Linda Construction Inc., et al v. City of Chicago et al

Filing 200

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 6/16/2017:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

LINDA CONSTRUCTION, INC.,
Plaintiff,
Case No. 15 C 8714
v.
Judge Harry D. Leinenweber
REPUBLIC SERVICES
PROCUREMENT, INC.,
Defendant.

MEMORANDUM OPINION AND ORDER
Because

Plaintiff

Linda

Construction,

Inc.

(“LCI”)

has

waived its right to arbitration and no ground exists to allow it
to

rescind

that

waiver,

LCI’s

Motion

to

Lift

the

Court’s

previously imposed stay on arbitration [ECF No. 194] is denied.
I.

BACKGROUND

This case has had a tortured procedural history.
2015,

LCI

Defendants.
corporate

brought

a

six-count

Complaint

against

a

Back in
number

of

Among those sued were the City of Chicago, multiple
entities

–

including

Republic

Services,

Inc.

(“Republic”) and Allied Waste Transportation, Inc. (“Allied”) –
and individual employees of the municipality and corporations.
None of these Defendants is the one entity that still remains in
the

case:

Republic

Services

Procurement,

Inc.

(“RSPI”).

Indeed,

LCI

did

not

even

mentioned

RSPI

in

its

original

Complaint.
The causes of action brought in the original Complaint fell
into two categories:

those alleging violations of LCI’s civil

rights and those stating claims in contract.

The contract that

LCI relied on to plead its case at this point was an agreement
between the City of the Chicago and Allied – what the Court in
its

previous

opinion

called

the

Main

Contract.

See,

Linda

Constr. Inc. v. Allied Waste Indus., No. 15 C 8714, 2017 U.S.
Dist.

LEXIS

specific

48367,

provision

current Motion.

at
to

*5-7
that

(N.D.

Ill.

Contract

is

Mar.
the

31,

2017).

fodder

for

A
the

Section 5.9 of the Main Contract contains the

following arbitration clause:
In the event a contractor has not complied with the
contractual MBEs/WBEs percentage in its Schedule D,
underutilization
of
MBEs/WBEs
shall
entitle
the
affected MBE/WBE to recover from the contractor
damages suffered by such entity as a result of being
underutilized; provided, however, that this provision
shall not apply to the extent such utilization occurs
pursuant to a waiver or substitution approved by the
City.
The Ordinance and contracts subject thereto
provide that any disputes between the contractor and
such affected MBEs/WBEs regarding damages shall be
resolved by binding arbitration before an independent
arbitrator other than the City, with reasonable
expenses, including attorney’s fees, being recoverable
by a prevailing MBE/WBE in accordance with these
regulations.
ECF No. 149, Ex. C (Main Contract).

- 2 -

Immediately after it filed the lawsuit in federal district
court, LCI went on the offensive by bringing a Motion for a
Preliminary

Injunction.

See,

ECF

Nos.

17-19.

Defendants

opposed the injunction and simultaneously moved to dismiss the
Complaint
briefed

for

both

failure
sets

of

to

state

motions

a
and

claim.

The

appeared

parties

before

the

fully
Court

multiple times to air their disputes.
On March 15, 2016, the Court issued its ruling, handing
down an all-around loss to LCI.

Not only did the Court deny the

company an injunction, it also dismissed the Complaint in its
entirety.

See, Linda Constr. Inc. v. City of Chi., No. 15 C

8714, 2016 U.S. Dist. LEXIS 33376, at *25-26 (N.D. Ill. Mar. 15,
2016).

In particular, the Court found that LCI was neither a

signatory
Contract

to,
and

Contract.

nor
so

a

did

third-party
not

Id. at *21-22.

with prejudice.

have

beneficiary

standing

sue

the

Main

under

that

It thus dismissed the contract claims

Id. at *25.

LCI then amended its Complaint.
Amended

to

of,

Complaint

looked

dismissed Complaint.

remarkably

Surprisingly, the First
like

the

original,

just-

Compare, ECF No. 1 (Original Compl.), with

ECF No. 65 (First Am. Compl.).

However, LCI attached to this

Amended Complaint a contract between it and RSPI – what the
parties sometimes call the Services Agreement and what the Court
- 3 -

referred

to

as

the

Transport

Agreement

in

its

last

opinion.

See, Linda Constr., 2017 U.S. Dist. LEXIS 48367, at *3.
The

key

thing

Transport/Services
distinct

legal

to

Agreement

documents.

keep

in

mind

and

the

Main

See,

id.

at

is

differences between the two contracts).

that

Contract

*38-39

the

are

two

(listing

the

The parties to the Main

Contract are the City of Chicago and Allied, which was at some
point

bought

by

Republic.

