The following situation may sound all-too-familiar for general counsel: a former employee files a lawsuit against the company, despite the existence of a binding arbitration clause in the employment contract. Now, the company must make an important decision. Should it engage in the suit, perhaps move to dismiss, or should it immediately move to compel arbitration and get out of court? This Article dis- cusses the Supreme Court’s May 23, 2022 unanimous opinion in Morgan v. Sundance, which involved this very factual scenario, and seemingly could make it easier for courts to find that the moving party has waived its right to arbitration by engaging in litigation because prejudice is no longer part of the equation. Accordingly, the answer to the question above requires careful analysis of a company’s strategic options at the outset of the case. If the company decides that arbitration is the preferred and more favorable path, it likely should invoke that right early to avoid the risk of losing the right to arbitrate altogether.
Susan L. Shin, Pravin R. Patel, Nicole Comparato, and Katheryn Maldonado,
Beware of Testing the Waters: Wading Into Litigation Could Cost the Company Its Arbitration Right,
77 U. Mia. L. Rev.
Available at: https://repository.law.miami.edu/umlr/vol77/iss4/4