In the
United States Court of Appeals
For the Seventh Circuit
No. 11-2120
K AWASAKI H EAVY INDUSTRIES, L TD.,
also known as K AWASAKI JUKOGYO
K ABUSHIKI K AISHA and K AWASAKI
M OTORS M ANUFACTURING C ORP., U.S.A.,
Plaintiffs-Appellees,
v.
B OMBARDIER R ECREATIONAL P RODUCTS,
INC., and BRP U.S., INC.,
Defendants-Appellants.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 3:10-cv-00641—David R. Herndon, Chief Judge.
A RGUED S EPTEMBER 15, 2011—D ECIDED O CTOBER 21, 2011
Before F LAUM, M ANION, and SYKES, Circuit Judges.
F LAUM, Circuit Judge. The plaintiffs-appellees, Kawasaki
Heavy Industries, Ltd. and Motors Manufacturing
Corp., U.S.A. (together “Kawasaki”), filed several claims
2 No. 11-2120
against appellants Bombardier Recreational Products,
Inc. and BRP U.S., Inc. (together “BRP”). Kawasaki also
filed claims against BRP’s attorneys and Bank of
Montreal, a secured lender of BRP. The claims all arise
from a settlement agreement between Kawasaki and
BRP, and that agreement contains an arbitration
clause. Pursuant to the arbitration clause, BRP filed a
motion to dismiss or stay all of Kawasaki’s claims
pending arbitration. Regarding the claims against BRP,
the district court held that BRP waived its right to arbi-
trate. As for the claims against the other parties,
the district court held that BRP’s attorneys and Bank of
Montreal can neither compel arbitration nor be com-
pelled to arbitrate, as they are not signatories to the
settlement agreement at issue. Thus, the district court
denied BRP’s motion to dismiss or stay as it applies to
all claims. For the following reasons, we reverse the
district court’s finding of waiver on the part of BRP and
vacate the court’s ruling regarding the arbitrability of
claims against Bank of Montreal and the attorneys.
I. Background
The dispute between BRP and Kawasaki originated
with several cases filed between February 2006 and
April 2007 alleging patent infringement, most notably
Kawasaki Heavy Industries, Ltd. v. Bombardier Recreational
Products, Inc. and BRP-US, Inc., Case No. 06-cv-222
(E.D.Tex. filed October 3, 2006) (the “Texarkana Litiga-
No. 11-2120 3
tion”), which was filed by Kawasaki. 1 In September 2007,
the parties agreed in principle to a settlement agree-
ment (the “Settlement Agreement”). The Settlement
Agreement required both parties to dismiss their respec-
tive lawsuits and includes covenants not to sue for
patent infringement. It also includes two important
provisions that are central to this case: an alternative
dispute resolution provision and a request for a subor-
dination agreement. The alternative dispute resolution
provision, or arbitration clause, stated, in pertinent part:
Any claim, dispute or controversy between the
parties arising out of or relating to this Settle-
ment Agreement shall be resolved by first a personal
meeting between representatives . . . . Should a resolu-
tion fail to be reached through a personal meeting . . .
the party asserting such dispute shall provide notice
to the other party of its intention to submit the dispute
to non-binding mediation . . . . Should a resolution fail
to be reached through non-binding mediation . . . each
party agrees to submit the dispute to binding arbitra-
tion to be held in Dallas, Texas.
The second provision at issue, the subordination clause,
required BRP to secure an agreement with Bank of Mon-
1
The others are Bombardier Recreational Products, Inc. and BRP-
US, Inc. v. Kawasaki Heavy Industries, Ltd., et al., No. 06-cv-JA-JGG
(M.D.Fla filed February 17, 2006) and Bombardier Recreational
Products, Inc. and BRP-US, Inc. v. Kawasaki Heavy Industries,
Ltd. et al., No. 07-cv-156 (E.D.Tex. filed April 11, 2007), both
of which were filed by BRP.
