Court of Appeals of Illinois, First District, Sixth Division
ARIN A . BOVAY, Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellees,
SEARS, ROEBUCK AND COMPANY, Defendant-Appellant.
The order denying defendant’s motion to compel arbitration of plaintiffs’ putative class action alleging that defendant injured plaintiffs by disclosing confidential data to third parties, including the numbers of credit cards defendants had issued to plaintiffs and the balances on those accounts, was affirmed on the ground that defendant’s request was untimely and the right to arbitrate had been waived, since defendant had a known right to arbitration when plaintiffs’ actions were filed, there was no showing that the assertion of the right to arbitration would have been futile, and defendant’s litigation of the case for many years before requesting arbitration prejudiced plaintiffs.
Appeal from the Circuit Court of Cook County, Nos. 01-CH-18096, 02-CH-4693, 03-CH-7605 cons.; the Hon. Richard J. Billik, Judge, presiding.
Francis A. Citera, Jane B. McCullough, and Paul J. Ferak, all of Greenberg Traurig LLP, of Chicago, for appellant.
Ben Barnow, Sharon Harris, and Erich P. Schork, all of Barnow & Associates, P.C., Norman A. Rifkind, Leigh Lasky, and Amelia S. Newton, all of Lasky & Rifkind, Ltd., and William J. Harte, all of Chicago, and Bonny E. Sweeney and Carmen A. Medici, both of Robbins Geller Rudman & Dowd LLP, of San Diego, California, for appellees.
Panel JUSTICE REYES delivered the judgment of the court, with opinion.Presiding Justice Lampkin and Justice Gordon concurred in the judgment and opinion.
¶ 1 In this interlocutory appeal brought pursuant to Illinois Supreme Court Rule 307(a)(1) (eff. Feb. 26, 2010), defendant Sears, Roebuck & Company (Sears) seeks the reversal of an order of the circuit court of Cook County denying its motion to compel arbitration of claims brought by plaintiffs in a consolidated class action. Sears maintains the circuit court erred in ruling Sears waived its right to arbitrate the claims and untimely demanded arbitration, arguing a United States Supreme Court opinion issued in 2011 represented a significant change in the law justifying its decision to seek arbitration years after plaintiffs filed their respective complaints. For the following reasons, we affirm.
¶ 2 BACKGROUND
¶ 3 The limited record on interlocutory appeal submitted by Sears and supplemented by plaintiffs fails to include the plaintiffs' initial complaints in this matter. Nevertheless, the record discloses plaintiffs Arin A. Bovay, Nancy Woods and Elizabeth Turner filed a putative class action complaint against Sears in 2001 (Bovay lawsuit). Plaintiffs Mark Triezenberg and Mary Lawson filed a putative class action complaint against Sears in 2002 (Triezenberg lawsuit). Plaintiffs Patricia Clark, Terrel Gore and Mary Rodriguez filed a putative class action complaint against Sears in 2003 (Clark lawsuit). These complaints, as subsequently amended, each alleged the respective plaintiffs were Sears credit card holders who were injured when Sears unlawfully disclosed confidential data, including credit card numbers and account balances, to third parties. The complaints alleged causes of action including: (1) violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2000)); (2) intrusion upon seclusion; (3) public disclosure of private facts; and (4) unjust enrichment. On April 25, 2002, the circuit court entered an order consolidating the Bovay lawsuit with the Triezenberg lawsuit. On May 13, 2003, the circuit court entered an order consolidating the Clark lawsuit with the Bovay lawsuit.
¶ 4 Depositions of the plaintiffs conducted by Sears disclose each of these named plaintiffs was a Sears credit card holder prior to 2000 through the end of 2003, with the exception of Woods, who stopped receiving credit from Sears in 2000. The credit card agreement between Sears and plaintiffs in effect as of March 2000 provides in part:
"Section 22. ARBITRATION. Any and all claims, disputes or controversies of any nature whatsoever (whether in contract, tort, or otherwise) arising out of, relating to, or in connection with: (a) this Agreement; (b) any prior Agreement you may have had with us ***; (c) the application for the Account, this Agreement or any prior agreement; (d) the relationships which result from this Agreement or any prior agreement (including any relationship with us ***); or (e) the validity, scope or enforceability of this arbitration section or this Agreement or any prior agreement *** shall be resolved, upon your election or our election, by final and binding arbitration before a single arbitrator, on an individual basis without resort to any form of class action, except that each party retains the right to seek relief in a small claims court, on an individual basis without resort to any form of class action, for claims within the scope of its jurisdiction.
Arbitration may be elected at any time, regardless of whether a lawsuit has been filed or not, unless such a lawsuit has resulted in a final judgment or the other party would suffer substantial prejudice as a result of the delay in demanding arbitration. The arbitrator shall be a lawyer or retired judge with not less than 15 years' experience in the practice of law. This arbitration agreement will not apply to claims previously asserted, or which are later asserted, in lawsuits filed before the effective date of this Agreement, but it will apply to all other claims, even if the facts and circumstances upon which the claims are based existed before the effective date of this Agreement *** .
All arbitrations shall be administered by the National Arbitration Forum ('NAF') in accordance with the Code of Procedure in effect at the time the claim is filed *** .
