Joca-Roca Real Estate LLC v. Brennan, Jr., 2014 U.S. App. LEXIS 22563

Joca-Roca Real Estate, LLC bought property from Robert T. Brennan, Jr. under an asset purchase agreement (Sept. 18, 2005) that included a broad arbitration clause for disputes about the agreement.
Joca-Roca sued Brennan in federal court (D. Me.) on March 4, 2013 alleging fraud and breach of contract and never sought arbitration before filing suit.
Brennan answered and listed plaintiff’s failure to seek arbitration as an affirmative defense but did not press it; the parties then engaged in extensive litigation over eight-plus months.
The magistrate judge set discovery and trial deadlines; the parties conducted 16 depositions, exchanged thousands of pages of documents, and litigated discovery disputes in multiple conferences.
On December 6, 2013 (with discovery nearly complete and trial approaching), Joca-Roca moved to stay the court case pending arbitration; the magistrate judge denied the stay as a conduct-based waiver of arbitration rights, and the district judge affirmed.
Plaintiff appealed; the First Circuit reviewed de novo (with factual findings for clear error) and affirmed the district court’s finding of implied waiver.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiff waived right to arbitrate by litigating for months before invoking arbitration	Delay alone is not waiver; no showing of prejudice here and discovery might have been needed in arbitration too	Plaintiff delayed eight months, litigated extensively, and only sought arbitration when litigation turned unfavorable, causing prejudice	Waiver implied: plaintiff waived arbitration by conduct; stay denial affirmed
Whether court applied correct legal standard (prejudice required)	Magistrate failed to require prejudice showing	Court did apply prejudice standard and considered litigation activity and prejudice	Court applied proper standard; prejudice was found

AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (federal policy favors enforcing arbitration agreements)
Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (strong federal policy for arbitration)
Creative Solutions Grp., Inc. v. Pentzer Corp., 252 F.3d 28 (1st Cir. 2001) (mere delay without prejudice insufficient for waiver)
Restoration Pres. Masonry, Inc. v. Grove Eur. Ltd., 325 F.3d 54 (1st Cir. 2003) (discusses implied waiver factors)
Menorah Ins. Co. v. INX Reins. Corp., 72 F.3d 218 (1st Cir. 1995) (standard of review for waiver determinations)
Rankin v. Allstate Ins. Co., 336 F.3d 8 (1st Cir. 2003) (timeliness required to preserve arbitration rights)
Marie v. Allied Home Mortg. Corp., 402 F.3d 1 (1st Cir. 2005) (prejudice and delay inquiry)
Sevinor v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 807 F.2d 16 (1st Cir. 1986) (early notice can mitigate prejudice)
Com-Tech Assocs. v. Computer Assocs. Int'l, Inc., 938 F.2d 1574 (2d Cir. 1991) (arbitration as cost-effective, expeditious alternative)
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (arbitration's informality and streamlined nature)
Tyco Int'l Ltd. v. Swartz (In re Tyco Int'l Ltd. Sec. Litig.), 422 F.3d 41 (1st Cir. 2005) (no bright-line rule; waiver decided on facts)