US Supreme Court rules for fast-food worker in arbitration dispute News
© WikiMedia Commons (Mike Mozart)
US Supreme Court rules for fast-food worker in arbitration dispute

The US Supreme Court ruled 9-0 Monday in Morgan v. Sundance, Inc. against a fast-food franchise owner who sought arbitration only after beginning to litigate a claim filed by an employee.

Petitioner Robyn Morgan worked at a Taco Bell franchise owned by Sundance. Morgan signed an agreement when she applied for the job to arbitrate any employment dispute. Even though Morgan signed the arbitration agreement, she “filed a nationwide collective action asserting that Sundance had violated federal law regarding overtime payment.” Sundance responded by defending the lawsuit “as if no arbitration agreement existed, filing a motion to dismiss (which the District Court denied) and engaging in mediation (which was unsuccessful).” After eight months, Morgan filed the lawsuit and Sundance moved to stay and to compel arbitration under the Federal Arbitration Act (FAA). However, Morgan opposed this by arguing Sundance, through litigating for so long, waived its right to arbitrate.

The US Supreme Court granted certiorari in the case to address “whether federal courts may adopt an arbitration-specific waiver rule demanding a showing of prejudice.”

Through its holding, the court rejected the Eighth Circuit’s “arbitration-specific waiver rule demanding a showing of prejudice.” Justice Elena Kagan wrote the court’s unanimous opinion and stated “federal courts may not create arbitration-specific variants of federal procedural rules, like those concerning waiver.” The court found “the Eighth Circuit was wrong to condition a waiver of the right to arbitrate on a showing of prejudice.” A court must focus on the actions of the person who held the right of waiver in order to determine whether waiver occurred.

Thus, the Supreme Court vacated and remanded the US Court of Appeals for the Eighth Circuit’s ruling.