diff --git a/scalafmt-core/shared/src/main/scala/org/scalafmt/internal/FormatTokens.scala b/scalafmt-core/shared/src/main/scala/org/scalafmt/internal/FormatTokens.scala
index 4a44f0dd0e..23ec1f42ae 100644
--- a/scalafmt-core/shared/src/main/scala/org/scalafmt/internal/FormatTokens.scala
+++ b/scalafmt-core/shared/src/main/scala/org/scalafmt/internal/FormatTokens.scala
@@ -127,7 +127,7 @@ class FormatTokens(leftTok2tok: Map[TokenHash, Int])(val arr: Array[FormatToken]
     getDelimsIfEnclosed(tree).map(_._2)
 
   def isEnclosedInMatching(tokens: Tokens, tree: Tree): Boolean =
-    getHeadIfEnclosed(tokens, tree).isDefined
+    getDelimsIfEnclosed(tokens, tree).isDefined
   def isEnclosedInMatching(tree: Tree): Boolean =
     isEnclosedInMatching(tree.tokens, tree)
 
diff --git a/scalafmt-core/shared/src/main/scala/org/scalafmt/internal/Router.scala b/scalafmt-core/shared/src/main/scala/org/scalafmt/internal/Router.scala
index aca8f80877..ec825dda41 100644
--- a/scalafmt-core/shared/src/main/scala/org/scalafmt/internal/Router.scala
+++ b/scalafmt-core/shared/src/main/scala/org/scalafmt/internal/Router.scala
@@ -666,8 +666,14 @@ class Router(formatOps: FormatOps) {
       // New statement
       case FormatToken(_: T.Semicolon, _, StartsStatementRight(stmt))
           if !stmt.is[Term.EndMarker] =>
+        val noSpace = !style.newlines.okSpaceForSource(newlines) ||
+          style.dialect.allowSignificantIndentation &&
+          stmt.is[Case] && stmt.parent.forall {
+            case p: Tree.Block => !isEnclosedInMatching(p)
+            case _ => false
+          }
         Seq(
-          Split(!style.newlines.okSpaceForSource(newlines), 0)(Space)
+          Split(noSpace, 0)(Space)
             .withSingleLine(endOfSingleLineBlock(getLast(stmt))),
           // For some reason, this newline cannot cost 1.
           Split(Newline2x(ft), 0),
diff --git a/scalafmt-tests-community/scala3/src/test/scala/org/scalafmt/community/scala3/CommunityScala3Suite.scala b/scalafmt-tests-community/scala3/src/test/scala/org/scalafmt/community/scala3/CommunityScala3Suite.scala
index 1d86a72961..ee7a839208 100644
--- a/scalafmt-tests-community/scala3/src/test/scala/org/scalafmt/community/scala3/CommunityScala3Suite.scala
+++ b/scalafmt-tests-community/scala3/src/test/scala/org/scalafmt/community/scala3/CommunityScala3Suite.scala
@@ -9,7 +9,7 @@ abstract class CommunityScala3Suite(name: String)
 
 class CommunityScala3_2Suite extends CommunityScala3Suite("scala-3.2") {
 
-  override protected def totalStatesVisited: Option[Int] = Some(32288017)
+  override protected def totalStatesVisited: Option[Int] = Some(32288009)
 
   override protected def builds = Seq(getBuild("3.2.2", dialects.Scala32, 791))
 
@@ -17,7 +17,7 @@ class CommunityScala3_2Suite extends CommunityScala3Suite("scala-3.2") {
 
 class CommunityScala3_3Suite extends CommunityScala3Suite("scala-3.3") {
 
-  override protected def totalStatesVisited: Option[Int] = Some(34858906)
+  override protected def totalStatesVisited: Option[Int] = Some(34858898)
 
   override protected def builds = Seq(getBuild("3.3.3", dialects.Scala33, 861))
 
diff --git a/scalafmt-tests/shared/src/test/resources/scala3/OptionalBraces_fold.stat b/scalafmt-tests/shared/src/test/resources/scala3/OptionalBraces_fold.stat
index 8b0714636f..030e231bde 100644
--- a/scalafmt-tests/shared/src/test/resources/scala3/OptionalBraces_fold.stat
+++ b/scalafmt-tests/shared/src/test/resources/scala3/OptionalBraces_fold.stat
@@ -7239,12 +7239,7 @@ tag match
     node.refPrivate = in0.readByte() == PRIVATE;
   case _ =>
 >>>
-test does not parse: [dialect scala3] `outdent` expected but `case` found
 tag match
    case TYPEREFsymbol | TYPEREFdirect | TERMREFsymbol | TERMREFdirect =>
-     node.refPrivate = in0.readByte() == PRIVATE; case _              =>
-                                                  ^
-====== full result: ======
-tag match
-   case TYPEREFsymbol | TYPEREFdirect | TERMREFsymbol | TERMREFdirect =>
-     node.refPrivate = in0.readByte() == PRIVATE; case _              =>
+     node.refPrivate = in0.readByte() == PRIVATE;
+   case _ =>
diff --git a/scalafmt-tests/shared/src/test/scala/org/scalafmt/FormatTests.scala b/scalafmt-tests/shared/src/test/scala/org/scalafmt/FormatTests.scala
index a38123b17a..43896ac07e 100644
--- a/scalafmt-tests/shared/src/test/scala/org/scalafmt/FormatTests.scala
+++ b/scalafmt-tests/shared/src/test/scala/org/scalafmt/FormatTests.scala
@@ -137,7 +137,7 @@ class FormatTests extends FunSuite with CanRunTests with FormatAssertions {
     val explored = Debug.explored.get()
     logger.debug(s"Total explored: $explored")
     if (!onlyUnit && !onlyManual)
-      assertEquals(explored, 1497994, "total explored")
+      assertEquals(explored, 1498031, "total explored")
     val results = debugResults.result()
     // TODO(olafur) don't block printing out test results.
     // I don't want to deal with scalaz's Tasks :'(