Amicus Curiae Brief — Robyn Morgan, Petitioner v. Sundance, Inc.

No. 21-328

In the Supreme Court of the United States

ROBYN MORGAN, PETITIONER

v.

SUNDANCE, INC.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE CHAMBER OF COMMERCE OF THE

UNITED STATES OF AMERICA AS AMICUS CURIAE IN

SUPPORT OF RESPONDENT

DARYL JOSEFFER

PAUL LETTOW

JONATHAN D. URICK

U.S. CHAMBER

LITIGATION CENTER

1615 H Street NW

Washington, DC 20062

ZACHARY D. TRIPP

Counsel of Record

JOSHUA HALPERN

WEIL, GOTSHAL & MANGES LLP

2001 M Street NW

Washington, DC 20036

(202) 682-7000

zack.tripp@weil.com

TABLE OF CONTENTS

Interest of amicus curiae .................................................1

Summary of argument .....................................................4

Argument ..........................................................................8

I. Prejudice dictates whether a defendant may

belatedly invoke arbitration in federal

litigation ....................................................................8

A. The FAA directs federal courts to the

Federal Rules of Civil Procedure in deciding

whether arbitration has been timely raised .....8

B. The Federal Rules of Civil Procedure permit

the movant to belatedly raise arbitration as

a defense, absent prejudice to the

nonmovant ........................................................ 10

C. Section 2’s saving clause does not apply to

waiver by litigation conduct .............................13

D. Even if Section 2 applies, prejudice would

still be required..................................................15

II. Petitioner’s harsh and unpredictable rule

would harm the interests of parties to arbitral

agreements and invite anti-arbitration

discrimination .........................................................22

Conclusion .......................................................................26

(i)

(ii)

TABLE OF AUTHORITIES

Cases

Page(s)

AGA S’holders, LLC v. CSK Auto, Inc.,

589 F. Supp. 2d 1175 (D. Ariz. 2008) .................. 17

Ali v. Fed. Bureau of Prisons,

552 U.S. 214 (2008) .............................................. 12

Allied-Bruce Terminix Cos. v. Dobson,

513 U.S. 265 (1995) .............................................. 22

Amirsaleh v. Bd. of Trade of City of N.Y., Inc.,

27 A.3d 522 (Del. 2011) ........................................ 17

Anderson v. Coop Ins. Cos.,

895 A.2d 155 (Vt. 2006) ....................................... 16

Arthur Andersen LLP v. Carlisle,

556 U.S. 624 (2009) .............................................. 14

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) ...................................... passim

Atl. Fruit Co. v. Red Cross Line,

5 F.2d 218 (2d Cir. 1924) ..................................... 20

Badgerow v. Walters,

No. 20-1143 (2021) ................................................. 2

Bio-Tech Pharmacal, Inc. v. Int’l Bus.

Connections, LLC,

184 S.W.3d 447 (Ark. Ct. App. 2004) .................. 17

Bleyer v. Veeder,

183 A. 203 (N.J. Ch. 1936) ................................... 18

BMC Indus., Inc. v. Barth Indus., Inc.,

160 F.3d 1322 (11th Cir. 1998) ............................ 17

Brockington v. Grimstead,

933 A.2d 426 (Md. Ct. Spec. App. 2007) .............. 18

Buckeye Check Cashing, Inc. v. Cardegna,

546 U.S. 440 (2006) ................................................ 8

Cent. Ill. Pub. Serv. Co. v. Atlas Mins., Inc.,

965 F. Supp. 1162 (C.D. Ill. 1997) ....................... 18

(iii)

Cases—Continued

Champ v. Siegel Trading Co.,

55 F.3d 269 (7th Cir. 1995) .................................. 10

Cives Corp. v. Callier Steel Pipe & Tube, Inc.,

482 A.2d 852 (Me. 1984) ...................................... 18

Comput. Strategies, Inc. v. Commodore Bus.

Machs., Inc.,

483 N.Y.S.2d 716 (App. Div. 1984) ...................... 18

Cornerstone Equip. Leasing, Inc. v. MacLeod,

247 P.3d 790 (Wash. Ct. App. 2011) .................... 19

Dangerfield v. Markel,

252 N.W.2d 184 (N.D. 1977) ................................ 18

Daniels v. Phila. Fair Hous. Comm’n,

513 A.2d 501 (Pa. Commw. Ct. 1986) .................. 18

Doctor’s Assocs., Inc. v. Casarotto,

517 U.S. 681 (1996) ........................................ 15, 21

Dynamic Mach. Works, Inc. v. Mach. & Elec.

Consultants, Inc.,

831 N.E.2d 875 (Mass. 2005) ............................... 18

First Tenn. Bank, N.A. v. Nunn & Assocs., Inc.,

No. 03A019103CH96, 1991 WL 119293

(Tenn. Ct. App. July 8, 1991) ............................... 18

Foman v. Davis,

371 U.S. 178 (1962) .............................................. 12

Found. Prop. Invs., LLC v. CTP, LLC,

186 P.3d 766 (Kan. 2008) ..................................... 18

Gaugert v. Duve,

579 N.W.2d 746 (Wis. Ct. App. 1998) .................. 19

Guar. Title & Tr. Co. v. Babbitt Bros. Trading Co.,

53 P.2d 734 (Ariz. 1936)....................................... 16

Hart v. Sims,

702 F.2d 574 (5th Cir. 1983) ................................ 18

Hassan v. U.S. Postal Serv.,

842 F.2d 260 (11th Cir. 1988) .............................. 13

(iv)

Cases—Continued

Highland Cap. Mgmt., L.P. v. Dondero (In re

Highland Cap. Mgmt., L.P.),

No. 19-34054, 2021 WL 5769320 (Bankr.

N.D. Tex. Dec. 3, 2021) ........................................ 20

Hyre v. Denise,

449 S.E.2d 120 (Ga. Ct. App. 1994) ..................... 16

Integrated Micro Sys., Inc. v. NEC Home Elecs.

(USA), Inc.,

329 S.E.2d 554 (Ga. Ct. App. 1985) ..................... 17

Johnson Controls, Inc. v. Jay Indus., Inc.,

459 F.3d 717 (6th Cir. 2006) ................................ 18

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

137 S. Ct. 1421 (2017) .......................... 3, 21, 22, 25

Klunder v. Brown Univ.,

778 F.3d 24 (1st Cir. 2015) .................................... 9

Kontrick v. Ryan,

540 U.S. 443 (2004) .............................................. 16

Ky. Utils. Co. v. S. E. Coal Co.,

836 S.W.2d 392 (Ky. 1992)................................... 18

Lally v. Allstate Ins. Co.,

724 F. Supp. 760 (S.D. Cal. 1989) ....................... 17

Lease Fin., Inc. v. Burger,

575 P.2d 857 (Colo. App. 1977) ............................ 17

Maak v. IHC Health Servs., Inc.,

372 P.3d 64 (Utah Ct. App. 2016)........................ 16

Masser v. London Operating Co.,

145 So. 79 (Fla. 1932) .......................................... 16

Meyer Milling Co. v. Baker,

43 S.W.2d 794 (Mo. 1931) .................................... 18

Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc.,

473 U.S. 614 (1985) .............................................. 22

(v)

