The current Supreme Court is undoubtedly pro-arbitration – but after Monday’s oral argument in Morgan v. Sundance, it appeared that it might nonetheless conclude that a party can lose the right to arbitrate by waiting too long to demand arbitration. At the same time, the justices seemed to differ over why that was, and what standard the court should adopt for future cases.
This case began when Robyn Morgan filed in Iowa federal court a wage-and-hour complaint on behalf of herself and similarly situated employees against Sundance, Inc., a Taco Bell franchisee. Sundance had included in Morgan’s job application an arbitration clause, which meant that the company could have immediately sought to put the litigation on hold, and to require Morgan to resolve her case through individual arbitration. Instead, Sundance began to litigate the case, first moving to dismiss Morgan’s complaint for reasons unrelated to arbitration, then filing an answer, then attempting to settle the case. Finally, about eight months after Morgan filed her complaint, Sundance moved to compel arbitration of Morgan’s claims.
The district court decided that by delaying, Sundance waived its right to demand arbitration. The U.S. Court of Appeals for the 8th Circuit reversed that decision based on its conclusion that Morgan had not been prejudiced by the delay. Before the Supreme Court, Morgan is arguing that courts cannot adopt special, arbitration-specific waiver standards: If state law normally does not...
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