Opinion ID: 777996
Heading Depth: 2
Heading Rank: 2

Heading: Who Decides Waiver

Text: 18 Finally, Bell contends that the issue of whether Cendant waived its right to arbitrate by filing the Connecticut action must be decided by the District Court. [O]rdinarily a defense of waiver brought in opposition to a motion to compel arbitration... is a matter to be decided by the arbitrator. S & R Co. of Kingston v. Latona Trucking, Inc., 159 F.3d 80, 82-83 (2d Cir.1998) (citing Doctor's Assocs., Inc. v. Distajo, 66 F.3d 438 (2d Cir.1995)); cf. World Brilliance Corp. v. Bethlehem Steel Co., 342 F.2d 362, 364-65 (2d Cir.1965) (holding that issues of waiver, like issues of fraud in the inducement of the entire contract, were properly decided by the arbitrators). However, to prevent forum shopping the district court could properly decide the question when the party seeking arbitration had already participated in litigation on the dispute.  S & R Co., 159 F.3d at 83 (emphasis added); see also Distajo, 66 F.3d at 456 & n. 12 (holding that court may decide the question of waiver where the party had previously ... litigate[d] the same dispute) (citation and internal quotation marks omitted). 19 In Distajo we held that the lower court could reach the waiver question where the plaintiff, a franchiser, commenced summary eviction proceedings against a number of its franchisees and later sought to compel arbitration of the identical controversies. Because the district court had reached and ruled on the waiver issue and we believed the district court's ruling was in error, we remanded the waiver issue to the district court for further fact-finding and reconsideration. Distajo, 66 F.3d at 456-57. Here, the District Court properly left the waiver issue for the arbitrator to decide. Although the Connecticut action and the arbitration both involve the same parties and were brought pursuant to the Adviser Agreement, they pertain to entirely different facts. In the Connecticut action, Cendant alleges that Bell violated the non-compete provisions of the Adviser Agreement by operating an Internet-based marketing company. In the arbitration, Cendant claims that Bell violated the Employer and Adviser Agreements by participating in the accounting scheme. Because Cendant never litigated the accounting fraud claims, the District Court properly referred the waiver issue to the arbitrator.