Cases—Continued

Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp.,

460 U.S. 1 (1983) .................................................. 21

RadLAX Gateway Hotel, LLC v. Amalgamated

Bank,

566 U.S. 639 (2012) .............................................. 14

RBC Nice Bearings, Inc. v. SKF USA, Inc.,

123 A.3d 417 (Conn. 2015) ................................... 17

Scheetz v. IMT Ins. Co. (Mut.),

324 N.W.2d 302 (Iowa 1982)................................ 20

Thermal Design, Inc. v. M & M Builders, Inc.,

698 S.E.2d 516 (N.C. Ct. App. 2010) ................... 18

Thompson v. Truesdale,

63 N.W. 259 (Minn. 1895) .................................... 18

United States v. Gonzales,

520 U.S. 1 (1997) .................................................. 12

United States v. Hougham,

364 U.S. 310 (1960) .............................................. 11

In re W. Wood Prod., Inc.,

No. 11-12-10057 JS, 2013 WL 1386285

(Bankr. D.N.M. Apr. 4, 2013) .............................. 18

Wallstreet Props., Inc. v. Gassner,

632 P.2d 1310 (Or. Ct. App. 1981) ....................... 18

Westinghouse Credit Corp. v. Shelton,

645 F.2d 869 (10th Cir. 1981) .............................. 18

Westmont Tractor Co. v. Viking Expl., Inc.,

543 F. Supp. 1314 (D. Mont. 1982)...................... 18

Statutes and Rules

Federal Arbitration Act, 9 U.S.C. 1 et seq. ....... passim

9 U.S.C. 2.................................................. 13, 14, 15

9 U.S.C. 3...................................................... passim

(vi)

Statutes and Rules—Continued

9 U.S.C. 6.................................................... 4, 5, 8, 9

11 U.S.C. 365(b)(1) .................................................... 20

Fed. R. Civ. P. 1 ..................................................... 4, 10

Fed. R. Civ. P. 8(c) ......................................... 11, 12, 13

Fed. R. Civ. P. 12 ....................................................... 11

Fed. R. Civ. P. 15(a)............................................... 4, 11

Fed. R. Civ. P. 81(a)(6)(B) ..................................... 4, 10

Ala. Code §7-2-209(5) ................................................ 17

Alaska Stat. Ann § 45.02.209(e) ............................... 17

Ariz. Rev. Stat. Ann. §47-2209(E)............................. 17

Ark. Code Ann. § 4-2-209(5) ...................................... 17

Colo. Rev. Stat. Ann. § 4-2-209(5) ............................. 17

Haw. Rev. Stat. Ann § 490:2-209(5) ......................... 18

Idaho Code Ann. § 28-2-209(5).................................. 18

Ind. Code Ann. § 26-1-2-209(5) ................................. 18

Iowa Code § 554.2209(5) ........................................... 20

Ky. Rev. Stat. Ann. § 355.2-209(5) ........................... 18

Mass. Gen. Laws ch. 106, § 2-209(5) ........................ 18

Me. Rev. Stat. Ann. tit. 11 § 2-209(5) ....................... 18

Mich. Comp. Laws Ann § 440.2209(5) ...................... 18

Miss. Code Ann. § 75-2-209(5) .................................. 18

Mont. Code Ann. § 30-2-209(5) ................................. 18

N.C. Gen. Stat. Ann. § 25-2-209(5) ........................... 18

N.D. Cent. Code Ann. § 41-02-16 (2-209) ................. 18

N.H. Rev. Stat. Ann. § 382-A:2-209(5)...................... 18

N.M. Stat. Ann. § 55-2-209(5) ................................... 18

N.Y. U.C.C. Law § 2-209(5) ....................................... 18

Neb. Rev. Stat. Ann. UCC § 2-209(5) ....................... 18

Nev. Rev. Stat. Ann. § 104.2209(5) ........................... 18

Ohio Rev. Code Ann. § 1302.12(E) ............................ 18

Okla. Stat. Ann tit. 12A § 2-209(5) ........................... 18

R.I. Gen. Laws Ann. § 6A-2-209(5) ........................... 18

S.C. Code Ann. § 36-2-209(5) .................................... 18

(vii)

Statutes and Rules—Continued

S.D. Codified Laws § 57A-2-209(5) ........................... 18

Tenn. Code Ann. § 47-2-209(5).................................. 18

Tex. Bus. & Com. Code Ann. § 2.209(e) .................... 18

U.C.C. § 2-209(5) ....................................................... 19

Utah Code Ann. § 70A-2-209(5) ................................ 19

Va. Code Ann. § 8.2-209(5)........................................ 19

Vt. Stat. Ann. tit. 9A, § 2-209(5) ............................... 19

W. Va. Code Ann. § 46-2-209(5) ................................ 19

Wis. Stat. Ann. § 402.209(5) ..................................... 19

Wyo. Stat. Ann. § 34.1-2-209(e) ................................ 19

Miscellaneous

Black’s Law Dictionary (2d ed. 1910) ..................... 4, 8

Black’s Law Dictionary (11th ed. 2019)...................... 9

John Bouvier, Bouvier’s Law Dictionary and

Concise Encyclopedia (1914) .................................. 8

2 Corbin on Contracts (2021) .................................... 19

Farnsworth on Contracts (4th ed. 2018 &

Supp. 2022-2) ................................................. 19, 20

2A J. Moore, Moore’s Federal Practice (2d ed.

1985) ..................................................................... 13

Random House Dictionary of English

Language (unabridged ed. 1967) ........................... 9

Restatement (Second) of Contracts (1981) ............... 19

Walter A. Shumaker & George Foster

Longsdorf, Cyclopedia Law Dictionary (2d

ed. 1922) ................................................................. 8

Webster’s New International Dictionary (2d ed.

1950) ....................................................................... 9

Williston on Contracts (4th ed. 2021) ............. 6, 17, 19

(viii)

Miscellaneous—Continued

5 Charles Alan Wright & Arthur Miller,

Federal Practice & Procedure (4th ed. 2021) ...... 12

6 Charles Alan Wright & Arthur Miller,

Federal Practice & Procedure (3d ed. 2021) ........ 12

In the Supreme Court of the United States

NO. 21-328

ROBYN MORGAN, PETITIONER

v.

SUNDANCE, INC.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE CHAMBER OF COMMERCE OF THE

UNITED STATES OF AMERICA AS AMICUS CURIAE IN

SUPPORT OF RESPONDENT

INTEREST OF AMICUS CURIAE1

The Chamber of Commerce of the United States of

America is the world’s largest business federation. It

represents approximately 300,000 direct members and

indirectly represents the interests of more than three

million companies and professional organizations of

every size, in every industry sector, and from every

region of the country. An important function of the

Chamber is to represent the interests of its members in

matters before Congress, the Executive Branch, and the

courts. To that end, the Chamber regularly files amicus

curiae briefs in cases, like this one, that raise issues of

Pursuant to S. Ct. Rule 37.6, counsel for all parties have

consented to the filing of this brief. No counsel for a party authored

this brief in whole or in part and no person or entity other than

amicus, its members, or counsel made a monetary contribution to

its preparation or submission.

