Petition for Writ of Certiorari — Robyn Morgan, Petitioner v. Sundance, Inc.

No. 21-____

IN THE

Supreme Court of the United States

____________________

ROBYN MORGAN, on Behalf of Herself and All

Similarly Situated Individuals,

Petitioner,

v.

SUNDANCE, INC.,

Respondent.

____________________

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Eighth

Circuit

PETITION FOR A WRIT OF CERTIORARI

KARLA GILBRIDE

Counsel of Record

LEAH NICHOLLS

PUBLIC JUSTICE, P.C.

1620 L Street NW

Suite 630

Washington, DC 20036

(202) 797-8600

kgilbride@publicjustice.net

CHARLES R. ASH, IV

JASON J. THOMPSON

SOMMERS SCHWARTZ, P.C.

One Towne Square

Suite 1700

Southfield, MI 48067

(248) 355-0300

Counsel for Petitioner

(Additional Counsel on Inside Cover)

BETH M. RIVERS

PITT MCGEHEE PALMER

& RIVERS, PC

117 W. Fourth Street

Suite 200

Royal Oak, MI 48067

(248) 398-9800

PAIGE FIEDLER

FIEDLER LAW FIRM, P.L.C.

8831 Windsor Parkway

Johnston, IA 50131

(515) 254-1999

Counsel for Petitioner

i

QUESTION PRESENTED

Waiver is the intentional relinquishment of a

known right and, in the context of contracts, occurs

when one party to a contract either explicitly

repudiates its rights under the contract or acts in a

manner inconsistent with an intention of exercising

them. In the opinion below, the Eighth Circuit joined

eight other federal courts of appeals and most state

supreme courts in grafting an additional requirement

onto the waiver analysis when the contract at issue

happens to involve arbitration—requiring the party

asserting waiver to show that the waiving party’s

inconsistent acts caused prejudice. Three other

federal courts of appeal, and the supreme courts of at

least four states, do not include prejudice as an

essential element of proving waiver of the right to

arbitrate.

The question presented is: Does the arbitrationspecific requirement that the proponent of a

contractual waiver defense prove prejudice violate

this Court’s instruction that lower courts must “place

arbitration agreements on an equal footing with other

contracts?” AT&T Mobility LLC v. Concepcion, 563

U.S. 333, 339 (2011).

ii

RELATED CASES

Morgan v. Sundance, Inc., No. 4:18-cv-316, U.S.

District Court for the Southern District of Iowa.

Denial of motion to compel arbitration entered

June 28, 2019.

Morgan v. Sundance, Inc., No. 19-2435, U.S. Court of

Appeals for the Eighth Circuit. Judgment entered

March 30, 2021.

iii

TABLE OF CONTENTS

QUESTION PRESENTED .........................................i

RELATED CASES .................................................... ii

TABLE OF AUTHORITIES ...................................... v

OPINIONS BELOW ................................................... 1

JURISDICTION ......................................................... 1

STATUTORY PROVISIONS ..................................... 1

INTRODUCTION ...................................................... 2

STATEMENT OF THE CASE ................................... 5

A. Robyn Morgan’s Allegations ...........................5

B. The Wood Action and Sundance’s Motion

to Dismiss ........................................................5

C. Information Exchange and Mediation ............6

D. Lower Court Opinions .....................................7

REASONS FOR GRANTING THE PETITION ........ 9

I.

WHETHER PREJUDICE IS REQUIRED TO

PROVE WAIVER IN THE ARBITRATION

CONTEXT HAS DIVIDED FEDERAL AND

STATE APPELLATE COURTS. ....................... 12

A. Nine Federal Courts of Appeals Require a

Finding of at Least Some Prejudice to

Establish Waiver of the Right to Arbitrate

Through Litigation Conduct. ........................12

B. The Seventh, Tenth, and D.C. Circuits

Consider Prejudice a Relevant Factor in

the Waiver Analysis But Do Not

Consistently Require Its Presence. ...............17

iv

C. Parties Are Subject to Disparate

Litigation-Conduct Waiver Standards in

State and Federal Court. ..............................20

II. THE

EQUAL-TREATMENT

PRINCIPLE

REQUIRES THAT THE STANDARD FOR

WAIVER OF ARBITRATION RIGHTS BE THE

SAME

AS

WAIVER

OF

OTHER

CONTRACTUAL RIGHTS. ............................... 21

A. Under this Court’s Equal-Treatment

Principle, Arbitration Contracts Must be

Treated the Same as Other Contracts. .........22

B. Outside the Arbitration Context, Prejudice

Is Not Required to Demonstrate Waiver of

a Contractual

Right. .............................................................23

C. Because Ordinary Contract Law Does Not

Require Prejudice for Waiver, the EqualTreatment Principle Requires the Same

for Arbitration Contracts. .............................25

III. THIS CASE SQUARELY PRESENTS THE

QUESTION PRESENTED, AND IS AN IDEAL

VEHICLE

FOR

RESOLVING

THE

LONGSTANDING CIRCUIT SPLIT. ............... 30

CONCLUSION ......................................................... 32

APPENDIX

Opinion of the U.S. Court of Appeals for the Eighth

Circuit .................................................... App. 1

Opion and Order Regarding Defendantʼs Motion to

Compel Arbitration and Dismiss of the U.S.

District Court for the Northern District of

Iowa ..................................................... App. 12

v

TABLE OF AUTHORITIES

CASES

Adams v. Merrill Lynch, Pierce, Fenner &

Smith,

888 F.2d 696 (10th Cir. 1989)........................... 18

Advest, Inc. v. Wachtel,

668 A.2d 367 (Conn. 1995) ............................... 20

American Locomotive Co. v. Gyro Process Co.,

185 F.2d 316 (6th Cir. 1950)............................. 12

ATSA of Cal., Inc. v. Cont’l Ins. Co.,

702 F.2d 172 (9th Cir. 1983)............................. 13

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) ............................... 22, 23, 28

Batson Yarn & Fabrics Machinery Grp.,

Inc. v. Saurer-Allma GmbH-Allgauer

Maschinenbau,

311 F. Supp. 68 (D.S.C. 1970) .......................... 13

Best Place, Inc. v. Penn Am. Ins. Co.,

920 P.2d 334 (Haw. 1996) ................................. 24

BOSC, Inc. v. Bd. of Cnty. Comm’rs of Cnty.

of Bernalillo,

853 F.3d 1165 (10th Cir. 2017)......................... 18

Brown v. State Farm Mut. Auto. Ins. Co.,

776 S.W.2d 384 (Mo. 1989) (en banc) ............... 25

Buckeye Check Cashing, Inc. v. Cardegna,

546 U.S. 440 (2006) ........................................... 22

vi

Burton-Dixie Corp. v. Timothy McCarthy

Constr. Co.,

436 F.2d 405 (5th Cir. 1971)............................. 12

Cabinetree of Wisc., Inc. v. Kraftmaid

Cabinetry, Inc.,

50 F.3d 388 (7th Cir. 1995)..................... 9, 24, 30

Cain v. Midland Funding, LLC,

156 A.3d 807 (Md. 2017) ................................... 20

Carcich v. Rederi A/B Nordie,

389 F.2d 692 (2d Cir. 1968) ........................ 12, 13

Carolina Throwing Co. v. S & E Novelty Corp.,

442 F.2d 329 (4th Cir. 1971)............................. 13

Carr-Gottstein Foods Co. v. Wasilla, LLC,

182 P.3d 1131 (Alaska 2008) ............................ 23

Citibank, N.A. v. Stok & Assocs., P.A.,

387 F. App’x 921 (11th Cir. 2010), cert.

granted, 562 U.S. 1215 (2011), cert.

dismissed, 563 U.S. 1029 (2011) .................. 3, 31

City of Glendale v. Coquat,

52 P.2d 1178 (Ariz. 1935) ................................. 25

Dean Witter Reynolds, Inc. v. Byrd,

470 U.S. 213 (1985) ................................ 10, 18-19

E. C. Ernst, Inc. v. Manhattan Constr. Co.

of Texas,

559 F.2d 268 (5th Cir. 1977)............................. 11

Erdman Co. v. Phx. Land & Acquisition, LLC,

650 F.3d 1115 (8th Cir. 2011)............................. 9

vii

Fisher v. A.G. Becker Paribas Inc.,

791 F.2d 691 (9th Cir. 1986)....................... 15, 19

Fundamental Portfolio Advisors, Inc. v.