The

parties

to

Agreement, on the other hand, are LCI and RSPI.

the

Transport

RSPI is not the

same entity as Republic or Allied, however much LCI seems to
treat them as fungible.
In its First Amended Complaint, LCI continued to assert a
breach of contract count against Republic and Allied (but not
RSPI).

However, LCI now relied on the Transport Agreement for

this claim.

See, ECF No. 65 at 5.

The litigation on the

contractual dispute thus proceeded apace despite language from
the Transport Agreement mandating arbitration.

See, ECF No. 65,

Ex. E, at 6 (“Any disputes under the Services [or Transport]
Agreement . . . that are not resolved by negotiation between the
parties

shall

be

resolved

by

binding

arbitration.”).

(Technically, this arbitration provision comes from an amendment
to

the

Transport

Agreement.

However,

the

parties

treat

the

original contract and its amendments as one integrated document,
- 4 -

and the Court does the same, referring to them collectively as
the Transport Agreement.)
Defendants
eight

days

dismissed

again

before

its

No. 92.

On

moved

the

contract
June

6,

to

dismiss

motions
claim

2016,

the

became

without

257

days

Complaint.

fully

briefed,

prejudice.
after

Just
LCI

See,

bringing

ECF

suit

in

federal court, LCI tendered a demand to Republic and Allied for
arbitration

of

the

contract

claim,

“citing

the

Services

[or

Transport] Agreement between LCI and RSPI as the source of [its]
right to arbitration.”

ECF No. 104 at 3.

Republic and Allied responded by asking the Court to stay
LCI’s demand for arbitration.
to

Enjoin

Mot.).

or

Stay

Defendants

arbitrate

by

LCI

and

its

contract
intent

claim

to

Arbitration)

and

104

(Mem.

argued

LCI

had

waived

of

contract

litigating

judicial forum.

See generally, ECF Nos. 103 (Mot.

that

the

breach

See, ECF No. 104 at 4-7.

owners’
is

“demand

pure

to

arbitrate . . . until

they

as

Support

its

of

right

claim

to

in

a

As Defendants stated,

arbitrate

gamesmanship”

in

their

they

feared

breach

had

that

shown

their

of
“no

claim

would be dismissed, for the second time, for failure to state a
claim.”
they

Id. at 5.

have

included

expended

“hundreds

Defendants also recited the time and money
in
of

responding
hours

to

LCI’s

interviewing
- 5 -

lawsuit.

witnesses,

These

analyzing

documents, engaging with Plaintiffs’ counsel, researching law,
responding to Plaintiffs’ motions, briefing their own motions,
and appearing in court.”

Id. at 6.

The Court granted Defendants’ Motion and stayed arbitration
of

the

Transport

Agreement

Motions to Dismiss.

pending

the

second

round

of

the

See, ECF No. 110 (Minute Order Granting

Mot. to Stay); ECF No. 150 (Tr. of Hr’g), at 3:4-5 (“The Court:
I will stay arbitration pending the outcome of the motions.”).
Two

months

Dismiss.

later,

the

Court

granted

in

full

the

Motions

to

See, Linda Constr. v. City of Chi., No. 15 C 8714,

2016 U.S. Dist. LEXIS 111311, at *14 (N.D. Ill. Aug. 22, 2016).
LCI

then

filed

a

Second

No. 136 (Second Am. Compl.).

Amended

Complaint.

See,

ECF

This Complaint differed from the

first two in that, for the first time, LCI named RSPI as a
Defendant in the case.
from its Complaint.

LCI also dropped the contract claims

As LCI explained to the Court, it did this

“in order to pursue arbitration as set forth in the Services [or
Transport] Agreement.”

ECF No. 136 at 2.

Indeed, after filing

this Complaint, LCI moved to stay the case pending arbitration.
Id.

The parties then appeared before the Court to argue the

Motion.
At

the

hearing,

Defendants

waived its right to arbitrate.

made

the

case

that

LCI

has

LCI did this “by not filing once

- 6 -

but twice a breach of contract claim before this Court, one of
which was fully briefed and dismissed as insufficient under the
first complaint, the second of which we had moved to dismiss
again and fully briefed [] on our end.”
7:1.

ECF No. 152 at 6:12-

Defendants convinced the Court that they had both the law

and facts on their side.

Accordingly, the Court denied LCI’s

Motion to Stay the Proceeding, stating in no uncertain terms
that “filing a breach of contract is a clear indication of a
waiver.”

Id. at 14:10-15.

the Court declined.

LCI asked for reconsideration, but

See, ECF Nos. 147 & 151.

