Defendants who delay can lose their chance to arbitrate, court rules in 9-0 decision

[John Dillinger]

<https://scotusblog.com>
Defendants who delay can lose their chance to arbitrate, court rules
in 9-0 decision
charlotte-garden

SCOTUS NEWS

on May 23, 2022 at 11:06 am

The Supreme Court on Monday unanimously ruled against a fast-food
franchise owner in a procedural dispute over whether a wage-theft
lawsuit belongs in federal court or in arbitration. Justice Elena
Kagan wrote the opinion in Morgan v. Sundance, Inc.

Plaintiff Robyn Morgan worked at a Taco Bell franchise owned by
Sundance. When she came to believe that some of Sundance's pay
practices violated federal wage-and-hour law, she filed a class action
lawsuit against the company.

However, the job application that Morgan completed before Sundance
hired her contained a clause that committed her to resolve any future
disputes with the company in individual arbitration. In previous
cases, the court has held that such clauses are typically enforceable
under the Federal Arbitration Act. The question in this case was
whether that still holds true if the company waits to demand
arbitration. The court held that defendants can lose their chance to
arbitrate if they wait too long.

When a plaintiff who is subject to an arbitration agreement files a
lawsuit in court, the defendant usually seeks to move the case to
arbitration without delay. But this case was unusual: Sundance waited
for eight months, during which time the parties began to litigate the
case and also discussed settlement. The district court concluded that
Sundance had waived its right to arbitrate because its actions had
prejudiced Morgan, but the U.S. Court of Appeals for the 8th Circuit
disagreed.

On Monday, the justices reversed the 8th Circuit. Kagan wrote that the
FAA does not authorize "special, arbitration-preferring procedural
rules" like the one the 8th Circuit created.

Check back soon for in-depth analysis of the opinion.

Recommended Citation: Charlotte Garden, Defendants who delay can lose
their chance to arbitrate, court rules in 9-0 decision, SCOTUSblog
(May. 23, 2022, 11:06 AM),
<https://www.scotusblog.com/2022/05/defendants-who-delay-can-lose-their-chance-to-arbitrate-court-rules-in-9-0-decision/>

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