4 No. 11-2120
treal, a creditor who holds a security interest over BRP’s
patent portfolio.2 The subordination clause states, “BRP
shall cause all security agreements between BRP and
the Bank of Montreal that affect any and all of the BRP
Patents . . . to be made subordinate to this Settlement
Agreement.” The purpose of this required agreement is
to prevent Bank of Montreal from taking BRP’s patents
free of the Settlement Agreement’s covenant not to sue
in the event that Bank of Montreal must foreclose
upon BRP.
Before executing the Settlement Agreement, Kawasaki
requested confirmation that the subordination agreement
between BRP and Bank of Montreal was in place. In
response to this request, BRP’s attorneys, Robert Goethals
and Harry Marcus, sent an email stating, “BRP has
just received word that Bank of Montreal will agree to
subordinate the security interests.” Satisfied with this
assurance, Kawasaki agreed to execute the Settlement
Agreement, which went into effect on March 31, 2008. In
accordance with the Settlement Agreement, both parties
dismissed their patent suits. Within eight days of the
effective date of the Settlement Agreement, however, BRP
informed Kawasaki that finalizing the subordination
agreement was taking longer than it anticipated, and
that BRP would need an additional 15 days to complete
and execute the subordination with Bank of Montreal.
2
Bank of Montreal is actually an administrative agent for all
of BRP’s secured lenders, but for the sake of clarity and sim-
plicity, it will be referred to as BRP’s secured lender.
No. 11-2120 5
When Kawasaki expressed concern regarding this
delay, BRP assured Kawasaki that Bank of Montreal
had already agreed to the subordination and that the
delay was due solely to the need to work with Bank of
Montreal’s attorneys on preparing the agreement. Once
again satisfied, Kawasaki completed its obligations
under the Settlement Agreement shortly thereafter.
On May 14, 2008, BRP informed Kawasaki that it
would not provide the subordination agreement detailed
in the Settlement Agreement. The parties attempted to
settle the dispute informally to no avail. In response to
the stalled negotiations, BRP demanded arbitration, but
on April 1, 2009, Kawasaki filed a petition in the
Texarkana Court—the court where it originally filed its
patent claim—seeking to vacate the voluntary dismissal
of its former claim and compel BRP to comply with the
Settlement Agreement. BRP opposed the motion, arguing
two jurisdictional points: (1) the court lacked subject
matter jurisdiction given that the dispute about the Set-
tlement Agreement was not related to the underlying
and original patent litigation, and (2) the parties agreed
to arbitrate all claims arising from or relating to the
Settlement Agreement. After briefing from both parties
on these issues, the Texarkana Court ultimately agreed
with BRP that the court lacked subject matter jurisdic-
tion over a dispute about the Settlement Agreement.2
2
In its finding that it lacked jurisdiction, the Texarkana Court
stated, “At its core, this is a contract dispute—a dispute about
(continued...)
6 No. 11-2120
Kawasaki appealed the Texarkana Court’s ruling to the
Federal Circuit, and while the appeal was pending,
both parties participated in court-mandated mediation.
Before the Federal Circuit decided the case, Kawasaki
voluntarily dismissed its appeal and filed the present
action.
The theory underlying Kawasaki’s claims is that either
BRP and its attorneys lied about the existence of a sub-
ordination agreement with Bank of Montreal or Bank
of Montreal reneged on its agreement to subordinate
its security interest in the patents. Pursuant to that
theory, Kawasaki has requested specific performance of
BRP’s obligations under the Settlement Agreement or,
in the alternative, has asserted claims for breach of con-
tract, fraud, fraud in the inducement, negligent misrepre-
sentation, and negligence against BRP. It has filed the
same claims, with the exception of the breach of contract
claim, against Robert Goethals and Harry Marcus, the
attorneys that represented BRP during the execution
of the Settlement Agreement. Finally, Kawasaki has
filed a breach of a third-party beneficiary contract
claim and a tortious interference claim against Bank of
Montreal. Citing the arbitration clause in the Settlement
2
(...continued)
whether paragraph 3 of the Agreement has or has not been
breached by Bombardier. Because this Court, through the
parties’ supplied stipulation and proposed order of dismissal,
neither reserved jurisdiction to enforce the Agreement nor
incorporated the terms of the Agreement into its order to
dismiss, the Court lacks jurisdiction to hear this dispute.”
