Celltrace Communications Limited v. Acacia Research Corporation, Nos. 16-2006, 16-2326 (2d Cir. Apr. 25, 2017) [click for opinion]

The one-paragraph decision of the Second Circuit, intended as a clear message to the courts and the Bar, reads as follows:

We expect appeals such as this one to grow increasingly rare and soon become extinct. The District Court granted defendants' motion to compel arbitration and dismissed, rather than stayed, the case. On appeal, both parties agree that the District Court erred in dismissing, rather than staying, the action. "[W]hen all claims are referred to arbitration and a stay requested," as happened here, "the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("FAA"), requires a stay of proceedings." Katz v. Cellco P'ship, 794 F.3d 341, 343 (2d Cir.), cert. denied, 136 S. Ct. 596 (2015) (emphasis added). Had the District Court entered a stay, moreover, this appeal would not exist. See id. at 346 ("[T]he FAA explicitly denies the right to an immediate appeal from an interlocutory order that compels arbitration or stays proceedings." (citing 9 U.S.C. § 16(b)(1)–(2)). While we are not thereby deprived of jurisdiction over the merits of this appeal, those merits require little discussion. Substantially for the reasons given by the District Court in its memorandum decision, we conclude that the parties agreed that, prior to litigating in court, they had "to try in good faith to settle [any] dispute" through a particular mechanism—"formal arbitration under the Rules of Arbitration of the International Chamber of Commerce"—and that this condition has not been met. Thus we need not disturb the District Court's ruling other than to vacate its order of dismissal and remand for entry of a stay.