Filed: October 19, 2001

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Nos. 00-2297(L)

(CA-00-985-A, CA-00-990-A)

MicroStrategy, Incorporated,

Plaintiff - Appellant,

versus

Betty J. Lauricia,

Defendant - Appellee.

ORDER

The court amends its opinion filed September 27, 2001, as

follows:

On page 3, second full paragraph, line 7 -- the spelling of

Jonathan Klein’s name is corrected.

For the Court - By Direction

/s/ Patricia S. Connor

Clerk
PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

MICROSTRATEGY, INCORPORATED,

Plaintiff-Appellant,

v.

BETTY J. LAURICIA,

Defendant-Appellee,

and

No. 00-2297

CLAUDE DAVID CONVISSER; STACEY

A. SPOLTORE; JOHN DOE,

Defendants.

EQUAL EMPLOYMENT OPPORTUNITY

COMMISSION,

Amicus Curiae.

BETTY J. LAURICIA,

Plaintiff-Appellee,

v.

MICROSTRATEGY, INCORPORATED,

Defendant-Appellant,

No. 00-2434

and

STACEY A. SPOLTORE; JOHN DOE,

Defendants.

EQUAL EMPLOYMENT OPPORTUNITY

COMMISSION,

Amicus Curiae.
Appeals from the United States District Court

for the Eastern District of Virginia, at Alexandria.

T. S. Ellis III, District Judge.

(CA-00-985-A, CA-00-990-A)

Argued: June 4, 2001

Decided: September 27, 2001

Before WIDENER, TRAXLER, and GREGORY, Circuit Judges.

_________________________________________________________________

Vacated and remanded with instructions by published opinion. Judge

Traxler wrote the opinion, in which Judge Widener and Judge Gregory joined.

_________________________________________________________________

COUNSEL

ARGUED: Daniel Meron, SIDLEY & AUSTIN, Washington, D.C., ARGUED:

for Appellant. Claude David Convisser, LAW OFFICE OF CLAUDE

D. CONVISSER, Alexandria, Virginia, for Appellee. John Foster

Suhre, EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

Washington, D.C., for Amicus Curiae. ON BRIEF: ON BRIEF: ON BRIEF: Carter G. Phillips, Amanda L. Tyler, SIDLEY & AUSTIN, Washington, D.C., for

Appellant. Gwendolyn Young Reams, Associate General Counsel,

Philip B. Sklover, Associate General Counsel, Vincent J. Blackwood,

Assistant General Counsel, EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Washington, D.C., for Amicus Curiae.

_________________________________________________________________

OPINION

TRAXLER, Circuit Judge:

Betty Lauricia brought an action against her employer, MicroStrategy, Incorporated, alleging that MicroStrategy retaliated against

her after she filed complaints with the Equal Employment Opportu-

 2
nity Commission and the Department of Labor. MicroStrategy moved

to dismiss the action, contending that the lawsuit was premature

because the EEOC issued Lauricia a "right-to-sue" letter fewer than

180 days after Lauricia filed her EEOC complaint. MicroStrategy also

sought to stay the action and compel Lauricia to submit her claims to

arbitration. The district court denied both motions, and MicroStrategy

appeals.1 We vacate the district court's order and remand with instructions to compel arbitration.

I.

Lauricia was the head of MicroStrategy's Human Resources

Department. During her employment, Lauricia signed a document

entitled "Employee Acknowledgment Form and Agreement to Arbitrate" in which she acknowledged receipt of MicroStrategy's

employee handbook. J.A. 63. The acknowledgment included a paragraph requiring Lauricia to arbitrate "[a]ny controversy or claim arising out of or relating to this Employee Handbook, procedures

delineated in it, or the employment relationship otherwise cognizable

at law and that could be the subject of legal action." J.A. 63.

