“Knowledge-Based Waiver” and the Party-Presentation Rule:
A Comprehensive Commentary on Andrew Berzanskis v. FCA US, LLC
(6th Cir. July 10, 2025)

1. Introduction

The Sixth Circuit’s published opinion in Andrew Berzanskis v. FCA US, LLC emerges from multi-district litigation over alleged fire risks in Chrysler Pacifica minivans. Eighteen of the sixty-nine named plaintiffs had unknowingly signed retail installment contracts that contained arbitration agreements. After discovery revealed those clauses, the manufacturer (FCA) moved to compel only those eighteen plaintiffs to individual arbitration. The district court sua sponte denied the motion, holding that FCA had waived its arbitration right by previously filing a Rule 12(b)(6) motion addressed to the entire consolidated complaint.

On interlocutory appeal, the Sixth Circuit (Batchelder, J.) reversed. The panel crystallises two doctrinal points of first impression in the Circuit—and, arguably, nationally—regarding arbitration waiver and civil procedure:

1. Knowledge-Based Waiver Rule. A litigant cannot implicitly waive the contractual right to arbitrate unless it knew or had reason to know the right existed at the time of the alleged inconsistent conduct. Mere industry custom or speculation about standard-form contracts is insufficient.
2. Strict Party-Presentation in Arbitration Motions. Absent truly exceptional circumstances, district courts may not sua sponte invoke waiver (or forfeiture) to defeat a motion to compel arbitration. Doing so violates the adversarial system and risks reversible error.

2. Summary of the Judgment

• The court reversed the district court’s order denying FCA’s motion to compel arbitration.
• It held that (a) waiver-through-litigation is presumptively a judicial question (not for the arbitrator) and the purchase contracts did not clearly delegate it to arbitration; (b) waiver requires knowledge of the right, which FCA lacked until it received the contracts in discovery; and (c) the district court erred by raising waiver sua sponte, contravening the party-presentation principle.
• The case was remanded for further proceedings consistent with the opinion; practically, the eighteen plaintiffs will proceed to arbitration unless they can raise other contract formation defences.

3. Analysis

3.1 Precedents Cited and Their Influence

The panel knit together Supreme Court, Sixth Circuit, and out-of-circuit authority to re-calibrate waiver doctrine post-Morgan v. Sundance (U.S. 2022).

• JPD, Inc. v. Chronimed Holdings, 539 F.3d 388 (6th Cir. 2008): Establishes the presumption that courts—not arbitrators—decide waiver based on litigation conduct. The panel relied on JPD to reject FCA’s threshold argument that an arbitrator should decide.
• Rent-A-Center v. Jackson, 561 U.S. 63 (2010) & Howsam v. Dean Witter Reynolds, 537 U.S. 79 (2002): Supply the “clear and unmistakable” delegation standard. The Sixth Circuit found the retail clauses’ reference to “arbitrability” too vague to shift waiver questions to the arbitrator.
• Morgan v. Sundance, Inc., 596 U.S. 411 (2022): Abolished the requirement that the non-movant show prejudice from delay before a finding of waiver. Berzanskis applies Morgan but fills the doctrinal vacuum by emphasising knowledge instead of prejudice.
• American Locomotive Co. v. Chemical Research Corp., 171 F.2d 115 (6th Cir. 1948): Early Sixth Circuit pronouncement that waiver cannot occur without knowledge of [the] right’s existence. Berzanskis revives and elevates this vintage precedent.
• Solo v. UPS, 947 F.3d 968 (6th Cir. 2020) & Schwebke v. United Wholesale Mortgage, 96 F.4th 971 (6th Cir. 2024): Both involved waiver where the defendant possessed all documents from the outset. The panel distinguished these cases because FCA lacked such documents until discovery.
• Out-of-Circuit Cases: White v. Samsung (3d Cir. 2023), Smith v. GC Services (7th Cir. 2018), and Hill v. Xerox (9th Cir. 2023) were cited by plaintiffs. The panel read them as consistent with the “should have known” standard rather than dispensing with knowledge entirely.
• Party-Presentation Authorities: Greenlaw v. United States, 554 U.S. 237 (2008); Sineneng-Smith, 590 U.S. 371 (2020); Wood v. Milyard, 566 U.S. 463 (2012). Provide the normative force for rebuking sua sponte waiver findings.

3.2 Legal Reasoning

1. Who decides waiver?
     • The presumption from JPD stands: courts decide waiver-through-litigation.
     • Delegation requires express language. A generic reference to “arbitrability” is not enough.
   
2. Elements of Waiver Post-Morgan.
     The Sixth Circuit articulates two indispensable elements:
     (a) Knowledge of an existing right to arbitrate; and
     (b) Conduct inconsistent with reliance on that right.
     Without element (a), element (b) cannot logically occur.
   
3. Application to FCA.
     • FCA lacked actual knowledge until May 2023.
     • The district court’s assumption that FCA “must” have known was unsupported by evidence and therefore clearly erroneous.
   
4. Party-Presentation Violation.
     • Waiver is an affirmative defence. Plaintiffs never raised it.
     • No exceptional circumstance justified judicial intervention. Consequently, the district court overstepped its role.

3.3 Impact on Future Cases

The opinion recalibrates arbitration litigation within the Sixth Circuit and offers guidance nation-wide:

• Litigants’ Playbook. Defendants may safely litigate threshold motions—e.g., Rule 12(b)(6) or MDL consolidation—while investigating whether arbitration clauses exist, without fearing automatic waiver. The clock begins when they possess (or negligently fail to possess) the contracts.
• Plaintiffs’ Strategy. Plaintiffs who seek to avoid arbitration must affirmatively plead and prove waiver. Silence or tactical omission risks forfeiture of the argument.
• District Court Practice. Judges must solicit party input before denying arbitration on sua sponte grounds. Failure to do so invites reversal and prolongs litigation, undermining the FAA’s efficiency goals.
• National Dialogue. By foregrounding “knowledge” rather than “prejudice,” Berzanskis supplies a doctrinal tool other circuits may adopt in reconciling Morgan. Whether the Supreme Court will eventually endorse a knowledge-based approach remains to be seen.

4. Complex Concepts Simplified

Arbitration Clause

A contractual provision requiring the parties to submit disputes to a private arbitrator instead of a court.

Waiver vs. Forfeiture

Waiver = intentional relinquishment of a known right.
Forfeiture = failure to assert a right timely, sometimes unintentionally. The opinion uses the term “waiver” for consistency, but notes the technical distinction.

Delegation Clause

A provision sending gateway issues (e.g., whether the arbitration agreement is valid) to the arbitrator. It must be “clear and unmistakable.”

Party-Presentation Principle

The court decides only issues the parties raise, acting as a neutral umpire—not as an advocate for either side.

Clear-Error Review

An appellate standard deferring to the trial court’s factual findings unless the appellate judges are left with a “definite and firm conviction” that a mistake occurred.

5. Conclusion

Berzanskis v. FCA US delivers a robust, two-pronged precedent: waiver of arbitration requires knowledge, and courts cannot conjure waiver on the parties’ behalf. In doing so, the Sixth Circuit both reinforces the Federal Arbitration Act’s mandate for efficient resolution and safeguards the adversarial structure of American adjudication. Practitioners must now pay closer attention to the timing of their knowledge (or constructive knowledge) of arbitration clauses and be prepared to litigate waiver explicitly—lest the issue be deemed abandoned. The opinion’s disciplined approach to party autonomy and evidentiary support is likely to echo well beyond the automotive MDL from which it arose, influencing arbitration jurisprudence in both federal and state courts nationwide.