United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
ROBERT BLAKEY, UNITED STATES DISTRICT JUDGE
case presents the question: Who decides whether a dispute is
arbitrable in the first instance? Plaintiffs Nandorf, Inc.,
d/b/a Unique Thrift Store, and Southwest Management Company
(collectively, Nandorf) purchased a workers’
compensation insurance package from Defendant Applied
Underwriters Captive Assurance Company, Inc. (AUCRA). As part
of the package, Nandorf entered into a Reinsurance
Participation Agreement (RPA) with AUCRA. AUCRA claims that
Nandorf refuses to pay amounts due and owing under the RPA;
thus, AUCRA filed a demand for arbitration before the
American Arbitration Association (AAA) in May 2015. Nandorf
refuses to proceed before the AAA and filed this action
seeking to enjoin AUCRA from proceeding with that
moves to compel arbitration, or in the alternative, to
transfer venue to the District of Nebraska. . For the
reasons explained below, this Court converts AUCRA’s
motion into a motion to dismiss for improper venue under Rule
12(b)(3), grants that motion, and dismisses this case without
is a captive reinsurance company, which from 2010 to 2014
offered a workers’ compensation program known as
EquityComp. [1-1] at 3, 4. Among other things, the EquityComp
program comprised a retrospective rating plan, embodied in
the RPA. Id. at 4. In October 2010, Nandorf
purchased a worker’s compensation policy from
AUCRA’s affiliate and executed the RPA. Id. at
5. The RPA, which provided Nandorf three years of
workers’ compensation insurance coverage, was effective
from October 4, 2010 to October 3, 2013. Id. at 14,
13 of the RPA contains an arbitration provision, stating:
(A) It is the express intention of the parties to resolve any
disputes arising under this Agreement without resort to
litigation in order to protect the confidentiality of their
relationship and their respective businesses and affairs. Any
dispute or controversy that is not resolved informally
pursuant to sub-paragraph (B) of Paragraph 13 arising out of
or related to this Agreement shall be fully determined in the
British Virgin Islands under the provisions of the American
(B) All disputes between the parties relating in any way to
(1) the execution and delivery, construction or
enforceability of this Agreement, (2) the management or
operations of the Company [AUCRA], or (3) any other breach or
claimed breach of this Agreement or the transactions
contemplated herein shall be settled amicably by good faith
discussion among the parties hereto, and failing such
amicable settlement, finally determined exclusively by
binding arbitration in accordance with the procedures
provided herein. The reference to this arbitration clause in
any specific provision of this Agreement is for emphasis
only, and is not intended to limit the scope, extent or
intent of this arbitration clause, or to mean that any other
provision of this Agreement shall not be fully subject to the
terms of this arbitration clause. All disputes arising with
respect to any provision of this Agreement shall be fully
subject to the terms of this arbitration clause.
Id. at 16–17.
further states: “All arbitration proceedings shall be
conducted . . . in accordance with the rules of the American
Arbitration Association and shall take place in Tortola,
British Virgin Islands or at some other location agreed to by
the parties.” Id. at 17.
also contains a general choice-of-law clause:
This Agreement shall be exclusively governed by and construed
in accordance with the laws of Nebraska and any matter
concerning this Agreement that is not subject to the dispute
resolution provisions of Paragraph 13 hereof shall be
resolved exclusively by the courts of Nebraska without
reference to its conflict of laws.
Id. at 18.
August 2014, AUCRA sent a letter to Nandorf, stating that
Nandorf had incurred amounts due under the RPA and
threatening to file a demand for arbitration. [17-5] at 2.
AUCRA filed a demand for arbitration with AAA on May 8, 2015.
[1-1] at 169–70. The demand named “Kenneth
Alterman d/b/a Unique Thrift Store” as the respondent.
Id. Nandorf claims that it repeatedly advised AUCRA
that their dispute should not go through arbitration.
Id. at 7.
3, 2018, Nandorf filed an action in the Circuit Court of Cook
County, Illinois, seeking to stay the arbitration proceedings
instituted by AUCRA. Id . at 2. The complaint seeks
relief to: (1) declare that Alterman, the former president of
Nandorf’s parent company, is not a proper party to the
arbitration; (2) declare the RPA’s arbitration
provision invalid; and (3) enjoin the arbitration.
Id. at 8–11; see also [17-3] at 2.
Defendant AUCRA removed the case to this Court in August
2018, [1-1], and subsequently moved to compel arbitration,
enacted the Federal Arbitration Act (FAA) in 1925 to counter
generalized judicial hostility to arbitration as an
alternative to litigation and to allow agreements to
arbitrate to be enforced. AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011). Arbitration
remains “a matter of contract.” First Options
of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995).
The FAA provides that arbitration agreements in contracts
involving interstate commerce are “valid, irrevocable,
and enforceable.” 9 U.S.C. § 2. State law ...