Eighth Circuit: Plaintiff Waives Right to Compel Arbitration by Filing Complaint and Litigating Dispute in Court

The Eighth Circuit Court of Appeals recently affirmed the denial of a motion to compel arbitration filed by the plaintiff in the matter. The court noted that arbitration “can be waived in a variety of circumstances, including by substantially invoking the litigation machinery rather than promptly seeking arbitration.” Here, the plaintiff filed suit seeking a preliminary injunction and a permanent injunction and participated in court-ordered mediation as well as discovery proceedings before filing a demand for arbitration. The court recognized that section 3 of the Federal Arbitration Act “typically applies to give defendants, not plaintiffs, a right to stay litigation.”

Focusing on the actions of the party demanding arbitration, as required after the U.S. Supreme Court’s decision in Morgan v. Sundance Inc. (which removed consideration of prejudice to the opposing party from the analysis), the court found that the right to arbitration had been waived by acts inconsistent with that right, i.e., litigating the claim in court prior to seeking arbitration of the same claim. In so doing, the court also noted that the opinion of the U.S. Supreme Court in Henry Schein Inc. v. Archer & White Sales Inc. “did not disturb the general principle that arbitration is a waivable contractual right” and, furthermore, that “[c]ourts determine whether a party waives arbitration, not arbitrators.”

Breadeaux’s Pisa v. Beckman Bros. Ltd., No. 22-2835 (8th Cir. Oct. 16, 2023).