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, 340 Ill.Dec. 196, 927 N.E.2d 1207, 1220 (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.").
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).
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 actions appear to be inconsistent with an intent to arbitrate. See Kawasaki Heavy Industries, Ltd., 660 F.3d at 994; Armstrong v.
If a plaintiff waives the right to arbitrate by proceeding in a judicial forum, that waiver obviously and necessarily ends the implicit waiver of the right to trial by jury. The same is true of a defendant who chooses to proceed in the judicial forum chosen by our hypothetical plaintiff instead of seeking to compel arbitration. In that context, there is no tension between either the plaintiff or defendant making a demand for a jury trial. But what if our hypothetical defendant — like the defendant in this case — insists that even though both parties have chosen to proceed in a judicial forum, the implied waiver of the right to trial by jury inherent in arbitration still binds the plaintiff? Extended discussion is not needed to show that not only would it be illogical, but exceedingly inequitable to allow the defendant to insist that an indivisible component of the arbitration agreement that he, himself, has waived nonetheless continues to be operative against the plaintiff (who has not made a jury demand in the federal forum).
Finally, there is the defendant's central argument that when one looks to the intent of the contracting parties at the time of the Agreement (as well as to the notes and guaranty), it is immediately apparent that any controversies between the parties arising out of the various undertakings and agreements not be resolved by a jury. Consequently, the argument goes, the plaintiffs' jury demand on the claims under the Agreement must be stricken to effectuate that overarching intent. While Dr. Crossetti is right that in interpreting any contract a court must look to the parties' objective intent as shown by the contract's language, Gore v. Alltel Communications, LLC, 666 F.3d 1027, 1033 (7th Cir.2012); Board of Directors of Plum Creek Condominium Ass'n v. Lorman, 2013 WL 3820864, *4 (1st Dist.2013), his conclusion about the parties' intent in this case is mistaken.
The intent of the parties in agreeing to arbitration in the Agreement — and that is the operative document — was that in the event of any dispute arising out of the Agreement, the parties would forego a judicial forum and have the case resolved pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Unlike the expansive, express, jury waivers in the guaranty and notes (which did not contain an arbitration clause and thus envisioned a judicial forum for disputes arising out of those undertakings),
The defendant's brief cites not a single case supportive of its argument. Although not cited by either side, there are cases that have considered the question raised here and have concluded that a motion to strike a jury demand following a waiver of arbitration must be denied. In Nat'l Iranian Oil Co. v. Ashland Oil, Inc., 716 F.Supp. 268 (S.D.Miss.1989), the court said:
Id. at 270 (Emphasis supplied).
World Wide Communications, Inc. v. Rozar, 1998 WL 386413 (S.D.N.Y.1998) expressly endorsed Ashland Oil's reasoning:
1998 WL 386413, *3 (Parenthesis in original).
In sum, if Dr. Crossetti wanted to avoid a jury trial on the plaintiffs' claims, he was required to have invoked the arbitration provision in the Agreement and to have moved to compel arbitration. But he chose not to do so and instead opted to proceed in an Article III forum. He is bound by that "litigation decision," with all its attendant consequences. World Wide Communications, 1998 WL 386413, *2. Cf., Crowe ex rel. Crowe v. Zeigler Coal Co., 646 F.3d 435, 444 (7th Cir.2011); Abbott Laboratories v. Takeda Pharmaceutical Co. Ltd., 476 F.3d 421 (7th Cir.2007); Lynch, Inc. v. SamataMason Inc., 279 F.3d 487, 490-492 (7th Cir.2002); United States v. Upton, 24 Fed.Appx. 564, 565 (7th Cir.2001).
The defendant's Supplemental Motion To Strike The Plaintiffs' Jury Demand [Dkt. # 37] is DENIED.
50 F.3d at 390-391 (Emphasis in original) (citations omitted).