DAWN VALLI; ANTON S. DUBINSKY, on behalf of herself and all others similarly situated v. AVIS BUDGET GROUP INC, A Delaware Corporation

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________________
No. 24-3025
_______________________
DAWN VALLI; ANTON S. DUBINSKY, on behalf of
herself and all others similarly situated,
v.
AVIS BUDGET GROUP INC, A Delaware Corporation;
AVIS RENT A CAR SYSTEM, LLC; AVIS BUDGET CAR
RENTAL LLC; BUDGET RENT A CAR SYSTEM, INC.,
Appellants
_______________________
On Appeal from the United States District Court
for the District of New Jersey
District Court No. 2:14-cv-06072
Magistrate Judge: Honorable James B. Clark III.
__________________________
Argued September 16, 2025
Before: RESTREPO, McKEE, and SMITH, Circuit Judges
(Filed: December 16, 2025)

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Ted A. Hages
Jason E. Hazlewood
James C. Martin [ARGUED]
Colin E. Wrabley
Reed Smith
225 Fifth Avenue, Suite 1200
Pittsburgh, PA 15222
Counsel for Appellants
William J. Pinilis [ARGUED]
Kaplan Fox & Kilsheimer
160 Morris Street
Morristown, New Jersey 07960
Joel B. Strauss
Kaplan Fox & Kilsheimer
800 Third Avenue, 38th Floor
New York, NY 10022
Counsel for Appellees
__________________________
OPINION OF THE COURT
__________________________
SMITH, Circuit Judge.
This appeal presents a narrow question: did Avis
Budget Group, Inc. (and related entities, collectively “Avis”)
waive, through conduct in litigation, its contractual right to

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compel arbitration of putative class members’ claims? The
District Court held that it did. We disagree. Avis’s actions and
inaction at times did not evince a preference for litigation over
arbitration. We therefore will vacate the District Court’s order
denying Avis’s motion to compel arbitration and remand for
the District Court to address enforceability questions it did not
reach when denying the motion.
I.
In June 2014, Dawn Valli rented a car from Avis Budget
Group.1 The rental agreement she signed obligated her to pay
any fines for traffic violations incurred during the car’s rental
period, plus a “reasonable administrative fee.” JA59. After a
traffic-infraction camera purportedly detected the vehicle
speeding while operating in Washington, D.C., the District of
Columbia mailed a “Notice of Infraction” to Avis as the
vehicle’s registered owner. Avis paid the ticket, notified Ms.
Valli that the company had done so, and demanded
reimbursement of the $150 fine and a $30 administrative fee.
1 Avis Budget Group operates multiple brands in the car rental
sector, including “Avis” and “Budget.” JA57–58. Avis is a
premium car rental service while, Budget—as its name
suggests—targets “leisure travelers looking for a bargain.”
Who We Are, Avis Budget Group,
https://wordpress.uat.avisbudget.com/about-us/ (last visited
Oct. 30, 2025). Avis Rent A Car System, LLC, and Budget
Rent A Car System, Inc. are both wholly owned subsidiaries of
Avis Budget Car Rental, LLC, which is itself a subsidiary of
Avis Budget Group, Inc.

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The notification also warned that Avis would charge $180 to
Ms. Valli’s credit card if she did not make timely payment.
Ms. Valli filed this putative class action in September
2014 in the District of New Jersey on behalf of all persons who:
(a) rented a motor vehicle from [Avis], (b) were
issued a fine, penalty, and/or court costs for
parking, traffic, toll, or other violation, and (c) on
whose behalf [Avis] (i) paid the Fines prior to
giving the Class notice of the alleged Fine or (ii)
collected from the Class an administrative and/or
handling fee[.]
JA67. The complaint did not delineate the class period, but
instead, defined it only as “the limitations period applicable to
this action.” Id. The complaint went on to allege, among other
things, that Avis deprived renters of an opportunity to contest
the traffic violations by paying the fines (thereby admitting
liability) before notifying renters of the infractions. It also
alleged that Avis and a separate defendant—American Traffic
Solutions Processing Services (“ATS”)—had a contractual
relationship whereby ATS processed and administered the
payment of fines incurred by Avis’s customers during their
rental periods. The complaint asserted state-law claims which
included violations of the New Jersey Consumer Fraud Act2
and unjust enrichment, and it sought damages and equitable
relief.
2 N.J. Stat. Ann. § 56:8-1–232 (West).

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In December 2014, Avis moved to dismiss the
complaint for failure to state a claim. Shortly thereafter, and
with Avis’s consent, Ms. Valli filed an amended complaint
(First Amended Complaint, “FAC”). In March 2015, Avis
moved to dismiss the FAC, again for failure to state a claim.
The inflection point for this appeal occurred on April 1,
2016, when Avis updated its terms and conditions to include
the following arbitration provision:
ARBITRATION. . . . Dispute Resolution[:] . . .
Except as otherwise provided below, in the event
of a dispute that cannot be resolved informally
through the pre-dispute resolution procedure, all
disputes between you and Avis arising out of,
relating to or in connection with your rental of a
car from Avis and these Terms and Conditions
shall be exclusively settled through binding
arbitration through the American Arbitration
Association (“AAA”) pursuant to the AAA’s
then-current rules for commercial arbitration . . .
YOU AND AVIS AGREE THATANY [SIC]
SUCH ARBITRATION SHALL BE
CONDUCTED ON AN INDIVIDUAL BASIS
AND NOT IN A CLASS, CONSOLIDATED
OR REPRESENTATIVE ACTION.
Notwithstanding any provision in these Terms
and Conditions to the contrary, if the class-action
waiver in the prior sentence is deemed invalid or
unenforceable, neither you nor we are entitled to
arbitration . . . This arbitration agreement is

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subject to the Federal Arbitration Act . . .
Disputes and claims that are within the scope of
a small claims court’s authority, as well as
disputes and claims regarding personal injury
and/or damage to or loss of a car related to your
Avis rental, are exempt from the foregoing
dispute resolution provision.
JA11–12.3 Because the amendment applied only prospectively,
it did not implicate Ms. Valli’s 2014 rental. On April 12, 2016,
the District Court administratively terminated Avis’s Motion to
Dismiss pending jurisdictional discovery related to ATS. On
August 18, 2016, after the parties had stipulated to dismiss
ATS, Avis filed a renewed motion to dismiss that did not
mention the new arbitration provision and again challenged the
merits of Ms. Valli’s claims. The District Court denied that
motion on May 10, 2017, and fact discovery commenced five
days later.
On May 25, 2017, Avis answered the FAC. Among the
38 affirmative defenses that Avis pled, the answer stated these:
(1) “Plaintiff’s claims are barred to the extent they seek relief
prohibited by the arbitration clause in the parties’
agreement(s)”; and (2) “Plaintiff’s claims are barred to the
extent they seek relief prohibited by the class action waiver
clause in the parties’ agreement(s).” JA430.
3 The contract covering Budget-brand terms and conditions
was also amended to contain identical language.

