On September 8, 2016, in Chassen v. Fidelity National Financial, Inc., the US Court of Appeals for the Third Circuit held that futility can excuse a litigant's delay in invoking his right to compel arbitration, joining with the Eighth, Ninth, Tenth, and Eleventh Circuits. The court remanded the case back to the district court, with instructions to compel individual arbitration of all of the plaintiffs' arbitrable claims ( (3d Cir. Sep. 8, 2016)).

The plaintiffs are a putative class of New Jersey real estate purchasers and refinancers who claim they were charged excess fees by the title agents and attorneys of the defendant title companies (Agents). The Agents allegedly overcharged for the recording of their deeds and mortgages far above what the county clerk charged. In addition, the Agents failed to disclose the excessive fees, which violated New Jersey state regulations, and pocketed the difference in an amount exceeding $50 million.

In 2009, the plaintiffs sued the defendants in New Jersey federal district court, alleging breach of contract and state law violations. The defendants raised several affirmative defenses and moved to dismiss the claims. Although their contracts with the plaintiffs contained arbitration clauses, the defendants did not yet move to compel arbitration, nor did they state why they declined to do so.

In 2011, the Supreme Court ruling in AT&T Mobility, LLC v. Concepcion preempted state laws that rendered certain arbitration clauses unenforceable, including a law in New Jersey (563 U.S. 333, 352 (2011)). The defendants' arbitration clause was now valid, and the defendants moved to compel arbitration shortly thereafter. The district court found that, prior to the Concepcion decision, the defendants' attempts to compel arbitration would have been futile, so the court excused the multi-year delay.

The district court granted the defendants' motion and ordered arbitration in a ruling that followed more than two years of litigation, more than 130 non-party subpoenas, and over $50,000 in expert fees. This appeal followed.

The Third Circuit affirmed, agreeing that the futility of any efforts to compel arbitration prior to Concepcion excused the defendants' delay in moving for that relief. Because the delay was excused, the court remanded the case back to the district court with instructions to compel individual arbitration.

In its analysis, the court reiterated the Third Circuit's general waiver rule that a party waives the right to arbitrate only where the "demand for arbitration came long after the suit commenced and when both parties had engaged in extensive discovery" (PaineWebber Inc. v. Faragalli, 61 F.3d 1063, 1068-69 (3d Cir. 1995)). The court then provided three reasons for adopting a futility exception to the waiver rule: