Background
The case originated from a dispute where the Eighth Circuit previously remanded the matter for a jury trial on whether the plaintiffs agreed to be bound by an agreement. Upon remand, the district court ordered that discovery on arbitrability and the merits proceed in tandem. Solid Financial Technologies, Inc. moved to stay all pretrial deadlines related to the merits pending the resolution of the motion to compel arbitration. The district court denied the motion, leading to this appeal.
The court’s reasoning
The court reviewed the denial of the motion to stay de novo. It addressed the argument that Solid waived its right to arbitration by complying with the district court’s instructions to propose deadlines. The court found no waiver because Solid had promptly filed a motion to compel arbitration and a motion to stay merits activity, never filing a motion to dismiss on the merits. The court then interpreted the term summarily in the Federal Arbitration Act to mean without delay or formality. It concluded that allowing merits discovery and dispositive motions to proceed before the arbitrability question is decided violates the statute’s intent to move parties to arbitration as quickly as possible. The court rejected the argument that this creates a special rule favoring arbitration, stating the requirement is dictated by the statute itself.
All activity related to the underlying merits must wait until after the proper venue for the action has been determined.
Howard v. Ferrellgas Partners, L.P., 748 F.3d 975, 978 (10th Cir. 2014)
What it means going forward
Lower courts must stay all merits-related discovery and dispositive motions until the question of arbitrability is resolved. This ensures that the narrow issue of whether an arbitration agreement exists is decided quickly before the parties engage in extensive litigation on the underlying claims.