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Morgan v. Sundance, Inc.

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Supreme Court of the United States
Morgan v. Sundance, Inc.
Term: 2021
Important Dates
Argued: March 21, 2022
Decided: May 23, 2022
Outcome
Vacated and remanded
Vote
9-0
Majority
Elena Kagan • Chief Justice John Roberts • Clarence Thomas • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Neil Gorsuch • Brett Kavanaugh • Amy Coney Barrett

Morgan v. Sundance, Inc. is a case that was decided by the Supreme Court of the United States on May 23, 2022, during the court's October 2021-2022 term. The case was argued on March 21, 2022.

The court vacated the decision of the U.S. Court of Appeals for the 8th Circuit in a unanimous ruling, holding U.S. federal courts may not create special procedural rules to favor arbitration over litigation. The court remanded the case for the 8th Circuit to resolve whether Sundance relinquished "the right to arbitrate by acting inconsistently with that right." Justice Elena Kagan delivered the opinion of the court.[1] Click here for more information about the ruling.

HIGHLIGHTS
  • The issue: The case concerned a circuit split regarding arbitration clauses, the Fair Labor Standards Act of 1938 ("FLSA"), and the Supreme Court's decision in AT&T Mobility LLC v. Concepcion (2011). Click here to learn more about the case's background.
  • The questions presented: "Does the arbitration-specific requirement that the proponent of a contractual waiver defense prove prejudice violate this Court's instruction that lower courts must 'place arbitration agreements on an equal footing with other contracts?' AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)."[2]
  • The outcome: The court vacated the 8th Circuit's decision in a unanimous ruling, holding U.S. federal courts may not create special procedural rules to favor arbitration over litigation.


    • The case came on a writ of certiorari to the United States Court of Appeals for the 8th Circuit. To review the lower court's opinion, click here.[3]

    Timeline

    The following timeline details key events in this case:

    • May 23, 2022: The U.S. Supreme Court vacated the United States Court of Appeals for the 8th Circuit's decision in a unanimous ruling and remanded the case.
    • March 21, 2022: The U.S. Supreme Court heard oral argument.
    • November 15, 2021: The U.S. Supreme Court agreed to hear the case.
    • August 27, 2021: Robyn Morgan, the petitioner, appealed to the U.S. Supreme Court.
    • March 30, 2021: The 8th Circuit reversed the U.S. District Court for the Southern District of Iowa's order denying Sundance, Inc.'s motion to compel arbitration for Robyn Morgan's claims.

    Background

    The petitioner Robyn Morgan was an employee at Taco Bell in Iowa. Sundance, Inc. is a company that owns more than Taco Bell franchises nationwide, including Morgan's employer.[4]

    In September 2018, Morgan sued Sundance in the U.S. District Court for the Southern District of Iowa for violating the Fair Labor Standards Act of 1938 ("FLSA"), alleging that Sundance did not pay her and certain other employees for overtime work. According to Morgan's petition to the Supreme Court, Sundance's policy was to record work hours exceeding the 40-hour allotment for the week for the following week. Morgan also alleged that she and other staff members were instructed to clock out and continue working afterward. Morgan's FLSA suit was filed nationwide as a collective action on behalf of hourly employees of Sundance franchises with the same allegations.[3][4]

    In 2016, a similar nationwide collective FLSA action, Wood v. Sundance, Inc. (2016) was filed against Sundance in the U.S. District Court for the Eastern District of Michigan. In June 2017, the action was certified on the condition that it only include Sundance's hourly employees located in Michigan.[3][4]

    In November 2018, responding to Morgan's complaint with the Southern District of Iowa, Sundance asked the court to dismiss it under the first-to-file rule, arguing that the Wood action made Morgan's action duplicative. Elsewhere, Morgan participated in settlement mediation with the Wood plaintiffs; their case settled and Morgan's case proceeded. On March 15, 2019, the district court denied the motion to dismiss, holding that because members of Morgan's action worked for Sundance outside of Michigan and therefore could not join the Wood action, the cases were not duplicative. In May 2019, Sundance asked the court to compel arbitration. The district court denied the motion, ruling that because Sundance participated in the litigation, it waived its right to arbitration.[3][4]

