Carr v. Gateway, Inc.
241 Ill. 2d 15
| Ill. | 2011Background
- Carr purchased a Gateway computer and later sued for misrepresentation about processor speed.
- Gateway moved to dismiss or compel arbitration under the sales contract's arbitration clause.
- Circuit court found no valid arbitration agreement or, alternatively, unconscionable; denied.
- NAF, the designated arbitration forum, stopped accepting consumer arbitrations, triggering questions about substitution.
- Appellate court assumed a valid arbitration agreement for purposes of appeal and addressed whether FAA §5 permits substituting a forum arising from unavailability.
- Court granted review to decide if §5 allows appointing a substitute arbitrator when the named forum is unavailable and whether designation of NAF is integral to the agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA §5 permits substituting an arbitrator when the chosen forum is unavailable | Carr argues §5 applies to substitute an arbitrator | Gateway argues §5 does not apply because NAF designation is integral | §5 applies only if forum designation is ancillary; here NAF integral → §5 not applicable |
| Whether the designation of NAF as forum was integral to the arbitration agreement | Carr asserts NAF rules affect outcome and were integral | Gateway contends designation was ancillary | NAF designation integral; §5 not applicable |
| Whether the arbitration clause is enforceable given NAF's unavailability | Carr contends clause fails if forum unavailable | Gateway contends clause remains enforceable | Arbitration agreement fails because NAF designation was integral and §5 cannot save it |
| Whether the clause punishing disputes brought in non-NAF forums shows integrality | Carr points to penalty clause indicating forum importance | Gateway argues it targets enforcement only when NAF available | Penalty clause indicates NAF designation was integral, supporting non-application of §5 |
| What is the controlling interpretation of the arbitration clause language and applicable law | Carr emphasizes liberal FAA policy favoring arbitration | Gateway emphasizes forum-integral analysis and supplied rules | Designation of NAF as forum integral; §5 not applicable; arbitration clause unenforceable |
Key Cases Cited
- Borowiec v. Gateway 2000, Inc., 209 Ill.2d 376 (2004) (arbitration policy favors enforcing arbitration agreements)
- Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217 (11th Cir. 2000) (unavailability of forum allows §5 substitution if forum is ancillary)
- Reddam v. KPMG LLP, 457 F.3d 1054 (9th Cir. 2006) (§5 may appoint substitute when forum designation not integral)
- Grant v. Magnolia Manor-Greenwood, Inc., 383 S.C. 125 (2009) (forum designation integral; §5 not applicable)
- Salomon Inc. Shareholders' Derivative Litig., 68 F.3d 554 (2d Cir. 1995) (discussion of forum designations and arbitration agreements)
- Covenant Health & Rehab. of Picayune, LLP v. Estate of Moulds, 14 So.3d 695 (Miss. 2009) (illustrates integral-forum concept in arbitration)