United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY UNITED STATES DISTRICT JUDGE
Lysik and Monika Ruzik-Klatka sued their former employer,
Citibank, N.A., alleging that Citibank terminated their
employment after they objected to sales practices that they
believed to be fraudulent and reported the practices to law
enforcement. The plaintiffs assert claims against Citibank
under the Consumer Financial Protection Act (CFPA), the
Illinois Whistleblower Act (IWA), and Illinois common law.
argues that Lysik and Ruzik both signed employment agreements
that require arbitration of employment-related disputes. It
moves to compel arbitration and dismiss the plaintiffs'
action under Federal Rule of Civil Procedure 12(b)(3). The
plaintiffs argue, among other things, that the arbitration
agreement is unenforceable under the CFPA, which prohibits
agreements that compel arbitration of claims arising under
the CFPA. The Court concludes that the CFPA bars enforcement
of the arbitration agreement and therefore denies
and Ruzik are former personal bankers at Citibank. A personal
banker's responsibilities include marketing consumer
financial products, such as bank accounts, and assisting
customers with these products. As a condition of continued
employment, Citibank employees must agree to the terms
included in the "Citi Employee Handbook" whenever
it is updated, including a term that requires employees to
submit employment-related disputes to arbitration. Each
signed the 2009, 2011, and 2013 Handbooks, and Ruzik, who was
hired several years before Lysik, also signed the 2006
allege that Citibank required personal bankers to impose
unwanted accounts and hidden fees upon unwitting customers.
Both Lysik and Ruzik say they described their concerns about
the practices to supervisors, who instructed them not to
raise the issue again and subsequently harassed them for
their complaints. After Lysik and Ruzik filed a complaint in
May 2014 with the Occupational Safety and Health
Administration (OSHA), the agency responsible for
investigating whistleblower claims from employees at consumer
financial institutions, they were confronted by supervisors.
Citibank terminated Ruzik in February 2015 and Lysik in March
asks the Court to dismiss plaintiffs' claims because they
previously agreed to arbitrate employment-related disputes.
Motions to compel arbitration and dismiss "concern venue
and are brought properly under Federal Rule of Civil
Procedure 12(b)(3)." Grasty v. Colo. Tech.
Univ., 599 Fed.Appx. 596, 597 (7th Cir. 2015). A court
ruling on a motion to compel arbitration may consider
evidence beyond the pleadings. Faulkenberg v. CB Tax
Franchise Sys., LP, 637 F.3d 801, 809-10 (7th Cir.
2011). The court "constru[es] all facts and draw[s]
reasonable inferences in favor of the plaintiffs."
Id. at 806.
Federal Arbitration Act requires a court to compel
arbitration if a party can identify "a written agreement
to arbitrate, a dispute within the scope of the arbitration
agreement, and a refusal to arbitrate." Zurich Am.
Ins. Co. v. Watts Indus., Inc., 417 F.3d 682, 687 (7th
Cir. 2005). Written agreements to arbitrate "shall"
be enforceable, "save upon such grounds as exist at law
or in equity for the revocation of any contract." 9
U.S.C. § 2. Plaintiffs do not dispute that an
arbitration agreement exists or that their claims are within
the scope of the agreement. Rather, the question before the
Court is whether there are grounds that render the
arbitration agreement unenforceable.
and Ruzik argue that the arbitration provision is
unenforceable for three reasons: (1) the CFPA prohibits
predispute arbitration requirements for claims arising under
the statute; (2) the arbitration provision unfairly
eliminates access to some of their potential statutory
remedies; and (3) the arbitration prohibition impermissibly
limits collective action.
and Ruzik contend that they were terminated in retaliation
for the statements they made to their supervisors and OSHA
about fraudulent practices they claim to have witnessed at
Citibank, including what they believed to be violations of
the Truth in Lending Act, the Home Ownership Equity
Protection Act, and the Real Estate and Settlement Procedures
Act. Retaliatory termination for objecting to or reporting a
violation of any of these statutes would give rise to a
dispute actionable under the employee protection provision of
the CFPA. See 12 U.S.C. § 5567(a)(1)-(4). The
CFPA also provides that "no predispute arbitration
agreement shall be valid or enforceable to the extent that it
requires arbitration of a dispute arising under this
section." Id. § 5567(d)(2).
argues that the CFPA does not bar arbitration of the
plaintiffs' action. It contends that plaintiffs are bound
by an agreement to arbitrate that predates the CFPA's
prohibition against arbitration. Application of the
prohibition, Citibank argues, amounts to retroactive
application of the CFPA to conduct predating its effective
date. This is contrary to law, Citibank argues, because the
statute does not expressly provide for retroactive
application and applying it to bar the preexisting
arbitration requirement would improperly impose a
"retroactive consequence . . . affecting substantive
rights, liabilities, or duties." Fernandez-Vargas v.
Gonzales, 548 U.S. 30, 37 (2006).
plaintiffs contend that application of the CFPA's
prohibition on arbitration is not inappropriate because the
arbitration requirement is not a "substantive"
right, liability, or duty that may not be impaired
retroactively. Their primary contention, however, is that the
applicable arbitration policy is the one in ...