Morgan v. Sundance, Inc.

P R E L I M I N A R Y P R I N T
Volume 596 U. S. Part 1
Pages 411–419
OFFICIAL REPORTS
OF
T H E S U P R E M E C O U R T
May 23, 2022
REBECCA A. WOMELDORF
reporter of decisions
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OCTOBER
TERM, 2021
411
Syllabus
MORGAN v. SUNDANCE, INC.
certiorari
to the united states court of appeals for
the eighth circuit
No. 21–328. Argued March 21, 2022—Decided May 23, 2022
Petitioner Robyn Morgan worked as an hourly employee at a Taco Bell
franchise owned by respondent Sundance. When applying for the job,
Morgan signed an agreement to arbitrate any employment dispute.
Despite that agreement, Morgan fled a nationwide collective action as-
serting that Sundance had violated federal law regarding overtime pay-
ment. Sundance initially defended against the lawsuit as if no arbitra-
tion agreement existed, fling a motion to dismiss (which the District
Court denied) and engaging in mediation (which was unsuccessful).
Then—nearly eight months after Morgan fled the lawsuit—Sundance
moved to stay the litigation and compel arbitration under the Federal
Arbitration Act (FAA). Morgan opposed, arguing that Sundance had
waived its right to arbitrate by litigating for so long.
The courts below applied Eighth Circuit precedent, under which a
party waives its right to arbitration if it knew of the right; “acted incon-
sistently with that right”; and “prejudiced the other party by its incon-
sistent actions.” Erdman Co. v. Phoenix Land & Acquisition, LLC,
650 F. 3d 1115, 1117. The prejudice requirement is not a feature of
federal waiver law generally. The Eighth Circuit adopted that require-
ment because of the “federal policy favoring arbitration.” Id., at 1120.
Other courts have rejected such a requirement. This Court granted
certiorari to resolve the split over whether federal courts may adopt an
arbitration-specifc waiver rule demanding a showing of prejudice.
Held: The Eighth Circuit erred in conditioning a waiver of the right to
arbitrate on a showing of prejudice. Federal courts have generally re-
solved cases like this one as a matter of federal law, using the terminol-
ogy of waiver. The parties dispute whether that framework is correct.
Assuming without deciding that it is, federal courts may not create
arbitration-specifc variants of federal procedural rules, like those con-
cerning waiver, based on the FA A's “policy favor ing arbitrati on. ”
Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U. S.
1, 24. That policy “is merely an acknowledgment of the FAA's commit-
ment to overrule the judiciary's longstanding refusal to enforce agree-
ments to arbitrate and to place such agreements upon the same footing
as other contracts.” Granite Rock Co. v. Teamsters, 561 U. S. 287, 302

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412 MORGAN
v. SUNDANCE, INC.
Syllabus
(internal quotation marks omitted). Accordingly, a court must hold a
par
ty to its arbitration contract just as the court would to any other
kind. But a court may not devise novel rules to favor arbitration over
litigation. See Dean Witter Reynolds Inc. v. Byrd, 470 U. S. 213, 218–
221. The federal policy is about treating arbitration contracts like all
others, not about fostering arbitration.
The text of the FAA makes clear that courts are not to create
arbitration-specifc procedural rules like the one here. Section 6 of the
FAA provides that any application under the statute—including an ap-
plication to stay litigation or compel arbitration—“shall be made and
heard in the manner provided by law for the making and hearing of
motions” (unless the statute says otherwise). A directive to treat arbi-
tration applications “in the manner provided by law” for all other mo-
tions is simply a command to apply the usual federal procedural rules,
including any rules relating to a motion's timeliness. Because the usual
federal rule of waiver does not include a prejudice requirement, Section
6 instructs that prejudice is not a condition of fnding that a party
waived its right to stay litigation or compel arbitration under the FAA.
Stripped of its prejudice requirement, the Eighth Circuit's current
waiver inquiry would focus on Sundance's conduct. Did Sundance
knowingly relinquish the right to arbitrate by acting inconsistently with
that right? On remand, the Court of Appeals may resolve that ques-
tion, or determine that a different procedural framework (such as for-
feiture) is appropriate. The Court's sole holding today is that it may
not make up a new procedural rule based on the FAA's “policy favoring
arbitration.” Pp. 416–419.
