« Originalism in the Cawthorn Litigation
Michael Ramsey
| Main | The Dobbs Draft and Stare Decisis: An Epistemic Approach to Integrating the Factors
Chris Green »

05/31/2022

Another 9-0 Win for Textualism in Morgan v. Sundance
Michael Ramsey

Last week the Supreme Court ruled unanimously in Morgan v. Sundance, Inc. that there is no atextual "policy favoring arbitration" that allows courts to make up additional requirements for waiver of a contractual provision for arbitration.  (SCOTUSBlog analysis from Charlotte Garden here).  From Justice Kagan's opinion reversing the Eighth Circuit:

Outside the arbitration context, a federal court assessing waiver does not generally ask about prejudice. Waiver, we have said, “is the intentional relinquishment or abandonment of a known right.” United States v. Olano, 507 U. S. 725, 733 (1993) (internal quotation marks omitted). To decide whether a waiver has occurred, the court focuses on the actions of the person who held the right; the court seldom considers the effects of those actions on the opposing party. That analysis applies to the waiver of a contractual right, as of any other. As Judge Colloton noted in dissent below, a contractual waiver “normally is effective” without proof of “detrimental reliance.” ... So in demanding that kind of proof before finding the waiver of an arbitration right, the Eighth Circuit applies a rule found nowhere else—consider it a bespoke rule of waiver for arbitration.

The Eighth Circuit’s arbitration-specific rule derives from a decades-old Second Circuit decision, which in turn grounded the rule in the [Federal Arbitration Act's] policy. ... But the FAA’s “policy favoring arbitration” does not authorize federal courts to invent special, arbitration-preferring procedural rules.  ...  And indeed, the text of the FAA makes clear that courts are not to create arbitration-specific procedural rules like the one we address here. Section 6 of the FAA provides that any application under the statute—including an application to stay litigation or compel  arbitration—“shall be made and heard in the manner provided by law for the making and hearing of motions” (unless the statute says otherwise). A directive to a federal court to treat arbitration applications “in the manner provided by law” for all other motions is simply a command to apply the usual federal procedural rules, including any rules relating to a motion’s timeliness. Or put conversely, it is a bar on using custom-made rules, to tilt the playing field in favor of (or against) arbitration. As explained above, the usual federal rule of waiver does not include a prejudice requirement. So Section 6 instructs that prejudice is not a condition of finding that a party, by litigating too long, waived its right to stay litigation or compel arbitration under the FAA.

And in conclusion:

Our sole holding today is that [courts] may not make up a new procedural rule based on the FAA’s “policy favoring arbitration.”

Seems like an easy case -- but it's not if courts don't stick to the text and let themselves "make up" rules.  As Justice Kagan noted, "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."

The Morgan case reminds me of Cassirer v. Thyssen decided earlier this year, in which the Court unanimously overturned a court of appeals decision that made up a federal policy not found in, and indeed contrary to the text of, the relevant statute.  Cases like Morgan and Cassirer are big wins for textualism over judicial policymaking.  They share another characteristic too: a sympathetic winning plaintiff, with a vaguely center-left political valence.  It's great to see the right-leaning Justices sticking to textualism in these cases.  But textualism can't really claim victory until we see left-leaning Justices sticking to textualism for right-leaning outcomes.