Court Opinion

ID: 8941294
Source: CourtListenerOpinion
Date Created: 2022-11-27 07:58:31.463551+00
Date Added: 2024-06-11T17:09:44.586421
License: Public Domain

WIGGINS, Circuit Judge,
concurring.
I concur in the result reached by the panel.
A rule that leaves open the opportunity for a party to oust the district court of its authority to hear a case otherwise within its jurisdiction, after three and one-half years of pretrial preparation and on the eve of trial itself, is to say the least remarkable. We follow that rule today and accept the result it commands. But I do not choose to do so without registering a sense of disappointment.
The decision of the Supreme Court in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), was helpful. It put to rest the intertwining doctrine and will avoid future litigation over whether arbitrable and non-arbitrable claims are in fact intertwined. But Byrd will not avoid unseemly last minute forum shopping. Although Byrd establishes that non-Security Act claims are arbitrable even when joined with nonarbi-trable Security Act claims, it does not resolve the issue of waiver. The right to arbitration remains waivable, and we may confidently expect future cases to raise the waiver issue in a variety of settings.
In my view, the interest of justice would be served if a bright line rule regarding cases such as this were declared. The rule should be, I believe, that waiver of arbitration will be found as a matter of law unless the party claiming arbitration asserts that right in his answer.
When a party to an agreement containing an enforceable arbitration clause files suit in the district court, contrary to the arbitration clause, it is clear that such party has made a choice of forum in favor of the district court and has offered to waive his right to arbitrate. Similarly, when the other party to such an agreement answers the complaint in district court and does not *699assert his contractual right to arbitration, it is evident that he accepts the choice of forum selected by his adversary. Both parties have agreed to a modification of their original agreement to arbitrate, and the law should not be reluctant to enforce it by finding waiver, as a matter of law, without regard to prejudice.
The salutary effect of such a bright line rule is evident to a system of rational justice and to litigants who invoke it. Had such a rule been in place before the filing of this action, the present appeal would not have been filed. Most likely the controversy between these parties would have been resolved in district court on the merits and the considerable time devoted to hearings and appeals on procedural motions avoided.
It is not accurate to assume that the present case raises circumstances not likely to recur in the wake of Byrd. Had Byrd preceded the filing of this lawsuit, the action might have followed much the same course. The district court action would have been necessary because the plaintiff alleges nonarbitrable Security Act violations. For tactical reasons, the plaintiff might have filed simultaneous pendent state claims in the district court which were subject to arbitration. The defendant might have answered, without asserting the arbitration clause. Three and one-half years later, on the eve of trial, the defendant, for tactical reasons, might choose to assert the .arbitration clause and the issue would then be joined on waiver. The defendant might argue waiver to be inappropriate because no prejudice is shown to the plaintiff.
We should not condone such a scenario if it is within our power to avoid it. Unfortunately, it does not appear to be within the province of this panel to proclaim what I believe to be a common sense rule in view of the contrary precedents of our circuit which tilt in favor of arbitration and against waiver.
At the appropriate time, those precedents should be reexamined. Courts have declared their bias in favor of arbitration, and their resistance to waiver, for so long that the underpinnings of that proposition are seldom questioned. The Supreme Court in Byrd, however, dispelled much of the fog surrounding this “strong federal policy” in favor of arbitration. It found that the policy was one based upon the enforcement of contract, rather than a preference for arbitration as an alternative dispute resolution mechanism. If what is at stake is the sanctity of a contract, I see no compelling reason why a contract to waive arbitration is not just as worthy of respect as a contract to compel arbitration. Properly considered in an appropriate case, those precedents standing in the way of waiver, based upon a failure to assert arbitration in an answer to a complaint, may be reviewed and found not to compel the result we reach today.