992 F. 3d 711, vacated and remanded.
Kagan, J., delivered the opinion for a unanimous Court.
Karla A. Gilbride argued the cause for petitioner. With
her on the briefs were Leah M. Nicholls, Charles R. Ash IV,
and Jason J. Thompson.
Paul D. Clement argued the cause for respondent. With
him on the brief were Erin E. Murphy, Michael D. Lieber-
man, Joel W. Rice, and Scott C. Fanning.*
*Briefs of amici curiae urging reversal were fled for the American
Association for Justice by Gerson H. Smoger and Jeffrey R. White; for
Law Professors by Jennifer D. Bennett, Matthew W. H. Wessler, and Rich-
ard H. Frankel; for the National Academy of Arbitrators by Vincent Levy

Cite
as: 596 U. S. 411 (2022)
413
Opinion of the Court
Justice Kagan delivered the opinion of the Court.
W
hen a party who has agreed to arbitrate a dispute in-
stead brings a lawsuit, the Federal Arbitration Act (FAA)
entitles the defendant to fle an application to stay the litiga-
tion. See 9 U. S. C. § 3. But defendants do not always seek
that relief right away. Sometimes, they engage in months,
or even years, of litigation—fling motions to dismiss, an-
swering complaints, and discussing settlement—before de-
ciding they would fare better in arbitration. When that
happens, the court faces a question: Has the defendant's re-
quest to switch to arbitration come too late?
Most Courts of Appeals have answered that question by
applying a rule of waiver specifc to the arbitration context.
Usually, a federal court deciding whether a litigant has
waived a right does not ask if its actions caused harm. But
when the right concerns arbitration, courts have held, a fnd-
and Gregory Dubinsky; and for Public Citizen by Scott L. Nelson and
Allison M. Zieve.
Briefs of amici curiae urging affrmance were fled for the Chamber of
Commerce of the United States of America by Zachary D. Tripp, Daryl
Joseffer, and Paul Lettow; for the Restaurant Law Center by Todd Lun-
dell and Karin Dougan Vogel; and for the Washington Legal Foundation
by John M. Masslon II and Cory L. Andrews.
A brief of amici curiae was fled for the State of Minnesota et al. by
Keith Ellison, Attorney General of Minnesota, Liz Kramer, Solicitor Gen-
eral, Michael P. Goodwin, Assistant Attorney General, and Henry Allen
Blair, Special Assistant Attorney General, by Brian E. Frosh, Attorney
General of Maryland, Steven M. Sullivan, Solicitor General, and Adam D.
Snyder, Assistant Attorney General, by Andrew J. Bruck, Acting Attor-
ney General of New Jersey, and by the Attorneys General for their respec-
tive jurisdictions as follows: Treg R. Taylor of Alaska, Phil Weiser of Colo-
rado, Kathleen Jennings of Delaware, Karl A. Racine of the District of
Columbia, Lawrence G. Wasden of Idaho, Kwame Raoul of Illinois, Tom
Miller of Iowa, Aaron M. Frey of Maine, Maura Healey of Massachusetts,
Letitia James of New York, Josh Stein of North Carolina, Ellen F. Rosen-
blum of Oregon, Peter F. Neronha of Rhode Island, Thomas J. Donovan,
Jr., of Vermont, Mark R. Herring of Virginia, and Robert W. Ferguson
of Washington.
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414 MORGAN
v. SUNDANCE, INC.
Opinion of the Court
ing of harm is essential: A party can waive its arbitration
r
ight by litigating only when its conduct has prejudiced the
other side. That special rule, the courts say, derives from
the FAA's “policy favoring arbitration.”
We granted certiorari to decide whether the FAA author-
izes federal courts to create such an arbitration-specifc pro-
cedural rule. We hold it does not.
I
Petitioner Robyn Morgan worked as an hourly employee
at a Taco Bell franchise owned by respondent Sundance.
