Customers of NECC Telecom (NECC), a telephone service provider, brought an action against NECC asserting, among other things, violations of the Federal Communications Act of 1934 and the Federal Communications Commission’s Truth-in-Billing Act. Plaintiffs asserted that NECC’s charges were inconsistent with the representations made by the telemarketer that convinced them to select NECC. NECC answered the original complaint, without asserting arbitration as an affirmative defense, but a year later, after an amended complaint was filed, moved to compel arbitration of the parties’ dispute. The District Court denied the motion and NECC appealed.
The 6th Circuit Court of Appeals affirmed the decision denying the motion to compel arbitration, holding that NECC waived whatever right it had to arbitrate when it failed to plead arbitration as an affirmative defense to the original complaint, as required by Federal Rule of Civil Procedure 8(c). The court’s decision was also based on the fact that NECC had participated in the litigation for a year, taking part in discovery and motion practice, without ever asserting that it had a right to compel arbitration. Finally, the court rejected NECC’s argument that the filing of an amended complaint revived NECC’s right to compel arbitration, finding that the new claims did not substantially alter the scope or theory of the case. (Manasher v. NECC Telecom, No. 07-2300, 2009 WL 361381 (6th Cir. Feb. 12, 2009))