Arbitration Waiver Claim Heads to Supreme Court

(CN) - A small Florida law firm successfully petitioned the Supreme Court to decide when a waiver of arbitration becomes binding.

Last year the 11th Circuit had ruled that Stok & Associates could not challenge Citibank's demand for arbitration because the firm had failed to demonstrate prejudice. The firm in Miami-Dade County sued Citibank over a checking discrepancy that caused it to cover a transaction by transferring funds from its operating account. Nearly a month after Citibank filed an answer to Stok's complaint, it sent Stok a letter electing to arbitrate and filed a motion to compel the process.

Stok argued that the bank had waived that right by filing its answer to the state action without reserving the right to elect arbitration. A federal judge agreed with the firm and dismissed Citibank's petition in June 2010, but the Atlanta-based federal appeals panel reversed the following month in an unpublished opinion.

"The Eleventh Circuit noted that Stok had 'done little to demonstrate the amount of expenses incurred as a result of [Citibank's] conduct," the firm wrote in its brief to the Supreme Court. "The Eleventh Circuit, in fact, lamented that [Stok] had apparently not incurred enough expenses below and, therefore, 'could not point to any portion of the record that reveals either the amount of money it spent or the number of hours it dedicated to conducting litigation-specific discovery and preparing litigation-specific documents.'"

In deciding to take up the case Tuesday, the Supreme Court followed its custom of not issuing any comment.

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