“[I]nvoking judicial process is presumptive waiver.”
How later courts described this case
- “[I]nvoking judicial process is presumptive waiver.”
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
VICENTE SORIANO,
Plaintiff,
v. Case No.: 2:22-cv-197-SPC-KCD
EXPERIAN INFORMATION
SOLUTIONS, INC.,
Defendant.
/
OPINION AND ORDER1
Before the Court are Defendant Experian Information Solutions, Inc.’s
(“Experian”) Objections to Magistrate Judge’s Order (Doc. 52) and Plaintiff
Vicente Soriano’s Response in Opposition (Doc. 54). The issue is ripe for
review.
BACKGROUND2
This is a fair credit case. Soriano alleges he suffered harm to his credit
standing due to Experian’s reporting mistake. In the first four months this
case was pending, Experian filed an answer, an amended answer, exchanged
1 Disclaimer: Papers hyperlinked to CM/ECF may be subject to PACER fees. By using
hyperlinks, the Court does not endorse, recommend, approve, or guarantee any third parties
or their services or products, nor does it have any agreements with them. The Court is not
responsible for a hyperlink’s functionality, and a failed hyperlink does not affect this Order.
2 Because the Court writes only for the parties (who are familiar with the facts), it includes
only what is necessary to explain the decision.
discovery, participated in mediation, submitted a case management report
where Experian requested a jury trial, and attended a pretrial conference. At
that pretrial conference held before United States Magistrate Judge Kyle C.
Dudek, Experian mentioned for the first time that the parties’ contract
required arbitration.
About one month later, and approximately five months into the
litigation, Experian moved to compel arbitration. Soriano opposed. Magistrate
Judge Dudek found that Experian waived the right to arbitrate. Experian
objected to Judge Dudek’s Order, arguing Judge Dudek committed several
errors by basing his order on erroneous facts and misapplying the legal
standard for arbitration waiver. Soriano responded that Judge Dudek’s Order
is correct—Experian waived its right to arbitrate. For the reasons stated below,
the objections to Judge Dudek’s Order are overruled.
LEGAL STANDARD
The parties dispute the appropriate legal standard under which this
Court should review Judge Dudek’s Order. Experian asserts this Court should
review the Order de novo, while Soriano believes the appropriate standard is
clear error. The issue turns on whether a motion to compel arbitration is
dispositive. If a motion is dispositive, courts review a magistrate judge’s report
de novo, but if a motion is non-dispositive, courts review a magistrate judge’s
order for clear error. Fed. R. Civ. P. 72.
Although the 11th Circuit has not explicitly provided guidance on
whether a motion to compel arbitration is non-dispositive, other courts have
found that motions to compel arbitration are non-dispositive. See Moore v.
Chuck Stevens Automative, Inc., No. 12-00663, 2013 WL 627232 at *1 (S.D.
Ala. Feb 20, 2013); Vernon v. Qwest Commc’ns Int'l, Inc., 857 F. Supp. 2d 1135
(D. Colo. 2012). The Court agrees with the reasoning underlying these
decisions. Arbitration, like mediation, is an alternative dispute resolution
forum. The Court may confirm, vacate, or modify an arbitration award under
certain conditions. 9 U.S.C.A. § 9. Although arbitration may resolve a case, it
is possible for a case to come back to this Court after arbitration. See Brown
v. ITT Consumer Fin. Grp., 211 F.3d 1217, 1217 (11th Cir. 2000) (discussing
whether a district court properly vacated an arbitration decision). Thus, the
Court agrees with Soriano that a motion to compel arbitration is non-
dispositive.
Given that compelling arbitration is non-dispositive, the Court must
review Judge Dudek’s Order under a clear error standard. Fed. R. Civ. P. 72(a).
The district court must “modify or set aside any part of the order that is clearly
erroneous or is contrary to law.” Fed. R. Civ. P. 72(a). “A finding is clearly
erroneous if the reviewing court, after assessing the evidence in its entirety, is
left with definite and firm conviction that a mistake has been committed.” A.R.
by and through Root v. Dudek, 151 F. Supp. 3d 1309, 1312 (S.D. Fla. 2015)
(citation omitted). “A magistrate judge’s order is contrary to law when it fails
to apply or misapplies relevant statutes, case law, or rules of procedure.” Id.
(citation omitted).
Having determined the correct review standard, the Court turns to
whether Judge Dudek committed clear error in finding Experian waived its
right to arbitrate.
DISCUSSION
The Court begins with the arbitration waiver legal standard and then
discusses Experian’s specific objections to Judge Dudek’s Order.
Before the Supreme Court’s opinion in Morgan v. Sundance, Inc., 142 S.
Ct. 1708 (2022), a party waived a contractual right to arbitrate when “(1) the
party seeking arbitration substantially participates in litigation . . . ; and (2)
this participation results in prejudice to the opposing party.” In re Checking
Acct. Overdraft Litig., 754 F.3d 1290, 1294 (11th Cir. 2014); Stone v. E.F.
Hutton & Co., 898 F.2d 1542, 1543 (11th Cir. 1990). Courts previously imposed
a “heavy burden” on the party opposing arbitration—in this case Soriano—to
show these factors exist because “any doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration.” Moses H. Cone Memorial
Hosp. v. Mercury Construction Corp., 460 U.S. 1, 24–25 (1983). But this heavy
burden was not and should not be insurmountable. See Stone, 898 F.2d at 1544.