Tocqueville Asset Mgmt., L.P.,

850 N.E.2d 653 (N.Y. 2006) .............................. 23

Gavlik Constr. Co. v. H. F. Campbell Co.,

526 F.2d 777 (3d Cir. 1975), ............................. 13

Gen. Dynamics Corp. v. U.S.,

563 U.S. 478 (2011) ........................................... 27

In re Gen. Elec. Capital Corp.,

203 S.W.3d 314 (Tex. 2006) .............................. 23

Hall Street Assocs., L.L.C. v. Mattel, Inc.,

552 U.S. 576 (2008) ........................................... 23

Hooper v. Advance Am., Cash Advance Ctrs.

of Mo., Inc.,

589 F.3d 917 (8th Cir. 2009)............................. 16

Hosp. Prods., Inc. v. Sterile Design, Inc.,

734 F. Supp. 896 (E.D. Mo. 1990), aff’d,

923 F.2d 859 (8th Cir. 1990)............................. 10

Hoxworth v. Blinder, Robinson & Co.,

980 F.2d 912 (3d Cir. 1992) .............................. 15

Hudson v. Citibank (S.D.) NA,

387 P.3d 42 (Alaska 2016) ............................ 4, 20

Int’l Energy Ventures Mgmt., LLC v. United

Energy Grp., Ltd.,

999 F.3d 257 (5th Cir. 2021)............................. 11

viii

Joca-Roca Real Estate, LLC v. Brennan,

772 F.3d 945 (1st Cir. 2014) ............................. 14

Johnson Assocs. Corp. v. HL Operating Corp.,

680 F.3d 713 (6th Cir. 2012)............................. 16

Kawasaki Heavy Indus., Ltd. v. Bombardier

Recreational Prods., Inc.,

660 F.3d 988 (7th Cir. 2011)............................. 19

Khan v. Parsons Glob. Servs., Ltd.,

521 F.3d 421 (D.C. Cir. 2008) ........................... 30

Kindred Nursing Ctrs. Ltd. P’ship v. Clark,

137 S. Ct. 1421 (2017)....................................... 22

Lamps Plus, Inc. v. Varela,

139 S. Ct. 1407 (2019)......................................... 9

LAS, Inc. v. Mini-Tankers, USA,

796 N.E.2d 633 (Ill. App. Ct. 2003) .................. 21

Leadertex, Inc. v. Morganton Dyeing &

Finishing Corp.,

67 F.3d 20 (2d Cir. 1995) ............................ 14, 15

Lewallen v. Green Tree Servicing, LLC,

487 F.3d 1085 (8th Cir. 2007)............................. 7

Major League Baseball v. Morsani,

790 So. 2d 1071 (Fla. 2001) ......................... 23-24

Martin v. Yasuda,

829 F.3d 1118 (9th Cir. 2016)............................. 4

Messina v. N. Cent. Distrib., Inc.,

821 F.3d 1047 (8th Cir. 2016)........................... 31

ix

Metz v. Merrill Lynch, Pierce, Fenner &

Smith, Inc.,

39 F.3d 1482 (10th Cir. 1994)........................... 18

MicroStrategy, Inc. v. Lauricia,

268 F.3d 244 (4th Cir. 2001)............................. 29

Midland Land & Improvement Co. v. U.S.,

270 U.S. 251 (1926) ........................................... 27

Miller Brewing Co. v. Fort Worth Distrib. Co.,

781 F.2d 494 (5th Cir. 1986)............................. 14

In re Mirant Corp.,

613 F.3d 584 (5th Cir. 2010)............................. 16

Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp.,

460 U.S. 1 (1983) ......................................... 10, 22

Nathan Miller, Inc. v. N. Ins. Co. of N.Y.,

39 A.2d 23 (Del. Super. Ct. 1944) ..................... 25

Nat’l Found. for Cancer Rsch. v. A.G.

Edwards & Sons, Inc.,

821 F.2d 772 (D.C. Cir. 1987) ............... 10, 17, 28

Newirth v. Aegis Senior Cmtys., LLC,

931 F.3d 935 (9th Cir. 2019)............................. 16

O.J. Distrib., Inc. v. Hornell Brewing Co.,

340 F.3d 345 (6th Cir. 2003)............................. 14

Parsons v. Halliburton Energy Servs., Inc.,

785 S.E.2d 844 (W. Va. 2016) ........................... 20

x

Patten Grading & Paving, Inc. v. Skanska

USA Building, Inc.,

380 F.3d 200 (4th Cir. 2004)............................. 15

Peterson v. Shearson/American Exp., Inc.,

849 F.2d 464 (10th Cir. 1988)........................... 17

Pitts v. Am. Sec. Life Ins. Co.,

931 F.2d 351 (5th Cir. 1991)............................. 25

Polyflow, L.L.C. v. Specialty RTP, L.L.C.,

993 F.3d 295 (5th Cir. 2021)............................. 11

Prima Paint Corp. v. Flood & Conklin Mfg. Co.,

388 U.S. 395 (1967) ................................ 22-23, 27

Raymond James Fin. Servs., Inc. v. Saldukas,

896 So.2d 707 (Fla. 2005) ................................. 20

Rent-A-Center, W. v. Jackson,

561 U.S. 63 (2010) ............................................... 4

Rota-McLarty v. Santander Consumer USA,

700 F.3d 690 (4th Cir. 2012)............................... 3

Royal Air Props., Inc. v. Smith,

333 F.2d 568 (9th Cir. 1964)............................. 24

S & H Contractors, Inc. v. A.J. Taft Coal Co.,

906 F.2d 1507 (11th Cir. 1990).................... 13-14

Sabatelli v. Baylor Scott & White Health,

832 F. App’x 843 (5th Cir. 2020) ...................... 11

Scheetz v. IMT Ins. Co.,

324 N.W.2d 302 (Iowa 1982) ........................ 4, 24

xi

Scherk v. Alberto-Culver Co.,

417 U.S. 506 (1974) ........................................... 22

Slidell, Inc. v. Millennium Inorganic

Chems., Inc.,

460 F.3d 1047 (8th Cir. 2006)............................. 9

Smith v. GC Servs. Ltd. P’ship,

907 F.3d 495 (7th Cir. 2018)............................. 19

St. Agnes Med. Ctr. v. PacifiCare of Cal.,

82 P.3d 727 (Cal. 2003) ..................................... 20

St. Mary’s Med. Ctr. of Evansville, Inc. v.

Disco Aluminum Prods. Co.,

969 F.2d 585 (7th Cir. 1992)............10, 18, 19, 28

Stifel, Nicolaus & Co. v. Freeman,

924 F.2d 157 (8th Cir. 1991)............................. 10

Tenneco Resins, Inc. v. Davy Intern., AG,

770 F.2d 416 (5th Cir. 1985)............................. 16

In re Tyco Int’l Sec. Litig.,

422 F.3d 41 (1st Cir. 2005) ................................. 3

United States v. Olano,

507 U.S. 725 (1993) ....................................... 2, 23

Volt Info. Sciences, Inc. v. Bd. of Trs. of

Leland Stanford Jr. Univ.,

489 U.S. 468 (1989) ........................................... 22

Wesley Ret. Servs., Inc. v. Hansen Lind

Meyer, Inc.,

594 N.W.2d 22 (Iowa 1999) ................................ 4

xii

STATUTES

9 U.S.C. § 2 ..................................................... 1, 3, 26

9 U.S.C. § 3 ......................................................... 1, 26

OTHER AUTHORITIES

28 Am. Jur. 2d Estoppel & Waiver § 35

(2011) ................................................................. 24

Black’s Law Dictionary (11th ed. 2019) ................ 26

31 C.J.S. Estoppel and Waiver § 87 (2021).............. 2

3A Corbin, Arthur Linton, Corbin on

Contracts § 753 (1960) ...................................... 24

2 Farnsworth, E. Allan, Contracts § 8.5 (2d

ed. 1990) ............................................................ 24

13 Lord, R., Williston on Contracts (4th Ed.

2012) .............................................................. 2, 24

Restatement (Second) Contracts (Am. L.

