Fuqua v. SVOX AG
13 N.E.3d 68
Ill. App. Ct.2014Background
- Fuqua, a computational linguist, signed a negotiated employment agreement with SVOX USA in Jan 2009 containing an arbitration clause that referenced AAA commercial arbitration rules and a carve-out permitting either party to seek court enforcement of restrictive covenants or confidentiality provisions.
- After termination, Fuqua filed arbitration demands with the AAA; the AAA arbitrator ruled the AAA commercial rules (not employment rules) applied, making arbitration costs higher for Fuqua.
- Fuqua filed federal claims in 2011; the federal court dismissed his federal claim and remanded state-law claims to Cook County, where Fuqua filed an amended complaint in Sept 2012.
- SVOX defendants moved (Oct 2012) to stay litigation and compel arbitration; Fuqua had obtained an earlier April 26, 2012 Cook County order staying arbitration after a removal attempt in April 2012.
- The Cook County court (Mar 7, 2013) granted the SVOX defendants’ motion to stay litigation and compel arbitration and dismissed claims against defendant-attorney Soseman with prejudice; it also found the April 26, 2012 stay had been entered without jurisdiction and lifted that stay.
- On interlocutory appeal, the Illinois Appellate Court affirmed the order compelling arbitration and dismissing Soseman, but reversed the portion vacating the April 26, 2012 stay (holding removal had not been perfected before that order). The case was remanded to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal to federal court was perfected before Cook County entered April 26, 2012 stay | Fuqua: removal was not perfected because he did not receive written notice before the April 26 order, so state court retained jurisdiction | Defs: they promptly filed removal and provided notice (courier + copies to judge), so removal divested state court | Held: removal was not perfected here (written notice did not reach Fuqua before April 26); the appellate court reversed portion vacating the April 26 stay |
| Whether Cook County properly granted SVOX's motion to stay litigation and compel arbitration (enforceability of arbitration clause) | Fuqua: clause is procedurally and substantively unconscionable — cost under AAA commercial rules is prohibitive; carve-out favors employer; unexpected application of commercial rules | Defs: clause is negotiated, contains offer/acceptance/consideration, parties bargained over terms, carve-out is narrow, arbitrator properly applied AAA rules; no record of proven financial inability | Held: arbitration clause is valid and enforceable; not procedurally or substantively unconscionable; stay compelling arbitration affirmed |
| Whether arbitrator’s interlocutory ruling applying AAA commercial rules can be reviewed here | Fuqua: arbitrator’s rule made arbitration unaffordable and supports unconscionability challenge | Defs: arbitrator correctly applied AAA rules; appellate court should not reweigh arbitrator’s interlocutory determinations | Held: appellate court declined to disturb arbitrator’s determination and held Fuqua failed to present evidence of hardship; no basis to void clause |
| Whether claims against attorney Soseman should be dismissed | Fuqua: alleged improper conduct by Soseman in litigation/removal | Soseman: entitled to qualified privilege for actions taken as counsel absent allegations of actual malice | Held: dismissal with prejudice affirmed because Fuqua did not plead facts showing actual malice against Soseman |
Key Cases Cited
- Hartlein v. Illinois Power Co., 151 Ill. 2d 142 (Ill. 1992) (state court loses jurisdiction once removal is filed and requirements met)
- Eastern v. Canty, 75 Ill. 2d 566 (Ill. 1979) (failure to give prompt written notice to adverse parties may mean removal not perfected)
- Melena v. Anheuser-Busch, Inc., 219 Ill. 2d 135 (Ill. 2006) (arbitration agreements evaluated under ordinary contract principles)
- Razor v. Hyundai Motor America, 222 Ill. 2d 75 (Ill. 2006) (court decides unconscionability as a matter of law; procedural vs substantive unconscionability explained)
- Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1 (Ill. 2006) (substantive unconscionability concerns one-sided contract terms)
- Menard County Housing Auth. v. Johnco Constr., 341 Ill. App. 3d 460 (Ill. App. Ct. 2003) (interlocutory appeals under Rule 307 review whether sufficient showing sustained trial court order compelling arbitration)