When applying for the job, she signed an agreement to “use
confdential binding arbitration, instead of going to court,”
to resolve any employment dispute. App. 77.
Despite that agreement, Morgan brought a nationwide col-
lective action against Sundance in federal court for violations
of the Fair Labor Standards Act. Under that statute, em-
ployers must pay overtime to covered employees who work
more than 40 hours in a week. See 29 U. S. C. § 207(a).
Morgan alleged that Sundance routinely fouted the Act—
most notably, by recording hours worked in one week as in-
stead worked in another to prevent any week's total from
exceeding 40. See App. 12.
Sundance initially defended itself against Morgan's suit as
if no arbitration agreement existed. Sundance frst moved
to dismiss the suit as duplicative of a collective action pre-
viously brought by other Taco Bell employees. In that mo-
tion, Sundance suggested that Morgan either “join” the ear-
lier suit or “refle her claim on an individual basis.” Id., at
39. But Morgan declined the invitation to litigate differ-
ently, and the District Court denied Sundance's motion.
Sundance then answered Morgan's complaint, asserting 14
affrmative defenses—but none mentioning the arbitration
agreement. Soon afterward, Sundance met in a joint media-
tion with the named plaintiffs in both collective actions.
The other suit settled, but Morgan's did not. She and
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as: 596 U. S. 411 (2022)
415
Opinion of the Court
Sundance began to talk about scheduling the rest of the
l
itigation.
And then—nearly eight months after the suit's fling—
Sundance changed course. It moved to stay the litigation
and compel arbitration under Sections 3 and 4 of the FAA.
See § 3 (providing for a stay of judicial proceedings on “is-
sue[s] referable to arbitration”); § 4 (providing for an order
“directing the parties to proceed to arbitration”). Morgan
opposed the motion, arguing that Sundance had waived its
right to arbitrate by litigating for so long. Sundance re-
sponded that it had asserted its right as soon as this Court's
decision in Lamps Plus, Inc. v. Varela, 587 U. S. ––– (2019),
clarifed that the arbitration would proceed on a bilateral
(not collective) basis.
The courts below applied Eighth Circuit precedent to de-
cide the waiver issue. See 992 F. 3d 711, 713–715 (2021);
No. 4:18–cv–316 (ND Iowa, June 28, 2019), App. to Pet. for
Cert. 21–33. Under that Circuit's test, a party waives its
contractual right to arbitration if it knew of the right; “acted
inconsistently with that right”; and—critical here—“preju-
diced the other party by its inconsistent actions.” Erdman
Co. v. Phoenix Land & Acquisition, LLC, 650 F. 3d 1115,
1117 (CA8 2011). The prejudice requirement, as explained
later, is not a feature of federal waiver law generally. See
infra, at 5. The Eighth Circuit adopted the requirement in
the arbitration context because of the “federal policy favor-
ing arbitration.” Erdman, 650 F. 3d, at 1120; see id., at
1117.
Although the District Court found the prejudice require-
ment satisfed, the Court of Appeals disagreed and sent Mor-
gan's case to arbitration. The panel majority reasoned that
the parties had not yet begun formal discovery or contested
any matters “going to the merits.” 992 F. 3d, at 715. Judge
Colloton dissented. He argued that Sundance had “led Mor-
gan to waste time and money” opposing the motion to dis-
miss and “engaging in a fruitless mediation.” Id., at 717.
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416 MORGAN
v. SUNDANCE, INC.
Opinion of the Court
More fundamentally, he raised doubts about the Eighth Cir-
cuit'
s prejudice requirement. Outside the arbitration con-
text, Judge Colloton observed, prejudice is not needed for
waiver. See id., at 716. In line with that general principle,
he continued, “some circuits allow a fnding of waiver of arbi-
tration without a showing of prejudice.” Id., at 716–717.
We granted certiorari, 595 U. S. ––– (2021), to resolve that
circuit split. Nine circuits, including the Eighth, have in-
voked “the strong federal policy favoring arbitration” in sup-
port of an arbitration-specifc waiver rule demanding a show-
ing of prejudice.
1
Two circuits have rejected that rule.