1

2

concern to the nation’s business community. See, e.g.,

Badgerow v. Walters, No. 20-1143 (2021).

Many members of the Chamber and the broader

business community have found that arbitration allows

them to resolve disputes promptly and efficiently while

avoiding the costs associated with traditional litigation.

In reliance on the policy reflected in the Federal

Arbitration Act (FAA), 9 U.S.C. 1 et seq., and this

Court’s consistent endorsement of arbitration, Chamber

members have structured millions of contractual

relationships around arbitration agreements.

Businesses can appear as plaintiffs or defendants (or

both) in litigation, and thus have strong interests in

having clear, predictable, and balanced rules for how

and when a defendant must invoke their right to

arbitration. The business community also has strong

reliance interests in having arbitral agreements

enforced to the same degree as other state contract

rights, as the FAA requires.

The FAA is properly understood to protect those

interests—and those of all litigants—by directing

federal courts to the Federal Rules of Civil Procedure for

deciding the procedural questions at the heart of this

case. The Federal Rules supply the necessary clarity,

predictability, and balance, and they protect against

anti-arbitration discrimination by treating arbitration

the same way as every other contract-based affirmative

defense. The Federal Rules encourage promptness by

giving defendants a window to raise new defenses by

right; they enable the court to forgive delay after that

point in the absence of prejudice; and they enable the

court to protect against gamesmanship, as that kind of

prejudice is a sufficient basis to prohibit the belated

invocation of arbitration.

3

Petitioner’s no-prejudice approach, by comparison,

would undermine both interests by making important

arbitration rights hinge on amorphous state-law

concepts of implied waiver. The rule is both

unpredictable and harsh, as a party could lose

important rights to arbitration based on an

inconsequential delay that the court nonetheless views

as too long. And because the standard is so ill-defined,

it invites manipulation and “the kind of ‘hostility to

arbitration’” that the FAA is designed to combat and

that this Court has repeatedly stepped in to prevent.

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

1421, 1428 (2017) (quoting AT&T Mobility LLC v.

Concepcion, 563 U.S. 333, 339 (2011)).

4

SUMMARY OF ARGUMENT

1. The right to invoke arbitration is important to

many businesses, and the FAA establishes that it is not

irrevocably lost merely because of inconsequential

delays. Section 3 and Section 6 of the FAA together

direct federal courts to the Federal Rules of Civil

Procedure in deciding whether a defendant is “in

default,” 9 U.S.C. 3, and accordingly has lost their right

to arbitrate a dispute due to delay in invoking

arbitration in ongoing litigation. Section 3 provides that

courts “shall” grant a stay of litigation unless the

movant is “in default in proceeding with such

arbitration.” Ibid. The term “default” means “[t]he

omission or failure to fulfill a duty.” Black’s Law

Dictionary 342 (2d ed. 1910). And rules of procedure are

the natural place to look for an answer to whether a

party has “fulfill[ed] [their] duty” to timely invoke

arbitration. Section 6 reinforces the point, by requiring

a motion to be made “in the manner provided by law.” 9

U.S.C. 6.

The Federal Rules establish a familiar framework

governing the manner for making motions and

otherwise raising defenses in federal court, including

how long a defendant has a right to invoke a defense and

when a defendant’s delay is forgiven. The Federal Rules

apply in “all” civil cases in federal court, including those

involving the FAA. See Fed. R. Civ. P. 1, 81(a)(6)(B).

And under the Federal Rules, leave is “freely give[n]” to

add contract-based affirmative defenses belatedly, Fed.

R. Civ. P. 15(a)(2), so long as the plaintiff does not suffer

prejudice as a result. The most straightforward and

predictable way to resolve this case is to conclude that

this same familiar framework applies to arbitration as

well: If the defendant moves for a stay at a time it can

5

still properly invoke a new defense under this

framework, the defendant is not “in default” under

Section 3, the motion was filed “in the manner provided

by law,” and the stay “shall” be granted. 9 U.S.C. 3, 6.

Petitioner asserts that the saving clause in Section 2

of the FAA applies and incorporates a body of state law

that allows for “implied waiver” by litigation delay,

without proof of prejudice. Pet. Br. 15, 32–37. That is

wrong. Section 3 and Section 6 together specifically

answer the procedural question at the heart of this case,

directing federal courts to the rules of procedure in

deciding whether the party seeking a stay is “in default”

through their litigation conduct. Section 2 has no

further role to play.

Moreover, even if Section 2 applied, an irrevocable

default still would not occur when a delay does not

prejudice the other side and instead is inconsequential.

As respondent puts it, “all state-law roads lead to a

prejudice requirement.” Resp. Br. 4.

First, forfeiture, estoppel, or laches—not waiver—

provide the proper rubric for determining whether a

party is too late in raising an argument. And petitioner

does not dispute that forfeiture, laches, and estoppel

require prejudice. Pet. Br. 23–29. Petitioner’s focus on

“implied waiver” is thus misplaced. Petitioner’s

approach is also unpredictable, given the overlap and

uncertain boundaries between implied waiver by delay,

forfeiture, estoppel, and laches.

Second, even if “implied waiver” were the correct

doctrine, the answer would still depend on the rules of

procedure. State law is uniform that waiver implied

from conduct arises only when that conduct is clearly

and unequivocally inconsistent with an intent to

arbitrate. If the defendant can still properly raise

6

arbitration as a defense as a matter of procedure (i.e.,

the defendant can still invoke it by right or the defense

is belated but there is no prejudice), then the

defendant’s conduct—participation in litigation before

that point—is not clearly inconsistent with their intent

to invoke arbitration in the future. A court thus need

only ensure compliance with ordinary procedural

requirements, and need not delve into any question of

“implied waiver” under state contract law.

Third, in every state (with the possible exception of

Louisiana), a defendant may revoke the waiver of an

executory promise so long as the plaintiff has not made

a material change in their position in reliance on the

implied waiver. 13 Williston on Contracts § 39:20 (4th

ed. 2021). And a promise to arbitrate an ongoing dispute

is a quintessential example of an executory promise,

because the dispute has not yet been resolved so

performance remains in the future.

Accordingly, even state contract law recognizes that

parties do not irrevocably lose important rights to future

performance merely based on an “implied waiver.” To

make such a waiver irrevocable, there must be

prejudice. In any event, the timeliness of a motion under

Section 3 is a procedural question that is answered by

ordinary rules of procedure.

