152 F. Supp. 3d 1091
N.D. Ill.2015Background
- Bahoor alleges Varonis induced acceptance of employment with false promises and later fired him.
- Varonis moves to compel arbitration under the employment agreement and seeks dismissal or stay.
- Bahoor argues arbitration is inapplicable due to scope, cost, and waiver of arbitration.
- The court treats the motion as arising under the FAA and converts it to a Rule 12(b)(3) improper venue dismissal because the arbitration must occur in New York.
- The arbitration clause is broad, covering all disputes arising out of or relating to Bahoor’s employment, including pre-employment misrepresentations.
- The court enforces the forum selection, concludes arbitration in New York is required, and grants dismissal for improper venue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of arbitration | Bahoor contends claims fall outside arbitration. | Varonis asserts broad clause covers all employment-related disputes. | Clause covers all claims arising from employment, including pre-employment misrepresentations. |
| Cost of arbitration | Arbitration would be cost-prohibitive for Bahoor. | Costs are shared and no concrete proof of prohibitive expense. | No sufficient evidence of prohibitive costs; no invalidation of arbitration. |
| Waiver of arbitration | Varonis waived its right by delaying arbitration and litigating. | No waiver; actions consistent with seeking arbitration. | No waiver; conduct indicates intent to arbitrate. |
| Forum/venue for arbitration | Forum selection not enforceable to block court action. | Arbitration must occur in New York per agreement; court must compel there. | Arbitration must occur in New York; case dismissed for improper venue in this district. |
Key Cases Cited
- Interlease Aviation Inv’rs II (Aloha) L.L.C. v. Vanguard Airlines, Inc., 262 F.Supp.2d 898 (N.D. Ill. 2003) (role of allegations and extrinsic evidence in venue rulings)
- Ferenc v. Brenner, 927 F.Supp.2d 537 (N.D. Ill. 2013) (forum for arbitration compelled outside current district when clause requires another forum)
- Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801 (7th Cir. 2011) (motion to compel arbitration as a Rule 12(b)(3) dismissal when forum is improper)
- Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Lauer, 49 F.3d 323 (7th Cir. 1995) (district court cannot compel arbitration outside its district when forum clause exists)
- Haber v. Biomet, Inc., 578 F.3d 553 (7th Cir. 2009) (appropriateness of forum and arbitration conflict resolution)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (strong presumption in favor of arbitrability and resolving doubts for arbitration)
- Janiga v. Questar Capital Corp., 616 F.3d 735 (7th Cir. 2010) (scope of arbitration agreements analyzed under contract law)
- Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (U.S. 2000) (case-by-case approach to cost-prohibitive arbitration concerns)