The Federal Arbitration Act requires courts to enforce arbitration agreements in most circumstances. But what happens if a party begins to litigate a case, and then seeks to compel arbitration several months later? Most courts have held that the arbitration agreement is still enforceable unless the other party has been prejudiced. In Morgan v. Sundance, which will be argued on Monday, the Supreme Court will consider whether this is the correct rule.
Sundance, Inc. is a Taco Bell franchisee that operates over 150 locations in multiple states. Robyn Morgan worked at a Sundance-owned Taco Bell in Iowa in 2015, and the application that she used to apply for her job contained an arbitration clause. Later, Morgan alleged that Sundance systematically violated wage-and-hour law in various ways, and she filed a lawsuit on behalf of all of Sundance’s hourly employees in federal district court in Iowa.
Morgan was not the first of Sundance’s employees to sue over the company’s pay practices; another lawsuit, Wood v. Sundance, had been filed in Michigan, though the court in that case had limited its scope to Sundance’s Michigan restaurants. Sundance responded to Morgan’s suit first by asking the Iowa court to dismiss the case as duplicative of Wood, arguing that Morgan could pursue her case “on an individual basis before this Court.” The Iowa court rejected Sundance’s argument, after which the company answered Morgan’s complaint; that answer also did not assert that Morgan was...
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