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In June 2018, Avis agreed to allow Ms. Valli to file a
Second Amended Complaint (“SAC”). The SAC added Anton
Dubinsky—a Budget brand renter—as a named Plaintiff and
added additional Defendants who are part of the Avis Budget
Group corporate family. Mr. Dubinsky’s 2014 rental agreement
likewise predated the arbitration provision. Notably, the SAC
retained the same proposed class definition and material
allegations as the FAC. Avis again invoked the arbitration and
class-waiver provisions in its answer, and the parties resumed
discovery.
In July 2019, Plaintiffs moved to certify the following
class under Federal Rule of Civil Procedure 23(b)(3)4:
All United States residents who rented an Avis or
Budget brand vehicle during the Class Period
and whose rented vehicle was the subject of an
alleged parking, traffic, toll or other violation,
4 Certification under Rule 23(b)(3) requires, first, that a
proposed class satisfy the threshold requirements of Rule
23(a): “numerosity, commonality, typicality and adequate
representation.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338,
349 (2011); Fed. R. Civ. P. 23(a). Once those prerequisites are
satisfied, Rule 23(b)(3) further requires that (1) “questions of
law or fact common to class members predominate over any
questions affecting only individual members” and (2) “that a
class action is superior to other available methods for fairly and
efficiently adjudicating the controversy.” Fed. R. Civ. P.
23(b)(3).

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where: (1) the ticket issuing authority sent notice
of the ticket directly to ABG [i.e., Avis Budget
Group]; (2) ABG or its agent paid the fine and/or
court costs associated with the alleged violation;
and (3) ABG charged the vehicle renter for such
fine, penalty and court costs, and/or an
associated administrative fee.
JA522. For the first time, Plaintiffs defined the class period as
“Sept[ember] 30, 2008 through the Present.” JA523. In
opposing class certification, Avis argued, inter alia, that many
putative class members were subject to the arbitration and
class-waiver provisions. Thus, Avis contended that the named
Plaintiffs—who were not subject to such provisions—could
not “adequately represent the interests of renters who must
arbitrate their claims” and their claims were “not typical of
these would-be class members[.]” JA537. Avis also argued
that, at the motion to dismiss stage, “arguments about the
enforceability of arbitration clauses were not ripe” because “it
was unclear how Plaintiffs would define the class and, thus,
speculative as to whether the class included renters who agreed
to arbitrate their claims.” Id.
Over the next two years, the District Court
administratively terminated the certification motion several
times, only to reinstate it while discovery continued and
unsuccessful attempts at mediation were undertaken. The
District Court eventually heard oral argument on the
certification motion in April 2021. There, Avis argued that
numerous putative class members had waived their right to
participate in this class action via the arbitration provision in

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their rental agreements. Plaintiffs countered that Avis waived
the right to rely upon the arbitration clauses by not having
raised the issue earlier and instead choosing to participate in
the litigation. After an unsuccessful attempt at private
mediation, the District Court ordered supplemental briefing on
class certification.
In its supplemental brief, filed September 15, 2022, Avis
reiterated that nearly half of the members of the putative class
had signed arbitration agreements, and that named Plaintiffs
could not “fairly represent the interests of [those] class
members . . .” JA682. Avis filed another brief approximately
two weeks later, arguing that it had preserved its right to assert
the arbitration provision by raising arbitration as an affirmative
defense in its answers to both the FAC and SAC. Avis also
emphasized that Plaintiffs’ July 2019 class certification motion
was the first time they identified arbitration-bound renters as
putative class members.
In October 2023, the District Court (Clark, M.J.)5
denied nationwide certification but certified the following Rule
23(b)(3) subclass “pursuant to Rule 23(c)(4)(B)”6:
5 In February 2023, the parties consented to the jurisdiction of
Magistrate Judge James B. Clark III, who presided over this
matter thereafter.
6 JA776. To avoid confusion, we note that the quoted citation
is from an earlier version of Rule 23, not applicable at that time.
“After the 2007 amendments to Rule 23, the former Rule
23(c)(4)(B) is now Rule 23(c)(5).” Harris v. Med. Transp.

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All Avis Preferred and Budget Fastbreak
members with a United States address who
rented an Avis or Budget brand vehicle during
the Class Period [September 30, 2008 through
the present] and whose rented vehicle was the
subject of an alleged parking, traffic, toll or other
violation, where: (1) the ticket issuing authority
sent notice of the ticket directly to ABG; (2)
ABG or its agent paid the fine and/or court costs
associated with the alleged violation; and (3)
ABG charged the vehicle renter for such fine,
penalty and court costs, and/or associated
administrative fee.
JA803–804. In its Rule 23(a)(3) typicality analysis, the District
Court—citing our decision in White v. Samsung Electronics
America, Inc., 61 F.4th 334, 341 (3d Cir. 2023)—concluded
that Avis had waived its right to arbitration by “engag[ing] fully
in the litigation for five years without ever moving to
arbitrate.” JA799.
Avis filed a Rule 23(f)7 petition with this court asserting
that the presence of arbitration and class-action waiver clauses
Mgmt., Inc., 77 F.4th 746, 757 n.1 (D.C. Cir. 2023); see also
Fed. R. Civ. P. 23(c)(5) (“When appropriate, a class may be
divided into subclasses that are each treated as a class under
this rule.”).
7 “A court of appeals may permit an appeal from an order
granting or denying class-action certification under this rule . .
.” Fed. R. Civ. P. 23(f).

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in certain class members’ contracts “created insurmountable
typicality and predominance problems for the putative class.”
No. 23-8047, ECF No. 1. A motions panel denied the 23(f)
petition in November 2023.
Following a status conference, the District Court set a
briefing schedule for partial summary judgment and
“Defendants[’] . . . motion regarding arbitrability.” JA807. In
accordance with that schedule, Avis moved to compel bilateral
(i.e. individual) arbitration in February 2024. It disputed that it
had waived arbitration, arguing that any earlier motion to
compel directed at unnamed class members would have been
futile before certification of a class. On September 30, 2024,
the District Court denied both Avis’s motion to compel and
Plaintiffs’ partial summary judgment motion, again concluding
that Avis’s pre-certification activity—including its 2016
motion to dismiss and participation in discovery, conferences,
and mediation—demonstrated waiver. The District Court also
faulted Avis for failing to “formally seek to enforce arbitration”
until after a class had been certified. JA17. Avis timely
appealed.
II.
The District Court had jurisdiction under the Class
Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2),8 and
8 To meet CAFA’s jurisdictional requirements, Plaintiffs
averred that: (1) the matter in controversy exceeds $5,000,000;
and (2) some members of the class are citizens of different
states than the Defendants.

