Unity Commun. Corp. v. Wireless, 120307 FED5, 06-60692

Docket Nº:06-60692
Party Name:UNITY COMMUNICATIONS CORPORATION, Plaintiff-Appellee v. CINGULAR WIRELESS, Defendant-Appellant
Case Date:December 03, 2007
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit



CINGULAR WIRELESS, Defendant-Appellant

No. 06-60692

United States Court of Appeals, Fifth Circuit

December 3, 2007

Appeal from the United States District Court for the Southern District of Mississippi USDC No. 2:03-CV-115

Before DENNIS, CLEMENT, and PRADO, Circuit Judges.


Unity Communications Corporation ("Unity") brought suit against Cingular Wireless's ("Cingular") predecessor company, alleging breach of contract. The parties engaged in extensive pretrial activity, including a motion for summary judgment which was appealed to this Court. Cingular moved to compel arbitration three years after the suit was commenced and the district court denied its motion. Cingular appeals and we affirm the finding of the district court for the reasons stated below.


This case is about whether Cingular waived its right to compel arbitration by not making a demand for arbitration until three years into the current lawsuit. Unity resold wireless phone services provided by Cingular and its predecessor companies to businesses in Mississippi under a reseller agreement which included an arbitration clause. The parties had a dispute in 2001 and entered into a letter agreement which did not include an arbitration clause. Unity subsequently sued Cingular, alleging that Cingular had breached the original reseller agreement. Cingular moved for summary judgment on the ground that the 2001 letter agreement constituted "mutual accord, satisfaction and release" of all claims arising under the original reseller agreement. The district court denied Cingular's motion and certified it for interlocutory appeal because it raised "close . . . and controlling questions of law." The Fifth Circuit summarily affirmed the district court's decision. Unity Commc'ns Corp. v. BellSouth Cellular, No. 04-61132, 2006 U.S. App. LEXIS 5193, at *2 (5th Cir. Mar. 1, 2006) (per curiam).

On remand before the district court, Cingular moved to bifurcate the trial on the threshold issue of whether the reseller agreement was still in force, or in the alternative to compel arbitration under the reseller agreement. The district court denied Cingular's motions to bifurcate the trial or in the alternative to compel arbitration. The court found that Cingular had waived its right to arbitration by raising it for the first time three years after the start of litigation. Cingular now appeals the district court's decision not to compel arbitration. The appeal is properly before this Court under 9 U.S.C. § 16(a)(1)(A).


This Court reviews the question of "whether a party's conduct amounts to a waiver of arbitration de novo." Republic Ins. Co. v. PAICO Receivables, LLC, 383 F.3d 341, 344 (5th Cir. 2004). This Court "review[s] any factual findings underlying the district court's waiver determination for clear error." Id. Findings of prejudice are considered factual and are reviewed by this Court for clear error. Price v. Drexel Burnham Lambert, Inc., 791 F.2d 1156, 1163 (5th Cir. 1986) ("[W]e hold that a determination that a party has waived its right to compel arbitration is a legal conclusion[;] . . . however, a finding of prejudice in support of that conclusion is a question of fact subject to the clearly erroneous standard of review.").


Cingular argues that the district court erred in finding that it waived its right to arbitrate. "There is a strong presumption against finding a waiver of arbitration, and the party claiming that the right to arbitrate has been waived bears a heavy burden." Republic Ins. Co., 383 F.3d at 344.

There are two prongs to a waiver analysis: whether the defendant substantially invoked the legal process, and whether this prejudiced the plaintiff. Id. "Waiver will be found when the party seeking...

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