In Johnson Associates Corp. v. HL Operating Corp., Case No. 10-6468, the Sixth Circuit affirmed the district court’s holding that the defendant waived its right to arbitrate. Plaintiffs sued HL Operating Corporation (“Hartmann”) over a dispute arising from their sourcing agreement. The sourcing agreement contained an arbitration clause, but Hartmann did not raise the issue of arbitration until eight months later. Hartmann failed to raise arbitration in its answer, and asserted a counterclaim for breach of contract. At the end of formal settlement discussions, Hartmann scheduled and requested discovery, including depositions. Then, on the eve of the due date for Plaintiffs to respond to Hartmann’s discovery requests, Hartmann asserted its right to arbitration. The Sixth Circuit held that, when considered together, its actions were sufficiently inconsistent with its right to arbitration. Further, the Sixth Circuit agreed with the district court that Hartmann’s belated assertion of its right to arbitrate “caused Plaintiffs actual prejudice in the form of unnecessary delay and expense.”
