On August 18, the U.S. Court of Appeals for the 7th Circuit affirmed the denial of a motion to compel arbitration in a Telephone Consumer Protection Act (TCPA) class action, holding that a defendant’s pre-certification conduct can support waiver of arbitration rights. The defendant, a vacation property company, contracted with third-party vendors to run a telemarketing campaign using pre-recorded calls that reached tens of thousands of potential customers. A plaintiff sued in 2019 alleging the calls violated the TCPA, and over the next four years the defendant filed pleadings focused on merits defenses, engaged in class-related discovery, moved for summary judgment, and opposed class certification — all without mentioning arbitration. Only after the class was certified and finalized did the defendant first raise arbitration, citing newly retained counsel’s review of the purported agreements as the reason for delay. The court reasoned that a change in counsel “late in the game cannot excuse prior counsel’s lack of diligence” and that parties cannot revive waived rights simply by hiring a new lawyer. Further, according to the court, arbitration agreements with putative class members should be produced during class-related discovery and raised in opposition to class certification. Failing to do so implies an intent to litigate class claims in court.

The court also clarified the appellate standard of review, overruling prior circuit precedent and holding that the ultimate waiver decision is reviewed for clear error rather than de novo, while questions that establish new legal principles are reviewed de novo. Applying clear error review, the court found the defendant’s four-and-a-half-year delay in raising arbitration, combined with its merits-focused litigation conduct before and after certification, supported the district court’s waiver finding.