Contributors

Eric P. Weiss

Principal

The California Supreme Court recently published its opinion in Quach v. California Commerce Club, Inc. which abrogated long-standing California Supreme Court precedent that, for over 21 years, has governed the often-disputed issue of whether a party waives a right to arbitration. In short, the Court held that in cases governed by the California Arbitration Act (“CAA”), a showing of prejudice to the party resisting arbitration is no longer required when determining whether the opposing party has waived the right to arbitration. The holding is consistent with federal courts that have addressed the issue in connection with the Federal Arbitration Act (“FAA”).

Key Takeaways

• A party seeking to enforce arbitration agreements should move to compel arbitration promptly, ideally immediately after filing a response to the complaint. Furthermore, such parties should avoid engaging in any conduct—including litigation of the merits and factual development through discovery—that suggests an inconsistent intent to proceed in court.
• The Court’s decision brings California law in line with federal law, ensuring that courts will apply the same waiver principles regardless of whether a case is governed by the FAA or the CAA. Under those principles, courts should focus “exclusively … on the waiving party’s words or conduct.”
• By eliminating the “stringent” prejudice requirement, the decision will make it easier for parties resisting arbitration to show that the party invoking an arbitration agreement had waived its rights under the agreement. Future courts will focus on any “undue delay and gamesmanship” in the invocation of an arbitration agreement.