By Gerald L. Maatman, Jr., Jennifer A. Riley, Ryan T. Garippo, and Brett A. Bohan
Duane Morris Takeaways: On August 18, 2026, in Moore, et al. v. Club Exploria, LLC, No. 25-2721, 2026 WL 2409841 (7th Cir. Aug. 18, 2026), Chief Judge Michael Brennan of the U.S. Court of Appeals for the Seventh Circuit affirmed the denial of a defendant’s motion to compel arbitration in a class action brought under the Telephone Consumer Protection Act (“TCPA”). The Seventh Circuit held that a defendant’s conduct, even prior to class certification, may support an inference that it waived its right to compel arbitration of putative class member’s claims. This ruling is significant for companies asserting an arbitration defense in a pending class action as preserving the right to compel arbitration can result in significant procedural complications.
Case Background
Club Exploria, LLC (“Exploria”) owns and manages vacation properties. To promote one of its properties, Exploria contracted with third-party vendors to run a telemarketing campaign. These vendors purchased the phone numbers of individuals who had agreed to receive sales calls which had been generated through various websites. Exploria used that list to call tens of thousands of potential customers using a prerecorded voice, including Plaintiff George Moore (“Plaintiff” or “Moore”).
In April 2019, Moore sued Exploria under § 227(b)(3) of the TCPA and claimed that he received these prerecorded calls without his consent. Over the next four years, Exploria filed pleadings with affirmative defenses, engaged in class-wide discovery, filed motions on the merits, and opposed class certification. After the class was certified, however, Exploria filed more motions, including a request to reopen discovery and to amend its answer to add additional affirmative defenses. In its third amended answer, Exploria stated that it sought to add an affirmative defense based on arbitration agreements with the class members. The district court denied this request and explained that the defense “was clearly waived by not bringing it up before now.” Id.
Thereafter, class notice was issued and Moore moved for summary judgment. But two months after briefing finished on Moore’s summary judgment motion, Exploria moved to compel arbitration and stated that 1,026 of the 66,682 class members had entered into mandatory individual arbitration agreements with the company. Exploria also explained that up to 70% of the class may be subject to similar agreements. The district court “ruled that Exploria had waived [the] arbitration defense” and “also granted summary judgment to Moore.” Id. at *2. Exploria appealed to the U.S. Court of Appeals for the Seventh Circuit.
The Seventh Circuit’s Ruling
On appeal, Chief Judge Brennan, writing for the Seventh Circuit, addressed three issues: (1) the appellate standard of review for orders denying motions to compel arbitration; (2) whether a court may consider a defendant’s pre-certification conduct in evaluating waiver; and (3) whether the district court clearly erred in finding waiver on the facts of this case.
First, the Seventh Circuit took the opportunity to clarify the standard of review for such cases as the case law was “in shambles” and highly conflicting. Id. at *3 (quoting Al-Nahhas v. 777 Partners LLC, 129 F. 4th 418, 430 (7th Cir. 2025) (Easterbrook, J., concurring)). To resolve the conflict, the Seventh Circuit turned to the U.S. Supreme Court case of U.S. Bank National Association v. Village at Lakeridge, LLC, 583 U.S. 387, 395-96 (2018) which explains that “[m]ixed questions [of law and fact] are not all alike.” Under that standard, where a district court is required to “expound on the law” the standard of review is de novo, but if the “decision does not announce a new legal rule, waiver decisions should be reviewed for clear error.” Moore, 2026 WL 2409841, at *4 (quotations omitted). The Seventh Circuit thus “overrule[d] the caselaw that does not follow [this] guidance,” particularly as to the case law that indicated that there is a per se rule that de novo review is the standard, but “only as to the applicable standard of review and to the extent [the cases] are inconsistent with this opinion.” Id.
Second, the Seventh Circuit considered whether a defendant’s pre-certification conduct could support an inference of waiver. “Waiver is the ‘intentional relinquishment or abandonment of a known right.’” Id. at *5 (quoting Morgan v. Sundance, Inc., 596 U.S. 411, 417 (2022)). The Seventh Circuit held that – although the issue was not free from dispute – that “a defendant’s pleadings, conduct during class-related discovery, and arguments in opposition to class certification are relevant to the waiver decision.” Id. at *6. “Arbitration agreements with putative class members should be produced during class-related discovery and in opposition to class certification. The number and variety of such agreements impact the district court’s Rule 23 analysis.” Id. “[I]f a diligent defendant intends to compel arbitration after class certification, it cannot do so promptly if those agreements have not been produced. Asking to reopen discovery shows a lack of diligence.” Id. Thus, the Seventh Circuit concluded that such conduct is relevant to the waiver inquiry.
Third, on the specific facts of this case and because the “legal principle [was] settled,” the Seventh Circuit reviewed the “waiver decision . . . for clear error.” Id. at *7. Here, the parties engaged in two years of class-related discovery and developed no evidence of arbitrability. Similarly, when class certification was briefed, the opposition made “no mention of arbitration.” Id. Thus, it was immaterial that “as much as 70% of the putative class [may] be subject to such agreements.” Id. “If Exploria intended to move to compel arbitration, it should have raised the issue of arbitrability in opposing class certification under Federal Rule of Civil Procedure 23” and could not do so without first developing the defense in discovery. Id.
The Seventh Circuit, therefore, affirmed the district court’s denial of Exploria’s motion to compel arbitration.
Implications For Companies
The Moore decision is quite significant for companies and their arbitration programs.
It is very common for companies to have an arbitration agreement with some members of a putative class and not others. When sued in a class action, there is often a temptation to hold such agreements back until after class certification in order to forgo the burden of collecting them until absolutely necessary. But the Moore decision instructs that this path forward is rife with peril and may result in a company losing the right to compel arbitration even when 70% of the class agreed to the provision.
From a legal perspective, the Seventh Circuit’s clarification of the standard of review, and the overruling of cases that call for a per se rule of de novo review, will also make it harder for defendants to overturn unfavorable waiver findings on appeal. When a waiver decision is ultimately reviewed for clear error, the burden to overturn an unfavorable decision will be exceedingly high at the appellate court level. Thus, the stakes at the district court level just got even higher for companies with federal cases pending in Illinois, Indiana, and Wisconsin, because the district court decision is likely to be the one that sticks in the long run.
As a result, corporate counsel should work with their outside counsel to audit their organizations’ arbitration agreements to ensure they are identified and ready to be used at the earliest stages of any pending class action.