On March 8, 2000, Lauricia filed a charge with the EEOC alleging

age and sex discrimination. On March 10, Lauricia filed a complaint

with the Department of Labor's Wage and Hour Division alleging that

MicroStrategy was violating the Fair Labor Standards Act by failing

to pay overtime. On March 13, Lauricia, through counsel, notified

MicroStrategy of the filing of the charges. The next day, Lauricia met

with Jonathan Klein, MicroStrategy's vice president and general

counsel, at Klein's request. Although Lauricia alleges that MicroStrategy knew about the charges at the time of this meeting, there

apparently was no discussion of the charges at that time.

Later that day, MicroStrategy delivered to Lauricia a letter placing

her on paid administrative leave "due to the conflict inherent to your

_________________________________________________________________

1 The district court's order refusing to compel arbitration is immedi- 1 

ately appealable under 9 U.S.C.A. § 16(a)(1) (West 1999). The district

court certified its right-to-sue ruling as appropriate for immediate appeal

under 28 U.S.C.A. § 1292(b) (West 1993), and we granted MicroStrategy permission to file an interlocutory appeal of that ruling.

 3
continued active status . . . while pursuing discrimination and wage

and hour claims against the Company." J.A. 330. The letter also stated

that the company "view[ed] your conduct this afternoon, in engaging

in discussions with counsel for the Company without informing them

of the pendency of these claims, as a breach of your duty of loyalty

to the Company," and reminded Lauricia that disclosure of any confidential information to anyone outside the company would be a breach

of her "continuing obligations and duty of loyalty to the Company."

J.A. 330. Lauricia remained on administrative leave until she was terminated on August 4, 2000.

On March 16, two days after it suspended Lauricia, MicroStrategy

filed in federal district court an action against Lauricia and her attorney ("MicroStrategy I"). In that action MicroStrategy sought a declaration that it did not violate the Fair Labor Standards Act by placing

Lauricia on paid leave and that terminating Lauricia would not violate

the Act, and MicroStrategy alleged that Lauricia and her attorney

should be held liable for stealing and disclosing trade secrets and

other confidential information. The district court allowed MicroStrategy to depose Lauricia for the limited purpose of identifying documents and records in Lauricia's possession.

On April 24, the district court dismissed the action for lack of jurisdiction, concluding that there was no case or controversy because

Lauricia had not filed suit against MicroStrategy. That same day,

MicroStrategy appealed the decision to this court and sought emergency injunctive relief, which we denied. Before any briefs were

filed, MicroStrategy moved to dismiss its appeal. The motion was

granted, and the appeal was dismissed without prejudice.

On April 27, three days after the district court dismissed MicroStrategy I, MicroStrategy filed an action in Virginia state court

against Lauricia and her attorney ("MicroStrategy II"), which

included the same state-law claims as alleged in the previous action.

MicroStrategy obtained an "Order for Writ of Possession" requiring

Lauricia and her attorney to turn over various documents that MicroStrategy believed were confidential, and the sheriff seized the documents from Lauricia's attorney. Lauricia subsequently responded to

a set of interrogatories and requests to produce submitted by MicroStrategy. See J.A. 382-418.

 4
On May 9, 2000, Lauricia filed a second charge with the EEOC

(the charge giving rise to this action), alleging that MicroStrategy had

retaliated against her by placing her on administrative leave after she

filed the initial charges. On May 11, the EEOC sent a letter to the parties stating that it had reasonable cause to believe a violation had

occurred and inviting the parties to participate in the conciliation process. On May 19, the EEOC sent MicroStrategy a letter about possible conciliation remedies and gave the company until May 31 to

respond. Lauricia, however, informed the EEOC that she did not wish

to participate in the conciliation process and she requested that she

immediately be issued her right-to-sue letter. The EEOC issued the

letter on May 25, 2000.

