Jeremiah Parker v. Kearney School District

United States Court of Appeals
For the Eighth Circuit
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No. 23-3727
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Jeremiah Parker; E.P., a minor, by and through his next friend, Tiffaney Whitt;
Z.P., a minor, by and through his next friend, Tiffaney Whitt; I.P., a minor, by and
through his next friend, Tiffaney Whitt; M.P. 1, a minor, by and through his next
friend, Tiffaney Whitt; M.P. 2, a minor, by and through his next friend, Tiffaney
Whitt; Tiffaney Whitt; N.P., a minor, by and through his next friend, Tiffaney
Whitt
Plaintiffs - Appellees
v.
Kearney School District
Defendant
Durham School Services, L.P.
Defendant - Appellant
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Appeal from United States District Court
for the Western District of Missouri - Kansas City
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Submitted: November 19, 2024
Filed: March 7, 2025
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Before SHEPHERD, ARNOLD, and ERICKSON, Circuit Judges.
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SHEPHERD, Circuit Judge.
Plaintiffs Tiffaney Whitt, on behalf of her minor children, and Jeremiah
Parker, Whitt’s adult son, filed this action against Kearney School District (Kearney)
and Durham School Services, L.P., (Durham) stemming from racial harassment that
Parker and his siblings experienced on a school bus servicing Kearney and operated
by Durham. As relevant to this appeal, Plaintiffs alleged a 42 U.S.C. § 1981 claim
against Durham. After the district court1 rejected Durham’s motion to dismiss and
motion for summary judgment challenging the cognizability of Plaintiffs’ claim,
Durham filed a motion to compel arbitration. The district court denied the motion,
concluding that Durham waived its right to enforce the arbitration clause by not
raising it earlier in the litigation. Durham appeals the denial of the motion to compel,
and, having jurisdiction under 9 U.S.C. § 16, we affirm the judgment of the district
court.
I.
Plaintiffs initiated this action in 2022, alleging that Parker and his siblings
were subjected to continuous racial harassment both at school and while riding the
Durham-operated school buses and that complaints to Kearney about the conduct
went unaddressed. Plaintiffs asserted Title VI and 42 U.S.C. §§ 1981 and 1983
claims against Kearney2 and a § 1981 claim against Durham. Plaintiffs’ § 1981
claim against Durham stemmed from the contractual agreement between Kearney
and Durham, with Plaintiffs alleging that they were third-party beneficiaries to the
contract, and, as intended third-party beneficiaries, they had the right to enforce the
1 The Honorable Gary A. Fenner, United States District Judge for the Western
District of Missouri.
2 Plaintiffs ultimately reached a settlement with Kearney and stipulated to
dismissal of these claims with prejudice. Plaintiffs’ claims against Kearney thus
form no part of this appeal.

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contract between Durham and Kearney requiring Durham to provide safe
transportation to school free from racial harassment.
Durham filed a motion to dismiss, asserting, in part, that Plaintiffs could not
state a § 1981 claim because they had no rights under the contract between Durham
and Kearney. The district court noted that “[t]he Eighth Circuit ha[s] not directly
addressed the open question of whether third-party beneficiaries are entitled to bring
§ 1981 claims,” ultimately concluding that dismissal on this ground was
inappropriate because, at this stage in the litigation, without being able to review the
contract and with no discovery having occurred, it could not conclude that Plaintiffs
could not state a § 1981 claim. The case proceeded through discovery, and Durham
filed a motion for summary judgment, arguing that the contract between Durham
and Kearney did not express any intent to confer benefits upon students or parents
meaning that, at best, Plaintiffs were incidental beneficiaries to the contract. The
district court rejected this argument, concluding that the terms of the contract
evidenced the intent to make Plaintiffs intended beneficiaries. Further, while it was
not a ground that Durham raised in its summary judgment motion, the district court
stated that it “believe[d] it likely that the Eighth Circuit would hold that third-party
intended beneficiaries of a contract have § 1981 rights” and concluded that even if
Durham were to make this argument it would be unsuccessful. As intended
beneficiaries, the district court concluded that Plaintiffs were entitled to pursue their
§ 1981 claim against Durham.
After the district court issued its summary judgment order, and 15 days before
the scheduled pretrial conference, Durham filed a motion to compel arbitration,
asserting that Plaintiffs’ § 1981 claim was subject to the arbitration provision
contained in the contract between Durham and Kearney. The contract’s arbitration
provision provides:
The parties agree to meet and confer in good faith on all matters and
disputes under this Agreement. If a dispute is not resolved under the
foregoing, and one party informs the other in writing that it reasonably
believes that the differences between the parties are not likely to be

