Recently, the U.S. Supreme Court has ruled that, unlike petitions to compel arbitration, petitions for confirm or vacate an arbitration award cannot be brought in federal court simply because the underlying dispute involves a federal question. The Supreme Court also heard oral argument on whether a showing of actual prejudice is necessary to argue waiver of an arbitration claim.

• Is a showing of actual prejudice necessary for waiver of arbitration?

On March 21, the Supreme Court heard oral argument in Morgan v. Sundance. The case was brought by Robyn Morgan who worked at a Taco Bell franchise owned and operated by Sundance, Inc. Morgan signed an application for employment that contained a mandatory arbitration provision, which required arbitration of all disputes. Morgan complains that Sundance used a business method known as "hours shifting," ensuring that no employee logged more than 40 hours in any given week, regardless of the number of hours the employee actually worked and that Sundance instructed employees to clock out, but continue working. Morgan alleged that Sundance prevented employees at its more than 150 Taco Bell franchises from ever collecting overtime pay for hours actually worked.

Morgan filed a nationwide class action under the Fair Labor Standards Act (FLSA) against Sundance in the U.S. District Court for the Southern District of Iowa. The court denied Sundance's motion to dismiss based on a prior pending class action, (the "Wood" case) and Sundance filed an answer asserting 14 affirmative defenses but made no mention of the agreement to arbitrate.