Gray Holdco Inc. v. Cassady, No. 10-4325 (3d Cir. 2011)Annotate this Case
Defendant began working for plaintiff in 2006 and entered into agreements that contained restrictive covenants and an arbitration provision. In 2009 defendant left the company and allegedly began acting in violation of the covenants. The company filed suit, but did not mention the arbitration clause. The district court denied the company's request for a preliminary injunction; months later, it denied the company's motion to stay pending arbitration and enjoined arbitration. The company made the demand under the Federal Arbitration Act, 9 U.S.C. 2, more than 10 months after it initiated suit. The Third Circuit affirmed. The company waived the right to enforce the arbitration agreement. The existence of a contractual "no waiver" provision did not require a court to disregard the company's conduct; its failure to notify defendant of its intent to seek arbitration substantively prejudiced defendant's approach to the case. In addition to substantive legal prejudice, defendant spent considerable time and money to educate his attorney in preparation for a trial.