2. Using the FAA’s text and the Federal Rules to

answer the question presented establishes a familiar

and clear rule for defendants that seek to arbitrate:

follow the rules of procedure. Defendants already need

to follow those timelines whenever they are a defendant,

and thus the framework above ensures evenhanded

treatment of arbitration. In particular, the Federal

Rules encourage prompt assertion of arbitration as a

defense, by giving the defendant an entitlement to do so

7

only until the time of the initial answer or an

amendment by right. Yet they also help to prevent

against the loss of important rights based on

inconsequential delays, as the Federal Rules ordinarily

allow belated invocation of defenses in the absence of

prejudice. And because they focus on prejudice, the

Federal Rules protect victims of gamesmanship, as such

prejudice readily justifies denial of leave.

By contrast, petitioner’s no-prejudice rule is both

unpredictable and harsh, triggering the loss of

important rights due to inconsequential delays.

Petitioner’s rule cannot supply clear answers about

when a defendant’s delay is too “inconsistent” with the

intent to invoke arbitration so as to constitute an

implied waiver, thus leaving litigants in a

fundamentally unpredictable position. And if the court

determines the defendant has crossed an invisible line

and is too late, even by a day, the right to arbitrate is

permanently lost even if the delay is otherwise

inconsequential.

To make matters worse, petitioner’s amorphous rule

of “implied waiver” invites discrimination against

arbitration. Congress enacted the FAA to overcome

hostility to arbitration and require that it be placed on

equal footing with other state contract rights. But

petitioner’s rule would expose defendants to greater risk

of hostility to arbitration by eliminating a critical limit

on waiver that applies to every contract defense and

every other executory obligation. Petitioner’s view

would thus undermine the very antidiscrimination

principle that petitioner purports to protect. The better

path is simply to treat arbitration like any other

defense, subject to ordinary procedural rules, under

which prejudice is the touchstone.

8

ARGUMENT

I. Prejudice Dictates Whether A Defendant May Belatedly

Invoke Arbitration In Federal Litigation

The FAA establishes a “national policy favoring

arbitration.” Buckeye Check Cashing, Inc. v. Cardegna,

546 U.S. 440, 443 (2006). To implement that policy, the

FAA empowers a defendant to file a motion for a stay to

halt litigation of a dispute that should be arbitrated. See

9 U.S.C. 3. The FAA requires that parties seeking to

stay litigation file a motion that complies with

applicable rules of procedure. 9 U.S.C. 6. In federal

court, the ordinary rule is that a defendant can

belatedly assert a defense in the absence of prejudice.

That same rule is properly understood to apply to

arbitration as well. An inconsequential delay is thus

insufficient to trigger the permanent loss of that

important right.

A. The FAA Directs Federal Courts To the Federal Rules of

Civil Procedure In Deciding Whether Arbitration Has

Been Timely Raised

Section 3 provides that a court “shall” grant a motion

to stay litigation of a dispute that is subject to an

arbitration agreement, “providing the applicant for the

stay is not in default in proceeding with such

arbitration.” 9 U.S.C. 3. The stay is accordingly

mandatory so long as the party is not “in default.”

The FAA does not define “default,” but dictionaries

from the time of the FAA’s enactment define the term to

mean “[t]he omission or failure to fulfill a duty.” Black’s

Law Dictionary 342; Walter A. Shumaker & George

Foster Longsdorf, Cyclopedia Law Dictionary 293 (2d

ed. 1922) (similar); John Bouvier, Bouvier’s Law

Dictionary and Concise Encyclopedia 814 (1914)

9

(similar). That meaning has not changed since the

FAA’s enactment. See Black’s Law Dictionary (11th ed.

2019) (“The omission or failure to perform a legal or

contractual duty.”); Webster’s New International

Dictionary 686 (2d ed. 1950) (similar); Random House

Dictionary of English Language (unabridged ed. 1967)

(similar). Section 3 thus requires the party moving for a

stay of litigation—usually, the defendant—to “fulfill

[their] duty” under the law, and in particular to “fulfill

[their] duty” to invoke arbitration in a timely manner as

required by applicable law.

Neither the FAA nor any other federal statute sets a

time limit for moving for a stay of arbitration. In the

absence of a contract that itself sets a time limit, a

defendant must fulfill its duty to raise arbitration in the

manner required by applicable rules of procedure. After

all, the questions are essentially (1) when a defense

must be invoked; (2) whether the belated invocation of a

defense can be forgiven; and (3) if so, under what

circumstances. Those are ordinary procedural questions

that arise in countless other cases. And the Federal

Rules provide the framework for answering those

questions in federal court. See, e.g., Klunder v. Brown

Univ., 778 F.3d 24, 34–35 (1st Cir. 2015).

The FAA’s text confirms the point. Section 6 provides

that any request to arbitrate, whether by a motion to

stay (under Section 3) or compel (under Section 4), “shall

be made and heard in the manner provided by law for

the making and hearing of motions, except as otherwise

… expressly provided” by the FAA. 9 U.S.C. 6. The FAA

does not expressly provide time limits, so Section 6

points to the ordinary rules governing “the manner” of

“making and hearing of motions.” See ibid.

10

The Federal Rules establish those rules in federal

court.2 Federal Rule of Civil Procedure 1 states that the

Federal Rules apply “in all civil actions and proceedings

… except as stated in Rule 81.” Fed. R. Civ. P. 1

(emphasis added). And Rule 81 provides that the

Federal Rules “govern proceedings under” Title 9

“relating to arbitration,” unless the FAA explicitly

“provide[s] other procedures.” Fed. R. Civ. P. 81(a)(6)(B).

The FAA does not provide otherwise, so the Federal

Rules govern whether the right to arbitrate has been

raised in a timely manner. See Champ v. Siegel Trading

Co., 55 F.3d 269, 276 (7th Cir. 1995).

B. The Federal Rules of Civil Procedure Permit The

Movant To Belatedly Raise Arbitration As A Defense,

Absent Prejudice To the Nonmovant

The Federal Rules provide a clear and familiar

framework for determining whether a defendant has

raised arbitration in a timely manner or instead is in

default due to delay: The same framework that governs

the timeliness of invoking other affirmative defenses,

including other contract defenses, before trial. The

defendant should invoke such defenses by the time of

the answer. But beyond that point, the Federal Rules

are permissive and courts should freely allow the

assertion of the defense, so long as the delay has not

caused prejudice sufficient to justify denying the

request. Prejudice is central to determining whether the

right to invoke arbitration has been irretrievably lost.

1. As an initial matter, the Federal Rules do not

establish the harsh rule that the right to invoke

2 In state court, state procedural rules would govern the timeliness

of the demand for arbitration, subject to the FAA’s ordinary

limitation that those procedures cannot be discriminatory.

11

arbitration is permanently lost if the defendant fails to

move for a stay in a pre-answer motion. The Federal

Rules impose that strict regime for only a handful of

expressly enumerated defenses—such as personal

jurisdiction and improper venue—which must be raised

in an answer or pre-answer motion, or else be

permanently waived. See Fed. R. Civ. P. 12(h)(1),

12(b)(2)–(5). Motions to stay litigation or to compel

arbitration are conspicuously absent from that list. The

Federal Rules thus do not provide that arbitration

rights are defaulted if not raised at the first opportunity.

