See you in court, err, arbitration! SCOTUS to decide whether litigating an employment dispute first precludes arbitrating it later

If your company makes its employees sign arbitration agreements, then this post is for you.

The rest of you can get an early start on happy hour find something else to read while sipping your morning cup of coffee.

Here’s the scenario:

Your employee sues you in federal court for failing to pay her and others overtime. All of these employees have signed arbitration agreements. However, instead of moving to compel arbitration, you decide to ’employ’ a different strategy.

First, you move to dismiss the lawsuit on other procedural grounds. Four months later, the court denies the motion. So, you answer the complaint and participate in mediation because, hey, why not try and settle?

But, the case doesn’t resolve. So, it moves forward. Only then — eight months into the case — do you move the court to compel arbitration.

Have you waived the right to arbitrate because you waited so long to do so?

The lower court said yes. The Eighth Circuit Court of Appeals disagreed, concluding that although the company had waited eight months to compel arbitration — and answered the complaint and participated in mediation in the interim — those intervening acts had not prejudiced the plaintiff(s) in any way. Indeed, nothing substantive had happened yet (e.g., no discovery), and the parties would not be duplicating any efforts if the case shifted from litigation to arbitration. It’s time to arbitrate.

But, not so fast!

The plaintiff(s) appealed to **checks notes** the Supreme Court. They asked the Supreme Court to resolve the following question: Should courts consider “prejudice” to the employee when deciding whether an employer waived its right to invoke arbitration?

Now, this isn’t some crazy fantasy. It actually happened. (Duh! We get it, Eric.)

And the Supreme Court was like, WTH, let’s do this! (Indeed,  there is somewhat of a circuit split on this issue. Most courts do consider prejudice automatically. Others generally don’t give it much, if any, weight.)

So, hold our drink, OSHA ETS lottery! The one’s going to be employment lawyer’s nerdgasm of a procedural debate. I’ve got the vapors.

“Doing What’s Right – Not Just What’s Legal”
Contact Information