No. 11-2120 7
Agreement, BRP moved to dismiss all of Kawasaki’s
claims or, in the alternative, stay the claims pending
arbitration pursuant to the Federal Arbitration Act. 9
U.S.C. § 1 et seq. Kawasaki opposed the motion by
arguing the following: (1) BRP waived its right to
arbitrate, and (2) Bank of Montreal, Goethals and
Marcus (together “non-signatory parties” or “non-signato-
ries”) do not have a right to participate in arbitration,
as they were not parties to the Settlement Agreement.
The district court agreed and denied BRP’s motion
to dismiss or stay pending arbitration. BRP appeals.
II. Discussion
A. BRP’s Waiver of Right to Arbitrate
The arbitration clause at issue covers “[a]ny claim,
dispute or controversy between the parties arising out of
or relating to [the] Settlement Agreement.” Thus, there
is no question that the arbitration clause in the Settle-
ment Agreement is broad enough to cover each of
Kawasaki’s claims against BRP.3 The only question, then,
3
In passing, Kawasaki suggests that BRP violated a condition
precedent to the contract, and thus no enforceable obliga-
tions from that contract existed, including the obligation to
arbitrate claims. In the same breath, however, Kawasaki cites
Schact v. Beacon Inc. Co., which clearly held that a failure to
fulfill a condition precedent does not negate the fact that a
contractual relationship exists, and thus arbitration is still
appropriate in such a situation. 742 F.2d 386, 390 (7th Cir. 1984).
(continued...)
8 No. 11-2120
is whether BRP waived its right to arbitrate the claims
brought against it.
The district court held that BRP’s actions throughout
its dispute with Kawasaki were inconsistent with the
intent to arbitrate, and thus BRP waived its arbitration
right. The court found that BRP’s intent to litigate rather
than arbitrate was evident from its participation in the
Texarkana litigation, the appeal that followed, and
the mandatory mediation. The district court further
reasoned that BRP exhibited undue delay in seeking
arbitration, which is contrary to an intent to arbitrate.
While the factual findings that led to the district court’s
conclusion of waiver are reviewed for clear error, “the
question of whether [BRP’s] conduct amounts to waiver
is reviewed de novo.” Ernst & Young LLP v. Baker
O’Neal Holdings, Inc., 304 F.3d 753, 756 (7th Cir. 2002).
The Federal Arbitration Act (“FAA”) was originally
enacted “to reverse the longstanding judicial hostility
3
(...continued)
Kawasaki suggests that the case at hand is different, stating,
“[W]here a party immediately breaches an agreement and
then fraudulently procures compliance by the non-breaching
party with that agreement until such time as the non-
breaching party has irrevocably completed performance, then
a decision on a condition precedent is one for the courts in
the first instance.” Kawasaki provides no support for this
contention and, in any event, the argument is waived due to
lack of development. Freeman United Coal Min. Co. v. Office
of Workers’ Compensation Programs, Benefits Review Bd., 957
F.2d 302, 305 (7th Cir. 1992).
No. 11-2120 9
to arbitration agreements that had existed at English
common law and had been adopted by American
courts, and to place arbitration agreements upon the
same footing as other contracts.” Gilmer v. Inter-
state/Johnson Lane Corp., 500 U.S. 20, 24 (1991). In further-
ance of this goal, the FAA “provides for stays of pro-
ceedings in federal district courts when an issue in the
proceeding is referable to arbitration, § 3, and for orders
compelling arbitration when one party has failed, ne-
glected, or refused to comply with an arbitration agree-
ment, § 4.” Id. at 25; 9 U.S.C. §§ 3-4. Despite the federal
policy favoring arbitration, a contractual right to arbitra-
tion can be waived. St. Mary’s Med. Ctr. of Evansville, Inc.
v. Disco Aluminum Prods. Co., Inc., 969 F.2d 585, 587 (7th
Cir. 1992). That waiver can be either explicit or inferred
from a party’s actions. Id. The parties agree that BRP
did not explicitly waive its right to arbitrate, so the ques-
tion to be answered is whether a waiver of its right
to arbitrate can be inferred from BRP’s actions.