After some more delays, LCI again amended its Complaint,
bringing

what

was

the

fourth

complaint

in

the

case.

This

Complaint was an amalgamation of all the previous pleadings.
Not only did the breach of contract claims reappear, there were
now two of them.
and was
three

The first was premised on the Main Contract

asserted

different

alleged

a

against
Allied

breach

of

the

City

the

Transport

Chicago,

The

entities.

of

second

Agreement

Republic,
contract

and

was

and

claim

brought

against RSPI.
This

Complaint

predecessors.

Nor

fared

little

should

LCI

better
have

than

expected

its
it

disposed-of
to.

The

Complaint did nothing to cure the deficiencies identified in the
Court’s prior opinions.

See, Linda Constr., 2017 U.S. Dist.
- 7 -

LEXIS 48367, at *15, 37 (“The Court has twice dismissed LCI’s
claims with leave to amend and clear instructions to cure the
persistent deficiencies in its pleading.
do so.”).
it

LCI yet again fails to

The Complaint did not lack for boldness, however, as

brought

back

prejudice,

i.e.,

Contract.

See,

a

claim
the

id.

that

was

contract
at

previously

claim

*29-30.

resting

Faced

with

dismissed
on

the

such

pleading, the Court again dismissed with prejudice.

with

a

Main
zombie

Id. at *37.

The sole surviving cause of action from the Complaint was the
contract claim LCI brought against RSPI.

See, id. at *37-40.

The Court nonetheless limited the scope of that claim, warning
LCI that it must cabin its action to the Transport Agreement and
not indiscriminately mix in allegations of breaches of the Main
Contract by the Allied and Republic entities.

See, id.

LCI does not seem able to let go of the Main Contract,
however.
Stay

of

It now brings this Motion, styled a “Motion to Lift
Arbitration,”

to

allow

it

to

arbitrate

an

underutilization claim that LCI alleges arose under the Main
Contract and is guaranteed arbitrability by Section 5.9 of that
document.

RSPI,

opposes the Motion.

the

one

remaining

Defendant

in

the

case,

RSPI argues that LCI has waived any right

to arbitrate, whether the company relies on the Main Contract or
the Transport Agreement as the source for such a right.
- 8 -

Much as

it did before, RSPI contends that LCI should be bound to its
choice to forego arbitration, even if the decision turned out to
be a poor one.

For the reasons discussed below, the Court

agrees.
II.

LEGAL STANDARD

While the Court’s determination that a party has waived its
contractual right to arbitrate is reviewed de novo, the factual
findings upon which the Court premises its legal conclusion of
waiver is reviewed only for clear error.

Ernst & Young LLP v.

Baker O’Neal Holdings, Inc., 304 F.3d 753, 756 (7th Cir. 2002)
(“The factual determinations that a district court predicates a
finding of waiver upon are reviewed for clear error, while the
legal

question

of

whether

the

conduct

amounts

to

waiver

is

reviewed de novo.”); see also, Iowa Grain Co. v. Brown, 171 F.3d
504, 508-09 (7th Cir. 1999) (“[T]here is both a factual and a
legal dimension to the waiver inquiry. On the whole, the facts
are

what

matter,

because

the

district

courts

must

make

an

inquiry into the totality of the circumstances that led to the
alleged waiver.”).
Court’s

decision

A review for “clear error” means that the

will

be

upheld

unless

the

court

of

appeals

“reaches a firm and definite conviction” that the Court made a
mistake.

Ernst & Young, 304 F.3d at 756.

- 9 -

To determine whether LCI has waived its right to arbitrate,
the Court looks to the totality of the circumstances to see if
the company acted inconsistently with an intention to exercise
that right.

See, e.g., id.; Iowa Grain, 171 F.3d at 509.

As is

particularly relevant here, “an election to proceed before a
nonarbitral tribunal for the resolution of a contractual dispute
is a presumptive waiver of the right to arbitrate.”

Cabinetree

of

(7th

Wis.

1995).

v.

Kraftmaid

Cabinetry,

50

F.3d

388,

390

Cir.

That presumption may be rebutted only by “extraordinary

circumstances.”

Id.

at

390-91.

Factors

that

lean

against

a

finding of such circumstances include the lack of diligence on
the

part

of

the

party

seeking

arbitration

(here,

LCI)

and

prejudice to the party resisting arbitration (here, Defendants).
Id. at 391.
III.

ANALYSIS

One of the more difficult questions in this Motion is to
figure out what it is that LCI is asking of the Court.
asserts

in

the

Motion

that

it

“has

Section 5.9” of the Main Contract.

arbitration

rights

ECF No. 194. ¶ 5.

