Participation In Litigation To Avoid A Default Judgment Does Not Waive A Party's Right To Compel Arbitration

An employer did not waive its right to compel arbitration under an employment agreement by seeking to set aside a default in an employment discrimination suit brought against it by its employee. Due to an "administrative oversight," the employer's counsel did not become aware it had been served with a complaint until after a default had been entered. The employer was successful in its effort to set aside the default, however, the employee argued that the employer's participation in the litigation resulted in a waiver of its right to compel arbitration.

The Eleventh Circuit disagreed. A two-part test controls whether a party has waived its right to arbitration. The first prong inquires whether, under the totality of the circumstances, the party has "acted inconsistently with the arbitration right." This occurs when the party "substantially invokes the litigation machinery prior to demanding arbitration." The second prong asks whether the invocation of litigation