2
We do too.
II
We decide today a single issue, responsive to the predomi-
nant analysis in the Courts of Appeals, rather than to all the
arguments the parties have raised. In their briefng, the
parties have disagreed about the role state law might play
in resolving when a party's litigation conduct results in the
loss of a contractual right to arbitrate. The parties have
also quarreled about whether to understand that inquiry as
involving rules of waiver, forfeiture, estoppel, laches, or pro-
cedural timeliness. We do not address those issues. The
Courts of Appeals, including the Eighth Circuit, have gener-
ally resolved cases like this one as a matter of federal law,
1
Joca-Roca Real Estate, LLC v. Brennan, 772 F. 3d 945, 948 (CA1 2014);
see O. J. Distributing, Inc. v. Hornell Brewing Co., 340 F. 3d 345, 355–356
(CA6 2003); PaineWebber Inc. v. Faragalli, 61 F. 3d 1063, 1068–1069 (CA3
1995); S & H Contractors, Inc. v. A. J. Taft Coal Co., 906 F. 2d 1507, 1514
(CA11 1990); Miller Brewing Co. v. Fort Worth Distributing Co., 781 F. 2d
494, 497 (CA5 1986); ATSA of Cal., Inc. v. Continental Ins. Co., 702 F. 2d
172, 175 (CA9 1983); Carolina Throwing Co. v. S & E Novelty Corp., 442
F. 2d 329, 331 (CA4 1971) (per curiam); Carcich v. Rederi A /B Nordie, 389
F. 2d 692, 696 (CA2 1968).
2
See St. Mary's Medical Center of Evansville, Inc. v. Disco Aluminum
Prods. Co., 969 F. 2d 585, 590 (CA7 1992); National Foundation for Cancer
Research v. A. G. Edwards & Sons, Inc., 821 F. 2d 772, 774, 777 (CADC
1987).
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417
Opinion of the Court
using the terminology of waiver. For today, we assume
w
ithout deciding they are right to do so. We consider only
the next step i n their reasoni ng: that they may create
arbitration-specifc variants of federal procedural rules, like
those concerning waiver, based on the FAA's “policy favoring
arbitration.” Moses H. Cone Memorial Hospital v. Mer-
cury Constr. Corp., 460 U. S. 1, 24 (1983). They cannot.
For that reason, the Eighth Circuit was wrong to condition
a waiver of the right to arbitrate on a showing of prejudice.
Outside the arbitration context, a federal court assessing
waiver does not generally ask about prejudice. Waiver, we
have said, “is the intentional relinquishment or abandonment
of a known right.” United States v. Olano, 507 U. S. 725,
733 (1993) (internal quotation marks omitted). To decide
whether a waiver has occurred, the court focuses on the ac-
tions of the person who held the right; the court seldom con-
siders the effects of those actions on the opposing party.
That analysis applies to the waiver of a contractual right, as
of any other. As Judge Colloton noted in dissent below, a
contractual waiver “normally is effective” without proof of
“detrimental reliance.” 992 F. 3d, at 716; see Cabinetree of
Wisconsin, Inc. v. Kraftmaid Cabinetry, Inc., 50 F. 3d 388,
390 (CA7 1995) (Posner, C. J., for the Court). So in demand-
ing that kind of proof before fnding the waiver of an arbitra-
tion right, the Eighth Circuit applies a rule found nowhere
else—consider it a bespoke rule of waiver for arbitration.
The Eighth Circuit's arbitration-specifc rule derives from
a decades-old Second Circuit decisi on, wh ich i n tur n
grounded the rule in the FAA's policy. See Carcich v. Re-
deri A/B Nordie, 389 F. 2d 692, 696 (CA2 1968); Erdman,
650 F. 3d, at 1120, n. 4 (“trac[ing] the origins of [the Eighth
Circuit's] prejudice requirement to Carcich”). “[T]here is,”
the Second Circuit declared, “an overriding federal policy fa-
voring arbitration.” Carcich, 389 F. 2d, at 696. For that
reason, the court held, waiver of the right to arbitrate “is
not to be lightly inferred”: “[M]ere delay” in seeking a stay
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418 MORGAN
v. SUNDANCE, INC.
