Opinion ID: 2834306
Heading Depth: 1
Heading Rank: 3

Heading: Do Courts or Arbitrators Decide Waiver?

Text: The Culls also assert that waiver of arbitration by litigation conduct is an issue to be decided by arbitrators rather than courts. To the contrary, this Court and the federal courts have held it is a question of law for the court. [17] Rather than referring such claims to arbitrators, we have decided them ourselves at least eight times, [18] as does every federal circuit court. [19] The Culls argue this was all changed in 2002 by Howsam v. Dean Witter Reynolds , in which the United States Supreme Court said the “presumption is that the arbitrator should decide ‘allegation[s] of waiver, delay, or a like defense to arbitrability.’” [20] For several reasons, we disagree that this single sentence changed the federal arbitration landscape. First, “waiver” and “delay” are broad terms used in many different contexts. Howsam involved the National Association of Securities Dealers’ six-year limitations period for arbitration claims, not waiver by litigation conduct; indeed, it does not appear the United States Supreme Court has ever addressed the latter kind of waiver. Although the federal courts do not defer to arbitrators when waiver is a question of litigation conduct, they consistently do so when waiver concerns limitations periods or waiver of particular claims or defenses. [21] As Howsam involved the latter rather than the former, [22] its reference to waiver must be read in that context. Second, the Howsam court specifically stated that “parties to an arbitration contract would normally expect a forum-based decisionmaker to decide forum-specific procedural gateway matters.” [23] Thus, the NASD’s six-year limitations rule in that case was a gateway matter for the NASD arbitrator because “the NASD arbitrators, comparatively more expert about the meaning of their own rule, are comparatively better able to interpret and to apply it.” [24] By contrast, when waiver turns on conduct in court, the court is obviously in a better position to decide whether it amounts to waiver. [25] “Contracting parties would expect the court to decide whether one party’s conduct before the court waived the right to arbitrate.” [26] Third, as the Howsam Court itself stated, parties generally intend arbitrators to decide matters that “grow out of the dispute and bear on its final disposition,” while they intend courts to decide gateway matters regarding “whether the parties have submitted a particular dispute to arbitration.” [27] Waiver of a substantive claim or delay beyond a limitations deadline could affect final disposition, but waiver by litigation conduct affects only the gateway matter of where the case is tried. [28] Finally, arbitrators generally must decide defenses that apply to the whole contract, while courts decide defenses relating solely to the arbitration clause. [29] Thus, for example, arbitrators must decide if an entire contract was fraudulently induced, while courts must decide if an arbitration clause was. [30] As waiver by litigation conduct goes solely to the arbitration clause rather than the whole contract, consistency suggests it is an issue for the courts. Every federal circuit court that has addressed this issue since Howsam has continued to hold that substantial invocation of the litigation process is a question for the court rather than the arbitrator — including the First, [31] Third, [32] Fifth, [33] and Eighth Circuits. [34] Legal commentators appear to agree. [35] So do we.