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Litigating waives right to arbitrate
September 26, 2005 by Ross Runkel at LawMemo
If an attorney doesn't know there was an arbitration agreement, can participating in litigation waive the right to arbitrate? Yes, says the Florida Court of Appeal. Mora v. Abraham Chevrolet (Florida Ct App 09/21/2005).
Facts: A typical employer-employee arbitration agreement. When the employer discharged the employee, he filed a whistleblower suit claiming a violation of Florida statute. The employer's attorney didn't know about the arbitration agreement. The employer filed an answer with ten affirmative defenses (not mentioning a right to arbitrate) and then engaged in discovery. Two months later the employer moved to compel arbitration.
The trial court thought that there was no intentional waiver of the right to arbitrate because the employer's counsel learned of the arbitration agreement only after serving the answer and defenses, so that court ordered arbitration.
The Florida Court of Appeal reversed. The employer signed the arbitration agreement, so it was "legally charged with knowledge of its terms." It did not matter that the employer's lawyer did not know about the agreement.
My view: Sounds right. It's the party (the employer here) that does the waiving, so if the party does not tell the lawyer about the arbitration agreement, then that's the employer's problem. You can't excuse a party's conduct simply because its lawyer wasn't told.
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