For waiver of the right to arbitrate to be inferred, we
must determine that, considering the totality of the cir-
cumstances, a party acted inconsistently with the right
to arbitrate. Sharif v. Wellness Int’l Network, Ltd., 376
F.3d 720, 726 (7th Cir. 2004). While several factors are
considered in the waiver analysis, diligence or the lack
thereof should weigh heavily in the decision. Cabinetree
of Wisconsin v. Kraftmaid Cabinetry, 50 F.3d 388, 391 (7th
Cir. 1995). Other factors that we consider include
whether the allegedly defaulting party participated in
litigation, substantially delayed its request for arbitra-
tion, or participated in discovery. St. Mary’s, 969 F.2d at
10 No. 11-2120
589-91. Some circuits require a showing that the non-
waiving party was prejudiced by its reliance on the liti-
gious behavior of the waiving party in order to find
waiver. See, e.g., J & S Const. Co., Inc. v. Travelers Indem. Co.,
520 F.2d 809, 809-10 (1st Cir. 1975). Though we do not
require a showing of prejudice to find waiver, it is a
relevant factor in the totality-of-the-circumstances analy-
sis. St. Mary’s, 969 F.2d at 590. Kawasaki first argues
that BRP’s participation in the Texarkana litigation il-
lustrated BRP’s desire to present the dispute to a judicial
decision maker, thus contributing to a finding of
waiver. Participation in litigation is considered in the
waiver determination in order to ensure that the
proper forum for a dispute is established as early as
possible. This policy prevents parties from waiting to
see how they fare in a judicial forum before choosing
arbitration, prevents the duplicative adjudication of
disputes, and prevents the undue prejudice that results
from a party spending time and money on litigation that
will not ultimately resolve a case. The key determina-
tion when considering this factor, therefore, is whether
a party manifested an intent to proceed with litigation.
Cabinetree, 50 F.3d at 390. We have held that when a
party chooses to proceed in a judicial forum, there is
a rebuttable presumption that the party has waived its
right to arbitrate. Id.
Kawasaki argues that BRP chose to proceed in a non-
arbitral forum by submitting briefs in the Texarkana
litigation, participating in court-mandated mediation,
and participating in the appeal to the Federal Circuit,
and thus BRP presumptively waived its right to arbitrate
No. 11-2120 11
under Cabinetree. In Cabinetree, a defendant had a case
removed to federal court and upon removal, participated
in extensive discovery. Cabinetree, 50 F.3d at 389. We
held that the defendant’s choice to remove the case to
federal court and participate in discovery was a choice
to proceed before a non-arbitral tribunal, triggering a
presumption of waiver. Id. at 390-91. Since the defendant
did not overcome this presumption, it was deemed to
have waived its right to arbitrate. Id.
Contrary to the defendant in Cabinetree, BRP did not
commit to a non-arbitral resolution of its dispute with
Kawasaki, and thus did not trigger the presumption of
waiver. First, BRP did not file a claim or motion in—nor
remove a case to—the Texarkana Court. BRP merely
responded to Kawasaki’s motion to reopen litigation,
which cannot be characterized as a choice for judicial
resolution of the dispute. Second, BRP did nothing to
suggest that it was willing to have the Texarkana
Court decide the merits of its dispute with Kawasaki.