Inst. 1981) ......................................................... 24

1

OPINIONS BELOW

The opinion of the U.S. Court of Appeals for the

Eighth Circuit (App. 1-11) is reported at 992 F.3d 711.

The opinion of the U.S. District Court for the

Southern District of Iowa denying Respondent’s

motion to compel arbitration (App. 12-34) is

unreported, but is available at 2019 WL 5089205.

JURISDICTION

The judgment of the court of appeals was entered

on March 30, 2021. The jurisdiction of this Court is

invoked under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS

9 U.S.C. § 2: “A written provision in any maritime

transaction or a contract evidencing a transaction

involving commerce to settle by arbitration a

controversy thereafter arising out of such contract or

transaction, or the refusal to perform the whole or any

part thereof, or an agreement in writing to submit to

arbitration an existing controversy arising out of such

a contract, transaction, or refusal, shall be valid,

irrevocable, and enforceable, save upon such grounds

as exist at law or in equity for the revocation of any

contract.”

9 U.S.C. § 3: If any suit or proceeding be brought

in any of the courts of the United States upon any

issue referable to arbitration under an agreement in

writing for such arbitration, the court in which such

suit is pending, upon being satisfied that the issue

involved in such suit or proceeding is referable to

arbitration under such an agreement, shall on

application of one of the parties stay the trial of the

action until such arbitration has been had in

accordance with the terms of the agreement,

2

providing the applicant for the stay is not in default

in proceeding with such arbitration.

INTRODUCTION

Unlike the equitable doctrines of laches and

estoppel, which require a showing of prejudice,

common-law waiver is traditionally a unilateral

concept. 31 C.J.S. Estoppel and Waiver § 87 (2021). It

consists of “the intentional relinquishment or

abandonment of a known right.” United States v.

Olano, 507 U.S. 725, 733 (1993) (using this definition

to distinguish waiver from forfeiture). Rights can be

waived explicitly, but waiver can also be implied by a

course of conduct inconsistent with an intent to

enforce the right. 13 R. Lord, Williston on Contracts

§ 39:30 (4th Ed. 2012).

But for one particular contractual right and one

particular type of implied waiver, these ordinary

contract principles have devolved into a muddled

mess. Parties who are contractually bound to resolve

future disputes in arbitration but who choose to

litigate those disputes in court instead face differing

legal standards throughout the country for whether

their inconsistent litigation conduct constitutes a

waiver of their right to demand arbitration.

Some courts, like the Courts of Appeals for the

Seventh and D.C. Circuits and the high courts of

Alaska, Florida, Maryland, and West Virginia, follow

an equal-treatment approach. They treat waiver of

the right to arbitrate like the waiver of any other

contractual right by focusing solely on the actions of

the allegedly waiving party, without requiring that

the other party suffer prejudice from those actions.

Other courts, such as the First Circuit, take a weakprejudice approach: They require only “a modicum” of

3

prejudice to be shown by the party asserting the

waiver. See In re Tyco Int’l Sec. Litig., 422 F.3d 41, 44

(1st Cir. 2005).

And a third, strong-prejudice group of courts

consider prejudice the crucial, dispositive facet of the

analysis. E.g., Rota-McLarty v. Santander Consumer

USA, 700 F.3d 690, 702 (4th Cir. 2012) (“The

dispositive determination is whether the opposing

party has suffered actual prejudice.”); Citibank, N.A.

v. Stok & Assocs., P.A., 387 F. App’x 921, 924-25 (11th

Cir. 2010), cert. granted, 562 U.S. 1215 (2011), cert.

dismissed, 563 U.S. 1029 (2011) (finding no waiver

despite substantial litigation conduct inconsistent

with right to arbitrate, solely because the other party

failed to prove prejudice).

In the opinion below, the Eighth Circuit placed

itself firmly into the strong-prejudice camp. The

majority opinion concluded that Sundance, Inc., knew

of its right to insist on arbitration and that it acted

inconsistently with that right by filing an answer in

federal court that did not mention arbitration and

otherwise participating in the litigation process in

federal court for eight months. App. 5. But it refused

to find this conduct constituted waiver of the right to

arbitrate because “Morgan was not prejudiced by

Sundance’s litigation strategy.” App. 6.

This addition of a prejudice requirement to the

contractual waiver analysis when the contract at

issue involves arbitration is not supported by the text

of the Federal Arbitration Act (FAA). To the contrary,

it violates what this Court has called “the primary

substantive provision” of that statute, 9 U.S.C. § 2,

which directs that agreements to arbitrate future

disputes be placed on “an equal footing with other

4

contracts.” Rent-A-Center, W. v. Jackson, 561 U.S. 63,

67 (2010) (internal citations and quotations omitted).

Nor does § 3 of the Act, under which many courts

analyze litigation-conduct waiver because it mentions

being “in default in proceeding with [the] arbitration,”

say anything about prejudice to the non-defaulting

party.

With different arbitration-specific waiver tests

proliferating around the country, contracting parties

must navigate a gauntlet of inconsistencies. The

federal-court waiver test for arbitration is different in

Illinois than in the neighboring state of Missouri. And

even within the same state, federal courts applying

the FAA reach a different conclusion on the need for

prejudice than state courts do. Compare Martin v.

Yasuda, 829 F.3d 1118, 1126 (9th Cir. 2016)

(requiring prejudice), with Hudson v. Citibank (S.D.)

NA, 387 P.3d 42, 47-49 (Alaska 2016) (rejecting

prejudice requirement).

Finally, in most states, the ordinary test for

waiving contractual rights differs from the test for

waiving the right to arbitrate, contravening this

Court’s repeated admonition that states treat

arbitration agreements the same as other contracts.

Compare Scheetz v. IMT Ins. Co., 324 N.W.2d 302,

304-05 (Iowa 1982) (waiver of insurer’s contractual

rights required only knowledge of those rights and an

intent to relinquish them, and it was not necessary

“that the facts be such as would support a plea of

estoppel”) with Wesley Ret. Servs., Inc. v. Hansen Lind

Meyer, Inc., 594 N.W.2d 22, 30-31 (Iowa 1999)

(requiring prejudice to prove waiver of right to

arbitrate).

5

This Court should grant the petition to provide

clarification and uniformity to this unsettled area of

law. Both are badly needed.

STATEMENT OF THE CASE

A. Robyn Morgan’s Allegations

Sundance owns more than 150 Taco Bell

franchises throughout the United States. Complaint

¶ 1 (Sept. 25, 2018). Robyn Morgan worked at one of

these franchises in Osceola, Iowa, as an hourly

employee from August to October of 2015. Id. ¶ 3.

Sundance had a policy of “shifting” hours that

employees worked in one week and recording them for

the following week so that the total number of

recorded hours in any given week would never exceed

40. Id. ¶ 17. As a result of this shifting, Ms. Morgan

and other crew members were not paid for all of the

hours they worked and were not paid overtime when

they worked more than 40 hours in a single week. Id.

¶ 15.

Ms. Morgan and other crew members were also

sometimes instructed to clock out and to continue

working off the clock. Id. ¶ 24. Ms. Morgan alleged

that these practices constituted willful violations of

the Fair Labor Standards Act (FLSA) and filed a

nationwide FLSA collective action on behalf of all

similarly situated hourly employees of Sundance

franchises. Id. ¶ 26.

B. The Wood Action and Sundance’s Motion

to Dismiss

Two years before Morgan filed this action in Iowa,

a similar action was filed under the FLSA against

Sundance in the Eastern District of Michigan

6

detailing the same practices of “shifting” time to

subsequent pay periods. Wood v. Sundance, Inc., No.

2:16-cv-13598 (E.D. Mich. Oct. 7, 2016) (the “Wood

action”). The Wood action was initially filed as a

nationwide collective action, but in June of 2017, it

was conditionally certified to include only hourly

employees of Sundance’s Taco Bell restaurants in

Michigan. Eighth Circuit Appendix (“8th Cir. App.”)

183.

After Morgan filed her complaint in Iowa,

Sundance moved to dismiss it pursuant to the “firstto-file” rule, arguing that her action was duplicative

of the Wood action. 8th Cir. App. 14-30. This motion

said nothing about Morgan’s claims being subject to a

mandatory arbitration provision. To the contrary, in

seeking dismissal of her nationwide collective action

as duplicative of Wood, Sundance argued that Morgan

could “refile her claim on an individual basis before

this court.” 8th Cir. App. 27.

