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Arbitration rights remain after more than six months of litigation.

Maryland, North Carolina, South Carolina, Virginia, West Virginia

The 4th circuit recently found that a defendant didn't waive its right to arbitrate despite litigating for six-and-a-half months.

In Rota-McLarty v. Santander Consumer USA Inc., plaintiffs in a proposed class action claimed a finance company violated Maryland consumer protection laws. The company entered into litigation. Six-and-a-half months later, it moved to compel individual arbitration. It said its delayed action was due to "uncertainty" about class arbitration, and it wanted to wait until district courts began applying the 2010 Supreme Court case Stolt-Nielsen v. AnimalFeeds International Corp., in which the court held that "a party simply may not be compelled under the [Federal Arbitration Act] to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so."

The district court found that the company waived its right to arbitrate, but the 4th Circuit reversed the decision on Nov. 28, 2012. The court said the defendant's delay didn't cause prejudice and that six-and-a-half months of litigation is "relatively short."

Other circuits have ruled differently. On Nov. 15, 2012, the 3rd Circuit ruled that 10 months of litigation waives arbitration rights. And in the 11th Circuit, a litigant that delays moving to compel arbitration until the law develops in its favor waives arbitration rights.
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Title Annotation:4TH CIRCUIT
Author:Post, Ashley
Date:Feb 1, 2013
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