On June 15, after receiving from Lauricia a courtesy copy of the

lawsuit she intended to file, MicroStrategy filed in federal district

court a third action ("MicroStrategy III"; MicroStrategy I, MicroStrategy II, and MicroStrategy III are sometimes collectively referred

to as the "prior actions"). In MicroStrategy III, MicroStrategy named

Lauricia and her attorney as defendants, sought a declaration that its

conduct did not and would not violate Title VII, the ADEA, or the

Fair Labor Standards Act, and reasserted its state-law claims. Lauricia

filed her action against MicroStrategy the next day.

In August 2000, the district court consolidated the actions filed by

MicroStrategy and Lauricia. The court also dismissed the state-law

claims asserted by MicroStrategy, which had the effect of dismissing

Lauricia's attorney as a defendant. MicroStrategy thereafter subpoenaed Lauricia's employment records from her former employers.

MicroStrategy first sought to compel arbitration in its motion to

dismiss filed on July 12, 2000. MicroStrategy also contended in that

motion that the district court lacked jurisdiction because the right-tosue letter issued by the EEOC was premature and thus invalid. The

district court denied the motions. The court first concluded that by

virtue of its "remarkably aggressive" course of litigation against

Lauricia, MicroStrategy had waived its right to insist on arbitration.

Lauricia v. MicroStrategy, Inc., 114 F. Supp. 2d 489, 492 (E.D. Va.

2000). The court next concluded that the EEOC properly issued the

right-to-sue letter upon Lauricia's request even though the letter was

 5
issued fewer than 180 days after Lauricia filed her charge. See id. at

496.

While we agree with the district court that MicroStrategy's litigation strategy against Lauricia was "remarkably aggressive," we conclude that Lauricia has failed to establish that MicroStrategy's

litigation activities were sufficient to amount to a waiver of its right

to insist on arbitration. Our resolution of the arbitration question

makes it unnecessary for us to consider the validity of the right-to-sue

notice.

II.

A.

Before considering the merits of the waiver question, we must first

address Lauricia's claim that no binding agreement to arbitrate exists.

According to Lauricia, the document containing the arbitration

requirement is not binding because it was signed only by her, and not

by the president of MicroStrategy.

The arbitration clause is found in the "Employee Acknowledgment

Form and Agreement to Arbitrate," which Lauricia signed to

acknowledge receipt of MicroStrategy's employee handbook. The

portion of the acknowledgment requiring arbitration, however, does

not include a requirement that the president of MicroStrategy sign the

acknowledgment. That language appears only in the third paragraph

of the acknowledgment, which states:

I acknowledge that the policies and practices set out in this

Handbook are not a contract of employment, and are not

intended to imply a contractual relationship. I also agree that

my employment is "at-will." I am free to terminate my

employment at any time, with or without reason, and the

Company has the right to terminate my employment at any

time, with or without reason. The only person authorized to

enter into employment agreements on behalf of the Company is the President, and any such contract shall be in

writing. . ..

 6
J.A. 63 (emphasis added). Lauricia argues that because the underlined

language requires the president of MicroStrategy to sign all employment agreements, the agreement to arbitrate is not valid because it

was not signed by MicroStrategy's president.

The problem with this argument, of course, is that the "Employee

Acknowledgment Form and Agreement to Arbitrate" is not an

employment agreement as contemplated by the above-quoted paragraph. That paragraph is an effort to emphasize the at-will nature of

employment with MicroStrategy and to forestall claims by employees

that, by virtue of certain handbook provisions or oral promises of

employment for a definite term, they could only be discharged for

cause. The paragraph makes clear that the only official authorized to

enter into a contract for something other than at-will employment is

the president and that such a contract must be in writing. Reading the

language focused upon by Lauricia in context, it is apparent that the

writing and signature requirement applies only to contracts for otherthan-at-will employment. The "Employee Acknowledgment Form and

Agreement to Arbitrate" itself is quite obviously not such a contract

and thus need not be executed by the president of MicroStrategy to

be enforceable. See generally O'Neil v. Hilton Head Hosp., 115 F.3d

272, 275 (4th Cir. 1997) (concluding that arbitration clause included

in form signed by employee acknowledging receipt of employee

handbook was valid and enforceable because "[a] mutual promise to

arbitrate constitutes sufficient consideration for this arbitration agreement").

