The world’s largest Pizza Hut franchisee, NPC International, Inc. (“NPC”), which operates more than 1200 Pizza Hut restaurants in the United States, was sued in federal district court by employees in five separate collective action lawsuits for alleged unpaid “off the clock” work, meeting, and training time. The district court found that the defendant employer’s litigation actions waived its contractual right to insist on arbitration of employees’ claims for unpaid compensation by failing to assert timely the right. The district court accordingly denied NPC’s motion to compel arbitration in all five cases. NPC appealed.
The Sixth Circuit Court of Appeals affirmed, concluding that NPC had “slept on its rights” by waiting almost fifteen months before raising the arbitration issue in any of the five cases. Further, it was only after NPC obtained unfavorable rulings on its initial dispositive motions that it moved to dismiss or compel arbitration. Finally, NPC’s belated assertion of its right to arbitration caused plaintiffs actual prejudice in the form of unnecessary delay and expense.
Gunn v. NPC Int’l, Inc., Nos. 14-6036/6040/6041/6042/6044 (6th Cir. Aug. 28, 2015).