Plain-English summary
Court unanimously bars special prejudice rule for finding waiver of arbitration right
In Morgan v. Sundance, the Supreme Court unanimously held that federal courts may not apply a special arbitration-only rule that requires a showing of prejudice before finding a party waived the right to arbitrate. The Court vacated and remanded the Eighth Circuit decision.
Why this matters
The decision prevents federal courts from forcing parties seeking to preserve arbitration rights to make an extra showing of prejudice. That keeps waiver analysis consistent across different legal rights and affects how and when parties can be compelled to arbitrate disputes.
Who may feel it
- Parties to contracts with arbitration clauses (businesses and consumers)
- Litigants and their lawyers in federal court
- Federal courts evaluating whether arbitration rights were waived
- Companies that routinely litigate rather than arbitrate
Key questions
- Can federal courts require a showing of prejudice before finding a party waived its right to arbitrate?
- How should waiver of the arbitration right be evaluated—by an arbitration-specific standard or by ordinary waiver principles?