Sixth Circuit Holds Defendants Lost Right to Arbitrate by Repeatedly Seeking to Dismiss Plaintiff’s Claims on Merits

The Sixth Circuit Court of Appeals reversed a district court’s order compelling arbitration after concluding that the defendants’ actions in twice seeking an immediate and total victory in court by asking the district court to reject the plaintiff’s case on the merits before they sought arbitration.

Valerie Kloosterman filed suit against her former employer, a hospital, and several of its officers. She asserted claims under 42 U.S.C. § 1983, Title VII, and Michigan law. The defendants moved to dismiss Kloosterman’s claims with prejudice. Kloosterman responded by amending her complaint. The defendants renewed their motions to dismiss. The district court granted their renewed motion in part and denied it in part. The defendants then raised an arbitration defense for the first time based on an arbitration clause in an employment agreement Kloosterman had signed. The district court held that the arbitration agreement was enforceable and applied to the dispute. It also rejected the argument that the defendants waived their defense by delaying seeking arbitration. The district court therefore granted the defendants’ motion and compelled arbitration.

The Sixth Circuit reversed. It explained that actions that are “entirely inconsistent” with arbitration, such as seeking “an immediate and total victory” in court through a Rule 12(b)(6) motion to dismiss, renders a party in default of an arbitration agreement and precludes arbitration. The defendants had acted entirely inconsistently with arbitration by twice seeking an immediate and total victory by asking the district court to dismiss Kloosterman’s claims with prejudice.

Kloosterman v. Metropolitan Hospital, No. 24-1398 (6th Cir. Aug 27, 2025).