Opinion ID: 2780542
Heading Depth: 1
Heading Rank: 3

Heading: Waiver of the Right to Arbitrate

Text: We also reject Appellants’ argument that PCM waived its right to arbitration by substantially invoking the judicial process. A district court’s determination that a party has waived its right to arbitration is reviewed de novo, though the factual findings underlying that determination are reviewed for clear error. In re Mirant Corp., 613 F.3d 584, 588 (5th Cir. 2010). A party waives its right to arbitration by (1) substantially invoking the judicial process (2) to the detriment or prejudice of the other party. Id. “The question of what constitutes a waiver of the right of arbitration depends on the facts of each case.” Tenneco Resins, Inc. v. Davy Int’l, AG, 770 F.2d 416, 420 (5th Cir. 1985). There is, however, “a strong presumption against finding a waiver of arbitration, and the party claiming that the right to arbitrate has been waived bears a heavy burden.” Republic Ins. Co. v. PAICO Receivables, LLC, 383 F.3d 341, 344 (5th Cir. 2004). 5 Case: 14-10193 Document: 00512940369 Page: 6 Date Filed: 02/19/2015 No. 14-10193 Beginning with the first element, we conclude that PCM did not substantially invoke the judicial process. In order to substantially invoke the judicial process and waive the right to arbitration, the party seeking arbitration must have taken acts in the lawsuit sufficient to “demonstrate[] a desire to resolve the arbitrable dispute through litigation rather than arbitration.” Id. at 345 (internal quotation marks omitted). PCM’s actions in this case were relatively limited. PCM’s motions to dismiss were confined to a single issue—whether Guerra and Hogan-Guerra qualified as “employers” under FLSA—and were very brief in length. We also significantly discount the relevance of PCM’s third motion to dismiss, as it was filed after PCM moved to compel arbitration. Once a defendant has put the plaintiff on notice of its intent to demand arbitration, the plaintiff’s burden of showing waiver by subsequent acts of the defendant is heavier. Cf. Keytrade USA, Inc. v. Ain Temouchent M/V, 404 F.3d 891, 897 (5th Cir. 2005) (“[The burden of showing waiver of the right to arbitration] falls even more heavily when the party seeking arbitration has included a demand for it in its answer.” (internal quotation marks omitted)); Tenneco Resins, 770 F.2d at 420 (“Thus, once the defendant, by answer, has given notice of insisting on arbitration, the burden is heavy on the party seeking to prove waiver.” (internal quotation marks and brackets omitted)). Further, while Appellants had sent out discovery, PCM had not yet responded or propounded its own discovery requests prior to moving to compel arbitration, a factor we have considered relevant in prior cases. See Tenneco Resins, 770 F.2d at 421 (“However, when 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 . . . .”). Moreover, while PCM did file a response in opposition to Appellants’ motion for class certification, PCM filed its motion to compel arbitration before the magistrate 6 Case: 14-10193 Document: 00512940369 Page: 7 Date Filed: 02/19/2015 No. 14-10193 judge recommended certifying the class or propounded a recommendation on PCM’s motion to dismiss, thus avoiding one of the concerns discussed in Mirant. See Mirant, 613 F.3d at 591 (“To hold otherwise would encourage litigants to delay moving to compel arbitration until they could ascertain how the case was going in federal district court.” (internal quotation marks omitted)). Given the limited scope of PCM’s actions in this case, they are insufficient to overcome the “strong presumption against finding a waiver of arbitration.” Republic, 383 F.3d at 344. As we conclude that PCM did not substantially invoke the judicial process, we need not, and therefore do not, address the prejudice element. 2