Recently, the Supreme Court eliminated at least the second prong of the
arbitration waiver test: “prejudice is not a condition of finding that a party, by
litigating too long, waived its right to stay litigation or compel arbitration . . .”
Morgan, 142 S. Ct. at 1714. But there remains a dispute over the scope of
Morgan.
Soriano argues that the Supreme Court eliminated the two-part test
altogether along with the heavy burden, which would make an arbitration
provision like any other contractual provision. Under this interpretation,
waiver would occur more often. However, Experian argues that the first prong
of the test still stands, and Soriano has a heavy burden to show that Experian
substantially participated in litigation. The Court need not decide on the
correct post-Morgan test for arbitration waiver at this juncture. Judge Dudek
properly outlined the complexities of the Supreme Court’s decision and, for the
reasons listed below, did not commit clear error in finding Experian waived
arbitration here even considering Experian’s post-Morgan interpretation
where Soriano has the heavy burden to show Experian substantially
participated in litigation.
The Court now addresses Experian’s objections.
A. Time Period
First, Experian argues it raised arbitration earlier than Judge Dudek
says it did: Judge Dudek’s Order asserts Experian failed to mention the
arbitration for “nearly six months.” (Doc. 51 at 7). Experian claims it took
“under five months” to mention arbitration. (Doc. 52 at 7).
Experian’s objection misses the mark even under its own reading of
Morgan. Although Experian is correct that it mentioned the arbitration
provision about five months after filing the Complaint (Doc. 35), it makes little
difference. This is because the primary consideration in determining if
Experian waived arbitration under Experian’s own reading of Morgan is
whether Experian “substantially participated” in the litigation. So, the issue
is not simply how long Experian took to raise arbitration, but the actions
Experian took in litigating its case before raising it. Time matters only because
the amount of time a party litigates before raising arbitration may evidence
how substantially it litigated.
Experian does not dispute the actions it took to litigate its case, nor can
it, during the “just under five months” or “nearly six months” before it
mentioned arbitration. So, Experian’s objection deals mostly with semantics:
there is little difference between “just under five months”—as Experian
argues—and “nearly six months”—as Judge Dudek found—when no one
disputes the litigation actions Experian took during that time without raising
arbitration. Experian filed an answer and an amended answer, exchanged
discovery, participated in mediation, submitted a joint case management
report seeking a jury trial, and attended an initial pretrial conference. The key
under Experian’s reading of Morgan is whether this amounts to substantial
participation in the litigation. This issue is discussed below.
B. Burden Shifting
Second, Experian objects that Judge Dudek erred by finding Soriano met
its burden to show arbitration waiver when Soriano presented no evidence as
to when or how Experian discovered it had a right to compel arbitration or
when it first contemplated arbitration. Experian claims Soriano should have
conducted arbitration-related discovery to answer these questions.
This objection is based on a misunderstanding of what burden Soriano
has, if it does still have one. Even if Soriano maintains a heavy burden post-
Morgan, that burden would be to show Experian substantially litigated before
mentioning arbitration. See Cabinetree of Wis., Inc. v. Kraftmaid Cabinetry,
Inc., 50 F.3d 388, 390 (7th Cir. 1995) (“[I]nvoking judicial process is
presumptive waiver.”) (emphasis omitted); Stone, 898 F.2d at 1543. Experian
presents no caselaw to support a burden exists upon Soriano to (1) show when
and how Experian discovered a right to arbitrate or (2) when Experian first
contemplated arbitration.
Soriano is not a mind reader. It was Experian’s responsibility to know
the arbitrability of its case and to alert the Court and Soriano about its intent
to arbitrate. Experian cannot expect Soriano, or any other individual party, to
inquire about whether it planned to compel arbitration, especially when
Experian chose not to assert arbitration as an affirmative defense in its initial
and amended answers. Judge Dudek did not commit clear error in finding
Soriano adequately met his burden without conducting arbitration-related
discovery and discussing when Experian discovered its right to arbitrate or
first contemplated arbitration.
C. Juridical Process
Third, Experian asserts that Judge Dudek committed clear error by
finding that Experian substantially participated in the litigation. Judge
Dudek did not. This action was filed on March 29, 2022. It was not until
August 10, 2022, that Experian first mentioned arbitration. They took until
September 1, 2022 to file to compel. During that period, Experian
substantially participated in the litigation by answering the Complaint,
amending its answer, participating in discovery, attending mediation, and
submitting a case management report requesting a jury trial – all without a
single mention of arbitration or moving to compel arbitration.
Experian cites to Bennett v. Sys. & Servs. Techs., Inc. to show a prior case
where this Court found that arbitration was not waived despite the parties
complying with a similar FCRA fast track schedule. But, as Judge Dudek
notes, Bennett has a key distinction. There, the defendant asserted an
affirmative defense that the action was subject to arbitration, putting the
opposing party and the Court on notice it might seek such alternative dispute
resolution. Here, Experian had two bites at the apple to fall within Bennett's
holding, both answering and amending its answer, and never once asserted a
similar affirmative defense. Experian cannot remedy its failure.
Judge Dudek did not commit clear error when finding Experian actively
and substantially litigated its case and, thus, Experian waived arbitration.
Accordingly, it is now
ORDERED:
Defendant’s Objections to the Magistrate Judge’s Order (Doc. 52) are
OVERRULED.
DONE and ORDERED in Fort Myers, Florida on December 8, 2022.
UNITED STATES DISTRICT JUDGE
Copies: All Parties of Record