Paige Martin v. Gary Yasuda, 829 F.3d 1118

Milan Institute (Amarillo College of Hairdressing) required students to sign enrollment agreements containing a binding arbitration clause; clause stated arbitrator decides scope, enforceability, and effect.
Plaintiffs (cosmetology students) sued Milan and its president Yasuda in federal court asserting state wage-law and FLSA claims, alleging they were unpaid employees rather than unpaid students.
Over 70 plaintiffs joined; litigation proceeded for ~17 months with pleadings, a partially successful motion to dismiss, discovery, a joint stipulation shaping discovery focused on employee status, Rule 26 disclosures, a protective order, and depositions.
Defendants acknowledged arbitration rights in an affirmative defense and in a Rule 26(f) footnote but delayed moving to compel arbitration and told the court at a scheduling conference they were "probably better off" litigating in federal court.
Defendants moved to compel individual arbitration 17 months after suit began; the district court denied the motion, finding defendants waived arbitration by litigation conduct due to knowledge of the right, inconsistent acts, and prejudice to plaintiffs.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Who decides whether arbitration was waived by litigation conduct?	Court should decide waiver; waiver is a question of arbitrability for the judge.	Arbitrator should decide waiver because the arbitration clause assigns scope and enforceability to the arbitrator.	Court: waiver-by-litigation-conduct is presumptively for the court to decide; clause here was not a clear-and-unmistakable delegation.
Did defendants waive the right to arbitrate by their litigation conduct?	Yes — defendants litigated for 17 months, sought merits rulings, engaged in discovery, and caused plaintiffs expense and a favorable merits ruling that would have to be relitigated.	No — defendants preserved arbitration in pleadings and argued enforceability; delay does not automatically show waiver.	Court: Yes — defendants waived arbitration (knowledge + acts inconsistent with right + prejudice to plaintiffs).

Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (distinguishes gateway arbitrability questions for courts from procedural issues for arbitrators)
Cox v. Ocean View Hotel Corp., 533 F.3d 1114 (9th Cir. 2008) (waiver-by-litigation-conduct is a question of arbitrability for courts)
Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754 (9th Cir. 1988) (extensive litigation and seeking merits relief can constitute acts inconsistent with arbitration)
Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691 (9th Cir. 1986) (three-factor test for waiver: knowledge, inconsistent acts, prejudice)
In re Mirant Corp., 613 F.3d 584 (5th Cir. 2010) (delays and significant litigation can support waiver and prejudice inquiry)