2. The Federal Rules are otherwise more permissive

and do not trigger default without prejudice when

raising a defense before trial. Under the Rules, “any”

other “avoidance or affirmative defense” must be raised

in the answer, Fed. R. Civ. P. 8(c), filed within 21 days,

Fed. R. Civ. P. 12(a)(1)(A)(i). But those defenses are not

permanently lost simply because the defendant does not

include them in its answer. There is a window to file an

amended answer as a matter of right. Fed. R. Civ. P.

15(a)(1). And even after the time to file an amended

answer has expired, courts still “should freely give

leave” to amend and add additional defenses before trial

“when justice so requires.” Fed. R. Civ. P. 15(a)(2).

Prejudice is central to the analysis of whether leave

should be granted. As this Court has explained, Federal

Rule of Civil Procedure 15 establishes a “liberal rule[]”

that is “designed to facilitate the amendment of

pleadings except where prejudice to the opposing party

would result.” United States v. Hougham, 364 U.S. 310,

316 (1960) (emphasis added). Elsewhere, this Court has

explained that, “[i]n the absence of … undue delay, bad

faith or dilatory motive,” “repeated failure to cure

deficiencies,” “undue prejudice to the opposing party,” or

12

“futility of amendment,” then “the leave sought should,

as the rules require, be ‘freely given.’” Foman v. Davis,

371 U.S. 178, 182 (1962). The prejudice inquiry includes

all of the various considerations listed in Foman, thus

providing a capacious standard that gives courts the

necessary tools to ensure fair play and protect against

gamesmanship. Under that standard, “if the court is

persuaded that no prejudice will accrue, the

amendment should be allowed.” 6 Charles Alan Wright

& Arthur Miller, Federal Practice & Procedure § 1487

(3d ed. 2021).

It is also well-recognized that this same prejudicebased approach applies to the timeliness of asserting a

new defense by motion. A defendant may interpose an

“unpleaded Rule 8(c) affirmative defense[] … by pretrial

motion,” so long as the filing will not produce “prejudice

to the opposing party.” 5 Charles Alan Wright & Arthur

Miller, Federal Practice & Procedure § 1278 (4th ed.

2021). So whether added by motion or pleading, an

inconsequential pretrial delay is not a basis for denying

leave to assert a defense. Prejudice is required.

3. The same familiar rules govern the timeliness of

a motion for a stay of litigation or to compel arbitration

under the FAA, as there is no sound basis under the

Federal Rules to set time limits for invoking arbitration

that are unlike the time limits for raising “any” other

“avoidance or affirmative defense.” Fed. R. Civ. P. 8(c).

“[T]he word ‘any’ has an expansive meaning, that is, ‘one

or some indiscriminately of whatever kind.’” Ali v. Fed.

Bureau of Prisons, 552 U.S. 214, 219 (2008) (quoting

United States v. Gonzales, 520 U.S. 1, 5 (1997)) (internal

quotation marks omitted). Arbitration is an “avoidance

or affirmative defense,” Fed. R. Civ. P 8(c), because it

“does not tend to controvert the opposing party’s prima

13

facie case as determined by the applicable substantive

law.” Hassan v. U.S. Postal Serv., 842 F.2d 260, 263

(11th Cir. 1988) (quoting 2A J. Moore, Moore’s Federal

Practice ¶ 8.27[3] (2d ed. 1985)) (internal quotation

marks omitted). Rule 8(c) also expressly lists other

contract-based affirmative defenses, like “accord and

satisfaction” and “arbitration and award,” for when an

arbitration has already completed. Fed. R. Civ. P. 8(c).

A request to arbitrate an ongoing dispute should be

treated the same way.

This familiar framework makes the rule simple: a

defendant is not “in default” if it invokes arbitration in

a timely manner, as determined by the Federal Rules.

Though formal amendment to the answer is not

required, a motion for a stay of litigation is timely filed

and therefore the defendant is not “in default” so long as

it is not too late to interpose that defense in a pleading,

i.e., so long as the defendant can still raise arbitration

as a matter of right, or the court would grant leave to

raise it because of the absence of prejudice. These

standard procedural rules provide the most

straightforward way to resolve the question presented.

C. Section 2’s Saving Clause Does Not Apply To Waiver By

Litigation Conduct

Contrary to petitioner’s argument, the FAA does not

make this familiar question of procedure hinge upon

substantive state contract law doctrines of waiver,

forfeiture, estoppel, or laches. Section 2 of the FAA

provides that arbitration agreements “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. That “saving clause permits

agreements to arbitrate to be invalidated by ‘generally

14

applicable contract defenses.’” Concepcion, 563 U.S. at

339 (citation omitted). But “generally applicable

contract defenses” do not ordinarily govern the question

of whether a defendant has timely raised a defense

during ongoing litigation. Those questions—when to

invoke a defense in litigation and when a defense is

permanently lost due to litigation delay—are ordinarily

questions of procedure, not substantive contract law.

See pp. 9–10, supra.

Congress reinforced that point in Section 3, directing

that a court “shall” grant a motion to stay litigation

unless the applicant is “in default.” 9 U.S.C. 3. Section

2, by comparison, does not speak directly to a party’s

litigation conduct. It addresses “the enforceability of

arbitration agreements” generally. Arthur Andersen

LLP v. Carlisle, 556 U.S. 624, 630 (2009). And under the

“general/specific canon,” “the specific presumptively

governs[.]” RadLAX Gateway Hotel, LLC v. Amalgamated

Bank, 566 U.S. 639, 648 (2012). Otherwise, the FAA

would make the very same question subject to

overlapping yet different and potentially conflicting

standards, with a defendant’s delay preventing them

from invoking arbitration even when they are not “in

default” within the meaning of Section 3. That would

allow Section 3’s specific “in default” language to be

“swallowed by the [more] general [language in Section

2],” thus “violat[ing] the cardinal rule that, if possible,

effect shall be given to every clause and part of a

statute.” Id. at 645 (citation and internal quotation

marks omitted). Petitioner identifies no sound basis for

interpreting the FAA in such a strange and selfdefeating manner.

Moreover, Section 2’s exception does not even

encompass an implied waiver of the ability to invoke

15

arbitration of a particular dispute because of delay in

invoking the defense in ongoing litigation of that same

dispute. Section 2 “permits … generally applicable

contract defenses, such as fraud, duress, or

unconscionability,” Concepcion, 563 U.S. at 339 (citation

and internal quotation marks omitted), to revoke a

contract or otherwise “to invalidate arbitration

agreements.” Doctor’s Assocs., Inc. v. Casarotto, 517

U.S. 681, 687 (1996). But the so-called “waiver” at issue

here is a dispute-specific defense. It limits only the

defendant’s rights to invoke arbitration of the particular

dispute in the particular litigation because of the

defendant’s delay. Even if the defendant is barred from

invoking arbitration within the particular court due to

their conduct in that particular litigation, the

arbitration clause would remain fully valid and

enforceable for any subsequent dispute between the

parties. The litigation waiver is thus properly

understood not to affect the “valid[ity],” “enforceab[ility],”

or “irrevocab[ility]” of the agreement itself, and thus to

fall outside the scope of Section 2’s exception. 9 U.S.C.

