Post-Morgan in the Fourth Circuit: Active Litigation and Use of Federal Discovery Constitute Waiver of the Right to Arbitrate, Despite “Reservation” Language

Case: Cheryl Ann Sarver, as Personal Representative of the Estate of Gordon Jay Sarver v. Claiborne Senior Living, LLC; TCABC Real Estate Holdings, LLC

Court: United States Court of Appeals for the Fourth Circuit

Date: October 14, 2025

Disposition: Affirmed (unpublished, per curiam)

Key Takeaways

After the Supreme Court’s decision in Morgan v. Sundance, a party waives the right to arbitrate by knowingly acting inconsistently with that right; showing prejudice to the other side is not required.
Eight months of active participation in federal litigation—including serving extensive written discovery, participating in and examining witnesses at depositions, and invoking the Federal Rules—constituted waiver.
Boilerplate “reservation of rights to arbitrate” in pleadings does not preserve arbitration when a party’s litigation conduct is inconsistent with that right.
Serving subpoenas while a court-ordered discovery stay is in place—especially one the party sought to protect arbitration—further evidences inconsistency with the right to arbitrate.
Defendants cannot justify delay by claiming they needed proof of authority to sign an arbitration agreement where they already had the agreement, admitted the resident on that basis, and could have sought limited formation-related discovery.

Introduction

This appeal arose from a wrongful death suit filed by the estate of Gordon Jay Sarver against Claiborne Senior Living and its affiliated real estate entity, TCABC Real Estate Holdings. Mr. Sarver, who suffered from dementia, died four months after entering a memory care facility managed by Claiborne, following an elopement and a fatal fall. Upon admission, Mr. Sarver’s wife, Cheryl Sarver, signed a Residency Agreement and a separate Binding Arbitration Agreement as his purported legal representative.

When Ms. Sarver sued in federal court, Claiborne initially answered and engaged in discovery for months, even while asserting arbitration as an affirmative defense. Nearly eight months into litigation, Claiborne moved to compel arbitration under the Federal Arbitration Act (FAA). The district court denied the motion, finding waiver. The Fourth Circuit affirmed, applying the Supreme Court’s modern waiver framework from Morgan v. Sundance.

At stake is a recurring, practical question in post-Morgan arbitration law: when does participation in litigation amount to a “knowing relinquishment” of the contractual right to arbitrate, especially if the party repeatedly “reserves” that right in papers?

Summary of the Opinion

The Fourth Circuit affirmed the district court’s denial of Claiborne’s motion to compel arbitration on the ground of waiver. The court held that under Morgan v. Sundance, waiver turns on whether the party seeking arbitration knowingly acted inconsistently with that right. Claiborne had the arbitration agreement from the outset, pleaded arbitration as a defense, and nonetheless litigated the case extensively for nearly eight months before moving to compel. Its actions included serving and responding to written discovery, attending and examining witnesses at depositions, and filing objections under the Federal Rules of Civil Procedure without invoking arbitration. After obtaining a stay of discovery to preserve its arbitration rights, Claiborne then served subpoenas in violation of the stay. The panel concluded that these steps, taken together, demonstrated a knowing relinquishment of the right to arbitrate.

Because the waiver holding was dispositive, the court did not reach Claiborne’s additional appellate arguments concerning Ms. Sarver’s authority to bind Mr. Sarver (or his estate) to the arbitration agreement or the asserted lack of mutual assent as to the parties to that agreement.