Neither the district court’s opinion nor Kawasaki’s
brief suggest that BRP even made mention of the merits
in its briefing to the Texarkana Court; BRP simply chal-
lenged the court’s jurisdictional ability to hear Kawasaki’s
claim. In fact, one of BRP’s arguments against the
Texarkana Court’s jurisdiction was that the case
belonged in arbitration instead of the courts. It is
evident, therefore, that BRP did not “proceed with litiga-
tion,” and thus no presumption of waiver should
be applied.
Kawasaki also attempts to analogize this case to
St. Mary’s, where we held that the defendant’s filing of
12 No. 11-2120
a motion to dismiss or for summary judgment—which
was based on a contractual limitation period barring
recovery—constituted a decision to proceed with litiga-
tion. 969 F.2d at 589. We reasoned that, regardless of
whether a motion based on a contractual limitation
period is a motion “on the merits,” a party that makes
such a motion is “[s]ubmitting [the] case to the district
court for decision,” which is inconsistent with the desire
to arbitrate. Id. We further discussed the important dif-
ference between a mere motion to dismiss and a motion
for summary judgment, the resolution of which would
“end[] the case just as surely as a judgment entered
after a trial.” Id. Unlike the motion submitted by the
defendant in St. Mary’s, BRP’s brief arguing against
Texarkana’s jurisdiction can in no way be construed as
submitting the case to the court for a decision that
resolves the dispute. Nor did BRP’s argument infringe
on Kawasaki’s right to continue to pursue its claims in
a proper forum. Despite Kawasaki’s arguments to the
contrary, the lines drawn by St. Mary’s suggest that
BRP’s actions fall short of any meaningful participation
in litigation for the purposes of waiver analysis. This
conclusion is bolstered by our more recent case law,
where we have held that a party does not waive its right
to arbitrate by filing a motion to dismiss.4 Faulkenberg v.
4
While BRP’s brief opposing Kawasaki’s petition to reopen
the Texarakana litigation was not, strictly speaking, a motion
to dismiss, it was the functional equivalent of a motion to
dismiss based on lack of jurisdiction, given that BRP could not
(continued...)
No. 11-2120 13
CB Tax Franchise Systems, 637 F.3d 801, 807 (7th Cir.
2011); see also Sharif v. Wellness Int’l Network, Ltd., 376
F.3d 720, 726 (7th Cir. 2004) (“[I]t is well-established
that a party does not waive its right to arbitrate merely
by filing a motion to dismiss.”). Thus, unlike the defen-
dants in Cabinetree and St. Mary’s, BRP did not proceed
with litigation in a manner inconsistent with the intent
to arbitrate.
As for BRP’s participation in Kawasaki’s appeal to
the Federal Circuit and the accompanying mandated
mediation, they cannot add any weight to the allega-
tion that BRP waived its right to arbitrate. BRP’s failure
to participate in either the appeal or the mediation
would have resulted in a default judgment in favor of
Kawasaki. If BRP could challenge the Texarkana Court’s
jurisdiction without waiving its right to arbitrate—as
we have said it can—it would be backwards to then
hold that defending the Texarkana Court’s dismissal on
appeal is inconsistent with the intent to arbitrate. Re-
garding the mediation, not only does the same argu-
ment apply, but the arbitration clause in the Settlement
Agreement actually calls for mediation before arbitra-
tion takes place, making mediation clearly consistent
with the parties’ arbitration agreement. Thus, BRP’s
participation in the appeal and mediation that followed
the Texarkana litigation does not serve to waive BRP’s
right to arbitrate.
4
(...continued)
have moved to dismiss a case that had already been dis-
missed voluntarily.
14 No. 11-2120
Kawasaki next argues that BRP waited two years
before it requested arbitration, and that this undue
delay further counsels in favor of a finding of waiver.
