Texas Supreme Court Rules that Court Abused Its Discretion By Refusing to Stay Litigation

The Texas Supreme Court held that a court abused its discretion when it refused to stay litigation that could moot arbitration of related claims in the same lawsuit.

In re Merrill Lynch & Co., Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc., No. 09-0161 (Tex. June 25, 2010) is similar to In re Merrill Lynch Trust Company FSB, 235 S.W.3d 185 (Tex. 2007). There, the court held that there are “many circumstances in which litigation must be abated to ensure that an issue two parties have agreed to arbitrate is not decided instead in collateral litigation.”

Here, the court applied the same principle to hold that the trial court abused its discretion by refusing to stay the litigation related to one corporation, MetroPCS Communications, Inc., until the identical claims of its corporate affiliate, MetroPCS Wireless, Inc., are decided by arbitration or until Wireless is a member of a certified class action.

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