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supplemental jurisdiction over Plaintiffs’ state-law claims
pursuant to 28 U.S.C. § 1367. Magistrate Judge Clark had
jurisdiction to conduct these proceedings pursuant to 28 U.S.C.
§ 636(c)(1) and Fed. R. Civ. P. 73. We have jurisdiction under
9 U.S.C. § 16(a)(1)(B) because the District Court’s order
denied Avis’s motion to compel arbitration pursuant to 9
U.S.C. § 4.
Our review is plenary over a district court’s
determination as to “whether a party, through its litigation
conduct, waived its right to compel arbitration.” Gray Holdco,
Inc. v. Cassady, 654 F.3d 444, 450–51 (3d Cir. 2011) (internal
quotation marks and citation omitted). “To the extent that a
district court makes factual findings in making [that]
determination[], we review its findings for clear error.” Id. at
451.
III.
Central to this case is the interplay between two familiar
doctrines: waiver and futility. Waiver is the “intentional
relinquishment or abandonment of a known right.” Morgan v.
Sundance, Inc., 596 U.S. 411, 417 (2022) (citation omitted);
see also White, 61 F.4th at 339 (“[W]aiver occurs where a party
has ‘intentional[lly] relinquish[ed] or abandon[ed] . . . a known
right.’” (alterations in original) (quoting Morgan, 596 U.S. at
417)). As with any contract right, “the right to arbitrate may be
waived either explicitly or through an implicit course of
conduct.” Toddle Inn Franchising, LLC v. KPJ Assocs., LLC,
8 F.4th 56, 64 (1st Cir. 2021); see also Al-Nahhas v. 777
Partners LLC, 129 F.4th 418, 426 (7th Cir. 2025) (“In the

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arbitration context, waiver encompasses both intentional
relinquishments and implicit abandonments of the right to
arbitrate.” (internal quotation marks and citation omitted)). In
the absence of an explicit waiver, we conduct an implied-
waiver analysis, which looks to whether the right-holder “acted
inconsistently with an intent to assert its right to arbitrate,” and
thus, “evince[d] a preference for litigation over arbitration.”
White, 61 F.4th at 340.This inquiry is informed by the
“circumstances and context of each case.” Id. at 339 (quoting
Gray Holdco, 654 F.3d at 451).
The question of futility may accompany an examination
into whether waiver has occurred. Futility “can excuse the
delayed invocation of the right to compel arbitration.” Chassen
v. Fid. Nat’l Fin., Inc., 836 F.3d 291, 293 (3d Cir. 2016). Put
simply, “if an earlier attempt to assert the defense of arbitration
would have been futile,” the failure to take this futile step “is
not inconsistent with that defense.” Id. at 296.9 Chassen
illustrates the point. There, the named plaintiffs were New
Jersey real-estate purchasers whose contracts with the
defendants contained arbitration clauses. Id. at 293–94. The
defendants moved to dismiss and answered plaintiffs’
complaint but did not move to compel bilateral arbitration
because then-controlling New Jersey law barred courts from
9 “[F]utility does not mean something is absolutely impossible;
nor does it mean something is merely improbable.” Id. at 299.
Rather, the assertion of a right is “futile” when it is “almost
certain to fail.” Id.

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compelling such arbitration in adhesion contracts. Id. Two
years later, while the case was still pending in the district court,
the Supreme Court held that the Federal Arbitration Act
(“FAA”) preempted those state-law barriers. Id. at 295 (citing
AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 352 (2011)).
The defendants then moved to compel arbitration. Id. On
appeal, we held that despite years of litigation, they had not
waived their right to arbitrate. Id. We “disregard[ed]
Defendants’ pre-Concepcion delay” concluding that any pre-
Concepcion motion “was almost certain to fail.” Id. at 302. We
therefore confined our analysis to the period after Concepcion
and before the filing of the motion to compel. Id. at 303.
The parties dispute Chassen’s reach in the case before us.
Avis contends Chassen is dispositive, foreclosing any
consideration of its pre-certification conduct because it could
not enforce its arbitration right until the District Court had
certified a class containing arbitration-bound members. See
Op. Br. at 19 (“Chassen is the beginning and the end of this
appeal.”). Plaintiffs respond that Chassen was undermined by
Morgan and, at all events, is distinguishable in that the futility
in Chassen stemmed from controlling law, whereas here it
turned on party status. See Resp. Br. at 19–20; ECF No. 50,
Transcript of Oral Argument at 17–18. This dispute tees up the
central legal question necessary to the resolution of this appeal:
may pre-certification conduct be considered in analyzing
whether a party waived its right to arbitration as to unnamed
members of a putative class, when no motion to compel could
have been granted? We answer in the affirmative.

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A.
We begin by confirming that Morgan does not displace
Chassen’s futility principle. A brief recap of the evolution of
our waiver doctrine sets the stage.
Before 2022, our Circuit—like many others10—treated
“prejudice [a]s the touchstone for determining whether the
right to arbitrate has been waived[.]” Hoxworth v. Blinder,
Robinson & Co., 980 F.2d 912, 925 (3d Cir. 1992). We asked
whether the non-movant could “demonstrate any prejudice
from the procedural matters [the moving party] raised before
moving to arbitrate[,]” id, and justified that approach by
invoking the FAA’s supposed “strong preference for
arbitration.” Painewebber Inc. v. Faragalli, 61 F.3d 1063, 1068
(3d Cir. 1995). The Supreme Court rejected that framework in
Morgan, holding that the FAA’s “policy favoring arbitration”
does not authorize federal courts to “devise novel rules to favor
arbitration over litigation.” 596 U.S. at 418. That “policy,” the
Court explained, simply places arbitration agreements “upon
the same footing as other contracts.” Id. (quoting Granite Rock
Co. v. Teamsters, 561 U.S. 287, 302 (2010)). Thus, courts may
10 See, e.g., Joca-Roca Real Est., LLC v. Brennan, 772 F.3d
945 (1st Cir. 2014); Erdman Co. v. Phoenix Land &
Acquisition, LLC, 650 F.3d 1115 (8th Cir. 2011); O.J. Distrib.,
Inc. v. Hornell Brewing Co., 340 F.3d 345 (6th Cir. 2003); S &
H Contractors, Inc. v. A.J. Taft Coal Co., 906 F.2d 1507 (11th
Cir. 1990); Miller Brewing Co. v. Fort Worth Distrib. Co., 781
F.2d 494 (5th Cir. 1986).