As Kawasaki rightly points out, we stated in Cabinetree
that a party must do all that it can reasonably be
expected to do to determine as early as possible whether
to proceed through arbitration or the courts. Cabinetree,
50 F.3d at 391. But in Cabinetree, the defendant “dropped
a bombshell” by invoking its right to arbitration after
significant delay, Cabinetree, 50 F.3d at 389, for which the
defendant had no explanation. Id. at 391. Similarly, we
found in St. Mary’s that the defendant’s ten-month
delay between the plaintiff’s filing of a claim and the
defendant’s motion to stay for arbitration was incon-
sistent with the intent to arbitrate, especially since the
defendant “never even mention[ed] arbitration until
after it lost its motion [to dismiss or for summary judg-
ment].” St. Mary’s, 969 F.2d at 589. BRP’s “delay” in
asserting its right to arbitration differs drastically from
the delay exhibited by the defendants in Cabinetree and
St. Mary’s in two important respects. First, the defendants
in Cabinetree and St. Mary’s failed to assert their right
to arbitrate for extended periods of time all during the
same pieces of litigation. Conversely, BRP’s delay in the
current litigation was nil. The alleged delay is the result
of time spent arguing in Texarkana, not this court.
Second, BRP’s assertion of its right to arbitrate was not
out of the blue. Unlike the defendants in St. Mary’s and
Cabinetree, BRP mentioned its desire to arbitrate at every
turn. Beyond simply informing Kawasaki that it wanted
any claims settled in arbitration, BRP actually argued,
No. 11-2120 15
in open court, that the dispute belonged in arbitration.
Given this candidness, it is hard to see how Kawasaki
could have believed that BRP did not desire arbitration.
Kawasaki concedes that BRP mentioned the possibility
of arbitration early in the dispute. But Kawasaki argues
that BRP should have filed a motion to stay pending
arbitration or to compel arbitration with the Texarkana
Court if it truly intended to arbitrate.5 Both of these
motions, however, were not only unnecessary to retain
the right to arbitrate—they would have been impossible
for the Texarkana Court to grant. With regard to a
motion to compel, the Texarkana Court did not have
the authority to compel arbitration under the FAA.
Section 4 of the FAA provides parties with the right to
5
In support of this claim, Kawasaki relies on Briggs & Stratton
v. Local 232, Int’l Union, AFL-CIO for the proposition that noting
the existence of an arbitration clause does not compel the
inference that the party wishes to arbitrate. 36 F.3d 712, 716
(7th Cir. 1994). This reliance, however, is misplaced. First, in
Briggs, there was actual evidence intimating that neither party
wanted to arbitrate, suggesting that a mention of the arbitra-
tion clause did not equal a desire to arbitrate. Id. at 715-16.
Second, the arbitration clause in Briggs was elective, stating
that a party may, not must, submit a dispute to arbitration. Id.
A putative plaintiff bound by an elective arbitration clause
has a choice between arbitration and court, unless the
opposing party has affirmatively invoked the arbitration
clause by filing a claim in arbitration or signaling its intent to
do the same. A plaintiff subject to a mandatory arbitration
clause, on the other hand, is bound by that agreement unless
the opposing party has waived its right to arbitrate.
16 No. 11-2120
compel arbitration, 9 U.S.C. § 4, but if an arbitration
clause contains a choice of venue provision, only a court
within the same district of that venue can enter an order
compelling arbitration. Haber v. Biomet, Inc., 578 F.3d 553,
558 (7th Cir. 2009), citing Merrill Lynch, Pierce, Fenner &
Smith v. Lauer, 49 F.3d 323, 327 (7th Cir. 1995). If the
Texarkana Court did not have the power to grant a
certain motion, BRP could not have been required to
submit that motion to prevent waiver.
