Walker v. J.C. Bradford & Co., s. 90-1744
| Decision Date | 30 July 1991 |
| Docket Number | Nos. 90-1744,90-1745,s. 90-1744 |
| Citation | 938 F.2d 575 |
| Parties | William G. WALKER and Sandra O. Walker, Plaintiffs-Appellees, v. J.C. BRADFORD & CO., Defendant-Appellant. Milburn L. BRYANT, Mary C. Bryant and Sandra L. Bryant, Plaintiffs-Appellees. v. J.C. BRADFORD & CO., Defendant-Appellant |
| Court | U.S. Court of Appeals — Fifth Circuit |
Kenneth H. King, Jr., Patricia Head Moskal, Boult, Cummings, Conners & Berry, Nashville, Tenn., for defendant-appellant.
Charles W. Austin, Jr., Marvin A. Rosman, Marvin Alan Rosman & Assoc., Richmond, Va., Stanley M. Chernau, Denney, Lackey & Chernau, Nashville, Tenn., for plaintiffs-appellees.
Appeals from the United States District Court for the Northern District of Mississippi.
Before BROWN, KING and GARWOOD, Circuit Judges.
Plaintiffs seek damages for various state securities law violations that the defendant allegedly committed. Thirteen months after plaintiffs filed suit, defendant filed a motion to compel arbitration and to stay proceedings. The district court denied the defendant's motion on the ground that defendant had waived its right to arbitration. Finding that the district court erred, we reverse and remand with instructions to the district court to grant defendant's stay motion so that the parties may pursue this case in an arbitral forum.
Plaintiffs began this case in state court, 1 alleging violations of various state laws. The case was removed to federal court and, once there, defendant J.C. Bradford & Co. (Bradford) served plaintiffs with several preliminary interrogatories and requested that plaintiffs produce certain documents. About ten months later, plaintiffs responded to the request for documents; they never answered the interrogatories. Bradford subsequently answered the complaint.
The district court entered an amended scheduling order which provided for completion of discovery, but later amended this to move the date back. After the parties held an initial pretrial conference, the court issued a third amended scheduling order. The court also granted plaintiffs permission to extend the time during which they could respond to Bradford's discovery requests.
After plaintiffs moved to transfer their suit to the United States District Court for the Middle District of Tennessee, Bradford filed a motion to compel arbitration and to stay proceedings, which the district court denied. The court found that Bradford, by using the court's judicial resources and process, had waived its right to arbitration. Bradford now appeals this order. We have jurisdiction over this interlocutory appeal because the district court ruled against enforcing an arbitration clause. See Purdy v. Monex Int'l, Ltd., 867 F.2d 1521, 1523 (5th Cir.) (per curiam), cert. denied, --- U.S. ----, 110 S.Ct. 180, 107 L.Ed.2d 136 (1989) ().
Bradford requests that we reverse the judgment of the district court. The district court ruled that Bradford, by positively invoking federal court procedures, waived its right to arbitrate these claims. "The question of what constitutes a waiver of the right of arbitration depends on the facts of each case," Tenneco Resins, Inc. v. Davy Int'l, AG, 770 F.2d 416, 420 (5th Cir.1985), and we review the factual foundation underlying the question of waiver under the clearly erroneous standard. We do review the waiver finding itself, however, de novo. Frye v. Paine, Webber, Jackson & Curtis, Inc., 877 F.2d 396, 398 (5th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 1318, 108 L.Ed.2d 493 (1990).
"Waiver will be found when the party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party." Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494, 497 (5th Cir.1986). In general, we hesitate to find that a party has waived its contractual right to arbitration. Accordingly, we indulge a presumption against finding waiver. A party asserting waiver thus bears a heavy burden of proof in its quest to show that an opponent has waived a contractual right to arbitrate. 2
In the instant case, we are well aware that Bradford now seeks to arbitrate a claim despite its earlier use of the district court's processes. In general, we do not look kindly upon parties who use federal courts to advance their causes and then seek to finish their suits in the alternate fora that they could have proceeded to immediately. Such actions waste the time of both the courts and the opposing parties. The decision whether to arbitrate is one best made at the onset of the case, and not part of the way through as Bradford seeks today. The attempt of Bradford's attorneys to switch judicial horses in midstream either shows poor judgment, if planned, or poor foresight, if not.
Nonetheless, we are compelled to grant Bradford's wish that it be allowed to pursue its claim in an arbitral forum. We confronted a similar situation in Tenneco,in which we reversed the lower court's denial of a motion to compel arbitration on the ground that the movant had waived its right to arbitration. While the case does not completely mandate our result based on its facts, its teaching on prejudice provides us with a clear signpost, and we today follow its framework to its logical result.