2. Rather, the party would be “in default” and thus

unable to obtain to a stay.

D. Even If Section 2 Applies, Prejudice Would Still Be

Required

Even if petitioner were correct that Section 2 means

that substantive state contract law doctrines of waiver,

forfeiture, estoppel, and laches apply to the procedural

question of whether to permit the belated invocation of

arbitration as a defense, petitioner would still be wrong

to exclude prejudice from the analysis. State law

incorporates a prejudice requirement into the analysis

by at least three separate routes.

16

First, the question here is more aptly described as an

issue of forfeiture, estoppel, or laches. Those doctrines

all require prejudice, Pet. Br. 23–29, and petitioner

provides no sound basis for treating “implied waiver” so

differently from its brethren, particularly when the

lines between them are so malleable. See Kontrick v.

Ryan, 540 U.S. 443, 458 n.13 (2004) (“jurists often use

the words [forfeiture and waiver] interchangeably.”). A

court that finds no “forfeiture” because the delay is

inconsequential could repackage that same delay as an

“implied waiver” and thereby deny a motion to stay that

the FAA would otherwise require the court to grant.

That is a recipe for discrimination, not even-handed

treatment of arbitration.

Second, even if “implied waiver” were the proper

rubric, the threshold state-law question of whether a

defendant’s litigation conduct constitutes an implied

waiver would turn on their ability to raise arbitration

under applicable rules of procedure.3 Consider the

ordinary standard: “An intent to waive will not be

inferred from doubtful or equivocal acts or language”;

“there must be a clear, unequivocal, and decisive act …

so consistent with an intention to waive that no other

If this case arises under Section 2, the Court does not need to

answer any questions of state contract law, other than identifying

the role the rules of procedure and prejudice play under relevant

aspects of the state law of forfeiture or waiver. Note, however, that

even petitioner (Pet. Br. 23 n.11) concedes several states require

prejudice in some form in the waiver analysis. See, e.g., Maak v.

IHC Health Servs., Inc., 372 P.3d 64, 73 (Utah Ct. App. 2016); Hyre

v. Denise, 449 S.E.2d 120, 124 (Ga. Ct. App. 1994) ; Anderson v. Coop

Ins. Cos., 895 A.2d 155, 159 (Vt. 2006); Guar. Title & Tr. Co. v.

Babbitt Bros. Trading Co., 53 P.2d 734, 736 (Ariz. 1936); Masser v.

London Operating Co., 145 So. 79, 83 (Fla. 1932).

3

17

reasonable explanation is possible.” 13 Williston on

Contracts § 39:28. If, under applicable procedural rules,

the defendant can still properly invoke arbitration as a

defense, then their participation in litigation before that

point is not “unequivocal[ly]” inconsistent with their

intent to invoke arbitration in the future. See ibid. And

because prejudice is a factor in deciding the procedural

question, it is a factor in deciding whether the delay

triggers an implied waiver in the first place.

Third, even if waiver can be implied from conduct as

a matter of state contract law without a showing of

prejudice, waiver standing alone is not sufficient to

decide the question presented. What matters is not

whether a defendant has waived their ability to invoke

arbitration through their delay. Rather, what matters is

whether the defendant can revoke any prior implied

waiver and invoke arbitration notwithstanding their

earlier delay. And in every state (with the possible

exception of Louisiana), a defendant can revoke a prior

waiver of an executory obligation like a promise to

arbitrate, so long as the plaintiff has not yet relied to

their detriment on the waiver.4

Ala. Code § 7-2-209(5); Alaska Stat. Ann § 45.02.209(e); AGA

S’holders, LLC v. CSK Auto, Inc., 589 F. Supp. 2d 1175, 1185 (D.

Ariz. 2008) (citing Ariz. Rev. Stat. Ann. § 47-2209(E)); Bio-Tech

Pharmacal, Inc. v. Int’l Bus. Connections, LLC, 184 S.W.3d 447, 452

(Ark. Ct. App. 2004) (quoting Ark. Code Ann. § 4-2-209(5)); Lally v.

Allstate Ins. Co., 724 F. Supp. 760, 763 (S.D. Cal. 1989), aff’d, 930

F.2d 28 (9th Cir. 1991) (Tbl); Lease Fin., Inc. v. Burger, 575 P.2d

857, 861–62 (Colo. App. 1977) (quoting Colo. Rev. Stat. Ann. § 4-2209(5)); RBC Nice Bearings, Inc. v. SKF USA, Inc., 123 A.3d 417,

426 (Conn. 2015); Amirsaleh v. Bd. of Trade of City of N.Y., Inc., 27

A.3d 522, 530 (Del. 2011); BMC Indus., Inc. v. Barth Indus., Inc.,

160 F.3d 1322, 1332–34 (11th Cir. 1998); Integrated Micro Sys., Inc.

v. NEC Home Elecs. (USA), Inc., 329 S.E.2d 554, 559 (Ga. Ct. App.

4

18

1985); Haw. Rev. Stat. Ann § 490:2-209(5); Idaho Code Ann. § 28-2209(5); Cent. Ill. Pub. Serv. Co. v. Atlas Mins., Inc., 965 F. Supp.

1162, 1173 (C.D. Ill. 1997), aff’d, 146 F.3d 448 (7th Cir. 1998); Ind.

Code Ann. § 26-1-2-209(5); Found. Prop. Invs., LLC v. CTP, LLC,

186 P.3d 766, 776 (Kan. 2008); Ky. Utils. Co. v. S. E. Coal Co., 836

S.W.2d 392, 400–01 (Ky. 1992), as modified on denial of reh’g (Aug.

25, 1992) (quoting Ky. Rev. Stat. Ann. § 355.2-209(5)); Cives Corp.

v. Callier Steel Pipe & Tube, Inc., 482 A.2d 852, 857 (Me. 1984)

(quoting Me. Rev. Stat. Ann. tit. 11 § 2-209(5)); Brockington v.

Grimstead, 933 A.2d 426, 442–43 (Md. Ct. Spec. App. 2007), aff’d,

10 A.3d 168 (Md. 2010); Dynamic Mach. Works, Inc. v. Mach. &

Elec. Consultants, Inc., 831 N.E.2d 875, 877 (Mass. 2005) (quoting

Mass. Gen. Laws ch. 106, § 2-209(5)); Johnson Controls, Inc. v. Jay

Indus., Inc., 459 F.3d 717, 725 (6th Cir. 2006) (citing Mich. Comp.

Laws Ann § 440.2209(5)); Thompson v. Truesdale, 63 N.W. 259,

259–60 (Minn. 1895); Miss. Code Ann. § 75-2-209(5); Meyer Milling

Co. v. Baker, 43 S.W.2d 794, 796–97 (Mo. 1931); Westmont Tractor

Co. v. Viking Expl., Inc., 543 F. Supp. 1314, 1319–20 (D. Mont. 1982)

(discussing Mont. Code Ann. § 30-2-209(5)); Neb. Rev. Stat. Ann.

