Bovay v. Sears, Roebuck & Co.
2013 IL App (1st) 120789
| Ill. App. Ct. | 2013Background
- Putative class actions alleging Sears disclosed confidential data to third parties; consolidated Bovay (2001), Triezenberg (2002), and Clark (2003) complaints claim credit card data exposures and various tort/consumer claims.
- Arbitration clauses appeared in 2000 and 2003 Sears credit card agreements; 2003 version expanded scope and allowed non-class arbitrations with potential class action waiver depending on certification status.
- Sears asserted defenses including statute of limitations, laches, waiver, estoppel, and federal preemption; Sears did not initially seek arbitration in answers to the complaints.
- Plaintiffs sought punitive damages; class certification process led to extensive discovery and litigation over several years; no arbitration motion was filed until August 2011, after Concepcion was decided.
- Sears moved to compel arbitration under FAA §3 in 2011; circuit court denied arbitration in 2012 on grounds of knowledge of a right to arbitrate, lack of futility, and substantial prejudice to plaintiffs from years of litigation; order was appealed under Rule 307(a)(1).
- Court affirmed circuit court, holding Sears had a known right to arbitrate from inception, there was no futility in seeking arbitration earlier, and Sears’ litigation conduct prejudiced plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sears waived the right to arbitrate | Sears delayed and litigated for a decade, showing inconsistent conduct with a known right. | Concepcion changed the law, making arbitration timely; pre-Concepcion futility prevented waiver. | Yes, Sears waived arbitration by long, inconsistent litigation and prejudice to plaintiffs. |
| Whether Sears had a known right to arbitrate from the outset | Sears could have moved to arbitrate earlier under the agreements. | Concepcion created the affirmative knowledge of right only later; futility standard applies. | Sears had a known right to arbitrate from the start; delaying was improper. |
| Whether Concepcion abrogated prior law and affected futility analysis | Concepcion does not excuse long delay harming plaintiffs. | Concepcion superseded Discover Bank, allowing delay to be excused. | Concepcion did not sanction Sears’ delay; not futile to seek arbitration earlier. |
Key Cases Cited
- Fisher v. A.G. Becker Paribas Inc., 791 F.2d 694 (9th Cir. 1986) (waiver analysis requires knowledge, inconsistency, and prejudice)
- Garcia v. Wachovia Corp., 699 F.3d 1273 (11th Cir. 2012) (pre-Concepcion futility unlikely; move to compel arbitration should be timely)
- Gutierrez v. Wells Fargo Bank, N.A., 704 F.3d 712 (9th Cir. 2012) (pre-Concepcion futility not clear-cut; motion to compel often timely)
- Southeastern Stud & Components, Inc. v. American Eagle Design Build Studios, LLC, 588 F.3d 963 (8th Cir. 2009) (futility/uncertainty of law governs timing of arbitration motion)
- Garcia v. Wachovia Corp., 699 F.3d 1273 (11th Cir. 2012) (pre-Concepcion futility not automatic; motion to compel should be timely)
- Discover Bank v. Superior Court, 113 P.3d 1100 (Cal. 2005) (California Discover Bank rule preempted by FAA under Concepcion)