Opinion of the Court
of litigation, “without some resultant prejudice” to the op-
p
osing par ty, “cannot carry the day. ” Ib i d. Over the
years, both that rule and its reasoning spread. Circuit after
circuit (with just a couple of holdouts) justifed adopting a
prejudice requirement based on the “liberal national policy
favoring arbitration. ” Caro lina Throwing Co. v. S & E
Novelty Corp., 442 F. 2d 329, 331 (CA4 1971) (per curiam);
see, e. g., PaineWebber Inc. v. Faragalli, 61 F. 3d 1063, 1068–
1069 (CA3 1995); Shinto Shipping Co. v. Fibrex & Shipping
Co., Inc., 572 F. 2d 1328, 1330 (CA9 1978).
But the FAA's “policy favoring arbitration” does not au-
thor i ze federa l cour ts to i nvent specia l, arbitrati on-
preferring procedural rules. Moses H. Cone, 460 U. S., at
24. Our frequent use of that phrase connotes something dif-
ferent. “Th[e] policy,” we have explained, “is merely an
acknowledgment of the FAA's commitment to overrule the
judiciary's longstanding refusal to enforce agreements to
arbitrate and to place such agreements upon the same foot-
ing as other contracts.” Granite Rock Co. v. Teamsters, 561
U. S. 287, 302 (2010) (internal quotation marks omitted). Or
in another formulation: The policy is to make “arbitration
agreements as enforceable as other contracts, but not more
so.” Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
U. S. 395, 404, n. 12 (1967). Accordingly, a court must hold
a party to its arbitration contract just as the court would to
any other kind. But a court may not devise novel rules to
favor arbitration over litigation. See Dean Witter Reynolds
Inc. v. Byrd, 470 U. S. 213, 218–221 (1985). If an ordinary
procedural rule—whether of waiver or forfeiture or what-
have-you—would counsel against enforcement of an arbitra-
tion contract, then so be it. The federal policy is about
treating arbitration contracts like all others, not about fos-
tering arbitration. See ibid.; National Foundation for
Cancer Research v. A. G. Edwards & Sons, Inc., 821 F. 2d
772, 774 (CADC 1987) (“The Supreme Court has made clear”
that the FAA's policy “is based upon the enforcement of con-

Cite
as: 596 U. S. 411 (2022)
419
Opinion of the Court
tract, rather than a preference for arbitration as an alterna-
tive
dispute resolution mechanism”).
And indeed, the text of the FAA makes clear that courts
are not to create arbitration-specifc procedural rules like the
one we address here. Section 6 of the FAA provides that
any application under the statute—including an application
to stay litigation or compel arbitration—“shall be made and
heard in the manner provided by law for the making and
hearing of motions” (unless the statute says otherwise). A
directive to a federal court to treat arbitration applications
“in the manner provided by law” for all other motions is sim-
ply a command to apply the usual federal procedural rules,
including any rules relating to a motion's timeliness. Or put
conversely, it is a bar on using custom-made rules, to tilt the
playing feld in favor of (or against) arbitration. As ex-
plained above, the usual federal rule of waiver does not in-
clude a prejudice requirement. So Section 6 instructs that
prejudice is not a condition of fnding that a party, by litigat-
ing too long, waived its right to stay litigation or compel
arbitration under the FAA.
Stripped of its prejudice requirement, the Eighth Circuit's
current waiver inquiry would focus on Sundance's conduct.
Did Sundance, as the rest of the Eighth Circuit's test asks,
knowingly relinquish the right to arbitrate by acting incon-
sistently with that right? See supra, at 415. On remand, the
Court of Appeals may resolve that question, or (as indicated
above) determine that a different procedural framework
(such as forfeiture) is appropriate. See supra, at 416. Our
sole holding today is that it may not make up a new proce-
dural rule based on the FAA's “policy favoring arbitration.”
***
For the reasons stated, we vacate the judgment of the
Court of Appeals and remand the case for further proceed-
ings consistent with this opinion.
It is so ordered.
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