In significant and hard-fought litigation, it is not uncommon for parties to reach a settlement that includes an agreement to jointly move the court to vacate earlier rulings on key motions in the case. For a settling plaintiff that lost the earlier ruling, vacatur can be important to preserve potential claims against other defendants. Likewise, vacatur of an adverse ruling against a defendant allows that defendant to contest the issue in future cases. For the party that prevailed on the motion, there is often little incentive to oppose an agreement to request vacatur if it is part of an otherwise favorable settlement agreement.

On June 12, the Richmond Division of the Federal Bar Association hosted a Lunch and Learn panel for chapter members, area practitioners, and special guests — the Honorable Mark R. Colombell and the Honorable Summer L. Speight, the Richmond Division’s newest magistrate judge sworn in earlier this year. With her appointment, Judge Speight returns to the Richmond Division, having begun her legal career there as a law clerk for the Honorable M. Hannah Lauck. Before receiving her appointment as a magistrate judge, Judge Speight served as a partner with McGuireWoods LLP in Richmond, VA. There, she counseled and represented employers in all aspects of employment-related litigation, traditional labor law, employee benefits, and ERISA litigation.

In Wood v. Omni Financial of Nevada, Inc., the plaintiffs filed a class action complaint alleging violations of the Military Lending Act (MLA). Specifically, the plaintiffs, two active duty service members who had entered into multiple installment loans with the defendant, alleged that the defendant violated the MLA by unlawfully: 1) extending loans with interest rates that exceeded the military annual percentage rate of interest (MAPR); 2) extending loans that rolled over prior loans; 3) requiring plaintiffs to establish an allotment to repay the loan as a precondition to receiving funding; and 4) requiring plaintiffs to provide a security interest in their bank account as a condition for receiving the loans. The court disagreed with the plaintiffs’ assertions and granted the defendant’s motion to dismiss for failure to state a claim.

Before the U.S. Supreme Court’s decision in Morgan v. Sundance, Inc., 142 S.Ct. 1708 (2022), most of the federal circuits, including the Fourth Circuit, required a showing of prejudice to establish waiver of the right to compel arbitration under a contract.  See e.g., Fraser v. Merrill Lynch Pierce, Fenner & Smith, Inc., 817 F.2d 250, 252 (4th Cir. 1987). Morgan rejected any requirement of prejudice, holding that the analysis of waiver of an arbitration right is identical to the analysis of waiver of other contract rights.  After Morgan, the party asserting waiver of a right to arbitrate must show only: (1) knowledge of an existing right to compel arbitration; and (2) acts inconsistent with that right.