SCOTUS Unanimously Rejects An Arbitration-Specific Waiver Rule

The Supreme Court has unanimously held that the broad policy favoring arbitration does not authorize federal courts to create a special rule necessitating a showing of prejudice in order to demonstrate the right to arbitration has been waived.

Morgan v. Sundance, Inc. involves alleged violations of the Fair Labor Standards Act for overtime pay. Although Morgan signed an agreement to resolve any employment-related dispute in arbitration, she nevertheless brought a nationwide collective action against her employer in federal district court in Iowa. Morgan's employer initially defended itself in court, as if the arbitration agreement did not exist, by filing a motion to dismiss suggesting that Morgan could join a related lawsuit or re-file her claims in court in her individual capacity. After its motion was denied, the employer answered the complaint and asserted several affirmative defenses without mentioning the arbitration agreement. Almost 8 months into the case, the