No Implied Waiver of Arbitration Against Unnamed Class Members Before They Become Parties

1. Introduction

Roger Salvatora v. XTO Energy Inc (3d Cir. Aug. 24, 2026) is an interlocutory appeal arising from a Rule 23(b)(3) royalty-underpayment class action involving oil-and-gas leases in Western Pennsylvania. The named plaintiffs (landowners/leaseholders) sued XTO Energy, Inc. for allegedly underpaying gas royalties.

A key feature of the dispute was an “arbitration asymmetry”: none of the named plaintiffs had arbitration clauses in their leases, but the proposed class definitions were broad enough to include unnamed leaseholders whose leases did contain arbitration clauses. After class certification and after the opt-out deadline passed, XTO moved to compel arbitration against those unnamed class members. The District Court held XTO had impliedly waived arbitration by litigating for years. The Third Circuit disagreed, vacated, and remanded.

2. Summary of the Opinion

The Third Circuit held that XTO did not impliedly waive its right to compel arbitration against unnamed class members whose leases contained arbitration clauses merely because XTO (1) litigated extensively prior to certification, (2) failed to plead arbitration as an affirmative defense in answers filed before certification, (3) engaged in class discovery and mediation, (4) opposed class certification, and (5) moved to compel arbitration only after the opt-out period expired—especially where XTO repeatedly expressly reserved its intent to enforce arbitration.

Applying the waiver standard for federal rights (as required by the Supreme Court), the court concluded the record did not show the required intentional relinquishment or abandonment of a known right. The order denying arbitration was therefore VACATED and the case REMANDED.

3. Analysis

3.1. Precedents Cited

  • White v. Samsung Elecs. Am., Inc., 61 F.4th 334 (3d Cir. 2023)
    The court used White for two core propositions: (1) the standard of review—waiver is reviewed de novo with factual findings for clear error; and (2) waiver in the arbitration context can be inferred from conduct showing a preference for litigation over arbitration, assessed holistically.
  • Morgan v. Sundance, Inc., 596 U.S. 411 (2022) and Johnson v. Zerbst, 304 U.S. 458 (1938)
    These cases supplied the governing definition of waiver for federal rights: it requires (i) intentional relinquishment or abandonment (ii) of a known right. Notably, after Morgan, courts may not impose arbitration-specific waiver rules (such as a heightened prejudice requirement).
  • Valli v. Avis Budget Grp., Inc., 162 F.4th 396 (3d Cir. 2025)
    This was the pivotal intervening precedent. The Third Circuit applied Valli’s “class-certification caveat”: when no named class member is subject to arbitration, the defendant’s failure to move to compel arbitration before class certification does not, by itself, evidence a preference for litigation over arbitration as to putative class members. Valli also emphasized that express reservations of arbitration rights undermine implied-waiver inferences, and that not all pre-certification conduct is irrelevant, but it must meaningfully reflect intent to abandon arbitration.
  • N. Sound Cap. LLC v. Merck & Co., 938 F.3d 482 (3d Cir. 2019) (quoting Smith v. Bayer Corp., 564 U.S. 299 (2011)), and Home Depot USA, Inc. v. Lafarge N. Am., Inc., 59 F.4th 55 (3d Cir. 2023)
    These cases grounded the court’s central procedural premise: unnamed class members are not “parties” before class certification. That principle did much of the work in defeating the waiver finding, because much of XTO’s “litigation conduct” occurred at a time when the arbitration-bound leaseholders were not yet parties.
  • Devlin v. Scardelletti, 536 U.S. 1 (2002) (Scalia, J., dissenting)
    Cited for the proposition (in dissent) that treating unnamed class members as parties pre-certification would be “novel and surely erroneous,” reinforcing the Third Circuit’s “not a party until certification” framing.
  • Nat'l Found. for Cancer Rsch. v. A.G. Edwards & Sons, Inc., 821 F.2d 772 (D.C. Cir. 1987)
    Used (through Valli) to caution against inferring waiver from discovery where both arbitrable and non-arbitrable claims exist and discovery may overlap.
  • Gray Holdco, Inc. v. Cassady, 654 F.3d 444 (3d Cir. 2011)
    Cited (through White) for the “circumstances and context” approach to waiver—i.e., a holistic assessment.
  • Lower-court and procedural backdrop cases shaping the litigation posture:
    • Salvatora v. XTO Energy, Inc., 2023 WL 4137306 (W.D. Pa. June 2, 2023) (class certification R&R; contemplated post-opt-out arbitration motion)
    • In re Ductile Iron Pipe Fittings ("DIPF") Direct Purchaser Antitrust Litig., 2016 WL 5508843 (D.N.J. Sept. 28, 2016) (quoted on analyzing “specific arbitration agreements”)
    • Salvatora v. XTO Energy, Inc., 2023 WL 4135570 (W.D. Pa. June 22, 2023) (adopting certification recommendation)
    • Valli v. Avis Budget Rental Car Group, LLC, 2024 WL 4349747 (D.N.J. Sept. 30, 2024) (district court waiver theory later vacated)
    • Salvatora v. XTO Energy, Inc., 759 F. Supp. 3d 615 (W.D. Pa. 2024) (order denying arbitration based on “preference for litigation”)
  • Appellate-jurisdiction line: Henry ex rel. BSC Ventures Holdings, Inc. Emp. Stock Ownership Plan v. Wilmington Tr., N.A., 72 F.4th 499 (3d Cir. 2023) (quoting Palcko v. Airborne Express, Inc., 372 F.3d 588 (3d Cir. 2004))
    These cases supported jurisdiction under 9 U.S.C. § 16(a)(1)(B) because the order had the practical effect of “declining to compel arbitration.”

