” Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 20 (1983) (emphasis

supplied by Court). See also EEOC v. Waffle House,

Inc., 534 U.S. 279, 289 (2002) (“The FAA provides for

stays of proceedings in federal district courts when

an issue in the proceeding is referable to

arbitration.”) (emphasis added).

However, when the agreement delegates all

issues in a suit to arbitration, as in this case, Section

3 does not apply because no issues remain in court

for a “trial of the action,” i.e., “the ultimate

resolution of the dispute on the merits.” Merrill

Lynch, Pierce, Fenner & Smith, Inc. v. Bradley, 756

F.2d 1048, 1052 (4th Cir. 1985) (interpreting Section

3’s “trial of the action”). To conclude otherwise

would render that key statutory language

superfluous. “[O]ne of the most basic interpretive

canons [is] that a statute should be construed so that

effect is given to all its provisions, so that no part

will be inoperative or superfluous, void or

insignificant.” Corley v. United States, 556 U.S. 303,

314 (2009) (cleaned up).

In particular, when the parties’ arbitration

agreement refers some issues in a suit to arbitration

but leaves other issues in court, and a party files an

application for a stay, Section 3 provides that the

court “shall stay the trial of the action until such

arbitration has been had.” 9 U.S.C. § 3. This

language clearly indicates that litigation on the

merits of the nonarbitrable claims will take place in

court after the parties have resolved their arbitrable

claims. See Lamps Plus, Inc. v. Varela, 587 U.S. 176,

197 (2019) (Breyer, J., dissenting) (“Where a suit

contains several claims, and the district court has

determined that the parties agreed to arbitrate only

a subset of those claims, Section 3 of the FAA

provides that the district court must stay the

litigation at the request of either party.”). See also

Thomas H. Oehmke with Joan M. Brovins, 3

Commercial Arbitration § 65:14 (2023) (“If some

issues in a multi-issue dispute are arbitrable, while

others are not, then the issues should be segregated

with the appropriate issues ordered to arbitration

and the remainder subject to resolution by

litigation.”). Cf. Moses H. Cone, 460 U.S. at 20 n.23

(when arbitrable dispute between two parties also

involves non-signatory third party, “it may be

advisable to stay litigation among the nonarbitrating parties pending the outcome of the

arbitration.”).

In short, Section 3 ensures the

orderly resolution of arbitrable and nonarbitrable

claims in a bifurcated suit.

A closer examination of Section 3’s language

confirms this interpretation. Right away, in the first

sentence, Congress has singled out an arbitrable

“issue” that is part of a “suit” or “proceeding.”

Congress has not provided that the “suit” or

“proceeding” is itself arbitrable. Also, if Congress

had wanted a Section 3 stay to apply even when all

of the “issues” in a suit were arbitrable, it would

have said so, such as by providing: “If any suit or

proceeding be brought in any of the courts of the

United States [which is] referable to arbitration[, in

whole or in part].” But Congress chose not to do so.

Instead, Congress decided to focus on the particular

“issues” that comprise a federal suit. “And its

decision governs.” Badgerow v. Walters, 596 U.S. 1,

11 (2022).

On that note, contrast Section 3’s granular

“any issue” language with the expansive language of

Section 4, which allows a federal court to compel

arbitration when it “would have jurisdiction . . . of

the subject matter of a suit arising out of the

controversy between the parties.” 9 U.S.C. § 4

(emphasis added). “[T]he words of a statute must be

read in their context and with a view to their place

in the overall statutory scheme.” Sturgeon v. Frost,

577 U.S. 424, 438 (2016) (cleaned up).

Unlike Section 3’s specific “any issue”

language, Section 4 refers sweepingly to the parties’

“full-bodied controversy.” Vaden v. Discover Bank,

556 U.S. 49, 68 n.16 (2009). This pointed textual

difference must mean that a Section 3 stay does not

apply when the parties’ “full-bodied controversy” is

arbitrable. “We have no warrant to redline the FAA,

importing Section 4’s consequential language into

provisions containing nothing like it.” Badgerow,

596 U.S. at 11.

Since Section 3 does not apply when all of the

issues in a suit belong in arbitration, the FAA leaves

undisturbed a federal court’s power to dismiss the

case and compel arbitration.2

Dismissal is

appropriate because the court has declined to

exercise its jurisdiction to decide the underlying

arbitrable controversy, in order to enforce the

parties’ arbitration agreement and the FAA’s

The parties in this case agree that all claims in the

petitioners’ suit belong in arbitration. Petitioners’ Brief at 2.

