Supreme Court Reverts to Previous Stance on Waiver

Well, it took a couple weeks, but the Texas Supreme Court has reverted to its pre-Perry Homes stance on the circumstances in which a party may or may not waive its right to compel arbitration. On Friday, while we were otherwise indisposed and unable to blog, the Texas Supreme Court found that a party’s decision to remove a case to federal court (and then agree to a remand back to state court) did not “substantially invoke the judicial process” and thus did not waive that party’s right to later invoke an arbitration clause.

The per curiam opinion adds little to what, before Perry Homes, we would have said was the clearly established position of a Supreme Court that had never, to our knowledge, stepped in to find waiver. The opinion is in fact quite similar to the Bank One opinion we blogged about last February. In both cases, the Supreme Court overruled trial courts and courts of appeals that had found that something other than sheer quantity of activity can be a gauge of substantial invocation of the litigation process. In both Bank One and Friday’s Citigroup case, in other words, it was the nature of the party’s action that had caused waiver, not the sheer bulk of action that had taken place; in Bank One, it was a motion for new trial, while in Citigroup it was a removal, both actions that specifically invoked a court’s jurisdiction.

For the second time now, the Supreme Court has sent a clear signal that it frankly does not care what type of activity a putative waivor takes when considering whether that activity invokes the judicial process. In other words, according to the Court, requesting a court to assume jurisdiction over the case somehow does not “invoke the judicial process”. The only factor that the Supreme Court has considered in these cases is the question of how many depositions had been taken, how many motions had been filed and how close to trial were the parties when the motion to compel arbitration is filed.

In re: Citigroup, ___ S.W.3d ___ (Tex. 2008) (Cause No. 06-0886).

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