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not “condition a waiver of the right to arbitrate on a showing
of prejudice.” Id. at 417. Instead—just as in any waiver
context—courts must “focus on [the movant’s] conduct” and
ask whether the movant “knowingly relinquish[ed] the right to
arbitrate by acting inconsistently with that right[.]” Id. at 419.
Chassen sits comfortably within the bounds of that
directive. Morgan eliminated any prejudice requirement and
forbade arbitration-specific procedural rules. But it said
nothing about futility. Indeed, futility is not an arbitration-
favoring gloss. It is a trans-substantive principle long
recognized across doctrines—an exception, for example, “to
both ripeness and administrative exhaustion”—and there is “no
reason why this logic would not extend” to waiver. Chassen,
836 F.3d at 296.
To be sure, Chassen recited our then-prevailing,
prejudice-based framework and cited Hoxworth and its
progeny. 836 F.3d at 295. But Chassen also expressly
distinguished Hoxworth, emphasizing that the case “was
simply not a futility case,” and that “the standard waiver
analysis”—with its prejudice factors—was “ill suited” where
the delay under review stemmed from legal futility. Id. at 295–
96. In short, our decision in Chassen to “disregard” and “fully
excuse[]” the defendant’s pre-Concepcion delay had nothing to
do with prejudice. Id. at 302–03.11 True, Chassen went on to
11 Chassen also referenced the FAA’s supposed “liberal federal
policy favoring arbitration.” Id. at 303 n. 14 (quoting
Concepcion, 563 U.S. at 339). However, it did so in a footnote
merely to underscore that the decision “to excuse the delay and

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apply a prejudice inquiry to the three-month, post-futility gap
between Concepcion and the defendant’s motion to compel. Id.
at 303. And to that limited extent, Morgan abrogates Chassen
in part. It nonetheless leaves Chassen’s core holding intact:
where an earlier motion to compel would have been “almost
certain to fail,” the failure to file such a motion is not
inconsistent with the right to arbitrate. Id. at 296–97.
B.
The harder inquiry is how we should apply Chassen
here. Avis urges that we do “not need to look beyond Chassen
to reverse.” Op. Br. at 29. But that would be too facile a
response. There is a subtle, but fundamental, distinction that
separates this case from Chassen. True, in both cases a litigant
could not compel arbitration until a triggering event took
place—Concepcion there; class certification here.12 But in
its resulting expense to Plaintiffs” was consistent with that
policy. Id. Importantly, our analysis in Chassen did not turn on
that policy.
12 True, in the context of preclusion, we have said that, for class
actions seeking predominantly damages, putative class
members do not attain “party” status “until the time to opt out
has elapsed.” N. Sound Cap. LLC v. Merck & Co., Inc., 938
F.3d 482, 492-93 (3d Cir. 2019). But unnamed class members
“may be parties for some purposes and not for others” because
the label “party” is merely “a conclusion about the applicability
of various procedural rules that may differ based on context.”
Devlin v. Scardelletti, 536 U.S. 1, 9-10 (2002). The
constitutional due process protections of notice and the

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Chassen, futility existed because then-controlling state law
barred the motion—until an exogenous shift in controlling
legal authority removed that barrier. Here, by contrast, futility
persisted only until a foreseeable (though not inevitable)
procedural event—class certification—brought arbitration-
bound car renters within the court’s reach. Avis could
anticipate that if a class including post-April 2016 renters were
certified, a motion to compel would then be viable.13 Put
opportunity to opt out, which inform preclusion, do not control
when unnamed class members become subject to an order
compelling arbitration. That turns on when absent class
members come within the court’s power, which occurs upon
class certification. See, e.g., Molock v. Whole Foods Mkt. Grp.,
Inc., 952 F.3d 293, 298 (D.C. Cir. 2020) (“It is class
certification that brings unnamed class members into the
action[.]”); In re Checking Acct. Overdraft Litig., 780 F.3d
1031, 1037 (11th Cir. 2015) (“Certification of a class is the
critical act which reifies the unnamed class members and,
critically, renders them subject to the court’s power.”); Cruson
v. Jackson Nat’l Life Ins. Co., 954 F.3d 240, 250 (5th Cir. 2020)
(“What brings putative class members before the court is
certification[.]” (citing In re Checking Acc. 780 F.3d at 1037)).
Accordingly, for our purposes the operative trigger is
certification, not the expiration of the opt-out period.
13 Indeed, Avis had anticipated this eventuality. It raised
arbitration as an affirmative defense on two occasions, well
before class certification was at issue. Such action
demonstrated its recognition of the likelihood that its
arbitration rights might eventually become enforceable.

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plainly, the defendants in Chassen did not “know” they had a
right to compel arbitration until Concepcion changed the law,
whereas Avis “knew” of its prospective right even if it lacked
a present ability to enforce it pre-certification.
That distinction matters because waiver is the
“intentional relinquishment or abandonment of a known right,”
not merely of a presently enforceable one. Morgan, 596 U.S.
at 417 (emphasis added). Our sister circuits agree that
knowledge of a right for waiver purposes does not hinge on its
immediate enforceability. See Hill v. Xerox Bus. Servs., LLC,
59 F.4th 457, 469 (9th Cir. 2023) (“[W]e have never suggested
that for waiver purposes, knowledge of an existing right to
arbitrate requires a present ability to move to enforce an
arbitration agreement.”); Degidio v. Crazy Horse Saloon &
Rest. Inc, 880 F.3d 135, 141 (4th Cir. 2018) (holding that, in an
FLSA suit, a defendant who was “well aware that [certain
arbitration] agreements were relevant to the ongoing litigation”
waived its right to enforce those agreements against future opt-
in plaintiffs even before “it could [] move to compel arbitration
against [those] parties”); In re Cox Enters., Inc. Set-Top Cable
Television Box Antitrust Litig., 790 F.3d 1112, 1119 (10th Cir.
2015) (rejecting the notion that the “right to arbitrate against
[unnamed] class members could not have become known until
[a] class was certified”). And in White we instructed that the
waiver analysis is triggered once a defendant is on notice that
a claim “could be arbitrable,” not solely when the right to
compel is certain. 61 F.4th at 340 (emphasis added).
Functionally, insulating a right from waiver until it
becomes enforceable would reward outcome-oriented

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gamesmanship and undermine the very purpose of waiver in
this setting—to prevent litigants from “us[ing] arbitration to
manipulate the legal process and in that process waste scarce
judicial resources.” Gray Holdco, 654 F.3d at 453–54; see also
Gutierrez v. Wells Fargo Bank, NA, 889 F.3d 1230, 1236 (11th
Cir. 2018) (“[T]he purpose of the waiver doctrine is to prevent
litigants from abusing the judicial process.”). A defendant,
knowing it intends to seek arbitration, could litigate
aggressively for merits advantage—even disclaim any intent to
arbitrate—and then pivot to arbitration the moment it becomes
advantageous to do so, all without consequence. Chassen
cannot be read to bless such a cost-free about-face.
Of course, Chassen’s futility principle excuses the
failure to file a formal motion to compel as to unnamed class
members prior to certification because a district court lacks
jurisdiction to rule on such a motion.14 See, e.g., N. Sound Cap.,
at 492 (“It is axiomatic that an unnamed class member is not ‘a
party to the class-action litigation before the class is certified.’”
(quoting Smith v. Bayer Corp., 564 U.S. 299, 313 (2011))); In
re Checking Acct., 780 F.3d at 1039 (explaining that “the
District Court lacked jurisdiction to rule on the arbitration
obligations of [] unnamed putative class members” prior to
class certification). But where a right’s enforceability turns on
a foreseeable procedural event—such as class certification—
14 Plaintiffs conceded as much at oral argument. See ECF No.
50, Transcript of Oral Argument at 16–17 (acknowledging that
it would have been futile for Avis to seek to compel arbitration
prior to class certification).