B.

Having concluded that the agreement to arbitrate is valid and binding, we now proceed to the question of whether MicroStrategy

waived its right to insist on arbitration of Lauricia's discrimination

claims. The district court concluded that MicroStrategy's actions

caused Lauricia to suffer actual prejudice in that MicroStrategy was

able to obtain discovery that was unavailable in arbitration. On

appeal, MicroStrategy contends that most of the information it

obtained could be obtained in arbitration and that Lauricia failed to

carry her burden of establishing that she suffered sufficient prejudice

to support a finding of waiver. We agree.

 7
"Under the Federal Arbitration Act, a party may demand a stay of

federal judicial proceedings pending exercise of a contractual right to

have the subject matter of the federal action decided by arbitration,

unless the party seeking arbitration is `in default' of that right."

Maxum Founds., Inc. v. Salus Corp., 779 F.2d 974, 981 (4th Cir.

1985); see 9 U.S.C.A. § 3 (West 1999). "Although this principle of

`default' is akin to waiver, the circumstances giving rise to a statutory

default are limited and, in light of the federal policy favoring arbitration, are not to be lightly inferred." Maxum, 779 F.2d at 981; see also

American Recovery Corp. v. Computerized Thermal Imaging, Inc., 96

F.3d 88, 95 (4th Cir. 1996) ("Because of the strong federal policy

favoring arbitration, . . . we will not lightly infer the circumstances

constituting waiver."). "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an

allegation of waiver, delay, or a like defense to arbitrability." Moses

H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25

(1983).

A party may waive its right to insist on arbitration if the party "so

substantially utiliz[es] the litigation machinery that to subsequently

permit arbitration would prejudice the party opposing the stay."

Maxum, 779 F.2d at 981. But even in cases where the party seeking

arbitration has invoked the "litigation machinery" to some degree,

"[t]he dispositive question is whether the party objecting to arbitration

has suffered actual prejudice." Fraser v. Merrill Lynch Pierce, Fenner & Smith, Inc., 817 F.2d 250, 252 (4th Cir. 1987) (emphasis

added). "Neither delay nor the filing of pleadings by the party seeking

a stay will suffice, without more, to establish waiver of arbitration.

However, delay and the extent of the moving party's trial-oriented

activity are material factors in assessing a plea of prejudice." Id. (citation omitted).

We review de novo a district court's conclusion that a party's conduct amounts to waiver of the right to arbitrate, although the court's

factual determinations upon which the waiver finding was based are

entitled to deference. See id. at 251-52 & n.2. The party opposing

arbitration "bears the heavy burden of proving waiver." American

Recovery, 96 F.3d at 95.

 8
As noted above, delay in seeking arbitration is a factor to be considered when determining waiver. In this case, however, MicroStrategy's delay in seeking arbitration was relatively short. Although

MicroStrategy filed three separate actions against Lauricia before

seeking arbitration, it requested arbitration approximately one month

after Lauricia filed her complaint, and the time between the filing of

the first action and the arbitration request was less than six months.

Nothing in the record suggests that this delay, in and of itself, caused

Lauricia to suffer actual prejudice. See, e.g., Maxum, 779 F.2d at 982

("[M]ere delay, without more, will not suffice to constitute waiver.");

In re Mercury Constr. Co., 656 F.2d 933, 939 (4th Cir. 1981) (en

banc) ("[I]t is only when . . . delay results in actual prejudice that it

may amount to `default' within the [Federal Arbitration] Act."), aff'd

sub nom. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460

U.S. 1 (1983). Any delay by MicroStrategy in asserting its right to

arbitration, therefore, is insufficient to support a finding of waiver.

