108 F.4th 610
8th Cir.2024Background
- Cybercriminals breached multiple companies and obtained customers' personal information, triggering nationwide class-action lawsuits.
- The defendants participated in litigation for several months, including filing a motion to dismiss and engaging in discovery planning, without raising arbitration.
- There was conflicting testimony regarding whether the defendants mentioned arbitration at a pretrial conference; no formal motion to compel arbitration was filed until months later.
- The district court found the delay and litigation conduct amounted to a waiver of the contractual right to arbitrate and denied the motion to compel.
- The case was appealed on the issue of waiver, particularly after the Supreme Court’s recent decision in Morgan v. Sundance, Inc.
- The appellate court reviewed whether the litigation conduct, under new waiver standards post-Morgan, resulted in waiver of arbitration rights.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of Right to Arbitrate | Defendants waived by substantially participating in litigation | No waiver; right to arbitrate retained, conduct insufficient | Waiver found; litigation conduct inconsistent with arbitration |
| Applicable Waiver Standard Post-Morgan | Morgan removes prejudice from waiver analysis | State law waiver principles may apply | Morgan governs; 2-part federal test applies |
| Timing and Knowledge of Arbitration Right | Defendants knew or should've known of arbitration right earlier | Only realized or considered arbitration later in proceedings | Constructive knowledge attributed; delay unjustified |
| Impact of Delay and Participation in Litigation | Delay and use of litigation machinery shows intentional waiver | Delay not sufficient to show intentional abandonment | Substantial litigation equals intentional relinquishment |
Key Cases Cited
- Donelson v. Ameriprise Fin. Servs., Inc., 999 F.3d 1080 (8th Cir. 2021) (substantial invocation of litigation waives arbitration)
- McCoy v. Walmart, Inc., 13 F.4th 702 (8th Cir. 2021) (circumstances for arbitration waiver)
- Sitzer v. Nat’l Ass’n of Realtors, 12 F.4th 853 (8th Cir. 2021) (using litigation as a preview before seeking arbitration)
- Hooper v. Advance Am., Cash Advance Ctrs. of Mo., Inc., 589 F.3d 917 (8th Cir. 2009) (gamesmanship and waiver of arbitration)
- Kelly v. Golden, 352 F.3d 344 (8th Cir. 2003) (conduct evidencing waiver of arbitration)