On March 15, 2019, the district court denied

Sundance’s motion to dismiss, concluding that

because members of Morgan’s putative collective

action who had worked for Sundance outside of

Michigan could not join the Wood action, the two cases

were not duplicative. 8th Cir. App. 186-88. Four days

later, Sundance filed its answer, listing fourteen

affirmative defenses. Eighth Circuit Appellee

Appendix 1-15. None of these defenses mentioned an

arbitration agreement.

C. Information Exchange and Mediation

Plaintiffs in this case and in the Wood action met

with representatives of Sundance for a joint

mediation on April 15, 2019. In preparation for that

mediation, Sundance provided Morgan’s counsel with

7

payroll data for nearly 12,000 members of the

putative collective, as well as thousands of pages of

emails from Sundance management. App. 17.

The mediation led to settlement of the Wood

action, but Morgan’s case did not settle.

Approximately two weeks later, on May 3, 2019,

Sundance moved to compel individual arbitration of

Morgan’s claims. 8th Cir. App. 191.

D. Lower Court Opinions

The district court applied the tripartite test

established by the Eighth Circuit in Lewallen v. Green

Tree Servicing, LLC, 487 F.3d 1085 (8th Cir. 2007), to

determine whether Sundance had waived its right to

arbitration. It first concluded that Sundance knew of

an existing right to arbitrate because that right was

set forth on a form contract on Sundance’s own

website. App. 26. Second, it held that Sundance acted

inconsistently with that right when it waited for eight

months before asserting its right to arbitration and

failed to mention arbitration in its answer, in its

motion to dismiss, or in scheduling discussions with

opposing counsel. App. 27-31. Finally, the court found

that Morgan was prejudiced by having to defend

against Sundance’s motion to dismiss and by

spending time preparing for a classwide mediation

instead of individual arbitration. App. 32-33.

Sundance appealed, and the Eighth Circuit

reversed, with Judge Colloton dissenting. The Eighth

Circuit majority found the question close as to

whether Sundance had committed enough actions

inconsistent with its right to arbitrate to meet the

second element of the Lewallen test, but ultimately

found waiver lacking because of “the absence of a

showing of prejudice to Morgan.” App. 6. Specifically,

8

the majority described the “first-to-file” dispute over

the Wood action as “quasi-jurisdictional” and

concluded that Morgan would not have to duplicate

efforts in arbitration because that first-to-file dispute

did not go to the merits of her claims.

The dissent noted that Sundance had made a

strategic choice to delay invoking its arbitration

rights and to instead “express [a] preference for a

judicial forum in the Eastern District of Michigan.”

App. 7. Judge Colloton next observed that Sundance’s

participation in mediation was also inconsistent with

its arbitration rights because it was seeking to settle

claims for the nationwide collective while it sought to

arbitrate Ms. Morgan’s claims alone, and the

settlement dynamics in the two fora would thus be

very different. App. 8-9.

Relatedly, the reason Sundance gave for waiting

to compel arbitration—this Court’s decision in Lamps

Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019)—only

added to the impression of gamesmanship. Sundance

had stated in its memorandum that before Lamps

Plus, it “risked being compelled to arbitrate this

matter as a collective action.” App. 9 (internal

quotations omitted). Or as Judge Colloton explained,

“Sundance was content with a judicial forum until it

believed that an intervening court decision improved

its prospects in arbitration.” App. 9-10.

Turning to the issue of prejudice, which the

majority had found dispositive, Judge Colloton

deemed it a “debatable prerequisite.” App. 10. He

recognized that at least two courts of appeals—the

Seventh and D.C. Circuits—do not require a showing

of prejudice to establish waiver of arbitration, and

cited an earlier Eighth Circuit opinion that described

9

the question as “unsettled.” App. 10 (quoting Erdman

Co. v. Phx. Land & Acquisition, LLC, 650 F.3d 1115,

1119 (8th Cir. 2011)). Moreover, in explaining why the

Seventh Circuit does not require a showing of

prejudice, he noted that “in ordinary contract law, a

waiver normally is effective without proof of

consideration or detrimental reliance.” App. 10

(quoting Cabinetree of Wisc., Inc. v. Kraftmaid

Cabinetry, Inc., 50 F.3d 388, 390 (7th Cir. 1995)).

However, he concluded, if prejudice is required to

prove waiver, then Morgan had satisfied that

requirement. App. 11.

REASONS FOR GRANTING THE PETITION

This Court should grant certiorari to resolve a

longstanding circuit split on the question whether a

party asserting waiver of the right to arbitrate

through inconsistent litigation conduct must prove

prejudice, and if so, how much. This question not only

divides the federal courts of appeals, but divides

federal courts from geographically co-located state

courts of last resort, so that someone asserting

litigation-conduct waiver in Maryland or West

Virginia would have to prove prejudice if their case

were in federal court and governed by Fourth Circuit

precedent but not if it were proceeding in state court.

Because the Eighth Circuit has joined the wrong

side of this circuit split, prejudice is explicitly

required in that circuit to establish waiver when an

arbitration contract is at issue and explicitly not

required when analyzing waiver of other contractual

rights. E.g., Slidell, Inc. v. Millennium Inorganic

Chems., Inc., 460 F.3d 1047, 1056 (8th Cir. 2006)

(applying Minnesota law) (waiver of contractual

rights based on inconsistent course of conduct does

10

not require detrimental reliance); Hosp. Prods., Inc. v.

Sterile Design, Inc., 734 F. Supp. 896, 904-05 (E.D.

Mo. 1990) (distinguishing waiver from estoppel in

contract case), aff’d, 923 F.2d 859 (8th Cir. 1990). This

departure of Eighth Circuit arbitration waiver

caselaw from its caselaw regarding waiver of other

contractual rights flies in the face of this Court’s

principle of equal treatment under the FAA, and that

equal-treatment principle has just as much force if

the question is one of federal-law default under § 3 of

that Act or one of state-law contract defenses under

§ 2.

The courts that have added an arbitration-specific

prejudice element to their tests for waiver have

explained this addition in terms of the federal policy

favoring arbitration embodied in the FAA. See Stifel,

Nicolaus & Co. v. Freeman, 924 F.2d 157, 158 (8th

Cir. 1991) (citing Moses H. Cone Mem’l Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). But as

the courts that have eschewed a prejudice

requirement have pointed out, the FAA sought to

make private agreements to arbitrate as enforceable

as other types of contracts, not to promote arbitration

over litigation at all costs. St. Mary’s Med. Ctr. of

Evansville, Inc. v. Disco Aluminum Prods. Co., 969

F.2d 585, 590 (7th Cir. 1992) (citing Dean Witter

Reynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1985)); Nat’l

Found. for Cancer Rsch. v. A.G. Edwards & Sons, Inc.,

821 F.2d 772, 774 (D.C. Cir. 1987) (NFCR) (same).

Nor does a prejudice requirement in fact appear to

promote the federal policy favoring arbitration, for

the circuits with some of the strictest prejudice

requirements also find themselves enmeshed in the

most litigation about whether that requirement has

11

been met. The Fifth Circuit, for example, which

considers prejudice to be “the essence of waiver,” E. C.

Ernst, Inc. v. Manhattan Constr. Co. of Texas, 559

F.2d 268, 269 (5th Cir. 1977), has entertained three

appeals on that question in the last year alone.1

Moreover, this high, and uncertain, threshold for

establishing waiver incentivizes parties with

arbitration agreements to test the waters in court

first and then retreat to the arbitral forum as a

fallback position if court litigation does not go well.

Such gamesmanship both wastes court resources and

frustrates the FAA’s promise of efficient and

streamlined dispute resolution.

Finally, this case presents an excellent vehicle for

correcting the confusion. No other issues besides

litigation-conduct waiver are presented by the appeal,

and the lack of a prejudice finding was dispositive to

the majority’s waiver decision. This Court should

grant the petition and put an end to the chaos this

area of law has spawned.