Whether MicroStrategy waived its right to insist on arbitration by

virtue of its litigation activities is a more difficult question. When

concluding that Lauricia was prejudiced by MicroStrategy's litigation

activities, the district court took into account all of MicroStrategy's

activities in the prior actions. See Lauricia, 114 F. Supp. 2d at 492-93

n.8. Most of MicroStrategy's conduct in the prior actions, however,

was in connection with its state-law claims which sought to prevent

Lauricia from disclosing trade secrets or other confidential information. Because these claims are distinct, both factually and legally,

from Lauricia's discrimination claims, the litigation surrounding these

claims cannot support a finding that MicroStrategy waived its right to

arbitrate the unrelated claims. See Subway Equip. Leasing Corp. v.

Forte, 169 F.3d 324, 328 (5th Cir. 1999) ("[A] party only invokes the

judicial process to the extent it litigates a specific claim it subsequently seeks to arbitrate."); Doctor's Assocs., Inc. v. Distajo, 107

F.3d 126, 133 (2d Cir. 1997) ("[O]nly prior litigation of the same

legal and factual issues as those the party now wants to arbitrate

results in waiver of the right to arbitrate."). Although MicroStrategy's

declaratory relief claims asserted in the prior actions involve the same

legal and factual issues underlying Lauricia's claims against MicroStrategy, we cannot conclude, as did the district court, that the mere

inclusion of these claims permits us to factor into the waiver analysis

MicroStrategy's actions in connection with the distinct state-law

 9
claims. As noted above, the bulk of the activity in the prior actions

was directed toward the state-law claims, and no decision on the merits of the declaratory relief claims was ever made in any of the

actions. Under these circumstances, we believe it was error for the

district court to rely on the litigation of the trade secret claims to support its waiver finding.

To be sure, the litigation of the prior actions did involve many

motions, responses, and other procedural maneuvers (more than 50,

according to Lauricia), including a later-dismissed appeal by MicroStrategy of the district court's dismissal of MicroStrategy I. And there

is no doubt that the litigation involved the expenditure of substantial

sums of money by all involved. In fact, because the state court in

MicroStrategy II refused to dismiss Lauricia's attorney as a defendant, Lauricia was forced to hire another attorney to represent her in

that action. But because the prior actions were primarily directed to

claims unrelated to those asserted by Lauricia, the expense and effort

associated with those claims cannot be used in support of the argument that MicroStrategy waived its right to arbitrate the discrimination claims. See Doctor's Assocs., 107 F.3d at 134 (concluding that

legal expenses incurred in connection with litigation of unrelated

claims did not amount to prejudice sufficient to support a waiver finding); cf. Rush v. Oppenheimer & Co., 779 F.2d 885, 889 (2d Cir.

1985) ("No waiver of the right to arbitrate can occur from conducting

discovery on non-arbitrable claims." (alteration and internal quotation

marks omitted)). Because neither the delay, nor the litigation surrounding the trade secrets claims, nor the expense associated with that

litigation can support a finding of waiver, we are left with the district

court's conclusion that Lauricia was prejudiced because the discovery

obtained by MicroStrategy would not be available in an arbitration

proceeding.

While we agree that MicroStrategy would not have been automatically entitled to discovery in an arbitration proceeding, it is incorrect

to say that discovery is completely unavailable in an arbitration proceeding. Under the rules by which the parties agreed to arbitrate, the

arbitrator may order such discovery as the arbitrator considers "necessary to a full and fair exploration of the issues in dispute." Brief of

Appellant at 16. Because discovery is available, albeit under standards different from those governing discovery in federal court, the

 10
relevant question is not whether MicroStrategy would have been entitled to such discovery in an arbitration proceeding, but whether

MicroStrategy likely could have obtained the same information in an

arbitration proceeding. If the same information could have been

obtained in the arbitration proceeding, then Lauricia would have suffered no prejudice by providing the information prior to arbitration,

thus precluding a finding of waiver. See Fraser, 817 F.2d at 252

("The dispositive question is whether the party objecting to arbitration

has suffered actual prejudice." (emphasis added)); see also Leadertex,

Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d 20, 26 (2d Cir.