UCC § 2-209(5); Nev. Rev. Stat. Ann. § 104.2209(5); N.H. Rev. Stat.

Ann. § 382-A:2-209(5); Bleyer v. Veeder, 183 A. 203, 206 (N.J. Ch.

1936); In re W. Wood Prod., Inc., No. 11-12-10057 JS, 2013 WL

1386285, at *15 (Bankr. D.N.M. Apr. 4, 2013) (quoting N.M. Stat.

Ann. § 55-2-209(5)); Comput. Strategies, Inc. v. Commodore Bus.

Machs., Inc., 483 N.Y.S.2d 716, 722 (App. Div. 1984) (quoting N.Y.

U.C.C. Law § 2-209(5)); Thermal Design, Inc. v. M & M Builders,

Inc., 698 S.E.2d 516, 523 (N.C. Ct. App. 2010) (quoting N.C. Gen.

Stat. Ann. § 25-2-209(5)); Dangerfield v. Markel, 252 N.W.2d 184,

188 (N.D. 1977) (quoting N.D. Cent. Code Ann. § 41-02-16 (2-209));

Ohio Rev. Code Ann. § 1302.12(E); Westinghouse Credit Corp. v.

Shelton, 645 F.2d 869, 872–73 (10th Cir. 1981) (quoting Okla. Stat.

Ann tit. 12A § 2-209(5)); Wallstreet Props., Inc. v. Gassner, 632 P.2d

1310, 1315 (Or. Ct. App. 1981); Daniels v. Phila. Fair Hous.

Comm’n, 513 A.2d 501, 502 (Pa. Commw. Ct. 1986); R.I. Gen. Laws

Ann. § 6A-2-209(5); S.C. Code Ann. § 36-2-209(5); S.D. Codified

Laws § 57A-2-209(5); First Tenn. Bank, N.A. v. Nunn & Assocs.,

Inc., No. 03A019103CH96, 1991 WL 119293, at *5 (Tenn. Ct. App.

July 8, 1991) (quoting Tenn. Code Ann. § 47-2-209(5)); Hart v. Sims,

702 F.2d 574, 579 (5th Cir. 1983) (quoting Tex. Bus. & Com. Code

19

“Under general principles of contract law, a party

who has waived an executory provision of a contract

may retract the waiver by notifying the other party that

strict compliance … will be required unless the

retraction would be unjust in light of a material change

of position undertaken in reliance on the waiver.” 13

Williston on Contracts § 39:20; see also U.C.C. § 2209(5) (“A party who has made a waiver affecting an

executory portion of [a] contract may retract the waiver

… unless the retraction would be unjust in view of a

material change of position in reliance on the waiver.”);

Farnsworth on Contracts § 8.05 (4th ed. 2018 & Supp.

2022-2) (similar). The Restatement states the same rule

in somewhat different terms: a “manifestation of assent

to … discharge” an executory obligation is not binding

without consideration or its equivalent, unless “it has

induced such action or forbearance as would make a

promise enforceable.” Restatement (Second) of

Contracts § 273 (1981).5

A promise to arbitrate an unresolved dispute is an

“executory” promise because it involves “future activity

that is not yet completed.” Gaugert v. Duve, 579 N.W.2d

746, 753 (Wis. Ct. App. 1998); 1 Williston on Contracts

Ann. § 2.209(e)); Utah Code Ann. § 70A-2-209(5); Vt. Stat. Ann. tit.

9A, § 2-209(5); Va. Code Ann. § 8.2-209(5); Cornerstone Equip.

Leasing, Inc. v. MacLeod, 247 P.3d 790, 796 (Wash. Ct. App. 2011);

W. Va. Code Ann. § 46-2-209(5); Wis. Stat. Ann. § 402.209(5); Wyo.

Stat. Ann. § 34.1-2-209(e).

5 This ability to revoke a waiver is a specific application of the

general rule that modification without consideration is not binding,

unless there has been a “material change of position in reliance on

the promise[d]” amendment. Restatement (Second) of Contracts

§ 89; 28 Williston on Contracts § 70:156 (same); 2 Corbin on

Contracts § 7.6 (2021) (same).

20

§ 1:19; cf. 11 U.S.C. 365(b)(1). “[A]n arbitration

agreement is a classic executory contract, since neither

side has substantially performed the arbitration

agreement at the time enforcement is sought.”

Highland Cap. Mgmt., L.P. v. Dondero (In re Highland

Cap. Mgmt., L.P.), No. 19-34054, 2021 WL 5769320, at

*6 (Bankr. N.D. Tex. Dec. 3, 2021) (internal citation and

quotation marks omitted). Indeed, the FAA was adopted

to override the common-law rule against the

enforceability of executory arbitration agreements. See,

e.g., Atl. Fruit Co. v. Red Cross Line, 5 F.2d 218, 220 (2d

Cir. 1924) (“[A]ny agreement contained in an executory

contract, ousting in advance all courts of every whit of

jurisdiction to decide contests arising out of that

contract, will not be enforced by the courts so ousted.”).

Arbitration agreements remain executory with respect

to any particular dispute until “the time for occurrence

of the condition has expired”—i.e., until judgment has

been entered or the dispute has otherwise been

resolved. Farnsworth on Contracts § 8.05.

Petitioner has no answer, and does not even mention

executory obligations. Petitioner asserts that “most

contractual rights can’t be reinstated through retraction

or revocation of the waiver.” Pet. Br. 23 (emphasis

added). But the qualifier “most” ignores the relevant

exception: a waiver of an executory obligation can be

revoked absent detrimental reliance. For example,

petitioner cites Iowa case law. Pet. Br. 23 n.10 (citing

Scheetz v. IMT Ins. Co. (Mut.), 324 N.W.2d 302 (Iowa

1982)). But that case itself recognizes that waiver can

be revoked for arbitration of present or “future”

disputes. Id. at 304 n.2. And an Iowa statute confirms

the point. See Iowa Code § 554.2209(5) (“A party who

has made a waiver affecting an executory portion of the

21

contract may retract the waiver … unless the retraction

would be unjust in view of a material change of position

in reliance on the waiver.”).

Petitioner’s premise that “implied waiver” of

arbitration is irrevocable is thus unfounded as a matter

of ordinary state contract law. To the contrary, under

ordinary principles of state contract law, a defendant

can retract a so-called “waiver” and reassert their right

to invoke arbitration, so long as the plaintiff has not

made a material change in their position in reliance on

the implied waiver.

Finally, even if state law ordinarily allowed for

irrevocable implied waivers of other executory

obligations, without proof of prejudice, the FAA still

would not foreclose a pro-arbitration rule that an

arbitration clause nonetheless remains valid and

enforceable. Section 2 sets a floor, not a ceiling, in

establishing a “‘liberal federal policy favoring

arbitration.’” Concepcion, 563 U.S. at 339 (quoting

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 24 (1983)). Whenever this Court has

preempted state laws under Section 2, it is because

those laws singled out arbitration for uniquely

disfavorable treatment compared to other contractual

rights, see, e.g., Doctor’s Assocs., 517 U.S. at 683, 687–

88; Kindred Nursing Ctrs., 137 S. Ct. at 1424–28;

Concepcion, 563 U.S. at 340–44, 346–52, and not

because state laws enunciated a pro-arbitration

doctrine. Petitioner has identified no justification for

transforming this Court’s Section 2 jurisprudence.