-- 20 of 38 --

21
that right may still be “known” for waiver purposes before it
becomes enforceable. Accordingly, pre-event conduct may still
inform whether a party intentionally elected to litigate rather
than arbitrate.
That conclusion leads to a practical question: What must
a defendant do to preserve future arbitration rights it cannot
presently enforce? Several of our sister circuits have indicated
that, in that situation, a defendant must provide clear,
reasonably prompt record notice of its intent to compel
arbitration. See Hill, 59 F.4th at 481–82 (Ninth Circuit
instructing that “had [defendant] wanted to avoid a waiver of
[its] arbitration rights, it was responsible for concretely
signaling its intention to raise [those rights] to the court—an
act that would not have been futile because it would have put
all relevant parties on notice of its claimed right to arbitrate”);
Degidio, 880 F.3d at 141 (Fourth Circuit explaining that the
defendant “did not need to wait to inform the district court
about its arbitration strategy until [plaintiffs] who had signed
arbitration agreements joined the case,” as it “could instead
have told the district court that it intended to compel arbitration
with respect to [those plaintiffs]”); Gutierrez, 889 F.3d at 1237
(Eleventh Circuit explaining that “fair notice at a relatively
early stage of litigation is a primary factor in considering
whether a party has acted consistently with its arbitration
rights”); In re Cox, 790 F.3d at 1119 (Tenth Circuit
emphasizing that “[t]he [district] court may not have been able
to compel arbitration of absent class members” prior to
certification, “but [the defendant’s] assertion or mention of its
right at that point would have fundamentally changed the

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22
course of the litigation” and “prevented . . . improper
gamesmanship”).
That rule makes sense. Waiver is the “intentional
relinquishment or abandonment of a known right.” Morgan,
596 U.S. at 417 (emphasis added). In the explicit waiver
context, a party outright declares that it will forgo arbitration
and leaves no doubt as to its intent. See, e.g., Brickstructures,
Inc. v. Coaster Dynamix, Inc., 952 F.3d 887, 891 (7th Cir. 2020)
(“The [waiver] analysis can be short when the basis of the
waiver is an express abandonment of the right. In most
situations, ‘I waive arbitration’ answers the question.”);
Menorah Ins. Co., Ltd. v. INX Reinsurance Corp., 72 F.3d 218,
221 (1st Cir. 1995) (finding explicit waiver where a defendant
“expressly declined” to arbitrate and “said it was both
unwilling and unable to participate in [future] arbitration”).
By contrast, a finding of implied waiver rests on an
inference drawn from litigation conduct. See Palcko v.
Airborne Express, Inc., 372 F.3d 588, 598 (3d Cir. 2004)
(“[W]aiver cannot be inferred from the facts of this case[.]”
(emphasis added)); Borror Prop. Mgmt., LLC v. Oro Karric N.,
LLC, 979 F.3d 491, 497 (6th Cir. 2020) (for implied waiver “we
must determine whether we should infer a waiver based on a
party’s actions (or inactions)”). When a party litigates in ways
that appear to be inconsistent with a desire to arbitrate, a court
may infer from that conduct an intent to forgo arbitration. But
that inference can be reasonably drawn only when there at least
appears to be uncertainty as to what the party actually intends.
When the right-holder consistently and explicitly states on the
record that it does intend to invoke arbitration, there is no

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23
uncertainty to resolve by inference and the predicate for
implied waiver largely collapses.15
Accordingly, where a party’s litigation activity might
otherwise suggest that it does not intend to pursue its
arbitration rights, that party “ha[s] an obligation to set the
record straight by dispelling th[at] impression.” Hill, 59 F.4th
at 482 n.26.16 Doing so prevents parties from “manipulat[ing]
15 To be clear, an on-the-record reservation is not a get out of
jail free card. Courts may still find waiver where, despite such
reservation, a party’s conduct is so inconsistent with an intent
to arbitrate that it evinces an intentional relinquishment. A
party may not “bank” arbitration as a fallback while litigating
indefinitely on the merits. See Gray Holdco, 654 F.3d at 453–
54 (warning against using arbitration to “manipulate the legal
process”). Nominal reservation cannot sanitize conduct that,
viewed in context, amounts to an election to remain in
litigation.
16 To be sure, advance notice of an intent to arbitrate might not
be called for where a party has not otherwise acted
inconsistently with that intent. To impose such a requirement
would run the risk of conflating the doctrine of forfeiture,
which “is the failure to make the timely assertion of a right,”
with waiver, the latter being the “intentional relinquishment or
abandonment of a known right.” United States v. Olano, 507
U.S. 725, 733 (1993); see also Gray Holdco, 654 F.3d at 455
(“[T]he length of the time between when a party initiates or
first participates in litigation and when it seeks to enforce an
arbitration clause is not dispositive in a waiver inquiry[.]”).

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24
the legal process.” Gray Holdco, 654 F.3d at 453–54. It also
avoids unnecessary judicial involvement and review, thereby
effectuating “the purpose behind arbitration itself . . . to
streamline the proceedings, lower costs, and conserve private
and judicial resources[.]” Nino v. Jewelry Exch., Inc., 609 F.3d
191, 209 (3d Cir. 2010); see also Concepcion, 563 U.S. at 348
(noting that the “principal advantage of arbitration” is
“informality” in order to achieve “lower costs, greater
efficiency and speed”).17
We therefore hold that when enforceability of a right to
arbitration hinges on the occurrence of a foreseeable
procedural event—in this case, certification of a class—futility
excuses only the failure to seek judicial action which the court
could not then grant. It does not remove all pre-event conduct
from the waiver inquiry. In that setting, a party must give clear,
reasonably prompt record notice of its intent to exercise its
arbitration right and then promptly move to do so once the
event occurs.
Nonetheless, this will rarely, if ever, be the case in putative
class actions where class certification issues frequently
“overlap with the merits of the plaintiff’s underlying claim.”
Comcast Corp. v. Behrend, 569 U.S. 27, 33–34 (2013).
17 For example, when “the court knows a party has potential
arbitration rights that could throw the case out of court, it can
limit the scope of early discovery” to avoid needless expense
if arbitration later governs. Gutierrez, 889 F.3d at 1236.