Therefore, the dismissal of this suit does not implicate the

procedural consequence that the issue of arbitrability can

become an appealable “final decision with respect to an

arbitration,” under 9 U.S.C. § 16(a)(3). See Lamps Plus, 587

U.S. at 181 (“[A]n order directing the parties to proceed to

arbitration, and dismissing all the claims before the court, is

‘final’ within the meaning of § 16(a)(3), and therefore

appealable.”) (cleaned up). However, parties generally could

avoid an appealable “final decision” on the issue of arbitrability

simply by delegating that threshold issue to the arbitrator in

their agreement. “When the parties’ contract delegates the

arbitrability question to an arbitrator, the courts must respect

the parties’ decision as embodied in the contract.” Henry

Schein, Inc. v. Archer & White Sales, Inc., 586 U.S.__, 139 S.

Ct. 524, 528 (2019).

mandate.3 “Article III demands that an actual

controversy persist throughout all stages of

litigation.” West Virginia v. EPA, 597 U.S. 697, 718

(2022) (cleaned up).4 See also Sea-Land Serv., Inc. v.

Sea-Land of Puerto Rico, Inc., 636 F. Supp. 750, 75758 (D.P.R. 1986) (“Given . . . that all issues raised in

th[e] action are arbitrable and must be submitted to

arbitration, . . . there are no live controversies before

th[e] court, [and] the appropriate procedure is

dismissal of the action.”) (emphasis added).

See 9 U.S.C. § 2 (“A written provision in any maritime

transaction or a contract evidencing a transaction involving

commerce to settle by arbitration a controversy thereafter

arising out of such contract or transaction . . . shall be valid,

irrevocable, and enforceable, save upon such grounds as exist at

law or in equity for the revocation of any contract.”) (emphasis

added).

4 After

all, an arbitration agreement is “a specialized kind of

forum-selection clause,” Viking River Cruises, Inc. v. Moriana,

596 U.S. 639, 653 (2022) (cleaned up). And the FAA answers

“[t]he threshold question . . . whether [a] court should have

exercised its jurisdiction to do more than give effect to the

legitimate expectations of the parties, manifested in their freely

negotiated agreement, by specifically enforcing th[at] forum

clause.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12

(1972) (emphasis added).

Section 3 Apparently Reflects The

Limited Scope Of Arbitration As It

Was Practiced At The Time Of The

FAA’s Enactment, When Nonlawyer

Merchants Would Resolve Ordinary

Business Disputes Between Fellow

Merchants.

The notion of bifurcated claims under an

arbitration agreement that is partial in scope may

seem quaint and foreign, let alone deserving of

special statutory treatment under Section 3. “But

this modern intuition isn’t easily squared with

evidence of the [section’s] meaning at the time of the

Act’s adoption in 1925.” New Prime Inc. v. Oliveira,

586 U.S. __, 139 S. Ct. 532, 539 (2019) (discussing

Section 1’s “transportation worker” exemption).

When Congress enacted the FAA in 1925,

arbitration was generally limited to the resolution of

ordinary contract disputes between merchants,

decided by nonlaywer fellow merchants who applied

industry norms, not legal principles. “[A]rbitrators

were seldom lawyers but were fellow merchants in

the same business as the disputants and were

selected because of the expectation that they would

decide using industry custom and usage norms.”

Edward Brunet, Seeking Optimal Dispute Resolution

Clauses in High Stakes Employment Contracts, 23

Berkeley J. Emp. & Lab. L. 107, 111 (2002). See also

Harlan F. Stone,5 The Scope and Limitation of

At the time, the future Chief Justice of the Court was the

Dean of Columbia Law School. See Stone, The Scope and

Limitation of Commercial Arbitration, 10 Proc. Acad. Pol. Sci.

N.Y. at 195.

Commercial Arbitration, 10 Proc. Acad. Pol. Sci. N.Y.

195, 195 (1923) (before passage of FAA, decrying fact

“[t]hat two merchants of full age and mental

competency should not be permitted by the laws of

their country to stipulate for the adjustment and

settlement of controversies between them exclusively

by the arbitration of a fellow merchant.”) (emphasis

added).6 This limited use of arbitration already had

deep historical roots in the country.7

Since arbitrators were typically experienced

merchants applying industry standards, not lawyers

or retired judges applying the law, arbitration was

deemed to be unsuitable for resolving complex legal

issues that might arise in the course of parties’

business dealings.

