BOSC, Inc. v. Board of County Commissioners, 853 F.3d 1165

Background

In July 2015 the Bernalillo County Board filed a state-court complaint against BOSC, Inc. and Thomas Hayes alleging unsuitable securities sales, but did not serve the defendants while it investigated whether arbitration was required.
BOSC and Hayes removed the case to federal court and moved to dismiss; four days after briefing concluded (about three months after filing) the Board voluntarily dismissed the suit and, four days later, filed for FINRA arbitration.
BOSC and Hayes then sued in federal court to enjoin arbitration, arguing the Board waived its right to arbitrate by filing the state-court action; the Board counterclaimed to compel arbitration under 9 U.S.C. § 4.
The district court denied injunctive relief, granted the counterclaim to compel arbitration, and denied BOSC and Hayes discovery into the Board’s motivations for filing the state suit.
The Tenth Circuit reviewed de novo whether the Board waived arbitration and for clear error any underlying factual findings, applied the Peterson waiver factors, and affirmed the district court’s order compelling arbitration.

Issues

Issue	Plaintiff's Argument (BOSC & Hayes)	Defendant's Argument (Board)	Held
Whether filing a lawsuit by a party later seeking arbitration constitutes an intentional waiver of arbitration	Filing suit is an intentional abandonment; adopt a bright-line rule that plaintiffs who later seek arbitration have waived the right	Filing alone does not show intent to waive—Board never served defendants and dismissed before court ruled	No bright-line rule; Tenth Circuit declined to adopt automatic waiver for plaintiffs who file suit
Whether the Board waived arbitration through its litigation conduct (Peterson factors)	Board’s filing, responding to motion to dismiss, and delay before arbitration invoked litigation machinery and caused prejudice	Board’s actions were limited (no service, quick dismissal before ruling, only ~3 months elapsed), little litigation progressed, and defendants’ costs were largely self-inflicted	Under Peterson factors, Board did not waive its right to arbitrate; arbitration compelled
Whether the district court erred in denying discovery into the Board’s motivations for filing the state suit	Discovery needed to show intent and factual disputes relevant to waiver; Rule 56(d) / summary procedures should allow inquiries	Peterson analysis focuses on external conduct; motivations are irrelevant to the conduct-based waiver inquiry; FAA §4 calls for a summary trial, not broad discovery	Denial of discovery affirmed; the Board’s subjective motivations were irrelevant to the Peterson conduct analysis
Proper procedure under the FAA when compelling arbitration and when a summary trial or discovery is allowed	Parties sought discovery under Rule 56(d) to resist the counterclaim to compel arbitration	FAA §4 permits a summary-trial-like procedure to resolve factual disputes quickly; broad discovery is not the default	Court explained FAA §4 summary-trial framework; district court did not abuse discretion in refusing discovery absent a material factual dispute on objectively relevant conduct

Key Cases Cited

Peterson v. Shearson/American Express, Inc., 849 F.2d 464 (10th Cir. 1988) (articulates multi-factor test for waiver by litigation conduct)
Reid Burton Constr., Inc. v. Carpenters Dist. Council of So. Colo., 614 F.2d 698 (10th Cir. 1980) (early Tenth Circuit guidance on waiver inquiry and useful factors)
Hill v. Ricoh Americas Corp., 603 F.3d 766 (10th Cir. 2010) (recognizes two forms of waiver including intentional subjective waiver)
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (establishes federal policy favoring arbitration and resolution of doubts in favor of arbitration)
In re Cox Enterprises, Inc., 835 F.3d 1195 (10th Cir. 2016) (recent Tenth Circuit treatment of waiver and standards of review)
Howard v. Ferrellgas Partners, 748 F.3d 975 (10th Cir. 2014) (explains FAA §4 summary-trial-like procedure and limits on discovery)