Third Circuit Finds Two Months of Litigation Sufficient to Waive Right to Arbitrate
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In a decision this week, the Third Circuit found two related parties had waived their right to arbitrate claims. One was no suprise — it had vigorously litigated the dispute for eleven months. But the second may have been simply guilty by association, as it had only litigated for two months. Supermedia v. Affordable Electric, Inc,, 2014 WL 1690749 (3d Cir. April 30, 2014).
In Supermedia, the plaintiff sued AEI for breach of contract. The contract at issue had been signed by Mr. Morley, AEI’s alleged president. AEI moved to dismiss the complaint, and when that failed, it answered the compaint and engaged in months of discovery, incuding discovery motions to the court. During those eleven months, AEI never mentioned its alleged right to arbitrate the dispute. Instead, it primarily disputed Mr. Morley’s right to bind it to a contract. Therefore, about nine months after filing its first suit, the plaintiff also sued Mr. Morley directly. The two cases were then consolidated.
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