    Sundance appealed to the U.S. Court of Appeals for the 8th Circuit. In a de novo review, the 8th Circuit reversed the Southern District of Iowa's order that Sundance waived its right to compel arbitration, and remanded the case for further proceedings. Judge Steven Colloton dissented from the majority opinion, stating that he would affirm the district court's ruling.[3]

    On August 27, 2021, Morgan petitioned the U.S. Supreme Court to review the case. In her petition, Morgan wrote:[4]

    “ Waiver is the intentional relinquishment of a known right and, in the context of contracts, occurs when one party to a contract either explicitly repudiates its rights under the contract or acts in a manner inconsistent with an intention of exercising them. In the opinion below, the Eighth Circuit joined eight other federal courts of appeals and most state supreme courts in grafting an additional requirement onto the waiver analysis when the contract at issue happens to involve arbitration—requiring the party asserting waiver to show that the waiving party’s inconsistent acts caused prejudice. Three other federal courts of appeal, and the supreme courts of at least four states, do not include prejudice as an essential element of proving waiver of the right to arbitrate. ...[5] ”

    On November 15, 2021, SCOTUS accepted the case to be argued on the merits.

    Questions presented

    The petitioner presented the following questions to the court:[2]

    Questions presented:
    “ Does the arbitration-specific requirement that the proponent of a contractual waiver defense prove prejudice violate this Court's instruction that lower courts must "place arbitration agreements on an equal footing with other contracts?" AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011).[5] ”

    Oral argument

    Audio

    Audio of oral argument:[6]



    Transcript

    Transcript of oral argument:[7]

    Outcome

    In a unanimous opinion, the court vacated the judgment of the 8th Circuit, holding U.S. federal courts may not create an arbitration-specific rule in which the waiver of a right to arbitrate is based on a showing of harm. Justice Kagan delivered the opinion of the court.[1]

    Opinion

    Justice Kagan wrote:

    “

    Nine circuits, including the Eighth, have invoked "the strong federal policy favoring arbitration" in support of an arbitration-specific waiver rule demanding a showing of prejudice. Two circuits have rejected that rule. We do too. ...

    We consider only the next step in their reasoning: that they may create arbitration-specific variants of federal procedural rules, like those concerning waiver, based on the FAA’s "policy favoring arbitration." Moses H. Cone Memorial Hospital v. Mercury 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. [5]

    		”
    —Justice Elena Kagan

    Text of the opinion

    Read the full opinion here.

    October term 2021-2022

    See also: Supreme Court cases, October term 2021-2022

    The Supreme Court began hearing cases for the term on October 4, 2021. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[8]

    The court agreed to hear 68 cases during its 2021-2022 term.[9] Four cases were dismissed and one case was removed from the argument calendar.[10]

    The court issued decisions in 66 cases during its 2021-2022 term. Three cases were decided without argument. Between 2007 and 2021, SCOTUS released opinions in 1,128 cases, averaging 75 cases per year.


    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 Supreme Court of the United States, Morgan v. Sundance, decided May 23, 2022
    2. ↑ 2.0 2.1 U.S. Supreme Court, "21-328 MORGAN V. SUNDANCE, INC.: QUESTION PRESENTED:," accessed November 15, 2021
    3. ↑ 3.0 3.1 3.2 3.3 3.4 U.S. Court of Appeals for the 8th Circuit, Morgan v. Sundance, Inc., decided March 30, 2021
    4. ↑ 4.0 4.1 4.2 4.3 4.4 U.S. Supreme Court, "Morgan v. Sundance, Inc.: PETITION FOR A WRIT OF CERTIORARI," filed August 27, 2021
    5. ↑ 5.0 5.1 5.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    6. ↑ Supreme Court of the United States, "Oral Argument - Audio," argued March 21, 2022
    7. ↑ Supreme Court of the United States, "Oral Argument - Transcript," argued March 21, 2022
    8. ↑ SupremeCourt.gov, "The Supreme Court at Work: The Term and Caseload," accessed February 4, 2021
    9. ↑ Consolidated cases are counted as one case for purposes of this number.
    10. ↑ U.S. Supreme Court, "Order List: 593 U.S.," May 17, 2021
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