1 Int’l Energy Ventures Mgmt., LLC v. United Energy Grp.,

Ltd., 999 F.3d 257 (5th Cir. 2021); Polyflow, L.L.C. v. Specialty

RTP, L.L.C., 993 F.3d 295 (5th Cir. 2021); Sabatelli v. Baylor

Scott & White Health, 832 F. App’x 843 (5th Cir. 2020).

12

I.

WHETHER PREJUDICE IS REQUIRED TO

PROVE WAIVER IN THE ARBITRATION

CONTEXT HAS DIVIDED FEDERAL AND

STATE APPELLATE COURTS.

A. Nine Federal Courts of Appeals Require a

Finding of at Least Some Prejudice to

Establish Waiver of the Right to Arbitrate

Through Litigation Conduct.

Few of the federal courts that now require

prejudice as an element of their arbitration waiver

analysis did so in their earliest arbitration waiver

cases. For example, the Sixth Circuit in American

Locomotive Co. v. Gyro Process Co., 185 F.2d 316, 31920 (6th Cir. 1950), described an extensive course of

litigation conduct in which American Locomotive Co.

had engaged before it ever invoked § 3 of the FAA to

stay the action in favor of arbitration, and found this

conduct “amounted to an intentional relinquishment

of its known right to arbitrate.” The Sixth Circuit

went on to note that such a waiver, “like an election

needs no consideration, and cannot be retracted.” Id.

at 320. See also Burton-Dixie Corp. v. Timothy

McCarthy Constr. Co., 436 F.2d 405, 408 (5th Cir.

1971) (approving of jury instruction that “any conduct

[by the parties] that might be reasonably construed as

showing that they did not intend to avail themselves

of the arbitration provision may amount to a waiver,”

without any requirement of prejudice).

The concept of prejudice first began creeping into

arbitration waiver opinions in the Second Circuit. In

Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d

Cir. 1968), two consolidated cases involving injuries

to longshoremen, the court held that mere

participation in litigation was not sufficient to

13

establish a waiver of the right to arbitrate the same

dispute “without resultant prejudice to a party.” The

sole basis for this new prejudice requirement

appeared to be that “there is an overriding federal

policy favoring arbitration,” and so waiver “is not to

be lightly inferred.” Id.

Three years later, the Fourth Circuit also invoked

the federal policy favoring arbitration when it

imposed an express prejudice requirement for the

first time, following the lead of a South Carolina

district court the year before. Carolina Throwing Co.

v. S & E Novelty Corp., 442 F.2d 329, 331 (4th Cir.

1971) (“The modern rule based on a liberal national

policy favoring arbitration seems to be that waiver or

‘default’ under [section 3 of the FAA] . . . must find a

basis in prejudice to the objecting party.” (quoting

Batson Yarn & Fabrics Machinery Grp., Inc. v.

Saurer-Allma GmbH-Allgauer Maschinenbau, 311 F.

Supp. 68, 73 (D.S.C. 1970)).

From these beginnings in the Second and Fourth

Circuits, and with the federal policy favoring

arbitration acting as an accelerant, the strongprejudice view spread quickly to the Third, Ninth, and

Eleventh Circuits. See Gavlik Constr. Co. v. H. F.

Campbell Co., 526 F.2d 777, 783-84 (3d Cir. 1975),

overruled on other grounds by Gulfstream Aerospace

Corp. v. Mayacamas Corp., 485 U.S. 271 (1988)

(following Second Circuit approach in Carcich and

testing waiver “by the presence or absence of

prejudice”); ATSA of Cal., Inc. v. Cont’l Ins. Co., 702

F.2d 172, 175 (9th Cir. 1983) (“[I]nconsistent behavior

alone is not sufficient; the party opposing the motion

to compel arbitration must have suffered prejudice.”);

S & H Contractors, Inc. v. A.J. Taft Coal Co., 906 F.2d

14

1507, 1514 (11th Cir. 1990) (waiver occurs where

party acts inconsistently with right to arbitrate “and,

in so acting, has in some way prejudiced the other

party”).

As the prejudice requirement wound its way

through the federal courts, it ended up taking root in

the Fifth and Sixth Circuits as well, where it had

previously been absent. Miller Brewing Co. v. Fort

Worth Distrib. Co., 781 F.2d 494, 497 (5th Cir. 1986)

(“Waiver will be found when the party seeking

arbitration substantially invokes the judicial process

to the detriment or prejudice of the other party.”); O.J.

Distrib., Inc. v. Hornell Brewing Co., 340 F.3d 345,

356 (6th Cir. 2003) (waiver occurs when a party

delays asserting its right to arbitrate “to such an

extent that the opposing party incurs actual

prejudice”).

But not all federal courts that require prejudice as

part of the arbitration waiver analysis require it to be

present to the same degree. In the First Circuit, the

separate requirement of prejudice is “tame at best”: If

a lengthy delay in seeking arbitration was

accompanied by sufficient litigation activity,

prejudice to the opposing party can be inferred. JocaRoca Real Estate, LLC v. Brennan, 772 F.3d 945, 949

(1st Cir. 2014).

At the other end of the spectrum, the Second

Circuit has held that “pretrial expense and delay[,]

. . . without more, do not constitute prejudice

sufficient to support a finding of waiver.” Leadertex,

Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d

20, 26 (2d Cir. 1995). The plaintiff in Leadertex was

only able to demonstrate prejudice sufficient to

establish waiver because its fabric inventory was

15

being held in a warehouse during the pendency of the

litigation, preventing it from filling customer orders,

and the defendant’s delay in asserting its arbitration

rights magnified this economic harm. Id. at 27.

The Third Circuit’s approach falls somewhere

between the First Circuit’s light touch and the Second

Circuit’s heavy hand. Considering prejudice to be the

“touchstone” of the waiver analysis, that court created

a list of six factors to assess whether the requisite

degree of prejudice had been experienced. Hoxworth

v. Blinder, Robinson & Co., 980 F.2d 912, 926-27 (3d

Cir. 1992) (including such factors as whether the

party charged with waiver has contested the merits of

its opponent’s claims, whether that party has

informed its opponent of its intent to arbitrate, and

the extent to which both parties have engaged in

discovery).

Several of the circuits that require prejudice give

discovery a prominent place in their analyses, but

they do so in different ways. The Ninth Circuit

considers whether the discovery was directed to

arbitrable or non-arbitrable claims, Fisher v. A.G.

Becker Paribas Inc., 791 F.2d 691, 697 (9th Cir. 1986),

while the Fourth Circuit is primarily concerned with

whether the potentially prejudiced party has divulged

something through discovery that it would not have

had to disclose in arbitration, giving the other party a

strategic advantage. Patten Grading & Paving, Inc. v.

Skanska USA Building, Inc., 380 F.3d 200, 207 (4th

Cir. 2004) (finding no prejudice where party could not

prove that its adversary “availed itself of discovery

procedures unavailable in arbitration, or gained a

strategic advantage through its discovery requests”).

16

In contrast, the Fifth and Sixth Circuits focus on

the sheer volume of discovery that has occurred.

Compare Tenneco Resins, Inc. v. Davy Intern., AG,

770 F.2d 416, 421 (5th Cir. 1985) (no waiver where

discovery was “minimal”), with Johnson Assocs. Corp.

v. HL Operating Corp., 680 F.3d 713, 720 (6th Cir.

2012) (distinguishing Tenneco Resins because the

plaintiff had produced 1,151 pages of responsive

documents and a 4.11 gigabyte hard drive).

Motions practice is also relevant to multiple

circuits’ prejudice inquiries, but again, in differing

ways. The Fifth Circuit has found motions practice to

be prejudicial based on expense alone. In re Mirant

Corp., 613 F.3d 584, 588, 591 (5th Cir. 2010)

(plaintiffs experienced prejudice where they incurred

$265,559 in attorneys' fees and costs defending

multiple motions to dismiss). By contrast, other

circuits find prejudice related to motions practice

because the party seeking arbitration waited to do so

until after obtaining an adverse ruling in court. E.g.,

Hooper v. Advance Am., Cash Advance Ctrs. of Mo.,

Inc., 589 F.3d 917, 922-24 (8th Cir. 2009) (defendant

sought “second bite at the apple” by attempting to

reargue issues in arbitration that it had lost on a

motion to dismiss); Newirth v. Aegis Senior Cmtys.,

LLC, 931 F.3d 935, 944 (9th Cir. 2019) (plaintiffs

would suffer prejudice if they were “forced to

relitigate an issue on the merits on which they have

already prevailed in court”). In short, even those

circuits that require a showing of prejudice are far

from unified about what that showing must entail.

