Right to arbitrate; Federal Arbitration Act (the Act); Whether defendants “extinguished” their right to arbitrate by litigating the case for a year; 9 USC § 3; Right to compel arbitration where there is no court case; § 4; Whether defendants were in default under § 3 when they sought arbitration by litigating the case for a substantial time; Whether defendants’ request to compel arbitration was inconsistent with arbitration where they litigated first & then moved to arbitrate only after the court rejected their claim to dismiss the case on the merits

[This appeal was from the WD-MI.] The court held that defendant-Metropolitan Hospital and the individual defendants lost their right to arbitrate under the Act because their request to arbitrate came after a year in litigation, and thus, they were in default when requesting arbitration. Kloosterman, a physician assistant, sued her employer, Metropolitan Hospital under § 1983, Title VII, and Michigan law, claiming she was terminated because her religious faith prevented her from treating LGBTQ+ patients, using the preferred pronouns, and participating in gender-affirming care. Defendants repeatedly requested that the claims be dismissed on the merits, and the district court dismissed several claims. After litigation had continued for a year, defendants moved for arbitration, which was part of her employment agreement. The court granted the motion and ruled that defendants’ delay in raising the issue did not affect the decision. Kloosterman argued that defendants lost their right to request arbitration after they had litigated the case for a year. Section 3 of the Act allows a party already in court to request a stay and invoke arbitration, while it permits a party to petition the court to compel arbitration where there is no pending federal case. Section 3 only applies where “‘the applicant for the stay is not in default in proceeding with such arbitration.’” The court explained the term “default” and held that it applied in this case. “If a defendant litigates in court for a long enough time before seeking arbitration, one would naturally say that the defendant has not lived up to the ‘promise’ to arbitrate[,]” and “‘default[ed] in proceeding with such arbitration ….’” It referred to defendants’ improper way of presenting the motion to compel to the court, in a summary judgment motion instead of a motion under § 3 or § 4. It then noted that precedent showed that a defendant’s actions are “‘entirely inconsistent’ with arbitration if the defendant first seeks ‘an immediate and total victory in court through a motion to dismiss under Rule 12(b)(6) and then moves to arbitrate only after the court rejects this initial attempt to end the dispute.’”