In Jeffrey Chong v. Bank of Am., N.A., No. 22-00151 JMS-KJM, 2022 U.S. Dist. LEXIS 203101, at *2-5 (D. Haw. Nov. 8, 2022), Judge Seabright found no waiver of arbitration of an FCRA case under the SCOTUS’ decision in Morgan.
In the Ninth Circuit (until recently), “[a] party seeking to prove waiver of a right to arbitration must demonstrate: (1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration resulting from such inconsistent acts.” Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir. 1986). On May 23, 2022, however, the Supreme Court eliminated the third element (prejudice). See Morgan v. Sundance, Inc., 142 S. Ct. 1708, 1712?13, 212 L. Ed. 2d 753 (2022) (holding that, under the FAA, a court may not “condition a waiver of the right to arbitrate on a showing of prejudice”). That is, after Morgan, the waiver question is controlled by Fisher’s first two elements: (1) “knowledge of an existing right to compel arbitration”; and (2) “acts inconsistent with that existing right.” 791 F.2d at 694. See Morgan, 142 S. Ct. at 1714 (“Stripped of its prejudice requirement,” the waiver inquiry focuses on whether a party “knowingly relinquish[ed] the right to arbitrate by acting inconsistently with that right”). In turn, under the Ninth Circuit’s test, “a party acts inconsistently with exercising the right to arbitrate when it (1) makes an intentional decision not to move to compel arbitration and (2) actively litigates the merits of a case for a prolonged period of time in order to take advantage of being in court.” Newirth by and through Newirth v. Aegis Senior Cmtys., LLC, 931 F.3d 935, 941 (9th Cir. 2019). “Seeking a decision on the merits of a key issue in a case indicates an intentional and strategic decision to take advantage of the judicial forum.” Id. Here, Experian did not “actively litigate the merits” of the case, and certainly did not litigate “for a prolonged period of time in order to take advantage of being in court.” Id. Rather, Experian began asserting its right to arbitrate about a month after receiving proper notice of the suit. Specifically, the record indicates that Experian did not receive proper service of the complaint (filed on April 8, 2022) on April 12, 2022, as initially contended by Plaintiff. See ECF No. 53-2. Experian did not receive notice of the suit until approximately May 19, 2022, see ECF No. 53-1 at 2, PageID.464, after Plaintiff filed a Request for Entry of Default on May 18, 2022, ECF No. 13. Experian then entered an appearance in the action on May 24, 2022, see ECF No. 19, and an Answer on June 2, 2022, see ECF No. 32. On June 22, 2022—within a month of entering an appearance—Experian notified Plaintiff of the arbitration clause in the CreditWorks agreement, and Experian began asserting its right to arbitrate by asking Plaintiff to stipulate to arbitrate. See ECF No. 49-2 at 2, PageID.454. Plaintiff did not stipulate, and Experian filed this Motion to Compel Arbitration on August 8, 2022. ECF No. 41.2 After entering an appearance, Experian did not seek a ruling on anything, much less a ruling on the merits of the case. It took no action “to take advantage of being in court.” Newirth, 931 F.3d at 941. All it filed in court was (1) a scheduling conference statement (explaining that it did not participate in an initial meeting between Plaintiff and BANA because it was not aware of the suit), ECF 27 at 3-4, PageID.147-48, and (2) a certificate indicating it provided initial disclosures under Rule 26(a)(1), ECF No. 38. Accordingly, Plaintiff has not met his burden to demonstrate that Experian waived its right to arbitrate by acting inconsistently with that right. See Newirth, 931 F.3d at 941. The court thus GRANTS Experian’s Motion to Compel Arbitration. ECF No. 41.