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25
IV.
We now apply that framework to the matter before us.
We first determine the relevant window for our inquiry to be
from April 1, 2016—when Avis first adopted the class-waiver
and arbitration provisions—through February 2, 2024—when
Avis formally moved to compel arbitration. In examining that
frame of time, we ask whether Avis’s conduct—or failure to
take action—amounts to an intentional relinquishment of its
right to arbitrate. We conclude that it does not.
Avis incorporated the operative arbitration and class-
waiver language into its rental terms on April 1, 2016. Before
then, there was no contractual source of any arbitration right to
“know,” assert, or relinquish because the provision creating
that right did not yet exist. Our inquiry therefore begins on
April 1, 2016, looking to whether Avis “evince[d] a preference
for litigation over arbitration” such that it knowingly and
intentionally relinquished its right to compel arbitration. White,
61 F.4th at 340.
After the arbitration clause took effect in 2016,
unnamed putative class members remained outside the District
Court’s authority until it certified a class on October 10, 2023.
Accordingly, any motion to compel directed at them during that
period would have been futile.18 But, as explained, futility does
18 To the extent the District Court faulted Avis for not formally
moving to compel arbitration prior to certification of a class,
that was legal error. See JA19 (stating that the fact that Avis’s
“formal assertion of their right to arbitration has come after the

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26
not excuse other pre-certification conduct that was inconsistent
with an intent to arbitrate. The District Court identified two
categories of such conduct: (1) Avis’s August 18, 2016 motion
to dismiss, which did not mention arbitration and (2) Avis’s
extensive participation in discovery and mediation. JA17. We
address each in turn.
Seeking merits dismissal can, in some settings, support
a finding of waiver.19 See e.g., White, 61 F.4th at 340
(defendant’s actions, including “pursu[ing] motions to dismiss
on the merits . . . demonstrate[d] a waiver of its alleged right to
arbitrate”). But our analysis is contextual—it must be informed
by the “circumstances and context of each case,” not controlled
by bright-line rules. Id. at 339 (citation omitted). Here, Avis set
course almost immediately after the District Court denied its
motion to dismiss. Fifteen days later, in its answer to the FAC,
Avis pled arbitration as an affirmative defense and reiterated
that position throughout the course of this litigation. Given that
prompt clarification, its motion to dismiss—filed just months
after the arbitration clause took effect—does not demonstrate
intentional relinquishment. See, e.g., Armstrong v. Michaels
Stores, Inc., 59 F.4th 1011, 1015 (9th Cir. 2023) (emphasizing
that the defendant “did not make an intentional decision” to
passage of extensive time and litigation . . . evinces a
preference for litigation”).
19 But cf. White, 61 F.4th at 340 (“[M]otions to dismiss will not
always evince an intent to litigate instead of arbitrate[.]” (citing
Palcko, 372 F.3d at 596-98)).

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27
forgo arbitration because it “pleaded arbitration as an
affirmative defense” and “repeatedly stated its intent to move
to compel arbitration”).
Moreover, it was not until over two years later that
Plaintiffs, in their class certification motion, even defined the
putative class to include post-April 2016 renters—the
arbitration-bound cohort of car renters. As Avis explained in
opposing class certification, “[a]t the motion to dismiss stage,
it was unclear how Plaintiffs would define the class and, thus,
speculative as to whether the class included renters who agreed
to arbitrate their claims.” JA537. So while Avis was certainly
aware that the yet-to-be-defined class could include
arbitration-bound members, the “speculative” nature of the
class period at this point weakens any reasonable inference that
Avis intended to waive its arbitration rights as to these tentative
members when it filed its motion to dismiss.
Plaintiffs next point to discovery and mediation. They
emphasize that Avis did not object to any discovery, nor seek
to exclude from that process any information concerning
arbitration-bound renters. Resp. Br. at 7–8. That may be so. But
Plaintiffs identify only a single instance in which Avis
produced information not also relevant to other customers who
are not subject to arbitration.20 And critically, Avis never
20 Plaintiffs point to Interrogatory No. 20 served on December
17, 2016, requiring defendants to:
“For each year (or portion thereof) of the
Applicable Time Period [defined as, September

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28
sought discovery specifically targeted at arbitration-bound
putative class members. Cf., Hill, 59 F.4th at 475 (defendant
“explicitly sought extensive discovery as to . . . putative class
members” who were subject to arbitration agreements, which
“weighs in favor” of waiver).
To be sure, discovery and mediation conduct can
support a finding of waiver in the appropriate circumstances.
See, e.g., Nino, 609 F.3d at 199 (finding that a defendant
waived his right to arbitrate where he actively litigated the case
for more than 15 months and engaged in “no fewer than ten
pretrial conferences” and “extensive discovery”); Ehleiter v.
Grapetree Shores, Inc., 482 F.3d 207, 223 (3d Cir. 2007)
(finding waiver where the defendant “engaged in extensive
discovery” and attempted to “resolve the case in mediation,”
along with engaging in substantial merits and non-merits
motion practice). That said, discovery directed at non-
arbitrable claims does not, by itself, waive the right to arbitrate
arbitrable claims. See, e.g., Nesslage v. York Sec., Inc., 823 F.2d
30 to the Present] identify by Type of Violation,
the total dollar amount you charged to, and
collected from, Avis Preferred and Budget
Fastbreak Customers for fines, penalties and
court costs for each Type of Violation and the
associated Administrative Fee.”
JA961; Resp. Br. at 9. Plaintiffs note that Avis provided the
requested information for all customers through August 2,
2019. Resp. Br. at 9.

-- 28 of 38 --

29
231, 234 (8th Cir. 1987) (declining to find waiver where
discovery was “largely limited to . . . claims, which, at the time
discovery was being conducted . . . were not arbitrable”); Nat'l
Found. for Cancer Rsch. v. A.G. Edwards & Sons, Inc., 821
F.2d 772, 775 (D.C. Cir. 1987) (noting that “[i]t is obviously [a
defendant’s] right to conduct discovery on any non-arbitrable
claims” without risking waiver as to other arbitrable claims).
Where both arbitrable and non-arbitrable claims are present,
courts “might hesitate to infer” waiver from discovery efforts
that might also “be relevant to the non-arbitrable claims.” Nat’l
Found. for Cancer Rsch., 821 F.2d at 775.
That hesitation is especially apt where, as here, the party
has repeatedly put its intent to arbitrate on the record. Indeed,
while discovery and mediation proceeded, Avis consistently
asserted its prospective arbitration rights in opposing
certification. For instance, Avis devoted an entire section of its
briefing before the District Court in opposing class
certification to arguing that the arbitration and class-waiver
provisions created significant issues concerning typicality and
adequacy. Avis reaffirmed its stance nearly two years later
during oral argument. In that context, Avis’s participation in
discovery and mediation does not reasonably support an
inference that it intended to relinquish its right to arbitrate.
Finally, Avis promptly moved to compel once it was no
longer futile to do so. Although about four months passed
between certification and Avis’s motion, the record shows why
this interval was not unreasonable. Thirteen days after it issued
its certification order, the District Court held a telephonic status
conference and directed Plaintiffs to file a letter brief regarding

