As part of the settlement of a class action, Navistar entered into a consent decree that required it to participate in a program overseen by a Supplemental Benefits Committee (SBC). When the SBC disputed some of Navistar’s financial records relating to Medicare payments, Navistar rejected requests for clarification. The parties wrangled in court over Navistar’s obligations under the consent decree, until Navistar invoked an arbitration clause found in the consent decree specifically designating arbitration by accountants in disputes about financial information. The district court found the dispute subject to arbitration, but also noted “Navistar’s reluctance to enter into arbitration over the Medicare subsidy payments prior to litigation, and the fact that Navistar did not seek to arbitrate the SBC’s first claim requesting information until after the court granted the SBC’s motion to intervene and found that these decisions were ‘completely inconsistent with any reliance on the [consent decree’s] dispute resolution procedures,’ and also caused a delay that prejudiced the SBC by delaying the resolution of the dispute and any payments that the SBC might be entitled to.”

The United States Court of Appeals affirmed the lower court’s finding that the dispute was subject to arbitration but reversed the finding that Navistar had waived its right to arbitrate. As to the first point, the Court wrote “the contract disputes involved in the SBC’s classification-based arguments are relatively simple and closely related to accounting; it is reasonable to suppose that the parties to the agreement intended such disputes to be arbitrated.” As to the second, it wrote “Navistar’s pre-litigation conduct and failure to raise arbitration in its response to the SBC’s motion to intervene at the start of litigation did not constitute a waiver of its right to arbitrate the claims raised by the SBC.” The Court detailed Navistar’s actions and found them to be “completely consistent with a willingness to arbitrate.”

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