In Quach v. California Commerce Club, the Supreme Court today overturns prior case law — including its own — about what is necessary in California to establish a party has waived its contractual right to compel arbitration. No longer must the party seeking to avoid arbitration show prejudice. In the Quach case, the defendant litigated in court for 13 months before moving to compel arbitration and the court finds a waiver regardless of whether the plaintiff was prejudiced by the delay.
The court’s unanimous opinion by Justice Joshua Groban says the prejudice rule was based on federal case law that the U.S. Supreme Court disapproved in Morgan v. Sundance, Inc. (2022) 596 U.S. 411. “Because our state-law arbitration-specific prejudice requirement is based upon the federal precedent that Morgan overruled, we now abrogate it,” the court declares. Making prejudice an element of waiver was based on a policy favoring arbitration, but, quoting Morgan, the court concludes, “an examination of the legislative history [of the state’s arbitration act] reveals that California policy, like federal policy, is fundamentally about making arbitration agreements ‘ “as enforceable as other contracts, but not more so.” ’ ”
The court reverses the partially published 2-1 opinion by the Second District, Division One, Court of Appeal. More about the case here.