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30
their request to file a motion for partial summary judgment.
That order also stayed discovery. In its responsive brief, and
“in accordance with [the Court’s] verbal instructions during the
teleconference,” Avis “focus[ed] solely on the untimeliness of
Plaintiffs’ proposed motion rather than the numerous defenses
that [Avis] would have to overcome that motion.” DCD No.
236. Avis’s Rule 23(f) petition—arguing, inter alia, that it had
not waived its right to compel arbitration—remained pending.
So any motions relating to arbitration would have been
premature. But ten days after the parties notified the District
Court that this court had denied that petition, the Court
scheduled another status conference for December 14, 2023
then set a deadline for Avis’s motion to compel. Avis met that
deadline. That sequence of events does not suggest intentional
relinquishment.
In sum, and viewed in context, Avis’s conduct does not
“evince a preference for litigation over arbitration.” White, 61
F.4th at 340. We therefore will vacate the District Court’s order
denying Avis’s motion to compel. As explained below,
however, we stop short of directing that Plaintiffs be compelled
to arbitrate. Enforceability issues not reached by the District
Court remain to be addressed on remand.
V.
From waiver, we move to Plaintiffs’ alternative grounds
for affirmance. First, they claim that this dispute falls outside
the scope of the arbitration provision because the agreement’s
small-claims carve-out applies. Resp. Br. at 21–26. Second,
they contend the arbitration provision is invalid because Avis

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31
added it to its terms while this litigation was pending. Id. at 27–
30. The first argument fails on the merits. The second—raised
for the first time on appeal—has been forfeited. However,
because the District Court ruled solely on waiver, we will
remand so that it may address enforceability in the first
instance.
A.
A motion to compel arbitration requires courts to
consider two questions: “(1) whether a valid agreement to
arbitrate exists and (2) whether the particular dispute falls
within the scope of that agreement.” Trippe Mfg. Co. v. Niles
Audio Corp., 401 F.3d 529, 532 (3d Cir. 2005). Regarding the
second requirement, Plaintiffs contend that “the arbitration
provision Avis . . . now seeks to enforce, by its very terms,
exempts Class Members from arbitration.” Resp. Br. at 3. They
point to the carve-out for “[d]isputes and claims that are within
the scope of a small claims court’s authority.” JA924. Because
each class member’s individual claim “generally amount[s] to
no more than a few hundred dollars,” Plaintiffs say the small-
claims exemption governs. Resp. Br. at 4. Their premise
misapprehends the posture of this case.
The class action, of course, is an “exception to the usual
rule that litigation is conducted by and on behalf of the
individual named parties only.” United States v. Sanchez-
Gomez, 584 U.S. 381, 387 (2018) (quoting Califano v.
Yamasaki, 442 U.S. 682, 700–01 (1979). This procedural
device—which Judge Posner once referred to as

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32
“ingenious”21—aggregates numerous small claims into a
single action, which then “acquires an independent legal status
once it is certified under Rule 23.” Genesis Healthcare Corp.
v. Symczyk, 569 U.S. 66, 75 (2013); see also Sanchez-Gomez,
584 U.S. at 387 (noting that class actions “provide[] a
procedure by which the court may exercise . . . jurisdiction over
the various individual claims in a single proceeding” (quoting
Califano, 442 U.S. at 700–01)). Indeed, “[o]nce a class has
been certified, its members effectively lose nearly all of their
litigative individuality.” United States v. Cammarata, 145 F.4th
345, 372 (3d Cir. 2025); see also In re Baby Prods. Antitrust
Litig., 708 F.3d 163, 179 (3d Cir. 2013) (distinguishing
between a class action and claims “brought on an individual
basis”); Samuel v. Univ. of Pittsburgh, 538 F.2d 991, 994 (3d
Cir. 1976) (explaining that once a class was decertified, “[t]he
members of the class thus were left to pursue their individual
claims”).
Here, Plaintiffs’ operative complaint invokes CAFA,
averring that “the matter in controversy exceeds $5,000,000.”
JA437 (citing 28 U.S.C. § 1332(d)(2)(A)). As pled, this action
far exceeds New Jersey’s small-claims jurisdictional limit of
$5,000. See N.J. Ct. R. 6:1-2(a)(2) (defining “[s]mall claims
actions” as those where “the amount in dispute . . . does not
exceed . . . $5,000”). Unsurprisingly, Plaintiffs fail to cite any
authority for their novel theory and district courts have rejected
21 Eubank v. Pella Corp., 753 F.3d 718, 719 (7th Cir. 2014).

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33
materially identical efforts to deploy “small claims” exceptions
against aggregated class disputes.22 We do likewise.
B.
Plaintiffs also argue that the arbitration provision is
unenforceable because Avis added it while this case was
pending—an attempt, they say, to “alter the contours of this
litigation.” Resp. Br. at 27. That contention is raised for the first
time on appeal, so we decline to consider it. See Holk v.
Snapple Beverage Corp., 575 F.3d 329, 335 (3d Cir. 2009)
(explaining that although we may affirm on alternative
grounds, “this rule does not apply to cases in which the party
has waived the issue in the district court.”);23 Cameron v. EMW
22 See, e.g., Gadomski v. Wells Fargo Bank N.A., 281 F. Supp.
3d 1015, 1021 (E.D. Cal. 2018) (“[T]he Court finds the ‘small
claims exception’ inapplicable to Plaintiff’s claims because the
potential class of hundreds of thousands of individuals ensures
the claims would exceed the jurisdictional limit of California’s
small claims court.”); Botorff v. Amerco, No. 2:12-CV-01286,
2012 WL 6628952, at *6 (E.D. Cal. Dec. 19, 2012) (citing
CAFA and explaining that “Plaintiff could not have brought
her current class action, seeking recovery of damages in excess
of $5,000,000 for herself and a putative class, in California’s
small claims court because the amount of damages Plaintiff is
seeking greatly exceeds small claims court’s jurisdictional
limits”).
23 Although we have often used the term “waiver” in describing
arguments raised for the first time on appeal, “this usage of
‘waiver’ is inconsistent with the waiver-forfeiture distinction

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34
Women's Surgical Ctr., P.S.C., 595 U.S. 267, 275 (2022) (“[I]f
a non-jurisdictional argument was not raised below, we
generally will not consider it as an alternative ground for
affirmance.”); c.f. Mark v. Borough of Hatboro, 51 F.3d 1137,
1139 n.1 (3d Cir. 1995) (“[W]e can affirm on a ground on
which the district court did not rely but which was raised before
it.” (emphasis added)). While we are “slightly less reluctant to
bar consideration of a forfeited pure question of law,” Barna v.
Bd. of Sch. Directors of Panther Valley Sch. Dist., 877 F.3d
136, 147 (3d Cir. 2017),24 such a question is not before us in
this case.
Although Plaintiffs do not say so expressly, their
argument appears to rest on Rule 23(d), which authorizes
district courts “to control communications between class action
litigants.” In re Sch. Asbestos Litig., 842 F.2d 671, 679 (3d Cir.
1988); see also Gulf Oil Co. v. Bernard, 452 U.S. 89, 100
(1981) (explaining that a district court has “both the duty and
the broad authority to exercise control over a class action and
to enter appropriate orders governing the conduct of counsel
drawn by the Supreme Court in Olano.” United States v. Sok,
115 F.4th 251, 264 n.11 (3d Cir. 2024) (citing Olano, 507 U.S.
at 733). Rather, “we would now refer to such untimely or
unpreserved arguments as being forfeited.” Id.
24 See also Est. of McMorris v. Comm'r, 243 F.3d 1254, 1258
n.6 (10th Cir. 2001) (noting that the rule that a court “will not
consider an issue that was not raised below” is “relaxed . . .
where the argument presents an alternative ground for
affirming a lower court ruling on a pure question of law.”).

