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Silc v. Crosetti

United States District Court, N.D. Illinois

July 29, 2013

JENNIFER T. SILC, an individual, JENNIFER T. SILC, D.D.S., M.S., LTD, and Illinois corporation, and WOODFIELD SURGICAL CENTER, LLC, an Illinois limited liability company, Plaintiffs
v.
HENRY W. CROSSETTI, Defendant

For Jennifer T Silc, an individual, Jennifer T Silc, D.D.S., M.S., Ltd., an Illinois Corporation, Woodfield Surgical Center, LLC, an Illinois Limited Liability company, Plaintiffs, Counter Defendants: Carter A. Korey, LEAD ATTORNEY, Korey Law, LLC, Chicago, IL; Elliot S. Richardson, LEAD ATTORNEY, Ryan D Gibson, Korey Cotter Heather & Richardson, Llc, Chicago, IL.

For Henry W Crossetti, an individual, Defendant: Peter A. Silverman, LEAD ATTORNEY, Figliulo & Silverman, Chicago, IL; Thomas Daniel Warman, Figliulo & Silverman, P.C., Chicago, IL.

For Henry W Crossetti, Counter Claimant: Peter A. Silverman, LEAD ATTORNEY, Figliulo & Silverman, Chicago, IL; Thomas Daniel Warman, Figliulo & Silverman, P.C., Chicago, IL.

OPINION

Page 958

MEMORANDUM OPINION AND ORDER

Jeffrey Cole, UNITED STATES MAGISTRATE JUDGE.

Previously, the defendant moved to strike the plaintiffs' jury demand. The motion was premised on the explicit waiver provisions of the right to trial by jury in a series of promissory notes and a guaranty executed by the plaintiffs. See infra at 5, n.4. However, the plaintiffs' claims were based, not on those documents, but on the parties' Stock and Membership Interest Agreement, (" the Agreement" ), which contained a broad arbitration clause that provided that " [a]ny controversy or claim arising out of or relating to any provision of this Agreement shall be settled by arbitration, in accordance with the Commercial Arbitration Rules of the American Arbitration Association . . . ." (Agreement, § 14).

The defendant's reply brief did address the question of waiver stemming from the arbitration clause, but as the ruling on the motion explained, that was too late. See Dexia Credit Local v. Rogan , 629 F.3d 612, 625 (7th Cir. 2010). Although the defendant's motion was denied, he was given the option of filing a new motion, addressing the effect of the arbitration clause on the plaintiffs' right to trial by jury. The " Supplemental Motion to Strike Jury Demand" again refers to the express jury waivers in the series of promissory notes and guaranty, but now rightly focuses on the Agreement's arbitration clause.

An arbitration clause in a contract constitutes a deliberate selection by the parties of an alternative method of dispute resolution that involves neither courts nor juries. See Janiga v. Questar Capital Corp. , 615 F.3d 735, 743 (7th Cir. 2010); Carter v. SSC Odin Operating Co., LLC , 237 Ill.2d 30, 50, 927 N.E.2d 1207, 1220, 340 Ill.Dec. 196 (2010). Since the Seventh Amendment right to trial by jury is incident to and predicated upon the right to a federal judicial forum, an arbitration provision waives the right to resolve a dispute through litigation in a judicial forum and implicitly and necessarily waives the parties' right to a jury trial. See Ernst & Young LLP v. Baker O'Neal Holdings, Inc. , 304 F.3d 753, 756 (7th Cir. 2002); Geldermann, Inc. v. Commodity Futures Trading Comm'n , 836 F.2d 310, 324 (7th Cir. 1987)(in light of the arbitration clause, " Geldermann is not entitled to an Article III forum [and therefore] the Seventh Amendment is not implicated." ). [1]

Page 959

As we shall see, a critical question in this case -- indeed the threshold inquiry -- is whether there has been a waiver by the parties of the right to arbitrate, for the implicit waiver of the right to trial by jury, being an indivisible component of the agreement to arbitrate, obviously cannot remain operative of its own force if the parties forgo arbitration by proceeding in a judicial rather than an arbitral forum. Phrased differently, one cannot waive arbitration and leave the implied jury waiver intact since the latter does not exist without the former.

Waiver of the contractual right to arbitrate can be express or implied. Courts " must examine the totality of the circumstances and 'determine whether based on all the circumstances, the [party against whom the waiver is to be enforced] has acted inconsistently with the right to arbitrate.'" Ernst & Young LLP , 304 F.3d at 756. (brackets in original). See also Kawasaki Heavy Industries, Ltd. v. Bombardier Recreational Products, Inc. , 660 F.3d 988, 994 (7th Cir. 2011). The question is whether that party did " all [he] could reasonably have been expected to do to make the earliest feasible determination of whether to proceed judicially or by arbitration." Cabinetree of Wisconsin, Inc. , 50 F.3d at 391. The plaintiffs have presumptively waived the right to arbitration by filing and prosecuting the case in a federal judicial forum. Grumhaus v. Comerica Securities, Inc. 223 F.3d 648, 650 (7th Cir.2000). [2] And so too, it would appear, has Dr. Crossetti, who has done nothing to effectuate arbitration during the five months that the case has been pending in this court.

Not only has he not invoked the arbitration clause and sought to compel arbitration, he has vigorously pursued the litigation by filing a counterclaim for declaratory judgment, two motions to strike the plaintiffs' jury demand, a protective order, and a confidentiality order. He has also consented to the jurisdiction of a magistrate judge, thereby allowing me to " conduct any and all further proceedings in this case, including trial, and order the entry of a final judgment." [Dkt. #22]. Taken as a whole, the defendant's ...


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