7th Circ. Finds Pre-Certification Conduct Waives Arbitration
A defendant's litigation conduct before class certification can waive its right to arbitrate, the Seventh Circuit ruled, also clarifying its standard of review for such waiver decisions.
The U.S. Court of Appeals for the Seventh Circuit has affirmed that a defendant can waive its right to compel arbitration through its litigation conduct before a class is even certified. In a Telephone Consumer Protection Act (TCPA) case, the defendant participated in merits-based litigation for more than four years—including filing pleadings, conducting discovery, moving for summary judgment, and opposing class certification—without mentioning arbitration. The court found this prolonged engagement demonstrated an intent to litigate in court, thereby waiving the right to later move the dispute to arbitration after the class was certified. The panel rejected the defendant's excuse that newly hired counsel discovered the arbitration agreements, stating that a late-game change in lawyers cannot excuse a lack of diligence. For class-action defendants, this decision underscores the critical need to identify and assert arbitration rights at the earliest stages of litigation in the Seventh Circuit. It forecloses a 'wait-and-see' approach. The court also altered its appellate standard for reviewing such waivers to the more deferential 'clear error' standard, making district court waiver findings more difficult to overturn.