LITIGATION OR ARBITRATION? THE EIGHTH CIRCUIT DECIDES
Plaintiffs Patricia Hooper and Josephine Vaughn filed a putative class action against their payday lender, Advance America Cash Advance Centers of Missouri Inc., in federal district court. Advance America, invoking a clause in Plaintiffs’ loans, moved to stay all litigation and compel Plaintiffs to binding arbitration. The District Court held that Advance America waived its right to arbitration when it filed an extensive motion to dismiss. Advance America appealed the ruling to the Eighth Circuit.
The Eighth Circuit affirmed, applying a tripartite test to find waiver because Advance America: (1) knew of its existing right to arbitration; (2) acted inconsistently with that right; and (3) prejudiced the other party by its inconsistent actions. The Court noted, however, that not every motion to dismiss is inconsistent with the right to arbitration, and that district courts should consider the totality of the circumstances in determining if a party acted inconsistently with the right to arbitrate. The Court concluded its opinion by reminding the parties that “experienced trial lawyers know how important it is to settle on a forum at the earliest possible opportunity and Advance America’s failure to move promptly for arbitration is powerful evidence that it made its election – against arbitration.” Hooper v. Advance America, Cash Advance Centers of Missouri, Inc., Case No. 08-3252 (8th Cir. Dec. 16, 2009).
This post written by John Black.
