The Second Circuit’s Post-Morgan Waiver Doctrine:
When Litigation Conduct Alone Extinguishes the Right to Arbitrate

1. Introduction

Case: Doyle v. UBS Financial Services, Inc., No. 24-696-cv (2d Cir. July 14 2025).
Court: United States Court of Appeals for the Second Circuit (Walker, Robinson & Merriam, JJ.).
Appeal from: Western District of New York (Geraci, J.).
Core Issue: Whether UBS and its advisor Jay S. Blair could compel arbitration after having first pursued dismissal of the trustees’ federal lawsuit.

The trustees of the Peter & Elizabeth C. Tower Foundation sued UBS and others for alleged breach of fiduciary duties and negligence in managing hundreds of millions of charitable assets. UBS invoked an arbitration clause—but only after it had moved to dismiss the complaint on abstention and merits grounds. Applying the Supreme Court’s 2022 decision in Morgan v. Sundance, Inc., the Second Circuit held that UBS had waived its contractual right to arbitrate by acting inconsistently with that right. Crucially, the court abolished any prejudice requirement and focused exclusively on the defendants’ litigation conduct. This is the Second Circuit’s first precedential roadmap for post-Morgan waiver and will reshape arbitration practice throughout the Circuit.

2. Summary of the Judgment

• The district court denied UBS’s motion to compel arbitration, reasoning that the validity of the arbitration agreement presented triable questions.
• On appeal, the Second Circuit affirmed but on a different ground: waiver.
• Key holding: After Morgan, the correct inquiry is whether the party “knowingly relinquished the right to arbitrate by acting inconsistently with that right.” Prejudice to the opposing party is irrelevant.
• UBS’s choice to file a substantive motion to dismiss—seeking dispositive relief in court—was “fundamentally inconsistent” with arbitration, thus constituting waiver.

3. Analysis

3.1 Precedents Cited and Their Influence

• Morgan v. Sundance, Inc., 596 U.S. 411 (2022): Eliminated the arbitration-specific “prejudice” element in waiver analyses. The Second Circuit treats Morgan as controlling and discards its own older tri-part test.
• Carcich v. Rederi A/B Nordie, 389 F.2d 692 (2d Cir. 1968): Source of the former “prejudice” rule. Explicitly overruled sub silentio.
• Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976): UBS’s abstention motion relied on this doctrine. The Circuit emphasized that seeking abstention is mutually exclusive with compelling arbitration, highlighting inconsistent conduct.
• Older Second Circuit waiver decisions (Leadertex, Kramer, PPG Industries) were revisited to illustrate how the court will reinterpret them post-Morgan.

3.2 Legal Reasoning

1. Step One – Reject the Old Test: The panel explains why the historical three-factor inquiry (delay, litigation activity, prejudice) cannot survive once prejudice is stripped; the remaining factors were too intertwined with prejudice to operate independently.
2. Step Two – Adopt the Morgan Question: The sole question is whether the party’s acts are inconsistent with arbitration.
3. Step Three – Apply to UBS’s Conduct:
   a. UBS deliberately filed a motion to dismiss on the merits and on Colorado River grounds.
   b. It failed to even mention arbitration until after that motion was denied.
   c. Such conduct signaled a choice of forum (federal court) and thus a “knowing relinquishment.”
   d. Timing (roughly 11 months) and other procedural steps were considered only insofar as they illustrated intent, not prejudice.
4. Conclusion – Waiver Found: Because arbitration is a binary choice, UBS “cannot have it both ways.” Waiver is established; motion to compel properly denied.

3.3 Likely Impact

• Circuit Precedence: Provides the Second Circuit’s definitive, precedential articulation of waiver after Morgan. District courts now have clear guidance.
• Strategic Litigation Choices: Parties must raise arbitration at the earliest possible moment. Any substantive motion practice in court—particularly motions seeking dismissal—risks forfeiture.
• Reduction of Tactical Delay: Defendants can no longer hold arbitration in reserve as a litigation strategy. Forum-shopping maneuvers become hazardous.
• Alignment with Contract Law: Emphasizes parity between arbitration clauses and other contractual rights; waiver turning on conduct mirrors ordinary contract waiver rules.
• Potential Spill-Over: Could influence analyses of “delegation clauses,” multi-party disputes, and international arbitration where similar waiver arguments arise.

4. Complex Concepts Simplified

Waiver (in arbitration context)

Giving up the right to arbitrate by behaving in a way that shows you prefer court litigation (e.g., filing motions to dismiss, taking discovery) even if you never said so explicitly.

Prejudice Requirement

Old rule requiring the other side to show they were harmed by your delay in requesting arbitration. Morgan abolished this.

Colorado River Abstention

A doctrine letting federal courts pause or dismiss a case when there is parallel state-court litigation dealing with the same matters. If granted, it ends federal involvement—making later arbitration relief impossible.

Knowing vs. Intentional Relinquishment

Legal shorthand for “you understood the right existed and chose actions inconsistent with it.” The court treats “knowing” and “intentional” as synonymous for waiver purposes.

5. Conclusion

Doyle v. UBS Financial Services cements a pivotal post-Morgan rule in the Second Circuit: a party waives arbitration when its litigation conduct—without regard to prejudice—demonstrates an intentional choice of the judicial forum. Filing motions that seek substantive or dispositive court rulings is the clearest example of such conduct. The decision harmonizes arbitration waiver with general contract principles, curtails tactical forum-shifting, and offers practitioners a bright-line warning—raise arbitration immediately or risk losing it forever.