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Abstract

Part I of this article outlines and critiques current law on stays pending appeal of refusals to enforce purported arbitration agreements. Part II proposes a simple analysis of expected error costs to determine whether to stay litigation pending interlocutory appeal of rejections of litigationavoidance claims. This analysis looks to (1) potential harm to plaintiffs of erroneously staying litigation pending appeal, (2) potential harm to defendants of erroneously refusing to stay litigation pending appeal, and (3) the likelihood of each of those types of harms arising, which is based on the likelihood that the district court’s denial of the litigationavoidance claim is affirmed. Part II then examines these factors through the lens of § 16(a) appeals of district courts’ refusals to enforce purported arbitration agreements and suggests that, while the potential harms to plaintiffs and defendants from erroneous stay decisions can be determined on a case-by-case basis by the district court, the likelihood of affirmance is best determined on an aggregate level. Part III reports the methodology and results of an analysis of § 16(a) appeals, finding an almost even split of affirmance and reversal. This article concludes that based on the essentially even odds that a district court’s refusal to enforce a purported arbitration agreement will be affirmed, district courts should, at least in the arbitration context, simply engage in an unweighted balancing of the magnitude of potential harms to plaintiffs and defendants to determine whether a stay pending interlocutory appeal is warranted in any particular case. The article closes by noting that while the results of this analysis are applicable only to appeals under the FAA, the analysis itself is applicable to other interlocutory appeals of rejected litigation-avoidance claims.

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