1995) (explaining that "[a]lthough [the defendant] did pursue various

avenues of discovery [before seeking arbitration], it does not follow

that [the plaintiff] was prejudiced"); Stifel, Nicolaus & Co. v. Freeman, 924 F.2d 157, 158-59 (8th Cir. 1991) (agreeing that brokerage

firm "acted inconsistently with its right to arbitration by initiating litigation and participating in discovery on arbitrable claims," but reversing waiver determination because the parties opposing arbitration

were not prejudiced); J&S Constr. Co. v. Travelers Indem. Co., 520

F.2d 809, 809-10 (1st Cir. 1975) (affirming district court's conclusion

that the defendant did not waive its right to arbitration by answering

complaint and participating in discovery because the plaintiff did not

establish prejudice).

Lauricia, however, has made no effort to establish what discovery

would or would not be available to MicroStrategy in an arbitration

proceeding. Instead, Lauricia simply asserts that discovery is unavailable in arbitration and that she was therefore prejudiced by that fact

that MicroStrategy obtained some discovery before seeking arbitration. In our view, such an approach is insufficient to establish waiver

of the right to arbitrate. As noted above, the party opposing arbitration

bears a "heavy burden of proving waiver." American Recovery, 96

F.3d at 95. And, as demonstrated by the Supreme Court's recent decision in Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S.

79 (2000), that proof must be concrete, not merely speculative.

In Green Tree, the buyer of a mobile home sought to avoid the

arbitration clause contained in the installment contract, arguing that

she could not effectively vindicate her claims under the Truth in

Lending Act because the arbitration agreement did not address how

the costs of the arbitration proceeding would be allocated. The buyer

 11
contended that "the arbitration agreement's silence with respect to

costs and fees creates a `risk' that she will be required to bear prohibitive arbitration costs if she pursues her claims in an arbitral forum,

and thereby forces her to forgo any claims she may have against petitioners." Id. at 90. The Supreme Court rejected this argument:

It may well be that the existence of large arbitration costs

could preclude a litigant . . . from effectively vindicating her

federal statutory rights in the arbitral forum. But the record

does not show that [the buyer] will bear such costs if she

goes to arbitration. Indeed, it contains hardly any information on the matter. . . . The "risk" that[the buyer] will be

saddled with prohibitive costs is too speculative to justify

the invalidation of an arbitration agreement.

Id. at 90-91. The Court believed that to invalidate an arbitration

agreement on such a showing "would undermine the liberal federal

policy favoring arbitration agreements . . . [and] would also conflict

with our prior holdings that the party resisting arbitration bears the

burden of proving that the claims at issue are unsuitable for arbitration." Id. at 91 (citation and internal quotation marks omitted)). The

Court held that if "a party seeks to invalidate an arbitration agreement

on the ground that arbitration would be prohibitively expensive, that

party bears the burden of showing the likelihood of incurring such

costs." Id. at 92. Because the buyer failed to carry that burden, the

Supreme Court reversed the circuit court's conclusion that the arbitration agreement was unenforceable. See id.

Although Green Tree involved a question of the validity of an arbitration agreement rather than the waiver of the right to arbitrate, we

believe that its approach is nonetheless applicable here. Lauricia

offered nothing to show the likelihood of MicroStrategy obtaining

similar discovery in an arbitration proceeding. That is, she offered no

evidence generally showing how often discovery is permitted by arbitrators conducting proceedings under the rules to which she agreed or

the extent of discovery that typically is permitted by such arbitrators.