Indeed, one of the primary

drafters of both the FAA and its State precursor, the

New York Arbitration Law of 1920, acknowledged

See also Julius Henry Cohen & Kenneth Dayton, The New

Federal Arbitration Law, 12 Va. L. Rev. 265, 266 (1926)

(“Systems of arbitration depending for their effectiveness

wholly upon the moral suasion of the business community have

grown up in the past decades in many lines of American

business. Usually the most successful are to be found in the

ranks of thoroughly organized trade associations which can

exercise an effective discipline, whether it be moral or actual.”)

(emphasis added).

7 “For example, the New York Chamber of Commerce set up an

arbitration system in 1768 in order to settle business disputes

according to trade practice rather than legal principles[.]”

Katherine Van Wezel Stone, Rustic Justice: Community And

Coercion Under The Federal Arbitration Act, 77 N.C. L. Rev.

931, 971 (1999) (cleaned up) (emphasis added).

this traditional shortcoming of arbitration when the

FAA took effect, in 1926:

Not all questions arising out of

contracts ought to be arbitrated. It is a

remedy peculiarly suited to the

disposition of the ordinary disputes

between merchants as to questions of

fact . . . . It has a place also in the

determination of the simpler questions

of law . . . . It is not the proper method

for deciding points of law of major

importance involving constitutional

questions or policy in the application of

statutes.

Julius Henry Cohen & Kenneth Dayton, The New

Federal Arbitration Law, 12 Va. L. Rev. 265, 281

(1926) (emphasis added).8 In a similar vein, the

Court itself appears to have initially adopted the

view that arbitration was inappropriate for deciding

various statutory claims.9

8 See also Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576,

589 n.7 (2008) (“The text of the FAA was based upon that of

New York’s arbitration statute [of 1920]. . . . Julius Henry

Cohen [was] one of the primary drafters of both the 1920 New

York Act and the proposed FAA.”).

9 See, e.g., Barrentine v. Arkansas-Best Freight Sys., Inc., 450

U.S. 728 (1981) (union workers could bring FLSA claims de

novo in federal court, after having unsuccessfully pursued same

wage claims under arbitration clause in collective bargaining

agreement); Alexander v. Gardner-Denver Co., 415 U.S. 36

(1974) (same with respect to union worker’s Title VII claims);

Wilko v. Swan, 346 U.S. 427 (1953) (claims under Securities

Act of 1933 are not arbitrable).

In sum, arbitration as it was practiced at the

time of the FAA’s enactment was generally unsuited

for deciding complex legal issues. Therefore, it

would have made sense for parties to agree to keep

those legal issues in court, while agreeing to

arbitrate their standard contract disputes first.

“Since many arbitration clauses, especially those in

building contracts, are partial in scope, litigation

after the determination of the arbitrators is

frequently necessary in order to settle the remaining

disputes.” Osmond K. Fraenkel, The New York

Arbitration Law, 32 Colum. L. Rev. 623, 632 (1932).

See also Stone, The Scope and Limitation of

Commercial Arbitration, 10 Proc. Acad. Pol. Sci. N.Y.

It was only relatively recently that the Court interpreted the

FAA to apply to virtually all state and federal claims, “unless

the FAA’s mandate has been overridden by a contrary

congressional command” in a federal statute. Am. Express Co.

v. Italian Colors Rest., 570 U.S. 228, 233 (2013) (cleaned up).

See, e.g., Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001)

(FAA exempts only employment contracts of transportation

workers engaged in interstate or international commerce);

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)

(distinguishing Alexander v. Gardner-Denver and holding that

arbitration clause in security broker’s securities registration

application applied to broker’s ADEA claims); Quijas v.

Shearson/Am. Express, Inc., 490 U.S. 477 (1989) (overruling

Wilko v. Swan and holding that securities claims under

Securities Act of 1933 are arbitrable); Perry v. Thomas, 482

U.S. 483 (1987) (FAA preempted provision of California Labor

Law stating that workers could maintain wage collection

actions without regard to any arbitration agreement);

Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220 (1987)

(FAA applies to claims under Securities Act of 1934 and RICO

statute); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614 (1985) (FAA applies to federal antitrust

claims, even in international arbitration).

at 199 ( “[I]t may be found useful in particular trades

or businesses to adopt a [pre-dispute] clause calling

for arbitration only on specified enumerated types of

controversy, which experience has shown can best be

settled or adjusted by those having expert knowledge

of the business, leaving other controversies to be

litigated in the court or by arbitration as may be

deemed advisable when the controversy actually

arises.”) (emphasis added).

