Dawn Valli; Anton S. Dubinsky, on behalf of herself and all others similarly situated v. Avis Budget Group Inc.; Avis Rent A Car System, LLC; Avis Budget Car Rental LLC; Budget Rent A Car System, Inc.

Summary

The United States Court of Appeals for the Third Circuit considers whether Avis Budget Group and related entities waived their contractual right to compel arbitration through litigation conduct in a putative class action. The Court holds that pre-certification conduct may be considered in determining waiver, although seeking to compel arbitration against unnamed putative class members before class certification would have been futile. The Court vacates the District Court’s order denying the motion to compel arbitration and remands for consideration of enforceability issues.

Holdings

1. Pre-certification conduct may be considered in determining whether a party waived arbitration even when a motion to compel arbitration directed at unnamed putative class members would have been futile before class certification.
2. Avis did not waive its right to compel arbitration because it promptly asserted arbitration as an affirmative defense, repeatedly preserved its prospective arbitration rights, did not specifically pursue discovery concerning arbitration-bound class members, and moved to compel promptly after certification made the motion viable.
3. The small-claims exception did not exclude this action from arbitration because the case was brought as an aggregated class action alleging more than $5 million in controversy, rather than as an individual small-claims action.
4. The argument that Avis's addition of the arbitration provision during the litigation rendered it unenforceable was forfeited because Plaintiffs raised it for the first time on appeal.

Questions Presented

1. Whether Avis waived its contractual right to compel arbitration of claims by unnamed members of a putative class through pre-certification litigation conduct.
2. Whether futility excuses Avis's failure to move to compel arbitration before class certification.
3. Whether the arbitration provision's small-claims carve-out excluded the aggregated class action from arbitration.
4. Whether the enforceability challenge based on Avis's addition of the arbitration provision during the litigation was preserved for appellate review.

Disposition

vacated