Key Takeaways
Parties seeking to compel arbitration should raise any applicable arbitration clause at the earliest practicable stage of litigation. Engaging in substantial litigation activity, such as discovery, motion practice, or substantive discovery negotiations, before requesting arbitration may evince a “preference” for litigation, and result in waiver of the right to arbitrate. Further, if arbitration terms are added after a complaint is filed, parties should consider providing clear and timely notice to affected litigants and putative class members; otherwise, a court may deem enforcement unfair and decline to compel arbitration.
Parties must exercise caution in pursuing arbitration after litigation has progressed, according to an opinion by Judge John F. Murphy of the U.S. District Court for the Eastern District of Pennsylvania.
The underlying Sherman Act claim, filed on May 28, 2024, accused Equifax of monopolizing the market for electronic income and employment verification services. Two months after the litigation was filed, Equifax added an arbitration agreement to its Online Universal Membership Agreement which took effect on August 13, 2024. Greystone Mortg., Inc. et al. v. Equifax Workforce Solutions LLC et al., No. 24-2260, Order at 2, ECF No. 138. The proposed class of direct U.S. purchasers would encompass buyers who agreed to Equifax’s later-added arbitration provision, which “specifically supersede[d] and replace[d]” prior service agreements. Id. at 3. Over a year into litigation, Equifax attempted for the first time to enforce that clause. Id.
On February 17, 2026, the court denied Equifax’s bid for arbitration. The Court found that after adding the arbitration provision to the Membership Agreement, Equifax attended oral argument on its motion to dismiss; held numerous meet and confers with opposing counsel; negotiated, drafted, and filed a discovery plan; served and responded to discovery requests; and produced thousands of documents. Order at 1, ECF No. 138.
Applying the Third Circuit’s waiver framework and its authority under Rule 23(d), the court scrutinized Equifax’s ten months of active litigation. Judge Murphy held that, while “[a] defendant seeking to enforce an arbitration clause often has a strong wind in its sails, even when it’s a post-complaint tactic,” Equifax waived the right to arbitrate because its “litigation behavior clearly evinced an intent to litigate.” Id. at 1-2.
Judge Murphy further noted that updating the arbitration provision in a way where class members would not necessarily see or affirmatively agree to that provision threatened the fairness of litigation, and that enforcing such an arbitration provision “would not serve the interests of justice in this case.” Id. at 1, 24.
