942 F. Supp. 2d 781
N.D. Ill.2013Background
- Plaintiffs Marzano (Illinois) and Majorek (Ohio) bring FLSA and state-law wage claims on behalf of Illinois and Ohio Classes against Proficio Mortgage Ventures, Proficio Bank, and First Liberty Financial Group.
- Defendants moved to dismiss or stay pending arbitration, asserting arbitration clauses control venue and arbitrability.
- First Liberty’s employment agreement requires arbitration within 100 miles of Independence, Ohio; Proficio’s agreement requires binding arbitration for disputes arising from the agreement.
- Court applies Utah law for contract validity and finds the arbitration provisions not indefinite, illusory, or unconscionable.
- Court dismisses the case under Rule 12(b)(3) for improper venue, noting no party moved to compel arbitration and the court is not the proper forum as to arbitration in Utah.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are First Liberty claims subject to arbitration under the agreement? | Arbitration does not cover statutory overtime claims not derived from the contract. | Disputes arising from the employment agreement fall within the arbitration clause. | Yes; claims arise under the agreement and are subject to arbitration. |
| Are Proficio claims subject to arbitration under the Proficio agreement? | Overtime and wage claims fall outside the arbitration clause. | Arbitration clause broadly covers disputes arising out of the agreement. | Yes; all claims fall within the arbitration clause and must proceed in arbitration. |
| Is the arbitration provision valid (definite, not illusory/unconscionable) under Utah law? | Provisos render arbitration indefinite/illusory and unconscionable. | Clauses are valid and enforceable; gaps can be filled by FAA/Utah Act; not illusory. | Valid under Utah law; not illusory or unconscionable. |
| Should the court compel arbitration or dismiss for improper venue? | Court should not compel arbitration absent a petition. | Court should compel arbitration or transfer/dismiss. | Dismissal for improper venue (with leaving arbitration to proceed in Utah) because no party moved to compel. |
Key Cases Cited
- Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (federal policy favors arbitration; threshold inquiries only)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (threshold questions of arbitrability governed by the arbitration clause)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (arbitrability issues severable from contract validity; arbitrator decides validity)
- Cont'l Cas. Co. v. Am. Nat’l Ins. Co., 417 F.3d 727 (7th Cir. 2005) (precedent on arbitrability and arbitration agreements in forum)
- Gore v. Alltel Communications, LLC, 666 F.3d 1027 (7th Cir. 2012) (arising out of employment contract language broad scope)
- Kiefer Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907 (7th Cir. 1999) (arbitration clause expansion and scope)