May 23, 2022
Decided May 23, 2022
Morgan v. Sundance, Inc., No. 21-328
Today, the Supreme Court held 9-0 that prejudice is not required to show that a party waived the right to arbitrate.
Background: A plaintiff filed a putative class action against her employer over the employer’s pay practices. Eight months later—and after moving to dismiss, answering the complaint, asserting affirmative defenses, and participating in mediation—the defendant-employer moved pursuant to the Federal Arbitration Act (FAA) to stay the litigation and compel arbitration. The district court held that the defendant waived its right to arbitrate. The Eighth Circuit reversed, concluding that the plaintiff had failed to show it was prejudiced by the defendant-employer’s delay in compelling arbitration.
Issue: Is it necessary to show prejudice to establish the opposing party waived the right to arbitrate?
Court’s Holding: No. Because federal procedural rules typically do not require prejudice to invoke waiver, a party need not demonstrate prejudice to prove that the opposing party waived its right to arbitrate.
“[T]he FAA’s ‘policy favoring arbitration’ does not authorize federal courts to invent special, arbitration-preferring procedural rules.”
Justice Kagan, writing for the Court
What It Means:
The Court’s opinion is available here.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court. Please feel free to contact the following practice leaders:
Appellate and Constitutional Law Practice
|Allyson N. Ho
|Thomas H. Dupree Jr.
|Julian W. Poon
|Lucas C. Townsend
|Bradley J. Hamburger
Related Practice: Class Actions
|Kahn A. Scolnick
Related Practice: Labor and Employment
|Jason C. Schwartz
|Katherine V.A. Smith
Related Practice: Judgment and Arbitral Award Enforcement
|Matthew D. McGill
|Robert L. Weigel
Related Practice: International Arbitration