17

B. The Seventh, Tenth, and D.C. Circuits

Consider Prejudice a Relevant Factor in

the Waiver Analysis But Do Not

Consistently Require Its Presence.

Once the prejudice requirement had begun taking

hold throughout the federal courts, parties charged

with litigation-conduct waiver would argue that as a

matter of federal substantive law, the opposing party

must be able to show prejudice before they could be

found “in default in proceeding with [the] arbitration”

under § 3 of the FAA. But not all circuits went along

with this view of the law.

In NFCR, the D.C. Circuit declined to include

“prejudice as a separate and independent element of

the showing necessary to demonstrate waiver of the

right to arbitration.” 821 F.2d at 777. Instead, that

circuit held that “whether there has been waiver in

the arbitration agreement context should be analyzed

in much the same way as in any other contractual

context,” namely, “whether, under the totality of the

circumstances, the defaulting party has acted

inconsistently with the arbitration right.” Id. at 774.

Prejudice is a relevant factor considered under this

totality of the circumstances, but “waiver may be

found absent a showing of prejudice.” Id. at 777.

The Tenth Circuit also considers prejudice to be a

relevant factor in the waiver analysis, including it in

a six-factor test along with such factors as “whether

the litigation machinery has been substantially

invoked” and whether “important intervening steps”

like discovery have occurred. Peterson v.

Shearson/American Exp., Inc., 849 F.2d 464, 467-68

(10th Cir. 1988).

18

In some post-Peterson cases, the Tenth Circuit has

applied these factors without explicitly making a

finding on prejudice. See Metz v. Merrill Lynch,

Pierce, Fenner & Smith, Inc., 39 F.3d 1482, 1490 (10th

Cir. 1994) (finding waiver based on “the totality of

[the defendant’s] conduct”). But in at least one case,

that circuit has declined to find waiver because the

party asserting it could not show it “suffered

substantial prejudice.” Adams v. Merrill Lynch,

Pierce, Fenner & Smith, 888 F.2d 696, 702 (10th Cir.

1989). See also BOSC, Inc. v. Bd. of Cnty. Comm’rs of

Cnty. of Bernalillo, 853 F.3d 1165, 1174 n.3 (10th Cir.

2017) (recognizing the inconsistency but declining to

resolve it because the totality of the Peterson factors

did not support a finding of waiver).

The Seventh Circuit has offered the most thorough

analysis of any federal court in reaching its conclusion

that prejudice should not be an essential element of

litigation-conduct waiver. Explaining that the

Second, Fourth, and Ninth Circuits required a

showing of prejudice while the D.C. Circuit did not,

the Seventh Circuit sided with the D.C. Circuit’s

minority view, holding that prejudice may be a

relevant factor but is not dispositive. St. Mary's Med.

Ctr., 969 F.2d at 590.

The Seventh Circuit went on to explain that a

failure to require prejudice was not inconsistent with

the strong federal policy favoring arbitration

manifested in the FAA. Citing this Court’s

enunciation of the equal-treatment principle, the

Seventh Circuit observed that Congress’s goal in

enacting the FAA was to ensure that courts enforced

private contracts to arbitrate, not to “prefer[]

. . . arbitration over litigation.” Id. (citing Dean Witter

19

Reynolds, 470 U.S. at 219-21). In other contractual

contexts, the court noted, such as an insurer’s

contractual right to insist on prior notice of loss, the

insurer is deemed to have waived its right to insist on

such notice if it proceeds to defend the claim,

regardless of whether the insurer was prejudiced by

the lack of notice. Id. at 591. Similarly, a party who

has a right to insist on arbitration of a dispute but

elects to litigate it instead has waived that right

through its inconsistent conduct, and “[t]here is no

more reason to insist” on prejudice in the arbitration

context than the insurance context. Id.

Another way to look at the issue, according to the

court in St. Mary’s, was as the creation of a new,

superseding agreement. Both parties had previously

agreed to arbitrate future disputes, but when both

chose to litigate this particular dispute in court

instead, they had entered into a new contract equally

worthy of the court’s respect. Id. See also Fisher, 791

F.2d at 699 (Wiggins, J., concurring) (proposing the

same contract-modification approach to the waiver

analysis, and advocating that prejudice not be

required). In subsequent years, as more and more

circuits have grafted prejudice requirements onto

their litigation-conduct waiver tests, the Seventh

Circuit has steadfastly refused to do so. See, e.g.,

Smith v. GC Servs. Ltd. P’ship, 907 F.3d 495, 499 (7th

Cir. 2018); Kawasaki Heavy Indus., Ltd. v.

Bombardier Recreational Prods., Inc., 660 F.3d 988,

994 (7th Cir. 2011).

20

C. Parties Are Subject to Disparate

Litigation-Conduct Waiver Standards in

State and Federal Court.

The courts of last resort in most states also require

a showing of prejudice as part of their test for

establishing litigation-conduct waiver of the right to

arbitrate. Some state high courts reached this

conclusion independently as a matter of state law.

E.g., St. Agnes Med. Ctr. v. PacifiCare of Cal., 82 P.3d

727, 738 (Cal. 2003). Others have adopted the federal

law of their circuit. E.g., Advest, Inc. v. Wachtel, 668

A.2d 367, 372 (Conn. 1995) (following Second Circuit

precedent).

But at least four state supreme courts share the

minority federal view that prejudice should not be

required, and all of those states are in circuits that

follow the majority view. Hudson, 387 P.3d at 47-49

(Alaska court following Seventh Circuit); Raymond

James Fin. Servs., Inc. v. Saldukas, 896 So.2d 707,

711 (Fla. 2005) (following D.C. Circuit); Cain v.

Midland Funding, LLC, 156 A.3d 807, 819 (Md. 2017)

(finding no prejudice required under Maryland law,

distinguishing waiver from estoppel); Parsons v.

Halliburton Energy Servs., Inc., 785 S.E.2d 844, 850

(W. Va. 2016) (common-law waiver of contract rights

under West Virginia law does not require proof of

prejudice or detrimental reliance).2 Conversely, the

2 The state supreme courts that take the minority federal

view are themselves split on whether the waiver question should

be analyzed under federal or state law, with Alaska’s and

Florida’s supreme courts treating it as a federal question

(though one on which this Court has not yet spoken) while the

high courts of Maryland and West Virginia analyzed it

exclusively under state contract law.

21

Illinois Court of Appeals has chosen to follow the

majority federal view, rejecting the Seventh Circuit’s

approach as wrongly decided. LAS, Inc. v. MiniTankers, USA, 796 N.E.2d 633, 637-38 (Ill. App. Ct.

2003).

Thus, parties litigating under the shadow of an

arbitration clause governed by the FAA face

inconsistent standards in state and federal court for

what would need to be proven to establish waiver of

the right to arbitrate based on conduct in that

litigation. The resulting uncertainty is most acute for

corporations that do business in multiple states or are

subject to suit in both state and federal court. But the

risk of arbitrary and unfair results is unacceptably

high for individual and corporate litigants alike. Only

this Court can step into such a chaotic legal landscape

and restore order. It should do so.

II. THE EQUAL-TREATMENT PRINCIPLE

REQUIRES THAT THE STANDARD FOR

WAIVER OF ARBITRATION RIGHTS BE

THE SAME AS WAIVER OF OTHER

CONTRACTUAL RIGHTS.

The majority rule—that waiver of arbitration by

litigation conduct requires a showing of prejudice—is

inconsistent with this Court’s repeated statements

that contracts to arbitrate should be put on equal

footing with other contracts. Outside of the

arbitration context, waiver of contractual rights rests

only on the actions of the waiving party, not whether

the other party is prejudiced by those actions. The

same standard should apply to waiver in the

arbitration context, and prejudice should not be

required to demonstrate waiver of arbitration by

litigation conduct.

22

A. Under this Court’s Equal-Treatment

Principle, Arbitration Contracts Must be

Treated the Same as Other Contracts.