Analysis

Precedents Cited and Their Role

Morgan v. Sundance, Inc., 596 U.S. 411 (2022): The Supreme Court rejected arbitration-specific rules that required a showing of prejudice to find waiver. The proper test is the ordinary waiver standard: intentional relinquishment of a known right, assessed by whether the party acted inconsistently with that right. The Fourth Circuit applied Morgan’s standard directly to Claiborne’s conduct.
MicroStrategy, Inc. v. Lauricia, 268 F.3d 244 (4th Cir. 2001): The panel cited MicroStrategy for two points: (1) the standard of review—de novo for the ultimate waiver conclusion, with deference to the underlying factual findings—and (2) that delay in seeking arbitration can be considered in the waiver analysis. Here, the eight-month delay weighed toward waiver.
Maxum Foundations, Inc. v. Salus Corp., 779 F.2d 974 (4th Cir. 1985); In re Mercury Construction Corp., 656 F.2d 933 (4th Cir. 1981): These older Fourth Circuit cases described pre-Morgan waiver with a “prejudice” component. The panel noted Morgan’s abrogation of any prejudice requirement and reframed the inquiry solely around inconsistent conduct amounting to knowing relinquishment.
Coinbase, Inc. v. Bielski, 599 U.S. 736 (2023): Cited for appellate jurisdiction under 9 U.S.C. § 16(a). It confirms immediate appealability of orders denying motions to compel arbitration.
Berkeley County School District v. Hub International, 944 F.3d 225 (4th Cir. 2019): The panel invoked Berkeley County to underscore a pathway Claiborne could have taken early: move to compel and seek limited discovery confined to formation issues (e.g., authority) instead of engaging the merits through broad federal discovery.
National Federation of the Blind v. The Container Store, Inc., 904 F.3d 70 (1st Cir. 2018): Quoted in Berkeley County for the proposition that a formation challenge can include whether a signatory had authority to bind a principal—reinforcing that Claiborne could have pursued narrow, formation-focused steps without litigating the merits.

Legal Reasoning

1) The Morgan Standard Controls: The Fourth Circuit applied Morgan’s straightforward waiver test: Did Claiborne knowingly relinquish the right to arbitrate by acting inconsistently with it? No showing of prejudice was required.

2) Knowledge of the Right from Day One: Claiborne possessed the Arbitration Agreement signed at admission. It raised arbitration as an affirmative defense in its Answer. That was enough to establish knowledge of the right to arbitrate.

3) Inconsistent Conduct Over Eight Months: The court catalogued extensive, merits-oriented participation in litigation before Claiborne moved to compel:

Participating in and shaping discovery: serving 24 interrogatories and 33 requests for production; responding to the plaintiff’s written discovery.
Attending and examining three witnesses at depositions under Rule 30.
Objecting to a subpoena solely under the Federal Rules, without invoking arbitration or reservation of arbitral process.
Seeking relief from the district court, including a consent confidentiality order and schedule modifications, as the case proceeded under a federal scheduling order.

4) “Reservation of Rights” Was Not a Safe Harbor: Claiborne repeatedly inserted statements “reserving” its arbitration right while litigating the merits. The panel characterized this as “double-mindedness.” Morgan’s focus on conduct (not magic words) meant that boilerplate reservations could not overcome the inconsistency of exploiting federal litigation tools.

5) Discovery Advantages in Court vs. JAMS: The Arbitration Agreement incorporated JAMS Comprehensive Arbitration Rules & Procedures. The panel emphasized a concrete mismatch: federal court litigation permitted broad written discovery and multiple depositions, whereas under JAMS the default is voluntary, informal exchanges and a presumptive limit of one deposition per side without special approval. Claiborne “obviously had advantages with discovery in court that would not have been present in arbitration,” reinforcing the inconsistency with an arbitral forum.

6) Violating the Stay It Sought: After moving to compel, Claiborne asked the court to stay discovery to protect its arbitration position. The court granted the stay. Claiborne then served subpoenas on third-party medical providers while the stay was in effect. The panel rejected Claiborne’s explanations (misunderstanding or consent) as inconsistent with the stay’s purpose and scope. This conduct underscored waiver.

7) The “We Needed the GDPOA” Argument Rejected: Claiborne contended it could not, in good faith, move to compel earlier because it lacked the recorded power of attorney (GDPOA). The panel noted the preservation problem (raised only on reconsideration) and, on the merits, rejected the premise. Claiborne had multiple avenues to assert enforceability without awaiting the GDPOA: apparent or actual authority inferred from admission practices, third-party beneficiary status, equitable estoppel, and South Carolina’s Adult Health Care Consent Act. Moreover, if authority was genuinely uncertain, Claiborne could have promptly sought to compel and requested limited discovery confined to contract formation issues, rather than participate in merits discovery.

8) Standard of Review: The court reviewed the waiver conclusion de novo and accepted the district court’s underlying factual findings supporting waiver. The established record amply supported the inference of knowing, inconsistent conduct.

What the Court Did Not Decide

Authority to Bind the Resident: Whether Ms. Sarver had authority to sign the arbitration agreement on Mr. Sarver’s behalf (via power of attorney, statutory authority, estoppel, or third-party beneficiary theories) was not reached because waiver resolved the appeal.
Meeting of the Minds: The district court’s alternative ground—alleged lack of mutual assent as to the identity of the “Parties” to the arbitration agreement—was likewise unnecessary to address on appeal.

