CA Supreme Court removes prejudice requirement for waiving arbitration rights

If a complaint is filed in court for a claim covered by an arbitration agreement, the defendant can move to compel arbitration.  If the defendant chooses to litigate in court, he may forfeit the right to arbitration through waiver.  The California Supreme Court previously required showing prejudice to establish waiver.  But in Morgan v. Sundance, Inc. (2022), the U.S. Supreme Court held that federal law treats arbitration agreements equally with other contracts (it doesn’t favor them). Therefore, courts must apply the same waiver principles to arbitration agreements as to other contracts. In light of this ruling, in Quach v. Cal. Commerce Club, Inc., No. S275121 (Cal. July 25, 2024), the California Supreme Court overruled its prior precedent requiring a showing of prejudice.  So, going forward, California no longer requires showing prejudice to establish waiver in arbitration cases, aligning state law with federal law.