Chassen v. Fidelity Nat’l Financial — civil / arbitration — affirmance — Smith
A divided Third Circuit panel today ruled in favor of a civil defendant seeking to compel individual arbitration (that is, non-class arbitration; the opinion refers to it as bipolar arbitration). The court held that the defendant did not waive its arbitration-clause defense — even though it did not raise the defense in two and a half years of expensive litigation below, and even though it could have but did not raise the arbitration defense to obtain class arbitration the whole time — because an effort to compel individual arbitration would have been futile under then-existing law. The majority ruled that the factors it previously had announced for deciding when a party waived an arbitration defense did not control when the sole reason for the delay in asserting the defense is futility.
Judge Rendell — who, as I’ve observed, has been a major force in the court’s recent en banc litigation — dissented. Her opinion began:
The majority’s opinion is flawed for a clear and obvious reason: it relies on caselaw that has no application here. Therefore, I must respectfully dissent.
In Muhammad v. County Bank of Rehoboth Beach, the New Jersey Supreme Court held that “the presence of the class-arbitration waiver in Muhammad’s consumer arbitration agreement render[ed] that agreement unconscionable.” 912 A.2d 88, 100 (N.J. 2006). Yet, despite the lack of a class arbitration waiver in the arbitration clauses here, the majority holds that a New Jersey court in 2009, at the outset of this case, would have found Muhammad controlling here. I reject that view, and urge you to read Muhammad and the actual arbitration clauses at issue here. Doing so will lead inexorably to one conclusion: this case is not Muhammad, and a motion by the Defendants in 2009 to compel arbitration thus would have been anything but futile. Moreover, the majority has expanded the concept of futility beyond what we as a court should recognize.
Seems like a good bet for a petition for en banc rehearing.