Oh no, Do-si-do re arbitration stays!

When this year started, the world of arbitration stays looked like this: In federal courts there was a split, with the law in the 9th Circuit being that if you appealed the denial of a motion to compel arbitration, there was no automatic stay of the litigation pending the appeal; you had to seek such a stay from the district court judge (and if that failed, the circuit). (Other courts following this approach were the 2d and 5th Circuits. In contrast, the 3d, 4th, 7th, 10th, 11th, and D.C. Circuits imposed an automatic stay.) In contrast to the 9th Circuit view, in California state court, such a stay was automatic (CCP 1294 made such orders appealable and CCP 916 allowed for an automatic stay).

Earlier this year the federal law changed: Under the Supreme Court's Coinbase v. Bielski (June 23, 2023, No. 22-105) opinion, a stay became automatic (Holding: A district court must stay its proceedings while an interlocutory appeal on the question of arbitrability is ongoing.). Thus, state and federal law were aligned.

However, this afternoon the Governor signed SB365 which removes the automatic stay under California law (effective Jan. 1, 2024). Now CCP 1294(a) will read (new text bolded): "An aggrieved party may appeal from (a) An order dismissing or denying a petition to compel arbitration. Notwithstanding Section 916, the perfecting of such an appeal shall not automatically stay any proceedings in the trial court during the pendency of the appeal." Thus, the state-federal alignment on this law will have lasted less than six months (between June 23, 2023 and December 31, 2023.)

This is yet another example of the round-and-round between California and federal law. When one zigs, the other zags. Keeps us all on our toes.

[Updates 10/11/23: the DJ has Request to arbitrate no longer guarantees stay in court proceedings {quoting this blog!} and The Recorder has Newsom Signs Bill Curbing Arbitration-Appeal Stays]