Sabo v. Dennis
408 Ill. App. 3d 619
| Ill. App. Ct. | 2011Background
- Dennis Technology and Sprint Nextel entered into 2002 and 2003 Authorized Representative (AR) Agreements requiring arbitration for disputes.
- In 2006, Dennis Technology signed a new AR Agreement (2006 AR) making it an exclusive Sprint Nextel dealer with higher compensation but arbitration remained.
- Sprint Nextel later merged, issued uniform ARs to all dealers, and Dennis Technology signed the 2006 AR after being advised about terms.
- Dennis Technology alleged its CSAs were unpaid and sought damages, while Sprint Nextel moved to compel arbitration and stay litigation against third-party defendants.
- Virginia law applied under the contract; Illinois law would yield similar results; arbitration location was New York City.
- The trial court granted arbitration compelment against most third-party defendants and stayed related proceedings, with Trask and DM Communication stayed pending arbitration outcomes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who may compel arbitration among third parties | Dennis Technology argues only Sprint Solutions could compel arbitration. | Sprint Nextel contends all affiliates covered by 2006 AR may compel arbitration. | Virginia-law interpretation supports arbitration by affiliates beyond Sprint Solutions. |
| Stay of proceedings for non-signatory parties | Stays against Trask and DM Communication are improper since not parties to 2006 AR. | Stays are appropriate where related issues would be resolved by arbitration. | Stay of Trask and DM Communication proceedings was proper to promote judicial economy. |
| Arbitrability of the contract and defenses to arbitration | Arbitration should be limited due to duress and unconscionability; the contract as a whole may be unenforceable. | Arbitration clause broad; defenses to arbitration are for arbitrators to decide. | Contract defenses are for arbitrators; broad arbitration clause covers the asserted claims. |
| Conscionability of the 2006 AR Agreement | 2006 AR is unconscionable in light of coercive terms and lack of mutuality. | Agreement was a commercial contract entered into freely with equal bargaining power. | Unconscionability is for the arbitrators to decide; the court found no basis to decide it at this stage. |
| Waiver or failure to negotiate/mediate before arbitration | Sprint Nextel violated procedural prerequisites that could waive rights to arbitrate. | No contractual obligation to negotiate/mediate post-filing; waiver claim fails. | Do not decide waiver issue; arbitation remains proper under Virginia law. |
Key Cases Cited
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. Supreme Court, 2006) (arbitration agreements are enforceable absent grounds to revoke a contract)
- Peach v. CIM Insurance Corp., 352 Ill.App.3d 691 (Ill. App. 2004) (review of arbitration agreement construction is de novo)
- Mission Residential, LLC v. Triple Net Properties, LLC, 275 Va. 157 (Va. 2008) (burden on asserting existence of arbitration agreement; arbitration favored)
- East Coast Hockey League, Inc. v. Professional Hockey Players Ass'n, 322 F.3d 311 (4th Cir. 2003) (courts should rule in favor of arbitration unless contract terms show non-arbitrability)
- Waterfront Marine Construction, Inc. v. North End 49ers Sandbridge Bulkhead Groups A, B & C, 251 Va. 417 (Va. 1996) (arbitrability and процесс considerations under Virginia law)