This Court has repeatedly and consistently

explained that the purpose of the FAA is to place

arbitration “agreements upon the same footing as

other contracts.” Volt Info. Sciences, Inc. v. Bd. of Trs.

of Leland Stanford Jr. Univ., 489 U.S. 468, 478 (1989)

(cleaned up) (quoting Scherk v. Alberto-Culver Co.,

417 U.S. 506, 511 (1974)). As such, under the FAA,

“courts must place arbitration agreements on an

equal footing with other contracts.” AT&T Mobility

LLC v. Concepcion, 563 U.S. 333, 339 (2011) (citing

Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.

440, 443 (2006)). Indeed, as this Court has

emphasized, contract “defenses that apply only to

arbitration or that derive their meaning from the fact

that an agreement to arbitrate is at issue” are

precluded by the FAA—precisely because the FAA

demands that arbitration agreements be treated just

like any other contract. See id. See also Kindred

Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421,

1426 (2017) (describing this approach as the “equaltreatment principle”).

This equal-treatment principal is not superseded

by the “liberal federal policy favoring arbitration.” See

Moses H. Cone, 460 U.S. at 24. Rather, in keeping

with the FAA, the policy in favor of honoring

arbitration agreements goes hand-in-hand with

applying ordinary contract law to contracts to

arbitrate. As this Court has explained, the FAA was

intended to make “arbitration agreements as

enforceable as other contracts, but not more so.” See

Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388

23

U.S. 395, 404 n.12 (1967). Consistent with the

original purpose of the FAA to overcome judicial

hostility to arbitration, the federal policy in favor of

arbitration has been applied by this Court to ensure

that courts and state laws do not single out

arbitration agreements as particularly unenforceable.

See, e.g., AT&T, 563 U.S. at 344-46; Hall Street

Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581-82

(2008) (describing policy favoring arbitration as

placing arbitration contracts on equal footing). This

Court has not relied on the Moses H. Cone principle to

do the opposite: apply entirely different contract-law

principles because arbitration is at issue.

B. Outside

the

Arbitration

Context,

Prejudice

Is

Not

Required

to

Demonstrate Waiver of a Contractual

Right.

Prejudice is not required to waive contractual

rights outside the context of waiver of arbitration

rights by litigation conduct. Courts, the Restatement,

and treatises are consistent on that point.

Waiver of a contractual right generally requires

the voluntary and intentional relinquishment of a

known right. That intent can be expressed either

through an explicit statement of intent or can be

ascertained from the waiving party’s conduct. Waiver

of contractual rights is not inferred lightly, and courts

generally recognize a presumption against waiver.

See, e.g., Olano, 507 U.S. at 733; Carr-Gottstein Foods

Co. v. Wasilla, LLC, 182 P.3d 1131, 1136 (Alaska

2008); In re Gen. Elec. Capital Corp., 203 S.W.3d 314,

316 (Tex. 2006); Fundamental Portfolio Advisors, Inc.

v. Tocqueville Asset Mgmt., L.P., 850 N.E.2d 653, 658

(N.Y. 2006); Major League Baseball v. Morsani, 790

24

So. 2d 1071, 1077 n.12 (Fla. 2001); Scheetz, 324

N.W.2d at 304; 13 Williston on Contracts § 39:27

(“Waiver of a contract provision may be made by a

party’s express declaration, or it may be implied from

representations that fall short of an express

declaration of waiver.”); 28 Am. Jur. 2d Estoppel &

Waiver § 35 (2011); Restatement (Second) Contracts

§ 84 cmt. b (Am. L. Inst. 1981).

Because the analysis focuses on the intent and

actions of the waiving party, prejudice is not normally

required to establish waiver. See, e.g., Royal Air

Props., Inc. v. Smith, 333 F.2d 568, 571 (9th Cir. 1964)

(“[N]o detriment to a third party is required for

waiver, it is unilaterally accomplished.”); Best Place,

Inc. v. Penn Am. Ins. Co., 920 P.2d 334, 353 (Haw.

1996) (“Waiver is essentially unilateral in character,

focusing only upon the acts and conduct of the

[waiving party].”); see also Cabinetree, 50 F.3d at 390

(“[I]n ordinary contract law, a waiver normally is

effective without proof of consideration or detrimental

reliance.”) (citing 2 E. Allan Farnsworth, Contracts

§ 8.5 (2d ed. 1990); 3A Arthur Linton Corbin, Corbin

on Contracts § 753 (1960)).

Indeed, courts and other authorities expressly

distinguish waiver from estoppel on this point:

Waiver is focused only on the actions of the waiving

party whereas estoppel, in contrast, focuses on the

detriment to the other party. See, e.g., 28 Am. Jur. 2d

Estoppel & Waiver § 35 (2011) (“Prejudice to the other

party is one of the essential elements of an equitable

estoppel whereas a waiver does not necessarily imply

that the party asserting it has been misled to his or

her prejudice or into an altered position.”);

Restatement (Second) Contracts § 84, cmt. b (1981)

25

(“When the waiver is reinforced by reliance,

enforcement is often said to rest on ‘estoppel.’”).3

Adding a prejudice requirement to the requirements

for waiver is not only inconsistent with the core issue

in waiver—the intent of the waiving party—but also

conflates waiver with the distinct principle of

estoppel.

In short, outside of the arbitration context,

contractual waiver simply does not require

prejudice—only the waiving party’s actions are

relevant.

C. Because Ordinary Contract Law Does Not

Require Prejudice for Waiver, the EqualTreatment Principle Requires the Same

for Arbitration Contracts.

Because the FAA-derived equal-treatment

principle requires that arbitration agreements be

subject to the same contract law as other contracts,

3 See also, e.g., Pitts v. Am. Sec. Life Ins. Co., 931 F.2d 351,

357 (5th Cir. 1991) (“Strictly defined, waiver describes the act,

or the consequences of the act, of one party only, while estoppel

exists when the conduct of one party has induced the other party

to take a position that would result in harm if the first party’s

act were repudiated.” (emphasis in original)); City of Glendale v.

Coquat, 52 P.2d 1178, 1180 (Ariz. 1935) (“[W]aiver depends upon

what one himself intends to do, regardless of the attitude

assumed by the other party, whereas estoppel depends rather

upon what the other party has done.”); Nathan Miller, Inc. v. N.

Ins. Co. of N.Y., 39 A.2d 23, 25 (Del. Super. Ct. 1944) (“[Waiver]

depends on what one party intended to do, rather than upon

what he induced his adversary to do, as in estoppel.”); Brown v.

State Farm Mut. Auto. Ins. Co., 776 S.W.2d 384, 386-87 (Mo.

1989) (en banc) (“To state the obvious, waiver and estoppel are

different legal doctrines.”).

26

and ordinary contract law does not impose a prejudice

requirement for waiver of a contractual right,

prejudice should not be required to demonstrate

waiver through litigation conduct of the right to

arbitrate. Any other rule—and the current majority

rule—is a contract rule that derives its meaning

precisely from the fact that an arbitration agreement

is at issue. This Court has said over and over that the

FAA prohibits such arbitration-specific rules. See,

supra, II.A.

The equal-treatment principle applies regardless

of whether contract-law principles are being applied

under § 2 of the FAA or § 3 of the FAA. As discussed,

supra, the waiver of a contractual right to arbitrate is

sometimes—usually by state courts—analyzed as a

state-law contract defense falling under § 2’s savings

clause, which provides that an agreement to arbitrate

“shall be valid, irrevocable, and enforceable, save

upon such grounds as exist at law or in equity for the

revocation of any contract.” 9 U.S.C. § 2.

Federal courts, on the other hand, generally view

waiver of arbitration rights through the lens of a

party having defaulted on their contractual right to

arbitrate under § 3, and therefore consider waiver to

be a question of federal law. Section 3 provides that,

if a matter is “referable to arbitration,” courts shall

stay court proceedings “until such arbitration has

been had in accordance with the terms of the

agreement, providing the applicant for the stay is not

in default in proceeding with such arbitration.” 9

U.S.C. § 3. “Default” is “[t]he omission or failure to

perform a legal or contractual duty[.]” Black’s Law

Dictionary (11th ed. 2019). Just like waiver, the key

to whether a party has defaulted is the conduct of the

27

defaulting party, not whether the other party has

been prejudiced. See, e.g., Gen. Dynamics Corp. v.