In sum, an inconsequential delay is not enough to

trigger the irrevocable loss of the right to invoke

arbitration. For the reasons set forth above, the proper

inquiry is simply to look at the Federal Rules to

22

determine whether the defendant is “in default,” as the

timeliness of making a motion in federal court is a

quintessential question of procedure. And even if state

substantive contract law were relevant, prejudice would

still be required before mere litigation delay will trigger

the binding loss of the right to invoke arbitration.

II. Petitioner’s Harsh and Unpredictable Rule Would Harm

The Interests of Parties to Arbitral Agreements and

Invite Anti-Arbitration Discrimination

Businesses have structured countless contracts in

reliance on the FAA and this Court’s precedents

interpreting it. This Court, like the Congress that

enacted the FAA, has recognized that arbitration

confers many advantages over litigation. Allied-Bruce

Terminix Cos. v. Dobson, 513 U.S. 265, 280 (1995);

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 628 (1985) (emphasizing arbitration’s

“simplicity, informality, and expedition”). It was to

ensure that parties could enjoy arbitration’s benefits

and avoid courts’ “‘hostility to arbitration’ that led

Congress to enact the FAA.” Kindred Nursing Ctrs., 137

S. Ct. at 1428 (citation omitted). Despite numerous

warnings from this Court, state courts continue to

devise “a great variety of devices and formulas” to flout

the FAA’s command to enforce arbitration agreements

evenhandedly and as written. Concepcion, 563 U.S. at

342 (citation and internal quotation marks omitted).

Businesses can be both plaintiffs and defendants,

and indeed businesses appear on both sides of the “v” in

many arbitration cases. Their interest is accordingly the

same as any party to an arbitration agreement who

cannot know in advance whether they will appear as a

plaintiff or as a defendant: Any such party would want

23

a balanced rule that takes into account both

perspectives, is clear, familiar, and predictable, and

protects against anti-arbitration discrimination. The

framework established in the FAA’s text and the

Federal Rules advances all of those interests, and

accordingly advances the interests of the FAA itself.

First, this approach provides clear guideposts for

when a defendant must invoke their right to arbitration:

The same timeframe that applies for invoking virtually

any other defense in federal court. So long as the

defendant moves for a stay when they can still raise new

defenses as a matter of right, or moves after that but the

delay has not caused prejudice so leave would be

granted to add arbitration to an amended pleading, then

the defendant is not “in default” and the motion “shall”

be granted. That rule encourages prompt assertion of

arbitration as a defense, when the defendant still may

do so as a matter of right. It enables proper flexibility,

allowing belated assertion of the defense when there is

no prejudice. But it also protects against gamesmanship

or other bad-faith or harmful delays, as such conduct

provides ample basis to deny leave and thus to deny the

motion as untimely and accordingly “in default.”

Finally, this approach subjects arbitration to the same

timeliness rules as every other contract-based

affirmative defense, and thus protects against antiarbitration discrimination.

By contrast, petitioner’s rule—that irrevocable

waiver is triggered by “inconsistent” litigation conduct

without regard to prejudice—is damaging because it is

both unpredictable and unduly harsh and invites the

very discrimination petitioner purports to avoid.

First, whereas the Federal Rules establish familiar

guideposts for when to invoke defenses, petitioner’s

24

approach lacks guideposts at all, leaving litigants

guessing about when litigation conduct will be deemed

sufficiently “inconsistent” with arbitration to constitute

an implied waiver through conduct. Must arbitration

appear in the very first filing? The first responsive

pleading? The pre-answer motion? Before a mediation?

What if there is other motion practice? Does it matter if

the other motion practice is slow? What if discovery

begins but duplicates what would be available in

arbitration? A party may never know. And the answers

could vary from state to state, without any uniformity

in federal court, creating a patchwork of indiscernible

and virtually unknowable rules.

Petitioner’s amorphous inquiry would allow courts to

find waiver even in situations where the defendant

could still raise arbitration by right under the Federal

Rules or comparable state procedures, so long as the

court viewed the delay up to that point as “inconsistent”

with future arbitration, thus depriving defendants of an

important and familiar safe harbor. And if the

defendant’s delay oversteps a line that it cannot even

see, the result is severe: permanent loss of the

important right to arbitrate a dispute even when the

delay is otherwise inconsequential and causes no

prejudice. An approach that is both unpredictable and

unduly harsh has little to commend it.

Petitioner asserts its harsh rule is necessary to

protect against “gamesmanship.” Pet. Br. 46–50. But

“gamesmanship” is just a label for a kind of bad faith

conduct that causes prejudice to the court or the

opposing party. The prejudice inquiry under the Federal

Rules already accommodates those considerations,

without the harshness and unpredictability that attend

petitioner’s view. See pp. 11–12, supra. By contrast,

25

petitioner’s focus on “inconsistency” standing alone

provides no basis for even considering whether the other

side is a victim of gamesmanship, because prejudice is

not a factor.

In practice, petitioner’s rule is also discriminatory

because it exposes arbitration alone to a harsh regime

that applies to no other comparable state-law contract

rights. First, in the absence of consideration, parties

justifiably expect to be able to revoke a waiver of an

executory obligation and thereby to enforce a

contractual commitment against the other side, so long

as the counterparty has not yet changed position in

reliance on the waiver. See pp. 17–20, supra.

Petitioners’ view thwarts those settled expectations by

treating arbitration waiver as uniquely irrevocable, and

thus worse than all other executory obligations. That is

exactly the kind of discrimination Congress enacted the

FAA to prevent. Kindred Nursing Ctrs., 137 S. Ct. at

1428. Petitioner’s rule would also discriminate against

arbitration as a matter of procedure, subjecting it to a

less predictable and harsher regime than all other

contract-based affirmative defenses.

At bottom, the Federal Rules and their prejudicebased approach provide a clear, fair, and appropriate

approach to addressing when a party is “in default”

because they were slow in invoking a defense. That

approach applies evenly to all affirmative defenses and

contractual rights in litigation. It balances the interests

in encouraging prompt assertion of the right, while also

avoiding harsh rules of waiver from trivial or

inconsequential delays. And it is predictable because it

draws upon a settled body of law that litigants

understand and already need to follow in all civil cases:

follow the rules of procedure.

26

CONCLUSION

For the foregoing reasons, this Court should affirm.

Respectfully submitted.

DARYL JOSEFFER

ZACHARY D. TRIPP

PAUL LETTOW

JOSHUA HALPERN

JONATHAN D. URICK

WEIL, GOTSHAL & MANGES LLP

U.S. CHAMBER LITIGATION

2001 M Street NW #600

CENTER

Washington, DC 20036

1615 H Street NW

(202) 682-7000

zack.tripp@weil.com

Washington, DC 20062

FEBRUARY 2022