In Moore v Club Exploria, LLC, No. 25-2721 (7th Cir. Aug. 18, 2026), the Seventh Circuit grapples with a divide in the case law about whether district court orders denying arbitration are reviewed deferentially or de novo. The court concludes that clear-error review applies unless the reviewing the order “requires us to elaborate on this circuit’s waiver rules and set precedent for future cases,” in which case review is de novo.
The case is a consumer class action challenging a telemarketing scheme that allegedly violates the Telephone Consumer Protection Act of 1991 (“TCPA”), see 47 U.S.C. § 227.
Four years into the case, following class certification and merits discovery, the defendant first raised the defense of an arbitration agreement, supposedly entered into by the consumers (though in the end, only a small percentage of the class was affected).
The district court denied the motion to compel arbitration on the ground of waiver. “The court noted that before certification, Exploria had engaged in two years of discovery and moved for summary judgment, and after certification . . . . To submit this case for decision on the merits after discovery and after certification, the district court explained, was inconsistent with an intent to arbitrate.”
The Federal Arbitration Act provides a right of appeal of interlocutory orders denying arbitration, 9 U.S.C. § 16(a)(1)(B). Defendant appealed the order here.
The Seventh Circuit affirms the order, upholding the district court’s conclusion that the defendant waived arbitration. Before reaching the merits, though, the panel resolves the intra-circuit split on the appellate standard of review for such orders.
“The parties differ as to what standard of review should apply to the denial of a motion to compel arbitration. Both parties agree that waiver presents a mixed question of law and fact—how a legal standard applies to the court’s factual findings. Exploria calls for de novo review of the ultimate waiver decision, and clear error review of only the underlying factual findings. Moore, on the other hand, calls for clear error review of the ultimate waiver decision and the underlying factual findings.”
The panel notes that Seventh Circuit authority over the decades supported both parties’ arguments.
“Partly to blame is that motions to compel arbitration can raise more than one mixed question of law and fact. For example, some motions are denied for lack of arbitrability—that is, whether two parties are bound by an arbitration agreement and whether the dispute fits within the scope of its terms. Other motions are denied on the basis of waiver, which is a separate defense against arbitration.” It observes that while a line of Seventh Circuit cases endorsed de novo review of such orders, they did so without “reasoned explanations.”
Furthermore, “[c]onflicting standards of review arose in cases in which waiver was the basis for denying a motion to compel arbitration. The earlier cases adopted a deferential posture toward the mixed question of waiver, reviewing both the facts and the application of law to the facts for clear error.”
Rather than attempt to harmonize the conflicting lines of authority, the panel chooses to reset the circuit’s appellate standard of review in light of U.S. Bank National Ass’n v. Village at Lakeridge, LLC, 583 U.S. 387 (2018) (“Lakeridge”).
“Following Lakeridge, courts of appeals reviewing orders denying motions to compel arbitration must consider whether the specific issue involves legal principles that will impact future cases or case-specific factual considerations. If the former, de novo review applies. If the latter, clear error review applies. This is true regardless of whether arbitrability, waiver, or any other issue is the grounds for the order denying a motion to compel arbitration.”
“Under Lakeridge, then, so long as the decision does not announce a new legal rule, waiver decisions should be reviewed for clear error.”
“To proceed under Lakeridge, however, we must overrule the caselaw that does not follow its guidance.” The panel thus overrules the line of authority calling for de novo standard of review of orders denying arbitration. (Under Circuit Rule 40(e), a three-judge panel in the Seventh Circuit may overrule circuit precedent if it first circulates the opinion to all active judges to obtain their assent.)
The panel finally reflects in a footnote that most circuits currently provide for de novo review, not clear error, so that this decision creates a circuit split with them. This sets up a potential issue for U.S. Supreme Court review.
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