Court V. Arbitrator: Who Should Decide Whether Prelitigation Conduct Waives the Right to Compel an Arbitration Agreement?
Scharpf, Michael P., St. John's Law Review
Traditionally, "federal appellate and district courts have primarily decided the equitable defense of waiver [of arbitration] themselves, rather than delegating the question to arbitrators."1 The courts' self-imposed responsibility for deciding waiver remained primarily unquestioned2 until the recent Supreme Court decision Howsam v. Dean Witter Reynolds, Inc.3 In the wake of Howsam, circuits have split over whether Howsam should be interpreted as (1) giving questions of waiver of arbitration by litigation conduct and prelitigation conduct to arbitrators, or (2) favoring the traditional rule that courts should decide issues of waiver of arbitration by litigation conduct and prelitigation conduct.4
Waiver is a term that is sometimes used quite loosely to incorporate many different circumstances in which a party "loses" the right to compel arbitration. To ensure clarity and for the purpose of this Note, waiver shall be construed in a more narrow and precise way to mean the "intentional relinquishment of a known right."5 It is this "intentional" aspect of waiver that sets it apart from terms such as laches,6 forfeiture,7 or contractual default,8 in that waiver represents not just "losing" the right to arbitrate but, in fact, voluntarily giving up and renouncing that right.9
A party can intentionally waive its right to compel arbitration through litigation conduct and prelitigation conduct.10 In both contexts, conduct may be considered a waiver if it "might be reasonably construed as showing that [parties] do not intend to avail themselves of such [arbitration] ."" Waiver by litigation conduct focuses on a party's degree of participation in the litigation process, specifically in regards to motions, discovery, and evidence.12 Waiver by prelitigation conduct encompasses conduct that takes place before, and that is outside the realm of, litigation activity. An example of such prelitigation conduct could be a statement made or a letter sent by the party who is seeking to compel arbitration that is "inconsistent with the notion that [it has] treated the arbitration provision as in effect."13
Circuit courts are split as to whether courts or arbitrators should decide questions of waiver by litigation conduct and prelitigation conduct.14 Circuit courts holding that waiver is a question for arbitrators have done so in regards to both waiver by litigation conduct and waiver by prelitigation conduct. Conversely, circuits holding that waiver is a question for the court to decide have done so only in the context of litigation conduct. Recently, however, in JPD, Inc. v. Chronimed Holdings, Inc., the Sixth Circuit held that prelitigation conduct is a question for the court to decide and not the arbitrator.15
This Note disagrees with Chronimed's holding that waiver by prelitigation conduct is a question for the court to decide. In arriving at this conclusion, this Note argues that the persuasive reasoning used by courts in favor of deciding waiver by litigation conduct does not apply to waiver by prelitigation conduct because of the unique differences between the two types of conduct. Moreover, as a matter of public policy, questions of waiver by prelitigation conduct are best left to the arbitrator, while questions of waiver by litigation conduct are best left to the court.
While acknowledging that Supreme Court clarification will ultimately be needed to resolve the confusion created by the Howsam decision, this Note concludes by recommending that waiver by prelitigation conduct be decided by the arbitrator. Part I of this Note provides the historical relationship between courts and the arbitration process prior to Howsam. Part II discusses the Howsam decision. Part III examines the circuit court split over waiver that has developed as a result of Howsam. Part IV analyzes the Sixth Circuit's decision in Chronimed and finds that the court incorrectly held that waiver by prelitigation conduct was for the court to decide. …