The Supreme Court on Monday agreed to settle a split between appeals courts over the standard a plaintiff must meet, to show that defendant waived its ability to compel arbitration.
The Justices granted certiorari to Robyn Morgan, the named plaintiff in a proposed wage and hour class action against Sundance Inc.
The 8th Circuit Court of Appeals in March disagreed in this decision, arguing that Sundance's decision to pursue a mediation in Morgan's case, before moving to compel arbitration, wasn't prejudiced with Morgan's case.
The ruling deepened an existing divide in which the court of the appeal had imposed the same prejudice standard as if three other others had said prejudice is only one factor to consider when deciding whether a party waived the ability to negotiate arbitration.
Neither the lawyers in Fisher Phillips who represent Sundance whose company employs about 150 stores in several states, respond immediately to a request for comment.
Morgan, who worked in an independent-owned company in Texas, accused the company in a 2018 lawsuit of violating federal wage law by moving hours worked to workweeks to avoid overtime pay obligations.
Sundance moved to dismiss, claiming the lawsuit was precluded by a nearly identical class action in the 58th-party federal court. Despite court filings, the plaintiff claims the suit failed while the motion was pending.
An Iowa federal judge denied the motion four months after it was filed and in May 2019 rejected Sundance's motion to compel arbitration. The judge said that by filing the motion to dismiss, Sundance implicitly waived its ability to invoke arbitration.
The majority of the cases found out that the 8th Circuit reversed the decision, saying that Morgan couldn't show she was prejudiced by the 87-month delay. No initial scheduling conference took place, no discovery had been initiated, and no merits-based motions had been filed when Sundance moved to compel arbitration, the majority found.
In her August petition the Supreme Court told the court that a requirement that plaintiffs show prejudice violated the Federal Arbitration Act, which puts arbitration agreements on the same foot of other contracts, that courts should never invent federal norms, Morgan said.
Sundance in response argued that because all courts consider prejudice to be a factor of the analysis, there was no real difference to be resolved.
The case is Morgan v. Sundance Inc., U.S. Supreme Court, No. 21-328.
Karla Gilbride of Public Justice for Morgan: Karla Gilbride, Public Justice.
For Sundance, Reyburn Lominack of Fisher Phillips for Jim Moren, For Sundance, Reyburn.