## Facts

- Robyn Morgan, an hourly employee at a Taco Bell franchise owned by Sundance, Inc., signed an employment agreement requiring arbitration of “any employment dispute.”
- Morgan later filed a nationwide Fair Labor Standards Act collective action in federal court alleging Sundance failed to pay overtime.
- Sundance initially litigated without invoking arbitration, including filing a motion to dismiss (denied) and participating in an unsuccessful mediation.
- About eight months after the suit was filed, Sundance moved to stay the case and compel arbitration under the Federal Arbitration Act (FAA).
- Morgan argued Sundance waived any right to compel arbitration by litigating for months before seeking arbitration.

## Issues

1. Whether the FAA permits federal courts to require a showing of prejudice as a condition to finding waiver of a contractual right to arbitrate.

## Decision

- The Supreme Court unanimously vacated the Eighth Circuit’s judgment and remanded.
- The Court held that federal courts may not impose an arbitration-specific waiver rule that requires the opposing party to show prejudice.
- The Court did not decide whether Sundance waived its arbitration right; it directed lower courts to apply the correct, non-arbitration-specific standard.

## Legal Principles

- The FAA’s policy favoring arbitration requires enforcement of arbitration agreements on the same footing as other contracts, not preferential procedural treatment for arbitration.
- Courts may not create arbitration-specific procedural rules that favor arbitration over litigation.
- Under ordinary federal waiver principles, waiver turns on a party’s knowing relinquishment of a right through conduct inconsistent with that right; prejudice is not an element of waiver absent a generally applicable rule requiring it.
- When analyzing loss of an arbitration right (whether labeled waiver, forfeiture, or another contract doctrine), courts must apply generally applicable contract principles rather than arbitration-only requirements.

## Conclusion

The Court rejected a prejudice requirement uniquely tied to arbitration and required lower courts to evaluate whether a party lost its right to compel arbitration under the same waiver rules that govern other contractual rights.


Morgan v. Sundance, Inc., 142 S. Ct. 1708 (2022)