Year-Long Delay to Compel Arbitration is Not Waiver

Michele Trausch
June 13, 2014

Does waiting a whole year before moving to compel arbitration constitute a waiver? Not according to the Court in Gloster v. Sonic Automotive.

In this employment litigation case, defendant made it clear prior to suit being filed that it expected its former employee to arbitrate his claims. It raised the requirement to arbitrate as an affirmative defense in its answer to the complaint. Finally, defendant made a motion for summary judgment which argued that the former employee had waived his right to file suit by executing an arbitration clause, or in the alternative, a petition to compel arbitration. The trial court found that the defendant had waived its right to demand arbitration by its delay. But the appellate court reversed, citing the “strong policy favoring arbitration” and noting that “waivers are not to be lightly inferred.”

The Court’s analysis focused on the lack of prejudice to the plaintiff and the plaintiff’s failure to demonstrate that the delay was unreasonable—both “heavy burdens” that lay with the plaintiff who was opposing arbitration. Further, “answering a complaint and participating in litigation” did not waive the right to demand arbitration nor should these be construed as inconsistent with an intent to arbitrate.

Lesson learned: While it is definitely not recommended that one wait a full year before moving to compel arbitration, unless the party opposing arbitration can demonstrate that the delay was unreasonable or show prejudice caused by the delay, such a delay may not actually be a waiver.