13 F.4th 460
5th Cir.2021Background:
- Forby enrolled on Scoresense.com and was enrolled in a negative-option $29.95/month credit-monitoring plan after a purported “free” trial; the site’s Terms contained an arbitration clause.
- Forby sued in state court (ICFA and unjust enrichment), One Tech removed, moved to dismiss, and then moved to compel arbitration; the district court compelled arbitration.
- Fifth Circuit in Forby I reversed, holding One Tech waived arbitration for the claims it had litigated by invoking the judicial process and obtaining a merits decision on a motion to dismiss.
- After remand and leave to amend, Forby added federal CROA claims alleging deceptive enrollment and other CROA-specific violations; One Tech promptly moved to compel arbitration of the new claims.
- The district court denied arbitration, concluding prior waiver extended to the CROA claims; One Tech appealed; the Fifth Circuit reversed, holding waiver is claim-specific and One Tech had not waived arbitration as to the newly pled CROA claims.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether One Tech waived arbitration for CROA claims by previously litigating ICFA/unjust-enrichment claims | Forby: prior litigation waived arbitration as to all claims arising from same facts, including CROA | One Tech: waiver is claim-specific; CROA claims were added later and never litigated, so arbitration not waived | Court: Waiver is claim-specific; One Tech did not waive arbitration for CROA claims; reversal and remand |
| Whether amendment "revived" or changed scope to permit arbitration of all claims | Forby: adding CROA doesn’t change that prior litigation showed intent to litigate dispute in court | One Tech: amended complaint created new claims it never litigated; Krinsk-style revival or at least arbitration of newly added CROA claims is permissible | Court: Declined to apply revival; relied on claim-specific waiver principle and Collado analog; CROA claims not waived |
Key Cases Cited
- Forby v. One Technologies, L.P., 909 F.3d 780 (5th Cir. 2018) (earlier Fifth Circuit decision finding waiver as to claims One Tech litigated)
- Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324 (5th Cir. 1999) (waiver evaluated on a claim-by-claim basis; party invokes judicial process only for claims it litigated)
- Cooper v. WestEnd Capital Mgmt., L.L.C., 832 F.3d 534 (5th Cir. 2016) (strong presumption against finding waiver of arbitration)
- Republic Ins. Co. v. PAICO Receivables, LLC, 383 F.3d 341 (5th Cir. 2004) (standards for reviewing waiver and factual findings)
- Collado v. J & G Transp., Inc., 820 F.3d 1256 (11th Cir. 2016) (defendant did not waive arbitration of claims added later because those claims were not part of the case when waiver occurred)
- Krinsk v. SunTrust Banks, Inc., 654 F.3d 1194 (11th Cir. 2011) (discussed as a revival theory for arbitration rights after an amended complaint)
- In re Mirant Corp., 613 F.3d 584 (5th Cir. 2010) (discusses seeking decision on merits before attempting to arbitrate)
- Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494 (5th Cir. 1986) (defining waiver as substantial invocation of the judicial process to the other party's prejudice)