Any arbitration you attend will take place at a location within the federal judicial district that includes your billing address at the time the claim is filed. We will advance either all or part of the fees on your behalf to the NAF and the arbitrator if you send us a written request. The arbitrator will decide whether you, us or any toher party will ultimately be responsible for these fees. You agree to return the amount of any advanced fees as finally allocated by the arbitrator. The arbitrartor shall apply relevant substantive law and applicable statutes of limitation and shall provide written, reasoned findings of fact and conclusions of law.
This arbitration section of this Agreement is made pursuant to a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act *** . If any portion of this arbitration section is deemed invalid or unenforceable, it shall not invalidate the remaining portions of this arbitration section *** .
YOU UNDERSTAND AND AGREE, AND WE UNDERSTAND AND AGREE, THAT BECAUSE OF THIS ARBITRATION CLAUSE NEITHER YOU NOR WE WILL HAVE THE RIGHT TO GO TO COURT EXCEPT AS PROVIDED ABOVE OR TO HAVE A JURY TRIAL, OR TO PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS OF CLAIMANTS PERTAINING TO ANY CLAIM.
Section 29. GOVERNING LAW. This Agreement and your Account will be governed by and interpreted in accordance with the laws of the United States and, to the extent governed by state law, the laws of the State of Arizona, regardless of where you live or where you use the Account. This Agreement is entered into in Arizona."
¶ 5 The credit card agreement between Sears and plaintiffs in effect as of March 2003 differs in several respects from the version in effect in 2000. The 2003 agreement places "the establishment, operating, handling or termination of the Account" and "any transaction or attempted transaction relating to the Account" expressly within the scope of the arbitration provision. The arbitrator need only have 10 years' experience in the practice of law. Moreover, the arbitration provision specifies it will not apply to "claims of a class certified prior to the effective date of [the] Agreement." The arbitration provision will apply to all other claims, including class claims not yet certified. In addition, the 2003 version of the credit card agreement further provides that arbitration will be administered by NAF, the American Arbitration Association or JAMS, in accordance with their respective rules.
¶ 6 Furthermore, the 2003 version of the credit card agreement provides:
"Whoever files the arbitration pays the initial filing fee. If we file, we pay; if you file; you pay, unless you get a fee waiver under the applicable rules of the arbitration firm. If you have paid the initial filing fee and you prevail, we will reimburse you for that fee. If there is a hearing, we will pay any fees of the arbitrator and arbitration firm for the first day of that hearing. All other fees will be allocated as provided by the rules of the arbitration firm and applicable law. However, we will advance or reimburse your fees if the arbitration firm or arbitrator determines there is good reason for us to do so, or if you ask us in writing and we determine there is a good reason for doing so. Each party will bear the expense of that party's attorneys experts and witnesses, and other expenses, regardless of which party prevails, but a party may recover any or all expenses from another party if the arbitrator, applying applicable law, so determines."
¶ 7 Sears answered plaintiffs' complaints, as amended, and asserted affirmative defenses. In the Bovay lawsuit, Sears asserted plaintiffs' claims were barred by: a statute of limitation; laches, waiver and estoppel; and various failures to allege sufficient facts to state claims for relief. In the Triezenberg and Clark lawsuits, Sears asserted similar defenses and also asserted the alleged disclosure of customer data was protected by federal law. Sears did not assert a right to arbitration in these answers. Subsequently, plaintiffs further amended their complaints in all three lawsuits to seek punitive damages. Sears again answered and raised affirmative defenses to the claims for punitive damages, but did not assert a right to arbitrate plaintiffs' claims.
¶ 8 The record on appeal does not contain the motions to dismiss Sears filed pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2004)). The supplemental record on appeal includes a June 9, 2005, order granting the motions to dismiss in part and denying them in part. In the order, the circuit court struck allegations regarding the misappropriation of names and likenesses from the invasion of privacy claim in the Bovay lawsuit. The circuit court also granted the motion to dismiss the breach of contract claims in the Triezenberg and Clark lawsuits without prejudice.
¶ 9 The record on appeal also does not contain plaintiffs' consolidated motion for class certification. The supplemental record on appeal includes a February 19, 2008, order granting plaintiffs' consolidated motion for class certification in part, denying the motion in part, and directing plaintiffs to revise their proposed class definition, which the circuit court found to be overly broad. The supplemental record on appeal also includes an April 7, 2008, order approving a class definition of all persons and entities in the United States, excluding members of a California class action, who, between September 9, 1995, and June 22, 2001, held a Sears credit card and had certain information disclosed to any third-party vendor with whom Sears had agreements under which Sears would receive money, directly or indirectly from sales made by the third parties to Sears credit card holders.
¶ 10 Sears petitioned for review of the circuit court's certification of the class. The petition was denied by this court and later by the Illinois Supreme Court. See Clark v. Sears, Roebuck & Co., 229 Ill.2d 664 (2008) (table).
¶ 11 The record on appeal does not contain Sears's motion to seek review in this court pursuant to Illinois Supreme Court Rule 308(a) (eff. Feb. 1, 1994). The supplemental record on appeal, however, includes a January 13, 2009, order denying said motion. The supplemental record on appeal also includes an April 30, 2009, order approving plaintiffs' plan for notice to the class, which included the publication of a press release in one weekend and one weekday edition of the USA Today newspaper, as well as the ...