The Supreme Court has agreed to hear a case that may make it easier for companies to be found to have waived arbitration requirements in their contracts. Morgan v. Sundance, Inc. gives the Court an opportunity to resolve a circuit split over whether a party can be deemed to have waived its right to compel arbitration if the party opposing arbitration cannot demonstrate prejudice as a result of the activity allegedly constituting the waiver. The Eighth Circuit reversed a district court’s denial of an arbitration motion, holding that the plaintiff did not make the necessary showing of prejudice. Morgan v. Sundance, Inc., 992 F.3d 711 (8th Cir. 2021). But one panel member dissented, pointing to a circuit split on whether any showing of prejudice is required, and arguing that time and money wasted by the plaintiff in defending against a motion to transfer and engaging in mediation should have been enough to satisfy the Eighth Circuit’s “modest prejudice requirement.” The Supreme Court has granted certiorari to address the applicable standard.

The Supreme Court will also decide in Viking River Cruises, Inc. v. Moriana whether the Federal Arbitration Act (FAA) preempts California’s Iskanian rule, which bars enforcement of arbitration agreements in cases brought under California’s Private Attorneys General Act (PAGA). In Iskanian v. CLS Transportation Los Angeles LLC, 59 Cal. 4th 348 (2014), the California Supreme Court held that an arbitration agreement could not be enforced in a PAGA action, reasoning that such actions are outside the scope of the FAA because they are representative actions brought on behalf of the state. Iskanian’s validity has been called into question since the Supreme Court’s 2018 decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2019).

Both of these cases are likely be argued in the spring, with decisions by the end of June.