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reconciled through further negotiation, then the parties agree to submit
such dispute to binding arbitration under the Commercial Rules of the
American Arbitration Association. Such arbitration will be held as
promptly as possible in Clay County, Missouri and will be conducted
before a panel of three (3) members. The DISTRICT and the
CONTRACTOR shall each select one arbitrator, and the third arbitrator
shall be selected by agreement of the other two arbitrators so chosen.
The decision of a majority of the arbitration panel will be binding on
the parties and may be submitted for enforcement to any court of
competent jurisdiction. All costs and expenses associated with the
arbitration shall be borne entirely by the non-prevailing party.
Durham argued that, although the Plaintiffs were not signatories to the contract, they
were still bound by the arbitration clause as intended beneficiaries. Plaintiffs
resisted the motion to compel arbitration, arguing that Durham waived its right to
seek arbitration “by filing its motion on the eve of trial” and that otherwise there was
no enforceable arbitration agreement between Durham and Plaintiffs.
The district court denied the motion to compel arbitration, agreeing with
Plaintiffs that Durham waived any right to arbitration. The district court stated that,
in considering whether a party has waived its right to arbitration, the court considers
whether the party knew of its right to arbitrate, acted inconsistently with that right,
and the party’s conduct prejudiced plaintiffs. The district court then concluded that
all three elements were present, stating:
Durham, as a signatory party to the Agreement, knew of the arbitration
clause. And, as recounted above, Durham has substantially invoked the
litigation machinery in this case without moving to compel arbitration
until 15 days before the pretrial conference. Durham has litigated and
continues to litigate Plaintiffs’ standing to bring[] their claim against it
without even mentioning the arbitration clause until November 29,
2023. Durham has also engaged in extensive discovery, including
deposing all Plaintiffs and raising discovery disputes requiring the
Court’s intervention. At this stage in the litigation, Durham’s Motion
to Compel Arbitration prejudices Plaintiffs.

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Durham thereafter filed this interlocutory appeal challenging the district court’s
dismissal of its motion to compel.
II.
Durham asserts that the district court erred in denying its motion to compel
arbitration because it did so based on the erroneous conclusion that Durham waived
its right to arbitration. Specifically, Durham argues that the district court improperly
considered the prejudice to Plaintiffs in concluding that Durham waived arbitration;
that Durham sought arbitration at the earliest possible point—when it first learned
that the arbitration provision applied to Plaintiffs’ claim through the district court’s
summary judgment order; and that Durham’s conduct during litigation was not
inconsistent with the right to arbitration because it was required to engage in
discovery and file dispositive motions regarding the third-party beneficiary issue to
determine whether the arbitration clause applied to Plaintiffs’ claim. In response,
Plaintiffs contend that Durham’s appeal is frivolous and urge this Court to adopt a
process allowing a district court to certify that an interlocutory appeal of an order
denying arbitration is frivolous. Plaintiffs also ask the Court to award damages or
costs pursuant to Fed. R. App. P. 38 because Durham’s appeal is frivolous.
“We review de novo the district court’s conclusion that a party has waived
arbitration and examine the factual findings underlying that ruling for clear error.
Because of the strong federal policy in favor of arbitration, ‘any doubts concerning
waiver of arbitrability should be resolved in favor of arbitration.’” Messina v. N.
Cent. Distrib., Inc., 821 F.3d 1047, 1050 (8th Cir. 2016) (citations omitted). This
Court has often recited the factors in determining whether a party waived its right to
arbitrate as the party “(1) knew of an existing right to arbitration; (2) acted
inconsistently with that right; and (3) prejudiced the other party by these inconsistent
acts.” See Lewallen v. Green Tree Servicing, LLC, 487 F.3d 1085, 1090 (8th Cir.
2007). However, in 2022, the United States Supreme Court issued Morgan v.
Sundance, Inc., which expressly rejected this Court’s use of the prejudice element.
596 U.S. 411, 417 (2022) (“[T]he Eighth Circuit was wrong to condition a waiver of

