Morgan v. Sundance, Inc., 596 U.S. 411

Robyn Morgan signed an employment arbitration agreement when she was hired by Sundance and later sued Sundance in federal court on behalf of a nationwide collective under the FLSA.
Sundance initially litigated the case for about eight months: it moved to dismiss, answered (raising affirmative defenses but not arbitration), and participated in mediation and settlement discussions.
After those steps failed, Sundance moved to stay the litigation and compel arbitration under the FAA; Morgan opposed, arguing Sundance had waived the arbitration right by litigating.
The Eighth Circuit applied its precedent (Erdman) requiring a showing of prejudice to find waiver of arbitration; the panel held no prejudice and compelled arbitration; the case presented a circuit split on whether prejudice is required.
The Supreme Court granted certiorari to resolve whether federal courts may adopt an arbitration-specific waiver rule requiring prejudice, and vacated and remanded after holding such a rule is impermissible.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal courts may require a showing of prejudice to find waiver of an arbitration right under the FAA	Morgan: A prejudice requirement is appropriate to avoid lightly inferring waiver given the FAA’s policy favoring arbitration	Sundance: No special prejudice requirement; waiver is judged by usual federal waiver principles or by timing and facts	The FAA does not permit courts to create arbitration-specific procedural rules (like a prejudice requirement); such rules are impermissible
Whether Sundance’s litigation conduct waived its arbitration right	Morgan: Sundance litigated and mediated for months, causing wasted time and expense and thus waived arbitration	Sundance: It asserted arbitration after legal developments (Lamps Plus) clarified arbitration scope; did not intentionally relinquish the right	The Court did not decide whether Sundance waived its right on these facts; remanded for the court of appeals to apply ordinary federal principles (or an alternative framework) without imposing an arbitration-only prejudice rule

Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1 (1983) (describing the FAA’s national policy language but not authorizing special arbitration procedural rules)
Granite Rock Co. v. Teamsters, 561 U.S. 287 (2010) (FAA policy places arbitration agreements on same footing as other contracts)
Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213 (1985) (courts may not invent special rules favoring arbitration over litigation)
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (arbitration agreements enforceable like other contracts)
United States v. Olano, 507 U.S. 725 (1993) (definition of waiver as intentional relinquishment of a known right)
Erdman Co. v. Phoenix Land & Acquisition, LLC, 650 F.3d 1115 (8th Cir. 2011) (Eighth Circuit precedent imposing a prejudice requirement for arbitration waiver)
Carcich v. Rederi A/B Nordie, 389 F.2d 692 (2d Cir. 1968) (Second Circuit decision that originated the prejudice-based arbitration-waiver rule)