Section 3 of the FAA reflects the limited scope

of arbitration as it was then practiced. “[The FAA]

must be read in the light of the situation which it

was devised to correct and of the history of

arbitration.” Cohen & Dayton, The New Federal

Arbitration Law, 12 Va. L. Rev. at 266. In Section 3,

Congress provided for the orderly resolution of

arbitrable and nonarbitrable issues in a suit that

was subject to a limited arbitration agreement.

Accordingly, Section 3 ensured the specific

enforcement of an arbitration agreement that was

only partial in scope, while it also ensured a “trial of

the action” for those legal issues that the parties left

in court. Section 3 also provided the procedure by

which a court adjudicating a bifurcated suit would

proceed, i.e., staying litigation of the nonarbitrable

issues until the parties resolved their arbitrable

issues. In sum, Section 3 was a product of its time

and embodied the traditional use of arbitration to

resolve ordinary business disputes, while preserving

complex legal issues for a “trial of the action” in

court.

A Federal Court’s Stay Of A Suit That The

Court

Has

Submitted

Entirely

Arbitration Cannot Provide The Necessary

“Independent Jurisdictional Basis” That

Would Allow The Court To Entertain An

“FAA-Created Arbitration Action.”

II.

Contrary to the petitioners’ arguments, a

federal court’s stay of a suit that the court has

submitted entirely to arbitration cannot provide the

necessary “independent jurisdictional basis” that

would allow the court to entertain an “FAA-created

arbitration action.” Badgerow, 596 U.S. at 8.10 An

FAA-created action would include an application to

compel the appearance of witnesses (Section 7), or an

application to confirm or vacate the arbitral award

(Sections 9 and 10, respectively).

“[T]hose

provisions, this Court has held, do not themselves

support federal jurisdiction.” Badgerow, 596 U.S. at

8. See also id. at 7 (“The district courts of the United

States are courts of limited jurisdiction, defined

(within constitutional bounds) by federal statute.”).

To the extent that the Court has presented a different

interpretation of Section 3 in certain earlier opinions, that

interpretation was dicta to the Court’s holding in each of those

cases. “It is to the holdings of our cases, rather than their

dicta, that we must attend[.]” Kokkonen v. Guardian Life Ins.

Co. of America, 511 U.S. 375, 379 (1994). See, e.g., Cortez Byrd

Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193, 195, 202

(2000) (discussing Section 3 but deciding case under venue

provisions of Sections 9 through 11); The Anaconda v. Am.

Sugar Refining Co., 322 U.S. 42, 44-46 (1944) (discussing

Section 3 but deciding case under Section 8, applicable to

arbitrable admiralty disputes); Marine Transit Corp. v.

Dreyfus, 284 U.S. 263, 274-76 (1932) (same).

Instead, those FAA actions are merely

procedural vehicles for the specific enforcement of an

arbitration agreement in federal court, addressing

various stages of the parties’ private arbitration

process. “[Q]uarrels about legal settlements--even

settlements of federal claims--typically involve only

state law, like disagreements about other contracts.”

Id. at 9.

Accordingly, the Court in Badgerow held that

a party seeking to confirm or vacate an arbitral

award must establish a jurisdictional basis on “the

face of the application itself.” Badgerow, 596 U.S. at

9. The Court made clear that only the “distinctive

language” of Section 4 (authorizing a petition to

compel arbitration) allows a court to “look through”

the petition to find a jurisdictional basis in the

parties’ underlying dispute. See id. at 5.11 “Without

that statutory instruction,” the Badgerow Court

concluded, “a court may look only to the application

actually submitted to it in assessing its jurisdiction.”

Id. (emphasis added).

The Court’s holding in Badgerow should apply

regardless of whether the FAA application is a

freestanding action, as it was in that case, or

whether the application is filed in a pending suit

that a court has stayed, while sending the entire

controversy to arbitration. In neither case has

Congress authorized resort to “the controversy

11 See also 9 U.S.C. § 4 (“A party . . . may petition any United

States district court which, save for such [arbitration]

agreement, would have jurisdiction . . . in a civil action or in

admiralty of the subject matter of a suit arising out of the

controversy between the parties.”) (emphasis added).

between the parties” to establish jurisdiction over

the FAA application, as Congress has expressly done

in Section 4. “Congress has not authorized a federal

court to adjudicate a Section 9 or 10 application just

because the contractual dispute it presents grew out

of arbitrating different claims, turning on different

law, that (save for the parties’ agreement) could

have been brought [and decided] in federal court.”

