Louisiana Stadium & Exposition District v. Merrill Lynch, Pierce, Fenner & Smith Inc.
2010 U.S. App. LEXIS 23928
| 2d Cir. | 2010Background
- LSED owns the Superdome and sought to refinance debt with ARS under Merrill Lynch entities in 2005.
- ARS were issued in 2006 based on MLPFS guidance allegedly misrepresenting demand for the securities.
- LSED filed suit in January 2009 in the Eastern District of Louisiana, later adding MLPFS and other Merrill entities.
- A parallel state-court action was removed and MDL proceedings centralized related ARS cases in SDNY.
- LSED moved to compel arbitration in December 2009, but the district court denied; the Second Circuit affirmed waiver of arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LSED waived its right to arbitrate | LSED continuously litigated; no timely arbitration sought against MLPFS. | Litigation activity and MDL centralization prejudiced arbitration rights. | Waiver of arbitration rights affirmed. |
| Prejudice as a basis to find waiver | Delay was justified due to ongoing investigation and discovery needs. | Litigation expenses and procedural developments harmed MLPFS; prejudice shown. | Prejudice found in both substantive and cost/time impact. |
| Effect of MDL centralization on waiver | MDL influences not necessarily waiver. | MDL centralization increased disruption burdening arbitration. | MDL centralization contributed to waiver. |
| Plaintiff status as initiator affects waiver | Plaintiff seeking arbitration does not alone waive rights. | Plaintiff's litigation inconsistent with arbitration rights. | Plaintiff's conduct sustained waiver. |
Key Cases Cited
- Thyssen, Inc. v. Calypso Shipping Corp., S.A., 310 F.3d 102 (2d Cir. 2002) (de novo review of waiver; clear error standard for factual findings)
- Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218 (2d Cir. 2001) (prejudice as key waiver factor)
- Leadertex, Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d 20 (2d Cir. 1995) (framework for evaluating waiver factors)
- PPG Indus. v. Webster Auto Parts, Inc., 128 F.3d 103 (2d Cir. 1997) (incurred litigation costs alone insufficient for waiver)
- Kramer v. Hammond, 943 F.2d 176 (2d Cir. 1991) (other surrounding circumstances in waiver analysis)
- Rush v. Oppenheimer & Co., 779 F.2d 885 (2d Cir. 1985) (prejudice element in waiver analysis)
- Welborn Clinic v. MedQuist, Inc., 301 F.3d 634 (7th Cir. 2002) (illustrates forum shopping concern in arbitration waiver)