Ex parte Merrill Lynch, Pierce, Fenner & Smith, Inc
In Ex parte Merrill Lynch, Pierce, Fenner & Smith, Inc., 494 So. 2d 1 (Ala. 1986), the plaintiff sued Merrill Lynch and others in the Jefferson Circuit Court on April 4, 1984. In June 1984, Merrill Lynch moved to stay the action to await the outcome of prior pending federal-multidistrict class-action litigation in which it was a defendant and the plaintiff was a member of the class. On January 25, 1985, the plaintiff opted out of the class in the federal action. On April 18, 1985, Merrill Lynch moved to compel arbitration.
The trial court denied its motion, and Merrill Lynch petitioned this Court for a writ of mandamus directing the trial court to grant its motion to compel arbitration.
The Court wrote: "Merrill Lynch did not substantially invoke the litigation process in the case before us. The defendants simply filed a motion to compel arbitration and stay proceedings pending arbitration; indeed, the defendants did not even file an answer to plaintiff's complaint." 494 So. 2d at 3.
The Court addressed Merrill Lynch's participation in the federal class-action litigation only to the extent that it addressed the plaintiff's argument that she had been prejudiced by the delay between her filing of the complaint and Merrill Lynch's filing of its motion to compel arbitration:
""Plaintiff argues that the defendants waived the right to arbitrate by waiting over a year before filing the motion to compel arbitration. Plaintiff, however, waited nearly ten months before she filed notice with the court that she was opting out of the class in the pending federal multidistrict litigation in New York. Defendants had no reason to seek arbitration before plaintiff's opt-out, as they could have reasonably believed that plaintiff would obtain her relief in the federal suit, and, consequently, that the action in Jefferson County would then be dismissed. Defendants filed the motion to compel arbitration less than three months after plaintiff opted out of the federal suit. We cannot find that this delay caused plaintiff any prejudice." Id.
The Court did not consider the class-action litigation, which had involved the same claims that the plaintiff brought against Merrill Lynch in Jefferson County, in determining whether Merrill Lynch had substantially invoked the litigation process and thereby waived its right to compel arbitration.