Badgerow, 596 U.S. at 12.

Moreover, when a court has stayed a suit that

it has submitted entirely to arbitration, the court

has relinquished its jurisdiction to decide the parties’

underlying arbitrable controversy.12 That situation

differs markedly from the ordinary motion arising

out of an ordinary pending suit, in which a court’s

exercise of “[j]urisdiction to decide the case includes

jurisdiction to decide the motion.” Badgerow, 596 at

15.

Therefore, the mere pendency of a suit that a

court has stayed but sent entirely to arbitration

cannot provide the necessary jurisdictional

foundation for a subsequent FAA application

concerning the specific enforcement of the parties’

contractual arbitral process.

See SmartSky

Networks, LLC v. DAG Wireless, LTD., 93 F.4th 175,

181 (4th Cir. 2024) (“SmartSky argues that the

district court had subject matter jurisdiction to

confirm the [arbitral] award because a complaint

that asserts federal claims acts as a ‘jurisdictional

anchor’ for subsequent FAA Section 9 and 10

applications when the [arbitrable] case was

12 See discussion at pp. 9-10 & n.4, above.

previously stayed pursuant to Section 3 . . . .

Badgerow does not permit such a result.”).

Nor does the text of Section 3 provide that a

federal court may retain jurisdiction over a case that

it has submitted entirely to arbitration. In fact,

Section 3 makes no mention of a court’s subject

matter jurisdiction whatsoever. See Badgerow, 596

at 11 (observing the same with respect to Sections 9

and 10). Instead, Section 3 merely requires a court

to stay “the trial of the action” of the nonarbitrable

issues in a bifurcated federal suit, to allow the

parties to resolve their arbitrable issues first.

In sharp contrast, Section 8 of the FAA, which

applies to arbitrable admiralty disputes, provides

that a federal court “shall retain jurisdiction to enter

its decree upon the [arbitral] award,” after it has

exercised its “jurisdiction to direct the parties to

proceed with the arbitration” of their admiralty

dispute. 9 U.S.C. § 8 (emphasis added).13 In

particular, Section 8 enforces the parties’ agreement

13 Section 8 of the FAA provides, in full:

If the basis of jurisdiction be a cause of action otherwise

justiciable in admiralty, then, notwithstanding

anything herein to the contrary, the party claiming to

be aggrieved may begin his proceeding hereunder by

libel and seizure of the vessel or other property of the

other party according to the usual course of admiralty

proceedings, and the court shall then have jurisdiction

to direct the parties to proceed with the arbitration and

shall retain jurisdiction to enter its decree upon the

award.

9 U.S.C. § 8 (emphasis added).

to arbitrate their admiralty dispute while, at the

same time, allowing the aggrieved party to proceed

in court with the traditional in rem “seizure of the

[disputed] vessel or other property,” as prejudgment

security.14 The court then “retains jurisdiction” over

the suit after it compels arbitration under the

parties’ agreement, so that it may “enter its decree

upon the award” after the arbitration concludes. Id.

Cf. Kokkonen v. Guardian Life Ins. Co. of America,

511 U.S. 375, 381-82 (1994) (federal court may

exercise

ancillary

jurisdiction

over

specific

enforcement of parties’ (non-arbitration) settlement

agreement of federal suit when court expressly

“retains jurisdiction” over agreement in its order of

dismissal).

Nowhere does Section 3 contain Section 8’s

“distinctive language,” Badgerow, 596 U.S. at 5,

which allows a federal court to “retain jurisdiction to

enter its decree upon the award” after arbitration

concludes, let alone exercise federal jurisdiction to

order pre-judgment security. “When Congress

includes particular language in one section of a

statute but omits it in another section of the same

Act, we generally take the choice to be deliberate.”

Id. at 11 (cleaned up). Section 3 simply provides no

textual support for the assertion that a federal court

has the jurisdiction to entertain an FAA application

when it has stayed a suit but has submitted all of its

14 See Marine Transit Corp., n.10 above, 284 U.S. at 275 (“The

intent of section 8 is to provide for the enforcement of the

agreement for arbitration, without depriving the aggrieved

party of his right, under the admiralty practice, to proceed

against ‘the vessel or other property’ belonging to the other

party to the agreement.”).

issues to arbitration, according to the terms of the

parties’ agreement.

CONCLUSION

For the reasons stated above, NELF

respectfully requests that this Court affirm the

judgment of the Ninth Circuit.

Respectfully submitted,

NEW ENGLAND LEGAL FOUNDATION

By its attorneys,