On Tuesday (Feb. 22), the Supreme Court granted a cert petition in Stok & Associates v. Citibank, Docket 10-514. The issue presented is: “Under the Federal Arbitration Act, should a party be required to demonstrate prejudice after the opposing party waived its contractual right to arbitrate by participating in litigation, in order for such waiver to be binding and irrevocable?” You can review links to the relevant documents, including the opinion below and the parties’ briefs in support of and opposing the Petition, on SCOTUSBlog, here. I am reviewing those documents and will have a more detailed analysis shortly.
JG
(H.T. to Ed Pekarek for alerting me to this interesting arbitration law development.)
The Court’s granting of cert on the watershed issue presented here, i.e., whether participating in litigation constitutes waiver of the right to compel arbitration under a contractual arbitration clause, could signal a much needed move away from the current status of the law, which routinely forces unwilling parties to arbitrate. It does so, (A) by upholding adhesion clauses that a well-informed claimant would almost never agree to if given real freedom of choice, (B) by limiting the basis of appeal to the narrow and egregious grounds set out in the FAA, and (C) by doing away with “manifest disregard of the law” (Hall Street). Let’s hope the Court agrees. The right to trial by jury should not be held hostage to the forces of economic duress exerted upon it, and upon hapless account holders, by Wall Street. Nor should this unfair limitation on fundamental due process be upheld by the courts, as has been the case, shamefully, since ’88.
I was hoping that someone would post on this case. I was looking at it, and I wonder if there isn’t a “hidden” arbitrability question. Here, the court determined the issue of waiver, but I wonder if the court isn’t interested in determining whether the court should have sent that issue to an arbitrator instead, given that arbitrators traditionally deal with defenses like waiver and laches.