The Second Circuit recently issued a summary order affirming a district court’s denial of a motion to compel arbitration because the defendants had waived their right to arbitrate. Technology in Partnership, Inc. v. Rudin, No. 12–3699–cv (2d Cir. Sept. 17, 2013) (click here to see a copy of the opinion). The defendants in this case did not seek enforcement of the arbitration agreement until fifteen months after the lawsuit was filed. Also, while the case was pending, the plaintiff had to defend two motions to dismiss, respond to extensive discovery which would not have been available in arbitration, and deal with extended discovery disputes before the court. The Second Circuit easily found waiver under these circumstances.
The defendants also made a creative argument based on the broad preemptive sweep of Concepcion, which purports to preempt any defense that “appl[ies] only to arbitration or that derive[s] [its] meaning from the fact that an agreement to arbitrate is at issue.” The defendants argued that a waiver argument is a special defense applicable only to arbitration, and because this defense targets arbitration and does not apply to all contracts generally, the FAA as interpreted by Concepcion preempts the waiver defense. The Second Circuit rejected these arguments by conceptualizing the right to arbitrate as an affirmative defense. The Second Circuit reasoned that any affirmative defense, such as the ones listed in FRCP 8(c), which specifically mentions arbitration, is “subject to forfeiture if not raised in a timely fashion.”