U.S., 563 U.S. 478, 481 (2011) (defense contractor

defaulted on contract by declaring that it would not

complete the contract; contractor argued that the

government’s conduct excused its default); Midland

Land & Improvement Co. v. U.S., 270 U.S. 251, 253

(1926) (contractor defaulted on government contract

where it refused to complete the work it agreed to do

under the contract).

While this Court has typically discussed the equaltreatment principle as deriving from § 2’s savings

clause—which requires that arbitration agreements

be subject to ordinary state-law contract defenses—

there’s no indication in the text of § 3 that courts

determining whether waiver (or default) occurred are

free to make up new principles of contract law

untethered from parties’ expectations about how

waiver law normally works. Nor is there any

indication courts are free to invoke a waiver standard

unique to arbitration contracts. And there is nothing

in the text of § 3 requiring a non-defaulting party to

demonstrate prejudice.

In other words, § 3 provides no reason to depart

from the FAA’s fundamental goal of enforcement of

arbitration contracts on equal terms with any other

private contract. See Prima Paint, 388 U.S. at 404

n.12. And so, if waiver is a question of federal law

under § 3 rather than a question of state law under

§ 2, the only difference is that courts should apply

federal common law, rather than state contract law,

not that the waiver standard should “derive [its]

28

meaning from the fact that an agreement to arbitrate

is at issue.” AT&T, 563 U.S. at 339.4

Nor does the federal policy favoring arbitration

demand the addition of a prejudice requirement to

ordinary contract waiver analysis. As explained,

supra, this Court has taken that policy preference to

mean that arbitration contracts should be placed on

“equal footing” with other contracts, not that special

rules apply to arbitration. As the Seventh Circuit

explained in declining to require prejudice: “In other

words, the federal policy embodied in the Arbitration

Act is a policy favoring enforcement of contracts, not

a preference for arbitration over litigation. Therefore,

we should treat a waiver of the right to arbitrate the

same as we would treat the waiver of any other

contract right.” St. Mary’s, 969 F.2d at 590 (citations

omitted); see also NFCR, 821 F.2d at 774 (“The

Supreme Court has made clear that the ‘strong

federal policy in favor of enforcing arbitration

agreements’ is based upon the enforcement of

contract, rather than a preference for arbitration as

an alternative dispute resolution mechanism. Thus,

the question of whether there has been waiver in the

arbitration agreement context should be analyzed in

much the same way as in any other contractual

context.” (citation omitted)).

Moreover, requiring a finding of prejudice

encourages

inefficiency

and

forum-shopping.

4 If the waiver standard is a question of state law, where

states have imposed a different standard for waiver in the

context of arbitration than outside of that context, those

arbitration-specific laws are preempted by the FAA precisely

because they are directed solely at arbitration. See AT&T, 563

U.S. at 339.

29

Particularly in circuits requiring a high measure of

prejudice, there is no incentive to choose arbitration

off the bat. Rather, parties can be reasonably

confident that they can roll the dice in court first and

still be able to seek arbitration if the court litigation

is not going smoothly.

In a particularly egregious example, after an

employee filed a charge with the Equal Employment

Opportunity

Commission

(EEOC)

alleging

discrimination, the employer sued the employee and

her attorney in federal court seeking a declaratory

judgment that it had not violated the FLSA and

damages for the employee’s alleged theft of

confidential information. MicroStrategy, Inc. v.

Lauricia, 268 F.3d 244, 246-47 (4th Cir. 2001). That

case was dismissed for lack of jurisdiction, and the

employer appealed; the appeal was also dismissed.

Meanwhile, the employer sued the employee in state

court, bringing the same claims. Id. at 247. As part of

the state-court suit, the parties engaged in discovery,

including deposition of the employee. After the

employee received her EEOC right-to-sue letter and

informed the employer she intended to sue, the

employer struck first, suing her again in federal court.

Id. The employee sued the employer the next day, and

the suits were consolidated. Id. Only then did the

employer move to compel arbitration. Id. at 248. The

Fourth Circuit held that—despite suing the employee

three times, appealing, and engaging in substantial

discovery—the employer had nevertheless not waived

its contractual right to arbitrate through its litigation

conduct because the employee had not met the

circuit’s high bar for demonstrating actual prejudice.

Id. at 251.

30

Permitting the type of gamesmanship and forumshopping illustrated by MicroStrategy is antithetical

to the reasons courts recognize waiver of arbitration:

It allows parties multiple bites at the apple, to play

“heads I win, tails you lose.” Cabinetree, 50 F.3d at

391; see Khan v. Parsons Glob. Servs., Ltd., 521 F.3d

421, 427 (D.C. Cir. 2008) (courts do not tolerate

delaying the invocation of arbitration “as a strategy to

manipulate the legal process”).

Conversely, requiring that parties seek arbitration

before engaging in significant litigation conduct,

regardless of whether the other party suffered

prejudice, promotes the efficient enforcement of

agreements to arbitrate and keeps arbitrable disputes

out of courts, just as the FAA intended.

III. THIS CASE SQUARELY PRESENTS THE

QUESTION PRESENTED, AND IS AN

IDEAL VEHICLE FOR RESOLVING THE

LONGSTANDING CIRCUIT SPLIT.

Whether prejudice is required to demonstrate that

a party waived its contractual right to arbitrate is

cleanly and squarely presented by this case, and there

are no other questions presented. This petition is a

straightforward appeal on the question whether

Sundance’s motion to compel arbitration should be

denied because it waived its right to arbitrate; there

are no other legal questions at issue on this appeal.

Further, there can be no question that the

prejudice requirement was dispositive below. The

Eighth Circuit expressly followed existing circuit

precedent holding that, to demonstrate that the party

seeking arbitration had waived its right to do so, the

party resisting arbitration must demonstrate that it

was prejudiced. App. 3 (relying on test as articulated

31

in Messina v. N. Cent. Distrib., Inc., 821 F.3d 1047,

1050 (8th Cir. 2016)). Then, the majority explained

that Sundance had not waived its right to compel

arbitration because “Sundance’s conduct, even if

inconsistent with its right to arbitration, did not

materially prejudice Morgan.” App. 3. The opinion

concludes by reiterating that the driving force behind

its decision was its no-prejudice finding: “In the

absence of a showing of prejudice to Morgan, we

conclude Sundance did not waive its contractual right

to invoke arbitration.” App. 6.

That prejudice was the dispositive question for the

majority is confirmed by Judge Colloton’s dissent:

“The majority does not dispute that Sundance acted

inconsistently with arbitration, but reverses the

district court’s determination of waiver on the ground

that Morgan was not prejudiced.” App. 10. Judge

Colloton went on to note the circuit split on the

prejudice requirement and highlight that prejudice is

not normally required outside of the arbitration

context. App. 10-11.

In short, the prejudice requirement was the

deciding issue before the Eighth Circuit and is the

sole question before this Court on certiorari.

Finally, this Court previously granted certiorari to

address the circuit split—further demonstrating the

unquestionable certworthiness of this issue—but the

parties settled and dismissed the appeal before this

Court could decide it. See Stok., 562 U.S. 1215

(granting cert.); 563 U.S. 1029 (dismissing cert.).

Given the longstanding division among the federal

courts of appeals, as well as the states, on this

question, this Court should take this opportunity to

32

finally decide whether prejudice is required and

resolve the chaos.

CONCLUSION

The Court should grant certiorari.

Respectfully submitted,

Karla Gilbride

Leah M. Nicholls

PUBLIC JUSTICE, P.C.

1620 L Street NW

Suite 630

Washington, DC 20036

(202) 797-8600

kgilbride@publicjustice.net

Charles R. Ash, IV

Jason J. Thompson

SOMMERS SCHWARTZ, P.C.

One Towne Square, Suite 1700

Southfield, MI 48067

(248) 355-0300

Beth M. Rivers

PITT MCGEHEE PALMER

& RIVERS, PC

117 W. Fourth Street

Suite 200

Royal Oak, MI 48067

(248) 398-9800

33

Paige Fiedler

FIEDLER LAW FIRM, P.L.C.

8831 Windsor Parkway

Johnston, IA 50131

(515) 254-1999

Counsel for Petitioner

August 27, 2021