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35
and parties”). That authority is often aimed at preventing
“[m]isleading communications to class members concerning
the litigation,” which “pose a serious threat to the fairness of
the litigation process . . . and the administration of justice
generally.” In re Sch. Asbestos, 842 F.2d at 680. However, a
district court may not exercise its supervisory authority under
Rule 23(d) “without a specific record showing by the moving
party of the particular abuses by which it is threatened” and
must “find that . . . the relief sought would be consistent with
the policies of Rule 23 giving explicit consideration to the
narrowest possible relief which would protect the respective
parties.” Gulf Oil Co., 452 U.S. at 102 (quoting Coles v. Marsh,
560 F.2d 186, 189 (3d Cir. 1977)).
At least one district court has used Rule 23(d) to
invalidate arbitration clauses added during a pending putative
class action. See In re Currency Conversion Fee Antitrust
Litig., 361 F. Supp. 2d 237 (S.D.N.Y. 2005).25 But see Gauzza
25 Plaintiffs cite two additional district court cases that—
although they arose in the FLSA context—rely upon In re
Currency Conversion and Rule 23(d) to similarly hold that
arbitration provisions introduced while litigation was pending
were unenforceable. Resp. Br. at 28–29; see generally
Balasanyan v. Nordstrom, Inc., Nos. 11-cv-2609, 10-cv-2671,
2012 WL 760566 at *3 (S.D. Cal. Mar. 8, 2012) (“To allow
defendants to induce putative class members into forfeiting
their rights by making them an offer and failing to disclose the
existence of litigation would create an incentive to engage in
misleading behavior”); O’Conner v. Agilant Sols., Inc., 444 F.

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36
v. Prospect Med. Holdings, Inc., No. CV 17-3599, 2018 WL
4853294, at *2 (E.D. Pa. Oct. 4, 2018) (rejecting the notion that
“all arbitration agreements imposed after the onset of [class]
litigation are inherently confusing, misleading, coercive, and
designed to thwart the rights of [putative class members]”
(internal quotation marks omitted)). There, several defendant
credit card companies amended their cardholder agreements to
include arbitration clauses while a putative class action was
pending. Id. at 243–44. When plaintiffs later sought
certification, the defendants moved to exclude class members
whose agreements now contained arbitration provisions. Id. at
245. The court denied the motion, holding the after-the-fact
clauses unenforceable. Id. Invoking its supervisory authority
under Rule 23(d), the court explained that “when a defendant
contacts putative class members for the purpose of altering the
status of a pending litigation, such communication is improper
without judicial authorization.” Id. at 253. According to the
Supp. 3d 593, 603 (S.D.N.Y. 2020) (reasoning that the
arbitration clauses were “improper and misleading”
communications because the clauses “did not disclose that by
signing the Arbitration Agreements, putative plaintiffs would
lose their right to participate in this lawsuit”). But see Jones v.
Judge Tech. Servs. Inc., No. CIV.A. 11-6910, 2014 WL
3887733, at *3 (E.D. Pa. Aug. 7, 2014) (rejecting plaintiffs’
argument that the defendant’s “implementation of an
arbitration agreement for new employees” without notifying
them of the pending litigation “constituted an improper
communication with putative [FLSA collective] members.”).

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37
court, that includes “[c]ommunications that threaten the choice
of remedies available to class members.” Id. at 252 (citing In
re Sch. Asbestos, 842 F.2d at 683). It also faulted the defendants
for omitting any mention of the ongoing case from the new
clauses, reasoning that Rule 23(d) forbids “mislead[ing] class
members by omitting critical information from its
communications.” Id.
Because the issue is not properly before us, we do not
decide whether the approach taken in In re Currency
Conversion and its progeny is permissible. Nonetheless, those
cases do suggest that—in appropriate circumstances—a
district court may have the authority to invalidate mid-
litigation contract changes that mislead or coerce putative
members or otherwise undermine the orderly administration of
a class action.26 The District Court here did not reach the
enforceability question under Rule 23(d)—both because the
issue was not presented and because the court resolved
arbitrability solely on waiver. Given the “broad authority”
granted to district courts under Rule 23(d), Gulf Oil Co., 452
U.S. at 100, and the “specific record showing” required to
26 Of course, there are critical differences between those cases
and the case before us. For example, in In re Currency
Conversion, the defendants “engrafted arbitration clauses”
onto the cardholder agreements of plaintiffs whose claims had
already arisen. 361 F. Supp. 2d at 249. By contrast, Avis’s 2016
arbitration provision is not retroactive and, thus, does not affect
the rights of car-renters whose claims arose prior to its
inclusion in the car rental agreement.

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38
exercise that authority, id. at 102, that issue belongs in the first
instance to the District Court on a fully developed record. See
Baron v. Allied Artists Pictures Corp., 717 F.2d 105, 109 (3d
Cir. 1983) (deeming it “inappropriate to consider … an
alternative ground for affirmance” where “[t]he present record
is not adequate for the resolution of that question”).
In sum, Plaintiffs’ small-claims argument fails given the
aggregated amount in controversy in this class action, and their
mid-litigation-addition argument—raised for the first time on
appeal—has been forfeited. We therefore decline to affirm on
those grounds. Because the District Court relied exclusively on
waiver, we will vacate and remand. On remand, the court may,
if properly presented, consider the enforceability of the
arbitration provision under Rule 23(d).27
VI.
For the foregoing reasons, we will vacate the District
Court’s September 30, 2024, order denying Avis’s motion to
compel and remand for further proceedings consistent with this
opinion.
27 Although “arguments not raised before the District Court are
waived on appeal[,] . . . when a case is remanded, a district
court may consider, as a matter of first impression, those issues
not expressly or implicitly disposed of by the appellate
decision.” E.E.O.C. v. Kronos Inc., 694 F.3d 351, 370 (3d Cir.
2012) (internal quotation marks and citations omitted).

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