153 F.4th 501
6th Cir.2025Background
- Valerie Kloosterman, a physician assistant at Metropolitan Hospital (eventually renamed University of Michigan Health-West), was terminated after refusing, on religious and medical grounds, to use gender identity-based pronouns or refer patients for gender reassignment treatments.
- Kloosterman sued the hospital and various administrators, bringing federal constitutional, Title VII, and Michigan state law claims alleging religious discrimination and retaliation.
- The hospital defendants twice moved to dismiss all claims on the merits rather than move to compel arbitration despite an arbitration clause in Kloosterman’s employment contract.
- After the court denied dismissal of several substantive claims, the hospital for the first time (over a year into the litigation) sought to compel arbitration and moved to dismiss the case in favor of arbitration.
- The district court granted the motion, holding the arbitration defense was not waived by the hospital’s litigation conduct, dismissing the case and compelling arbitration.
- Kloosterman appealed, arguing the hospital had forfeited its right to enforce arbitration by actively litigating in court for an extended period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the hospital forfeited its right to arbitrate by litigating in court before seeking arbitration | Kloosterman argued the hospital waived/forfeited arbitration by seeking judicial merits decisions before invoking arbitration | The hospital argued it retained the right to arbitrate, asserting no intentional waiver and that no prejudice to Kloosterman occurred | The court held the hospital was in “default” under the FAA, as its conduct was inconsistent with the right to arbitrate, thus losing its arbitration right |
| Whether federal or state law governs default/waiver of arbitration rights | Kloosterman argued federal law on procedural default applies in federal court; alternatively, Michigan state law also supports waiver | The hospital argued only state (Michigan) law governing contracts applies and state law does not have an analogous procedural “default” bar | The court concluded the Federal Arbitration Act’s procedural rules govern whether a party is in default, even if state law governs substantive waiver |
| Whether conduct must be intentional to constitute waiver/default | Kloosterman asserted that conduct, not intent, should control; even neglect or mistake can result in forfeiture | The hospital argued only intentional waiver should suffice | The court found that intent is not required under federal procedural law for forfeiture of the arbitration right |
| Whether delay and seeking judicial merits ruling before moving to arbitrate justifies denial of arbitration | Kloosterman argued that seeking merits dismissal in court, then shifting to arbitration upon adverse results, is unfair | The hospital claimed that their litigation conduct was not inconsistent enough to bar arbitration | The court found seeking “total victory” on the merits before requesting arbitration constitutes “default” under the FAA |
Key Cases Cited
- Morgan v. Sundance, Inc., 596 U.S. 411 (2022) (clarifies waiver of arbitration rights does not require showing of prejudice under the Federal Arbitration Act)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (confirms that the same procedural standards apply whether seeking a stay or a motion to compel under the FAA)
- Am. Locomotive Co. v. Chem. Rsch. Corp., 171 F.2d 115 (6th Cir. 1948) (defendants defaulted on arbitration by litigating for an extended period)
- Solo v. United Parcel Serv. Co., 947 F.3d 968 (6th Cir. 2020) (key test: conduct completely inconsistent with right to arbitrate suffices for forfeiture)
- Schwebke v. United Wholesale Mortg. LLC, 96 F.4th 971 (6th Cir. 2024) (post-Morgan, prejudice is not required to forfeit arbitration right—conduct is dispositive)