Thus, Lauricia's assertion that MicroStrategy would not have been

able to obtain similar discovery in an arbitration proceeding is just as

speculative as the buyer's claim in Green Tree that arbitration would

be prohibitively expensive. And just as the Supreme Court in Green

 12
Tree concluded that the buyer's speculative and unsubstantiated assertions were insufficient to carry the buyer's burden, we must likewise

conclude that Lauricia's speculative and unsubstantiated claims about

the unavailability of discovery is insufficient to carry her heavy burden of proving waiver.

To the extent that the district court based its waiver determination

on a conclusion that Lauricia suffered actual prejudice simply by virtue of the difference in the standards governing the availability of discovery in arbitration and in federal court, the district court committed

an error of law. To the extent the waiver determination rested on a

factual conclusion that similar discovery would not be available to

MicroStrategy in an arbitration proceeding, that conclusion is without

evidentiary support. In either case, the error is one that we may correct on appeal. See, e.g., Mayhew v. Wells, 125 F.3d 216, 218 (4th

Cir. 1997) (explaining that a district court's legal conclusions are

reviewed de novo); Consolidation Coal Co. v. Local 1643, United

Mine Workers of America, 48 F.3d 125, 128 (4th Cir. 1995) ("A [factual] finding is clearly erroneous if no evidence in the record supports

it . . . .").

We recognize that even though the parties' arbitration agreement

specifically prohibits "[t]he taking of depositions, except to perpetuate

the testimony of unavailable witnesses," J.A. 63, MicroStrategy took

Lauricia's deposition in MicroStrategy I. This fact, however, is insufficient to support the district court's waiver determination. In the prior

actions, MicroStrategy contended that Lauricia was in possession of

trade secrets and other confidential information, and MicroStrategy

sought an injunction to prevent her from disclosing the protected

information. The trial court in MicroStrategy I authorized MicroStrategy to depose Lauricia for the limited purpose of identifying any

protected documents in her possession. Thus, the deposition took

place in conjunction with MicroStrategy's state-law claims, which, as

discussed above, are legally and factually distinct from the discrimination claims it now seeks to arbitrate.2 Under these circumstances,

_________________________________________________________________

2 Lauricia contends that she has a protected right to gather and turn 2 

over information necessary to support her claims of discrimination, thus

suggesting that MicroStrategy's state-law claims are related to her dis-

 13
the mere occurrence of the deposition cannot support a waiver finding, notwithstanding the arbitration agreement's general prohibition

against the taking of depositions.3 See Doctor's Assocs., 107 F.3d at

133 (concluding that prior litigation waives the right to arbitrate only

"when a party has previously litigated the same claims it now seeks

to arbitrate," and noting that "[f]inding waiver where a party has previously litigated an unrelated yet arbitrable dispute would effectively

abrogate an arbitration clause once a party had litigated any issue

relating to the underlying contract containing the arbitration clause");

cf. Rush, 779 F.2d at 889 ("No waiver of the right to arbitrate can

occur from conducting discovery on non-arbitrable claims." (alteration and internal quotation marks omitted)).

Even if the deposition strayed from the limited subject matter

authorized by the district court in MicroStrategy I, as Lauricia contends it did, that fact alone, without a showing of actual prejudice, is

an insufficient basis upon which to ground a finding of waiver. During the deposition, MicroStrategy did not inquire about the substance

of Lauricia's claims or her litigation strategy. While Lauricia identifies several areas of inquiry that she believes were outside the scope

of the deposition, she offers no concrete argument as to how her

responses to any improper inquiry prejudiced her ability to arbitrate

_________________________________________________________________

crimination claims. We disagree. The consideration of such a privilege

as a defense to MicroStrategy's state-law claims would not require an

inquiry into the merits of Lauricia's discrimination claims. That is, even

if MicroStrategy did not discriminate against Lauricia, she could still

argue that any disclosure to the EEOC or other officials was protected.