3.2. Legal Reasoning

The court’s reasoning proceeds in a structured sequence:

  1. Identify the correct waiver standard.
    Under Morgan v. Sundance, Inc., arbitration-waiver is evaluated under ordinary federal waiver principles: intentional relinquishment/abandonment of a known right. “Implied” waiver requires conduct inconsistent with an intent to arbitrate, often described (in this circuit) as a demonstrated preference for litigation over arbitration (per White v. Samsung Elecs. Am., Inc.).
  2. Apply the “Valli caveat” to the class-action posture.
    Because none of the named plaintiffs had arbitration clauses, XTO could not realistically move to compel arbitration against them. Under Valli v. Avis Budget Grp., Inc., the absence of a pre-certification motion to compel arbitration against putative members does not itself suggest waiver.
  3. Evaluate other pre-certification conduct—and reject it as waiver evidence in this posture.
    The court held that:
    • Failure to plead arbitration in answers before certification did not show waiver because the arbitration-bound leaseholders were not parties then (per N. Sound Cap. LLC v. Merck & Co.; Smith v. Bayer Corp.). The court added that even if treated as parties, arbitration is not among the Rule 12(h)(1) defenses automatically waived by omission.
    • Class discovery did not show preference for litigating against arbitration-bound class members because they were not parties yet, and the discovery was consistent with XTO’s efforts to prevent or limit certification of an arbitration-asymmetric class.
    • Mediation participation—especially where presumptively required by W.D. Pa. LCvR 16.2—was minimally probative of intent to abandon arbitration; mediation is non-binding and not inherently inconsistent with arbitration rights (with a cautionary “cf.” to Valli that mediation may matter in other circumstances).
    • Opposition to class certification did not show waiver because XTO expressly reserved arbitration rights and sought to keep arbitration-bound members out of the class. Per Valli, where a party consistently reserves arbitration, implied-waiver by inference becomes difficult; only unambiguous contrary conduct could suffice.
  4. Assess post-certification timing—and deem it reasonably prompt and consistent with the case’s management path.
    Plaintiffs argued XTO waited too long by filing after the opt-out period expired. The court treated this as consistent with (1) XTO’s previously stated intent to enforce arbitration, (2) the practical need to know who remained in the class after opt-outs, and (3) the certification R&R’s own suggestion that arbitration issues could be raised post-opt-out (Salvatora v. XTO Energy, Inc., 2023 WL 4137306). The record also showed little intervening litigation activity aimed at the arbitration-bound members, and XTO moved within about five weeks of final class membership.
  5. Holistic “no waiver” conclusion.
    Even considering the full course of conduct, the plaintiffs’ theory suffered from a recurring defect: it treated XTO as having litigated against the arbitration-bound class members long before they became parties. Since waiver turns on intentional abandonment of a known right, and the challenged conduct was largely pre-party-status conduct, the inference of waiver did not hold.

3.3. Impact

The decision strengthens (and operationalizes) a defendant-protective rule in arbitration-asymmetric class actions:

  • Timing protection in asymmetric classes. Where named plaintiffs are not subject to arbitration, defendants in the Third Circuit gain meaningful latitude to litigate certification-related issues without being deemed to have waived arbitration as to later-added (certified) class members.
  • Party-status matters. The opinion reinforces that waiver analysis must respect the procedural reality that unnamed members are not parties pre-certification; this framing narrows the range of conduct that can plausibly show “preference for litigation” against those members.
  • Express reservations are highly consequential. Repeated, clear statements that a defendant intends to enforce arbitration rights substantially raise the bar for implied waiver; plaintiffs must show unambiguous contrary conduct.
  • Post-opt-out motions can be “reasonably prompt.” Defendants may cite this case to justify waiting until class composition is known (after opt-outs) to move to compel arbitration, particularly where the court’s own certification-related guidance contemplated that sequencing.
  • Practical class-definition drafting pressure. Plaintiffs’ counsel may respond by narrowing class definitions to exclude arbitration-bound leaseholders from the outset to avoid post-certification fragmentation, motion practice, and potential decertification/typicality disputes.

4. Complex Concepts Simplified

  • Rule 23(b)(3) class action: A damages class action where class members must receive notice and have a right to “opt out.” If they do not opt out, they are generally bound by the judgment.
  • Opt-out period: The time window in which class members can exclude themselves from the case to preserve their right to sue (or arbitrate) separately.
  • Arbitration clause / motion to compel arbitration: A contract term requiring disputes to be decided by a private arbitrator rather than a court. A “motion to compel” asks the court to enforce that contract and send the dispute to arbitration.
  • Implied waiver of arbitration: Losing the right to arbitrate not by saying so, but by acting in a way that shows you chose court litigation instead (e.g., litigating the merits for an extended period). After Morgan v. Sundance, Inc., waiver focuses on intent and ordinary waiver principles, not arbitration-specific hurdles.
  • Unnamed class member “not a party” (pre-certification): Before a class is certified, absent class members are not treated as parties. This matters because conduct toward “non-parties” is less probative of choosing litigation over arbitration with them.
  • “Arbitration asymmetry”: Some people in the proposed class are bound to arbitrate while the named representative is not—raising questions about typicality, adequacy, and how the case should proceed.

5. Conclusion

Roger Salvatora v. XTO Energy Inc clarifies that, in the Third Circuit, a defendant does not impliedly waive arbitration against unnamed class members merely by litigating through class certification when the named plaintiffs are not subject to arbitration and the defendant has consistently reserved its arbitration rights. The decision aligns waiver doctrine with class-action party-status rules and provides a predictable sequencing principle: when class membership and arbitration coverage are uncertain until certification and opt-outs, waiting to compel arbitration until the class is finalized can be consistent with—rather than contrary to—an intent to arbitrate.