Cases concerning waiver of arbitration rights typically get into the nitty-gritty of what the parties did prior to one of them seeking to change course. The First Circuit Court of Appeal recently decided one such case, concluding that engaging in discovery for some nine months – including participation in sixteen depositions amid other discovery – constituted waiver of the right to arbitrate. Per the federal court, it was “nose-on-the-face plain” that the opposing party would be prejudiced by allowing the late-game change to arbitration. Perhaps most critically, there was no real explanation for the change of heart, e.g., a new pleading or cause of action, which probably doomed the request.
The plaintiff failed to mention arbitration in its complaint, and the defendant included only one oblique reference to arbitration via an affirmative defense. Discovery proceeded for more than nine months, and the magistrate judge was called upon to referee discovery disputes no less than four times. Just before the close of discovery, and less than two months away from the trial date, the plaintiff decided it was time to seek to stay the case pending arbitration. Not surprisingly, the defendant opposed the request.
The decision written by Justice Selya, as is typical, will cause one to open the dictionary. For example, Justice Selya refers to the plaintiff’s “cunctation” in seeking arbitration, and also notes that the standard for prejudice involves a “salmagundi of factors”. With no meaningful explanation for the delay, the court’s decision was no surprise. This is one more reminder of the impact of delay in seeking arbitration, when a lawsuit is pending. The case is Joca-Roca Real Estate, LLC v. Brennan, No. 14-1353 (1st Cir. Dec. 1. 2014), available here.