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the right to arbitrate on a showing of prejudice.”). In light of Morgan, “our pre-
Morgan three-part test now has two parts, but otherwise remains the same. To
evaluate whether a party has ‘intentional[ly] relinquish[ed] or abandon[ed]’ the right
to arbitration, courts must determine whether it (1) knew of its ‘existing right’ and
(2) acted ‘inconsistently with’ it.” In re Pawn Am. Consumer Data Breach Litig.,
108 F.4th 610, 614 (8th Cir. 2024) (alterations in original) (citations omitted). While
the district court erroneously considered the element of prejudice, this is not
reversible error so long as the other two elements support the district court’s
conclusion that Durham waived its right to arbitrate. See 28 U.S.C. § 2111 (“On the
hearing of any appeal . . . the court shall give judgment after an examination of the
record without regard to errors or defects which do not affect the substantial rights
of the parties.”); Fed. R. Civ. P. 61 (same).
Turning to the first element, we conclude that the district court properly
determined that Durham knew of its right to arbitrate. We have previously found
that a party “knew of its existing right to arbitration because it possessed the
arbitration agreement,” and we see no reason to depart from that rule here. See
Messina, 821 F.3d at 1050. There is no dispute that Durham was in possession of
the contract between it and Kearney, and it thus would have known about its right to
arbitrate. We are not persuaded by Durham’s contention that it did not know of its
right to arbitrate until after the district court’s ruling on the motion for summary
judgment because it was not until this point that Durham knew for certain that the
arbitration clause would apply to Plaintiffs. In Hooper v. Advance America Cash
Advance Centers of Missouri, Inc., we rejected a similar argument from a party that
it could only know whether certain claims were arbitrable after the district court
ruled on a motion to dismiss, stating:
With some force, Advance America maintains it could not have known
for certain Counts II through VII were arbitrable until the district court
dismissed Count I. The problem with Advance America’s argument is
that its motion to dismiss sought more than clarification. Advance
America did not, for example, file a motion to dismiss Count I for lack
of jurisdiction and simultaneously move to compel arbitration on

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Counts II through VII pending the district court’s ruling. Instead,
Advance America sought a decision on the merits on Counts II through
VII, an immediate and total victory in the parties’ dispute. The district
court correctly inferred . . . that instead of merely seeking clarification,
Advance America “wanted to see how the case was going in federal
district court before deciding whether it would be better off there or in
arbitration.” Advance America “wanted to play heads I win, tails you
lose,” which “is the worst possible reason” for failing to move for
arbitration sooner than it did.
589 F.3d 917, 922 (8th Cir. 2009) (citations omitted) abrogation on other grounds
recognized by In re Pawn Am., 108 F.4th at 613. Although in Hooper we provided
this analysis in the context of the second element of the waiver analysis, we conclude
that the reasoning applies with full force here. Durham sought a decision on the
merits of the cognizability of Plaintiffs § 1981 claim without doing anything to
preserve its right to arbitrate should the district court conclude that the Plaintiffs
could pursue their claim. Like Hooper, Durham did not simultaneously move to
compel arbitration and move to dismiss or for summary judgment, and we are left
with the conclusion that Durham merely “wanted to see how the case was going in
federal court before deciding whether it would be better off there or in arbitration.”
See id. (citation omitted).
As to the second element, we similarly conclude that the district court properly
determined that Durham acted inconsistently with its right to arbitrate. “A party acts
inconsistently with its right to arbitrate if the party ‘[s]ubstantially invoke[s] the
litigation machinery before asserting its arbitration right.’” Lewallen, 487 F.3d at
1090 (alterations in original) (citation omitted). Invoking the machinery of litigation
involves, “for example, . . . fil[ing] a lawsuit on arbitrable claims, engag[ing] in
extensive discovery, or fail[ing] to move to compel arbitration and stay litigation in
a timely manner.” Id. Here, there is no dispute that Durham engaged in the litigation
machinery, proceeding through extensive discovery and summary judgment before
filing its motion to compel arbitration. Durham asserts that it sought to compel
arbitration at the earliest possible opportunity—when the district court affirmatively
ruled that the Plaintiffs were intended third-party beneficiaries under the contract.

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However, as discussed in Hooper, nothing precluded Durham from filing its motions
to dismiss and summary judgment simultaneously, but it chose not to do so. Because
Durham could have preserved its right to arbitration while at the same time seeking
a determinative ruling on the cognizability of Plaintiffs’ claim and did not do so
while engaging in extensive discovery and motions practice, we conclude that the
district court properly determined that Durham acted inconsistently with its right to
arbitrate. The district court thus did not err in denying Durham’s motion to compel
arbitration.
Finally, Plaintiffs have asked us to adopt a process which would allow a
district court to certify an interlocutory appeal of a denial of a motion to compel
arbitration as frivolous, but we decline to do so here, where the facts do not
demonstrate that Durham has pursued a frivolous appeal. Misischia v. St. John’s
Mercy Health Sys., 457 F.3d 800, 806 (8th Cir. 2006) (defining an appeal as
frivolous “when the result is obvious or when the appellant’s argument is wholly
without merit”). While Durham does not prevail on its claim that it did not waive
its right to arbitrate, we find a good-faith basis for Durham to have argued that the
question of cognizability of a § 1981 claim from a third-party beneficiary precluded
it from invoking its right to arbitrate at an earlier point in litigation. Further, we
likewise reject Plaintiffs’ requests for awards or costs under Fed. R. App. P. 38. In
addition to determining that the appeal is not frivolous, we also note that Plaintiffs
have not “separately filed [a] motion or notice” as required by the Rule. See Fed. R.
App. P. 38.
III.
For the foregoing reasons, we affirm the judgment of the district court. We
also deny Durham’s motions to take judicial notice of a companion case in the
Western District of Missouri.
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