23-1551
6th Cir.Mar 27, 2024Background
- Jason Schwebke, who is deaf, sued his employer United Wholesale Mortgage (UWM) for disability discrimination and retaliation under the ADA and Michigan law, claiming failure to accommodate by not providing sign-language interpreters.
- Both parties agreed that Schwebke’s claims were subject to an arbitration clause found in the employment agreement.
- UWM did not mention arbitration in its answer or during nearly seven months of extensive discovery, including document production, depositions, and subpoenas.
- UWM only moved to compel arbitration after discovery was nearly complete, claiming its counsel was unaware of the arbitration clause earlier.
- The district court denied the motion, finding UWM had implicitly waived its right to compel arbitration, and UWM appealed.
Issues
| Issue | Schwebke’s Argument | UWM’s Argument | Held |
|---|---|---|---|
| Waiver of arbitration by participating in litigation | UWM’s extensive discovery and delay amounted to waiver | Attempts to compel arbitration after litigation is not waiver, especially absent prejudice | UWM’s conduct was inconsistent with reliance on arbitration; waiver applies |
| Effect of failing to raise arbitration in answer | Shows intent to litigate, not arbitrate | Lack of knowledge by counsel was an excusable error | Defense in answer is important to waiver analysis; mistake is not excusable |
| Need for prejudice to find waiver | Prejudice is not required after U.S. Supreme Court’s Morgan decision | Prejudice should still be necessary or important | Prejudice not required; ordinary waiver rules apply |
| Compare to prior case law (Johnson Assocs.) | UWM’s conduct was as inconsistent as prior cases finding waiver | Johnson Assocs. also included counterclaim & other conduct not present here | Totality of UWM's conduct supports finding of waiver |
Key Cases Cited
- Morgan v. Sundance, Inc., 596 U.S. 411 (Supreme Court abrogating the prejudice requirement for arbitration waiver)
- Johnson Associates Corp. v. HL Operating Corp., 680 F.3d 713 (6th Cir. 2012) (waiver found where defendant participated extensively in litigation before moving to compel arbitration)
- Hurley v. Deutsche Bank Tr. Co. Americas, 610 F.3d 334 (6th Cir. 2010) (pre-Morgan: required prejudice for waiver, but focused on conduct inconsistent with arbitration)