This case concerned a business dispute between two physicians. Despite the arbitration clause contained in their agreement, Dr. Raju sued Dr. Murphy in state court. However, after Dr. Murphy removed the case to the District Court for the Southern District of Mississippi and counterclaimed, Dr. Raju invoked the arbitration clause and moved to stay the court proceedings. The district court denied Dr. Raju’s motion to compel arbitration, which prompted this interlocutory appeal.
The Fifth Circuit affirmed the district court’s decision, reasoning that the right to arbitrate is subject to waiver when, as here, “the party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party.” As the court determined, “Dr. Raju clearly prefer[red] litigation over arbitration, apparently just not in this Court.” The court went on to find that Dr. Murphy had been prejudiced by “being required to answer the complaint, to file a counterclaim, to consult with two law firms, and to gear her legal strategy to court proceedings instead of arbitration” as well as by “the public nature of the lawsuit” as compared to the “private and confidential” nature of arbitration. Raju v. Murphy, No. 17-60550 (5th Cir. Jan. 26, 2018).
This post written by Gail Jankowski.
See our disclaimer.