In Tenneco, the defendants had filed an answer, interrogatories, and a request for document production, moved for a protective order, and agreed to a joint motion for a continuance requesting an extension of the discovery period. The defendants then decided to seek resolution in an arbitral forum. We reversed the decision of the district court, stating that
[w]hile it is true that [the defendants] waited almost eight months before moving that the district court proceedings be stayed pending arbitration, and, in the meantime, participated in discovery, this and other courts have allowed such actions as well as considerably more activity without finding that a party has waived a contractual right to arbitrate.
Id. at 420-21. Because the movant in Tenneco invoked the judicial process to approximately the same extent as did Bradford in the instant case, we follow the lead of the Tenneco court by directing the district court to send the instant case to arbitration.
The plaintiffs believe that Price is a more fitting model for us to follow than Tenneco. We disagree. In Price, we affirmed the lower court's finding that the party moving to compel arbitration had waived its right to arbitration. In that case, the district court found that the movant "initiated extensive discovery, answered twice, filed motions to dismiss and for summary judgment, filed and obtained two extensions of pre-trial deadlines, all without demanding arbitration." Price, 791 F.2d at 1159. Our holding today does not conflict with this case, as the movant in Price invoked the judicial process to a significantly greater degree than did Bradford. The district court actions in the instant case, after all, mainly were routine scheduling orders and discovery continuances. Bradford did not ask the court to make any judicial decisions, for example by requesting summary judgment, as did the movant in Price.
We also ascribe far less weight than do plaintiffs to two other factors that might mandate a different result. First, the two-year lapse between the occurrence of the events prompting this suit and the filing of the motion to compel arbitration is not determinative. Pre-suit inactivity does not invoke the judicial process and cannot support a finding of waiver. See General Guar. Ins. Co. v. New Orleans Gen. Agency, Inc., 427 F.2d 924, 928 (5th Cir.1970).
Second, the district court cited Bradford's attempts at settlement as evidence of pre-trial activity supporting a finding of waiver. Attempts at settlement, however, are not inconsistent with an inclination to arbitrate and do not preclude the exercise of a right to arbitration. See Southwest Indus. Import & Export, Inc. v. Wilmod Co., 524 F.2d 468,...
To continue reading
Request your trial
-
Jim Burke Automotive, Inc. v. Beavers
...did not discuss who bears the burden after the existence of an agreement to arbitrate is put in issue); and see Walker v. J.C. Bradford & Co., 938 F.2d 575 (5th Cir.1991) (court indulges presumption against waiver of contractual right to arbitrate). The Fifth Circuit also said that that cou......
-
Jones v. Halliburton Co. D/B/A Kbr Kellogg Brown & Root (kbr)
...that they have waived their right to arbitration. See In re Mirant Corp., 613 F.3d 584, 589 (5th Cir.2010); Walker v. J.C. Bradford & Co., 938 F.2d 575, 577 (5th Cir.1991). 9. Our May 2008 Order simply noted that Jones's sexual assault “ might be considered within Plaintiff's ‘scope of empl......
-
Southern Systems, Inc. v. Torrid Oven Ltd.
...substantially invokes the judicial process to the detriment or prejudice of the other party."); accord Walker v. J.C. Bradford & Co., 938 F.2d 575, 577 (5th Cir.1991) (citing Miller, 781 F.2d at 497); Stifel, Nicolaus & Co., Inc. v. Freeman, 924 F.2d 157, 158 (8th Cir. 1991) (adopting same ......
-
Neutra, Ltd. v. Terry (In re Acis Capital Mgmt., L.P.)
...arbitration. See, e.g., Petroleum Pipe Ams. Corp. v. Jindal Saw, Ltd. , 575 F.3d 476, 480 (5th Cir. 2009) ; Walker v. J.C. Bradford & Co. , 938 F.2d 575, 577 (5th Cir. 1991) ; Tenneco Resins, Inc. v. Davy Int'l, AG , 770 F.2d 416, 420 (5th Cir. 1985). It is equally well-established that a p......
-
"Heads I win, tails you lose": The End of Employers' Exploitation of the Federal Arbitration Waiver Prejudice Requirement.
...249 (4th Cir. 2001) (quoting Maxum Founds., Inc. v. Salus Corp., 779 F.2d 974, 981 (4th Cir. 1985)); Walker v. J.C. Bradford & Co., 938 F.2d 575, 577 (5th Cir. (77) See Barrowclough, supra note 6. (78) Barrowclough, supra note 6; Ryan A. Glasgow & Timothy Kim, U.S. Supreme Court Wil......