Conducting Civil Discovery May Result in Waiver of Right to Arbitrate
In Zamora v. Lehman, a California court held this week that a party to an arbitration agreement waives the right to compel arbitration by engaging in conduct inconsistent with the agreement to arbitrate. In this case, one of the parties to a lawsuit waited until four months before trial to seek to compel arbitration of the dispute. Prior to requesting arbitration, the party conducted discovery in the court proceedings. The court noted that the parties' arbitration agreement did not allow for discovery in arbitration and that by conducting discovery in the court action, the party acted inconsistently with the agreement to arbitrate. As such, the court found that the party had waived the right to compel arbitration of the dispute. The party seeking arbitration argued that any waiver would have to be "knowing" and that there was no knowing waiver because the party forgot that there was an arbitration agreement and did not recall the existence of the agreement until four months before trial and after conducting discovery. The party argued that upon "discovering" the agreement, she diligently pursued arbitration. The court rejected this argument and held that any right to arbitrate had been waived.
This case serves as a good reminder that parties to arbitration agreements must act diligently to pursue the right to arbitrate. Conduct inconsistent with arbitration may result in a finding of waiver.