Originally from Dispute Resolution Journal

SECURITIES

Procedural and Substantive Prejudice Warranted Waiver Finding

The 2nd Circuit affirmed the denial of a plaintiff’s motion to compel arbitration where the parties actively litigated for 11 months and the defendants had won some key procedural motions in the case and had revealed to the plaintiff deficiencies in its complaint.

Louisiana Stadium & Exposition District (LSED), the owner of the New Orleans Superdome, acting on advice of Merrill Lynch, issued $240 million of auction-rate municipal bonds to finance repairs to the Superdome necessitated by Hurricane Katrina. The bond auction failed. On Jan. 22, 2009, LSED filed a lawsuit in federal court in Louisiana against its bond insurer and a few days later, amended the complaint to add three Merrill Lynch entities as defendants. Then LSED filed an identical state court lawsuit against the defendants. On Dec. 21, 2009, LSED moved for the first time to compel arbitration.