California no longer requires a party seeking to avoid arbitration to prove they were prejudiced.

The California Supreme Court on Thursday abrogated a rule that had been followed for decades. Quach v. California Commerce Club (California 07/25/2024) [PDF]

This case was brought under the California Arbitration Act, so that statute now lines up with how the Federal Arbitration Act treats waivers.

In 2022 the US Supreme Court decided Morgan v. Sundance, Inc., which announced that prejudice is not part of waiver analysis under the Federal Arbitration Act. The California court adopted the reasoning in the Morgan case. The so-called "policy favoring arbitration” is about putting arbitration agreements on equal footing with other contracts, not about favoring arbitration with arbitration-specific preferential rules.

In the Quach case, a former employee sued his former employer, alleging various employment law claims. Then the employer waited for 13 months before moving to compel arbitration.

During those 13 months the employer actively pursued discovery, requested a jury trial, posted jury fees, left the check box for indicating it was “willing to participate” in arbitration blank, and represented that the only motion it intended to file was a “dispositive motion.” This constituted a waiver of the right to arbitrate.