While courts cannot grant a § 4 order to compel arbitra-
tion unless they sit in the same district as the arbitration
venue, a § 3 order to stay pending arbitration has no
such requirement. Nonetheless, the Texarkana Court
could not have issued a § 3 order, nor should BRP have
been required to submit such a motion to prevent the
waiver of its right to arbitrate. First, as the Texarkana
Court indicated in its ruling, it did not have jurisdic-
tion over claims about the Settlement Agreement be-
tween Kawasaki and BRP.6 When a court grants a § 3
stay pending arbitration, it retains jurisdiction over a
matter so that it can effectuate the decision of an arbi-
trator or handle additional matters or claims that were
not subject to arbitration. Therefore, the Texarkana Court
would still need jurisdiction over a Settlement Agree-
6
That is not to say that the Texarkana Court could not have had
jurisdiction over a dispute regarding the Settlement Agreement;
it merely lacked jurisdiction under the patent case that
Kawasaki had originally filed and was attempting to reopen.
We decline to comment on whether Texarkana could have
had jurisdiction over a newly filed claim.
No. 11-2120 17
ment claim to order a stay. Since the FAA itself does not
provide a jurisdictional basis, Vaden v. Discover Bank, 556
U.S. 49, ___, 129 S. Ct. 1262, 1271 (2009), and the Texarkana
Court did not have an independent jurisdictional basis,
the court did not have the power to grant a stay pending
arbitration under the FAA. Thus, BRP could not have
been granted a motion to stay.
But even if, arguendo, the Texarkana Court did have
the power to grant a motion to stay, BRP should not
have been required to file that motion in order to prevent
the waiver of its arbitration right. We stated in Cabinetree,
“A defendant who wants arbitration is often content
with a stay, since that will stymie the plaintiff’s effort to
obtain relief unless he agrees to arbitrate.” 50 F.3d at 389.
Similarly, an appropriate motion to dismiss (or an argu-
ment against jurisdiction, as the case may be) stymies a
plaintiff’s attempt at judicial relief and is consistent with
the intent to arbitrate, especially when that motion in-
cludes an argument that the case belongs in arbitra-
tion. The waiver determination is not based on whether
a party has jumped through the proper technical hoops,
but rather is a totality-of-the-circumstances analysis
that aims to ascertain whether a party intended to
abandon the right to arbitrate by submitting a dispute
to the courts, or at least acted in such a way. Even if a
motion to stay pending arbitration in the Texarkana
Court would have been the most expeditious path to
arbitration, a declaration that the case should be
dismissed and sent to arbitration is just as effective in
signaling BRP’s desire to arbitrate rather than litigate.
18 No. 11-2120
BRP’s failure to file a § 3 motion to stay pending ar-
bitration or a § 4 motion to compel arbitration does
not constitute undue delay. BRP has consistently stated
that it is prepared to arbitrate Kawasaki’s claims. BRP
does not itself have any claims to settle, and if Kawasaki
wants to take issue with BRP’s performance, it is
enough for BRP to avoid substantive litigation activity
and indicate that it is not forgoing its right to arbitrate.
Finally, Kawasaki correctly asserts that in this Circuit,
“waiver may be found absent a showing of prejudice,”
though prejudice is a relevant consideration. St. Mary’s,
969 F.2d at 590, quoting Nat’l Found. for Cancer Research
v. A.G. Edwards & Sons, 821 F.2d 772, 777 (D.C. Cir.
1987). Prejudice is only considered, however, when it
results from “the conduct allegedly constituting waiver.”
Dickinson v. Heinold Securities, Inc., 661 F.2d 638, 641 n. 5
(7th Cir. 1981); see also Cabinetree, 50 F.3d at 391 (ex-
plaining that prejudice “should weigh heavily in the
decision” when an allegedly defaulting party proceeds
in a judicial forum but the circumstances may none-
theless counsel against a finding of waiver). Here, BRP’s
actions were wholly consistent with the intent to arbi-
trate. There was therefore no conduct constituting waiver
which could have prejudiced Kawasaki, so prejudice is a
non-factor in this case.
As evidenced in the above analysis, BRP has not only
acted consistently with an intent to arbitrate Kawasaki’s
claims, but BRP has continually voiced its desire to arbi-
trate. Accordingly, we reverse the district court’s denial
of BRP’s motion to stay the proceedings pending arbitra-
tion as it applies to the claims against BRP.
