Morgan v. Sundance, Inc.
Issues
Does a party waive its contractual right to arbitrate a claim whenever it engages in litigation proceedings on that claim or only when the opposing party is prejudiced by those litigation proceedings?
This case asks the Supreme Court to interpret the Federal Arbitration Act (“FAA”) to assess whether arbitration clauses in contracts may be waived by entering litigation. The FAA provides standards that courts must apply when enforcing contractual agreements to arbitrate disputes. Robyn Morgan argues that the FAA requires courts to interpret arbitration agreements to be no less and no more enforceable than other contractual provisions. Therefore, Morgan contends that she does not need to show that she was prejudiced in order to establish that her employer, Sundance, Inc. (“Sundance”), waived an agreement to arbitrate. Sundance counters that the FAA merely provides minimum standards for arbitration clauses, and even if it did not, proving waiver in this instance requires a showing of prejudice. The outcome of this case has heavy implications for arbitration proceedings and employment contracts.
Questions as Framed for the Court by the Parties
Whether the arbitration-specific requirement that the proponent of a contractual waiver defense prove prejudice violates the Supreme Court’s instruction in AT&T Mobility LLC v. Concepcion that lower courts must “place arbitration agreements on an equal footing with other contracts.”
Congress passed the Federal Arbitration Act in 1925. Brief for Petitioner, Robyn Morgan at 5. The FAA’s purpose was to make arbitration agreements, previously disfavored in legal proceedings, as enforceable as other contracts. Id. at 6. To that end, Section 2 of the FAA explicitly states that agreements to arbitrate are valid and enforceable.
Additional Resources
- Martin Guys, Camille M. Ng, & Jadranka Jakovic, Morgan v Sundance: how Taco Bell could impact waiving arbitration, Reuters (Mar. 1, 2022).
- Seth Stern & John Crawley, Taco Bell Case Puts Arbitration in Spotlight at Supreme Court, Bloomberg Law (Nov. 15, 2021).
- Wilford H. Stone, Supreme Court to hear Iowa arbitration clause issue in overtime case, The Gazette (Feb. 24, 2022).