188 F. Supp. 3d 696
N.D. Ill.2016Background
- Allscripts (successor to Mysis) and Etransmedia entered a Partner Agreement (2008) containing a broad AAA-administered arbitration clause; Allscripts became party via merger.
- The Agreement was terminated in April 2014, but disputes continued because Etransmedia hosted data for mutual customers and resisted migrating data/upgrades.
- Etransmedia initiated AAA arbitration in May 2015 (following an earlier arbitration in 2014); Allscripts filed suit in state court and later in federal after removal.
- The parties signed a mediation Term Sheet in Sept. 2015 requiring immediate steps (Allscripts to provide upgrades; Etransmedia to produce documents and pay); Etransmedia failed to comply or pay.
- Allscripts’ amended complaint alleges breach of contract, unjust enrichment, defamation, tortious interference, breach of the Term Sheet, and deceptive trade practices; it also seeks a declaration that Etransmedia’s AAA claims are baseless.
- Etransmedia moved to stay the litigation and compel arbitration under the FAA; the district court stayed the case and compelled arbitration but reserved the right to reopen the case if arbitrators find claims non-arbitrable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration clause covers Allscripts’ claims | Arbitration clause doesn't reach claims tied to Allscripts Professional or post-termination conduct | Clause is broad and applies; arbitrator should decide scope | Delegated to arbitrators under clear incorporation of AAA rules |
| Who decides arbitrability | Court should decide arbitrability, especially for an expired contract | AAA Rule incorporation delegates arbitrability to arbitrators | Incorporation of AAA rules is a clear-and-unmistakable delegation to arbitrators |
| Effect of contract expiration on delegation | Expired contract means court should resolve arbitrability; presumption of arbitrability weakened | Clear delegation still controls even if contract expired | Expiration does not overcome clear delegation to arbitrators via AAA rules |
| Whether staying suit and compelling arbitration is proper | Plaintiff seeks to litigate in court; arbitration inappropriate for these claims | FAA and the delegation clause require arbitration before AAA | Court granted stay and compelled arbitration; preserved right to reopen if arbitrators rule non-arbitrable |
Key Cases Cited
- Tinder v. Pinkerton Security, 305 F.3d 728 (7th Cir. 2002) (standards for evaluating motions to compel arbitration and factual disputes)
- Gore v. Alltel Commc’ns, LLC, 666 F.3d 1027 (7th Cir. 2012) (federal policy favoring arbitration and contract-grounded arbitration analysis)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (courts generally decide arbitrability absent clear delegation)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (parties can clearly and unmistakably delegate arbitrability to arbitrators)
- Litton Fin. Printing Div. v. N.L.R.B., 501 U.S. 190 (1991) (presumption of arbitrability is limited for expired agreements)
- Contec Corp. v. Remote Solution Co., 398 F.3d 205 (2d Cir. 2005) (incorporation of arbitral rules can constitute clear delegation of arbitrability)