No. 11-2120 19
B. Non-Signatory Parties’ Right to Arbitrate
BRP’s motion sought to dismiss or stay not only
Kawasaki’s claims against BRP, but also Kawasaki’s
claims against the Bank of Montreal, against Marcus, and
against Goethals despite the fact that none of these
parties were signatories to the Settlement Agreement.
BRP argued that the claims against the non-signatory
defendants were so intertwined with the Settlement
Agreement that the non-signatories should be able to
enforce the arbitration clause against Kawasaki. The
district court held that the claims against Bank of
Montreal, Marcus, and Goethals are not substantially
the same as, or intertwined with, the claims against BRP,
and thus the non-signatories could not compel Kawasaki
to arbitrate. The district court also held that BRP did not
successfully advance any theory under which the non-
signatories could be compelled to arbitrate by Kawasaki.
Regardless of whether any of the non-signatory parties
have a right to enforce the arbitration clause or can be
forced to arbitrate themselves, this is not a justiciable
matter. For one, BRP lacks standing to protect the non-
signatory defendants’ rights. The Supreme Court has
continually held that third-party standing is, on the
whole, inappropriate. See, e.g., Kowalski v. Tesmer, 543
U.S. 125, 129 (2004) (“[The Supreme Court has] adhered
to the rule that a party generally must assert his own
legal rights and interests, and cannot rest his claim to
relief on the legal rights or interests of third parties.”
(internal quotation omitted)). The exception to this rule
requires a party seeking third-party standing to show, inter
20 No. 11-2120
alia, that the possessor of the right is somehow hindered
from protecting her own interests. Id. at 130. BRP has
not attempted to make this showing, and thus, BRP
cannot argue on behalf of the non-signatories’ rights,
whether or not those rights exist.
The issue of whether the arbitration clause can or must
apply to the non-signatory parties is also not ripe for
review. Under Article III of the United States Constitution,
there must be an actual dispute between parties with
adverse legal interests for a court to hear a case or issue.
Rock Energy Co-op v. Vill. of Rockton, 614 F.3d 745, 748
(7th Cir. 2010) citing MedImmune, Inc. v. Genentech, Inc.,
549 U.S. 118, 127 (2007). Here, Kawasaki has explicitly
said that it wants to litigate its claims and does not
want to arbitrate. There is no evidence in the record that
the non-signatory parties have any interest in arbitrating
Kawasaki’s claims. Thus, a determination of whether
the non-signatories can enforce the arbitration clause
or have it thrust upon them would be nothing more
than an advisory opinion to be used as guidance on the
chance that one party decides to change course and
attempt arbitration. Deveraux v. City of Chicago, 14 F.3d
328, 330 (7th Cir. 1994) (reaffirming that federal courts
do not have the power to render advisory opinions).
Given that BRP does not have standing to assert the non-
signatory parties’ rights, and given the fact that
the issue is not ripe for review, the district court’s
holding that the non-signatory parties can neither force
arbitration nor be forced to arbitrate is vacated. It is
entirely possible that Kawasaki will want to arbitrate
No. 11-2120 21
its claims against the non-signatory parties now that it
may be arbitrating its claims against BRP.7 This battle,
however, must be fought by the interested parties—
Kawasaki and the non-signatories.
III. Conclusion
For the foregoing reasons, the district court’s denial
of BRP’s motion to stay proceedings is R EVERSED as
it applies to the claims against BRP and V ACATED as it
applies to the claims against the non-signatory parties.
7
BRP rightly asserts that the mere presence of the non-signa-
tory parties does not affect BRP’s right to arbitrate. See Moses H.
Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983)
(“Under the Arbitration Act, an arbitration agreement must
be enforced notwithstanding the presence of other per-
sons who are parties to the underlying dispute but not to the
arbitration agreement.”). Thus, if Kawasaki still wants to
bring its claims against BRP, it will need to settle for arbitra-
tion, barring a change of course on BRP’s part.
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