United States District Court, N.D. Illinois, Eastern Division
SHANNON ZOLLER and ALEXANDER BEIGELMAN, on behalf of themselves and all others similarly situated, Plaintiffs,
UBS SECURITIES LLC, UBS FINANCIAL SERVICES INC., and UBS AMERICAS INC., Defendants.
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY UNITED STATES DISTRICT JUDGE
Zoller and Alexander Beigelman are former employees of UBS
Securities LLC, UBS Financial Services Inc., and / or UBS
Americas Inc. (collectively UBS). Zoller and Beigelman
brought a putative class action against UBS, alleging that
the company unlawfully fired employees before it had to pay
out their promised bonuses. UBS moved to compel arbitration,
and the Court has ordered the plaintiffs to show cause why
the motion should not be granted.
Court assumes familiarity with its prior written ruling in
which it denied the defendants' motions to compel
arbitration of Zoller's claims and to dismiss
Beigelman's claims for improper venue. See Zoller v.
UBS Securities LLC, No. 16 C 11277, 2018 WL 1378340
(N.D. Ill. Mar. 19, 2018). UBS appealed that decision to the
Seventh Circuit. While UBS's appeal was pending, the
Supreme Court decided Epic Systems Corp. v.
Lewis, 138 S.Ct. 1612 (2018), in which it reversed the
Seventh Circuit's holding that section 7 of the National
Labor Relations Act rendered unenforceable an arbitration
provision that barred employees from bringing class,
collective, or representative proceedings. See Lewis v.
Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016). In
light of the Supreme Court's decision, the Seventh
Circuit panel reviewing UBS's appeal vacated this
Court's ruling and remanded the case for further
proceedings. See dkt. no. 62.
Court has ordered the plaintiffs to show cause why the Court
should not grant the defendants' motion to compel
arbitration. For the reasons stated below, the Court
concludes that the plaintiffs have not shown cause and grants
UBS's motion to compel arbitration.
plaintiffs do not dispute that their claims fall within the
scope of their arbitration agreements or that those
agreements are enforceable under Epic Systems.
Instead, they contend that the arbitration organization-the
Financial Industry Regulatory Authority (FINRA)-is not a
suitable forum because it does not permit the effective
vindication of their rights. They also argue that UBS is
judicially estopped from moving to compel arbitration of
Beigelman's claim under the Age Discrimination in
Employment Act (ADEA).
Suitability of the arbitral forum
plaintiffs contend that FINRA arbitration is not a suitable
forum in which to bring their claims. They make three
arguments: first, that FINRA lacks appropriate standards for
hiring and training its arbitrators; second, that it lacks a
system for ensuring that the arbitral panel receives the
parties' filings; and third, that FINRA's arbitrator
pool and selection process leads to systemic bias.
argues that the plaintiffs have waived these arguments by
failing to raise them in their original response to the
motion to compel arbitration. UBS perhaps means to argue that
these arguments are forfeited rather than waived. "The
terms waiver and forfeiture-though often used interchangeably
by jurists and litigants-are not synonymous.
'[F]orfeiture is the failure to make the timely assertion
of a right[;] wavier is the intentional relinquishment or
abandonment of a known right.'" Hamer v.
Neighborhood Hous. Servs. of Chi., 138 S.Ct. 13, 17 n.1
(2017) (alterations in original) (quoting United States
v. Olano, 507 U.S. 725, 733 (1993)).
of whether UBS's argument is construed in terms of
forfeiture or waiver, however, the Court concludes that the
plaintiffs' failure to raise these suitability arguments
in response to the motion to compel precludes the plaintiffs
from making them for the first time now. The plaintiffs argue
that there is no waiver or forfeiture because the Supreme
Court's decision in Epic Systems "altered
the applicable legal framework." Pls.' Resp. to Show
Cause Order, dkt. no. 64, at 15. They cite Indiana Bell
Telephone Co. v. McCarty, 362 F.3d 378 (7th Cir. 2004),
in which the Seventh Circuit stated that if "the Supreme
Court decides a relevant case while litigation is pending . .
. omission of an argument based on the Supreme Court's
reasoning does not amount to a waiver. . . ."
Id. at 390 (alterations in original). It is true
that Epic Systems altered the legal framework of the
arbitration agreement, but the plaintiffs' new arguments
are not based on the Supreme Court's reasoning in that
case. Rather, the plaintiffs rely on cases that predate
Epic Systems-including American Express Co. v.
Italian Colors Restaurant, 570 U.S. 228 (2013),
and Jackson v. Payday Financial, LLC, 764 F.3d 765
(7th Cir. 2014)-for the proposition that the arbitral forum
must be adequate to protect the parties' rights. Epic
Systems therefore did not change the legal framework in
any way relevant to the plaintiffs' new arguments.
most, Epic Systems altered the strategic rather than
the legal framework of the motion to compel. For example, if
Epic Systems had already been decided when the
plaintiffs submitted their response brief, they might have
devoted more pages to raising additional arguments about
FINRA's suitability. But even if this may sometimes
suffice to avoid forfeiture, it is unconvincing in the
particular circumstances of this case. When the plaintiffs
submitted their response brief, they were aware that "if
the Seventh Circuit's decision [in Lewis] is not
affirmed, their individual claims will be compelled to
arbitration." Pls.' Mot. to Stay, dkt. no. 17 ¶
4. Perhaps to hedge against that very risk, the plaintiffs
did not rest their response entirely on the Seventh
Circuit's ruling in Lewis, but also argued that
FINRA was not a suitable forum because its
"outrageous" costs would prevent them from
effectively vindicating their rights. Pls.' Resp. to Mot.
to Compel Arbitration, dkt. no. 31, at 9-11. The
plaintiffs' choice not to make more or different
arguments about FINRA's suitability as a forum does not
excuse their forfeiture. See, e.g., Holder v.
Ill. Dep't of Corr., 751 F.3d 486, 493 (7th Cir.
2014) ("When a party selects among arguments as a matter
of strategy, he also waives those arguments he decided not to
plaintiffs were also aware of the factual basis of their new
arguments when they responded to the motion to compel. Their
objections to the alleged deficiencies in FINRA's hiring
and training procedures, arbitrator selection process, and
document filing systems relate to policies and practices that
predate the response to the motion. The Court acknowledges
that plaintiffs cite anecdotes from Beigelman's
arbitration proceedings to support their arguments and that
they did not have this evidence when they responded to the
motion to compel. See, e.g., Friedman Decl., dkt.
no. 64-1 ¶ 8. But these anecdotes are merely additional
evidence for arguments that were already available to the
plaintiffs based on FINRA's published policies, and the
plaintiffs do not contend that they could not have raised
these issues before observing Beigelman's arbitration
the Court concludes that the plaintiffs have forfeited their
new arguments concerning FINRA's suitability as an
arbitral forum, it ...