Impact and Practical Implications

For Litigants and Counsel

Move Early or Risk Waiver: Post-Morgan, courts will look at conduct. If you know of an arbitration agreement and intend to invoke it, file a motion to compel promptly. Delay plus participation in merits litigation is fertile ground for waiver.
Minimize Merits Litigation: Avoid serving broad written discovery, taking or defending depositions on the merits, or filing merits motions before seeking to compel. Such actions will likely be deemed inconsistent with arbitration.
Reservations Are Not Shields: Merely “reserving” the right to arbitrate in pleadings does not inoculate against waiver. The court will measure actions, not disclaimers.
Use Formation-Focused Tools: If authority, formation, or scope is uncertain, move to compel early and request limited, formation-specific discovery. This aligns conduct with the arbitral right and avoids the optics of leveraging federal discovery advantages first.
Respect Stays: Violating a discovery stay—especially one you sought to safeguard arbitration—strongly signals inconsistent conduct.

For District Courts

Clear, Prompt Case Management: Encourage early identification of arbitration issues. Consider staging limited discovery on formation or scope when appropriate.
Monitor Conduct Post-Motion: Once a motion to compel is filed, consider whether to stay merits discovery. Enforcement of stays helps prevent strategic conduct undermining arbitration rights.
No Prejudice Requirement: In line with Morgan, focus on whether the moving party knowingly acted inconsistently with arbitration, not whether the non-movant was prejudiced.

Substantive Arbitration Law in the Fourth Circuit

This opinion—while unpublished and not binding—adds to the Circuit’s post-Morgan body of law by illustrating the kinds of litigation activity that courts consider inconsistent with arbitration, and by rejecting common defenses for delay (e.g., waiting for formal proof of an agent’s authority despite multiple alternative enforceability theories and a ready path to seek limited formation discovery).

Complex Concepts Simplified

Waiver (Arbitration Context): After Morgan v. Sundance, waiver occurs when a party intentionally gives up a known right—here, by acting inconsistently with the right to arbitrate. No need to show the other side was prejudiced.
“Acting Inconsistently” Examples: Litigating on the merits (extensive written discovery, depositions, motions under the Federal Rules), delaying a motion to compel, and violating a discovery stay.
Per Curiam, Unpublished: A per curiam opinion is by the court as a whole rather than a single judge. Unpublished Fourth Circuit opinions are not binding precedent but can be persuasive.
Arbitral vs. Court Discovery: The JAMS rules (incorporated here) generally allow informal document exchanges and limit depositions (often one per side without special approval). Federal court discovery is typically far broader. Exploiting that breadth before moving to arbitrate can support waiver.
Apparent Authority: Even without a recorded power of attorney, a principal can be bound if a counterparty reasonably believes the signatory had authority, based on the principal’s manifestations. The panel noted Claiborne admitted Mr. Sarver to the facility based on documents his wife signed.
Third-Party Beneficiary and Equitable Estoppel: Alternative theories by which a non-signatory (like an estate) may be bound to an arbitration agreement—cited here to show Claiborne had multiple enforceability avenues without waiting for the GDPOA.
Section 16(a) Appeals: Under the FAA and Coinbase v. Bielski, an order denying a motion to compel arbitration is immediately appealable.
Limited Discovery on Formation: Courts may allow narrowly tailored discovery to resolve whether an agreement to arbitrate exists (authority, assent, etc.), distinct from full merits discovery.

Conclusion

In Sarver v. Claiborne Senior Living, the Fourth Circuit underscored the practical force of Morgan’s waiver rule: where a party knows of its arbitration right and nonetheless litigates as if in court—serving expansive written discovery, defending and examining witnesses at depositions, invoking federal procedural rules, and even violating a discovery stay—the party acts inconsistently with arbitration and thereby waives it. “Reservation of rights” language does not salvage the situation.

Although unpublished, this decision offers a clear roadmap for practitioners. If arbitration is the endgame, make it the opening move. Promptly move to compel and confine any necessary discovery to formation issues. Do not attempt to “test the waters” in federal court and then pivot to arbitration after harvesting the benefits of court discovery. Post-Morgan, actions speak louder than reservations; inconsistency is waiver.