While such a defense may create a tangential connection between the

discrimination claims and state-law claims, we believe that the connection is tenuous and that, at least for purposes of determining whether

MicroStrategy waived its right to arbitrate, the claims remain legally and

factually distinct. See Subway Equip. Leasing, 169 F.3d at 328 ("[A]

party only invokes the judicial process to the extent it litigates a specific

claim it subsequently seeks to arbitrate.").

3 Lauricia also points out that the deposition lasted approximately four 3 

hours, which she believes supports her argument that she was prejudiced

by the deposition. While four hours seems excessive given the limited

scope of the deposition, the length of the deposition was primarily the

result of the behavior of counsel for both parties.

 14
her discrimination claims. This approach is insufficient to carry Lauricia's burden of establishing prejudice and waiver. Moreover, after

reviewing the deposition, we cannot conclude that Lauricia was prejudiced by the minimal amount of information obtained by MicroStrategy that arguably was not relevant to the trade secret claims. See

Coca-Cola Bottling Co. of New York, Inc. v. Soft Drink & Brewery

Workers Union Local 812, 242 F.3d 52, 57-58 (2d Cir. 2001) (holding

that a union did not waive its right to arbitrate even though the union

obtained "substantial discovery"); Tenneco Resins, Inc. v. Davy Int'l,

AG, 770 F.2d 416, 421 (5th Cir. 1985) ("[W]hen only a minimal

amount of discovery has been conducted, which may also be useful

for the purpose of arbitration, the court should not ordinarily infer

waiver based upon prejudice to the party opposing the motion to stay

litigation . . . ."); Dickinson v. Heinold Sec., Inc., 661 F.2d 638, 642

(7th Cir. 1981) ("Admittedly, Heinold's discovery[on non-arbitrable

claims] would be helpful to a presentation of the state law claims to

the arbitrator but pursuit of such discovery is not sufficient to constitute a waiver in the instant case."). Because Lauricia has failed to

establish that she suffered the kind of prejudice necessary to support

a finding that MicroStrategy waived its right to insist on arbitration,

the district court erred by denying MicroStrategy's motion to compel

arbitration.

III.

In this case, MicroStrategy filed three separate actions against

Lauricia and her attorney, during the course of which MicroStrategy

deposed Lauricia, successfully sought the seizure of documents it

believed contained trade secrets, received responses from Lauricia to

interrogatories and requests to produce, and obtained Lauricia's

employment records from her former employers. Only then did

MicroStrategy assert its contractual right to arbitration of Lauricia's

discrimination claims. Although Lauricia makes a strong argument

that MicroStrategy undertook its "remarkably aggressive" course of

litigation for the sole purpose of wearing her out, both emotionally

and financially, we hold only that Lauricia failed to carry her "heavy

burden" of establishing that she suffered legally significant prejudice

from MicroStrategy's litigation activities. See Leadertex, 67 F.3d at

26 ("[H]owever unjustifiable [the] conduct [of the party seeking arbitration], there can be no waiver unless that conduct has resulted in

 15
prejudice to the other party."). We express no opinion as to whether

or not a similar level of litigation activity could, in another case, support a finding of waiver of the right to insist on arbitration. Accordingly, we reverse the district court's conclusion that MicroStrategy

waived its right to arbitration. We remand with instructions for the

district court to enter an order compelling arbitration and, if appropriate, staying other proceedings pending arbitration. 4

VACATED AND REMANDED WITH INSTRUCTIONS

_________________________________________________________________

4 MicroStrategy suggests that if this court were to conclude that it 4 

improperly obtained information through discovery, then an order barring MicroStrategy from using that information in the arbitration proceedings would better honor the policy favoring arbitration than would

a finding of waiver. While we conclude that Lauricia has failed to establish that MicroStrategy has waived its right to arbitrate, we do not

address the appropriateness of MicroStrategy's use during arbitration of

the information it obtained. That question, as well as the related question

of whether Lauricia should be allowed to seek similar information from

MicroStrategy, is better left to the arbitrator.

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