Fabian v. BGC Holdings, LP
24 N.E.3d 307
Ill. App. Ct.2015Background
- Fabian was a founding partner of BGC Holdings, LP and alleges he earned 100,393 "founding partner units" convertible to BGC common stock; he left BGC in 2009.
- BGC sent letters in 2013 asserting Fabian forfeited most units for violating a noncompete and sold remaining units to cover an account deficit; Fabian demanded liquidation of 97,205 units and sued when BGC refused.
- Fabian sued in Illinois state court asserting claims under the Illinois Wage Payment and Collection Act (count I) and various common-law claims; the partnership agreement contains Delaware choice-of-law and exclusive-forum (Delaware) clauses.
- BGC moved to dismiss under section 2-619(a)(9) (forum-selection) and 2-615 (choice-of-law); the trial court enforced the forum clause and dismissed all claims against BGC, labeling some dismissals "with prejudice."
- On appeal Fabian challenged only the dismissal with prejudice of his Act claim; the Appellate Court found the forum clause enforceable but held the trial court abused its discretion in dismissing the Act claim with prejudice because enforcing a forum clause is not a merits adjudication.
- The appellate court reversed and remanded for the trial court to rule on BGC’s unaddressed choice-of-law (section 2-615) argument; if the choice-of-law clause requires Delaware law, dismissal should be with prejudice, otherwise dismissal should be without prejudice to suit in Delaware.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of forum-selection clause | Fabian: clause violates Illinois public policy embodied in the Illinois Wage Payment and Collection Act, so it should not bar his Act claim | BGC: forum-selection clause in partnership agreement is valid and requires litigation in Delaware | Court: forum-selection clause is prima facie valid; enforcement does not contravene Illinois public policy, so clause is enforceable |
| Whether dismissal based on forum clause may be with prejudice | Fabian: trial court improperly dismissed his Act claim with prejudice | BGC: dismissal with prejudice appropriate | Court: dismissal pursuant to a forum-selection clause is not an adjudication on the merits; trial court abused discretion by dismissing count I with prejudice |
| Whether Illinois courts should void forum clauses when claim arises under Illinois statute | Fabian: protecting Illinois statutory rights requires non-waivable access to Illinois forum | BGC: selecting Delaware forum is valid even for Illinois statutory claims | Court: Illinois public policy does not void forum-selection clauses merely because a claim arises under an Illinois statute; enforcement stands absent specific antiwaiver provision or other compelling reason |
| Next procedural step after finding forum clause enforceable | Fabian: (limited to contesting with-prejudice dismissal) | BGC: trial court should have dismissed with prejudice | Held: remand for trial court to decide BGC’s choice-of-law (2-615) motion; if Delaware law governs and bars the Act claim, dismissal should be with prejudice; if not, dismissal without prejudice to refiling in Delaware |
Key Cases Cited
- Yamada Corp. v. Yasuda Fire & Marine Ins. Co., 305 Ill. App. 3d 362 (1999) (forum-selection clauses are prima facie valid and enforceable absent contravening public policy)
- The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses unenforceable only if they contravene strong public policy or are unreasonable)
- Calanca v. D&S Mfg. Co., 157 Ill. App. 3d 85 (1987) (contractual forum-selection clauses should generally be enforced)
- English Co. v. Northwest Envirocon, Inc., 278 Ill. App. 3d 406 (1996) (forum and choice-of-law clauses evaluated against statutory public-policy provisions)
- Maher & Assocs., Inc. v. Quality Cabinets, 267 Ill. App. 3d 69 (1994) (court held forum clause void under Sales Representative Act antiwaiver provision — discussed and distinguished)
- Mueller Co. v. Dep’t of Labor, 187 Ill. App. 3d 519 (1989) (contract cannot alter statutory employee rights; distinguished as forum clause here did not modify statutory rights)