LCI
under
The

company requests that the Court “lift the arbitration stay” and
“allow

the

matters

between

Linda

Construction

and

Defendant

Republic that fall under Section 5.9 of the Main Contract [to]
be arbitrated.” Id. at 2.

This seems straightforward – except
- 10 -

for the fact that there is no arbitration stay on the Main
Contract.

There

was

an

arbitration

stay

on

the

Transport

Agreement, but, as explained, the Transport Agreement and the
Main Contract are not to be treated as interchangeable.
The Court resolves the conundrum as follows.

Insofar as

LCI is asking the Court to lift an existing stay to allow it to
arbitrate the terms of the Main Contract, the Motion is denied
because no such stay is in place.

As a review of the procedural

history of the case makes clear, the Court granted a Motion to
Stay Arbitration of the Transport Agreement.
104, 110, and 150.

See, ECF Nos. 103,

No similar arbitration stay of the Main

Contract was previously requested or granted.
Insofar as LCI is asking to be permitted to arbitrate “the
matters between Linda Construction and Defendant Republic that
fall under Section 5.9 of the Main Contract,” ECF No. 194 at 2,
the

Court

denies

the

Motion

for

the

same

reason

that

it

previously denied LCI’s request to stay the proceeding in favor
of arbitration.
and

no

LCI has waived any right it had to arbitrate,

extraordinary

circumstance

exists

so

as

to

allow

the

company to rescind that waiver.
A.

LCI Has Waived Its Right to Arbitrate

“Like any other contractual right, the right to arbitrate a
claim may be waived.”

Welborn Clinic v. Medquist, Inc., 301
- 11 -

F.3d

634,

637

(7th

Cir.

2002).

Thus,

even

assuming

of

the

Main

Contract

gives

LCI

the

Section 5.9
arbitrate
disputes),

an

underutilization

LCI

may

no

claim

longer

(something

compel

that

right

which

arbitration

if

to
RSPI

it

has

“through an implicit course of conduct” waived that right. Id.
LCI is the plaintiff in this case, and it filed this lawsuit in
the district court.

The company has thus made plain that it

wishes to litigate its claims, not arbitrate them.

As the Court

previously stated, LCI’s conduct evinces a “clear indication of
a waiver” to arbitrate.

ECF No. 152 at 14:10-15.

Seventh Circuit case law supports this conclusion.
than

one

occasion,

“[l]litigating

a

the

Seventh

claim

is

Circuit

clearly

perceived right to arbitration.”

has

On more

explained

inconsistent

that

with

any

Welborn Clinic, 301 F.3d at

637; accord, St. Mary’s Med. Ctr., Inc. v. Disco Aluminum Prods.
Co., 969 F.2d 585, 589 (7th Cir. 1992) (“Submitting a case to
the district court for decision is not consistent with a desire
to

arbitrate.”);

“normally
waiver

of

the

decision

to

arbitration”);

important

part

determine

as

lawsuit

Cabinetree,

of

a

intended

the

matter
to

50

F.3d

proceed

Iowa

at

in

Grain,

a

391

judicial

171

F.3d

district

court’s

waiver

of

whether

the

elect

fact
a

judicial

- 12 -

(holding

forum

at

forum
509

inquiry

party

that
is

(“[A]n
is

filing

rather

a

than

to
the
the

arbitral tribunal.”); Grumhaus v. Comerica Secs., Inc., 223 F.3d
648, 651 (7th Cir. 2000) (stating that “a plaintiff expresses
his

intent

to

submit

to

a

judicial

forum

by

filing

a

complaint”); Kawasaki Heavy Indus. v. Bombardier Rec. Prods.,
660

F.3d

988,

994-95

(7th

Cir.

2011)

(“Participation

in

litigation is considered in the waiver determination in order to
ensure that the proper forum for a dispute is established as
early as possible.”).

Having acted contrary to “any perceived

right to arbitration,” LCI effectively waived that right and
cannot now exercise it.

Welborn Clinic, 301 F.3d at 637.

Indeed, courts in this circuit have found waiver when a
party was far less active than LCI in litigating its case.

In

Grumhaus, for instance, the plaintiffs sued, tried the case for
several months, and then filed a demand for arbitration after
their claims were dismissed.

See, 223 F.3d at 649-50.

When the

district court ruled that the plaintiffs had not waived their
right
Circuit

to

arbitration

reversed.

under

See,

such

id.

at

circumstances,
653.

The

the

Seventh

appellate

court

reasoned that because the plaintiffs “were aware of their right
to arbitrate, as it was included in the documents they signed”
but nonetheless chose to litigate their claims, they had made a
“knowing selection of one forum over the other” and “must now
live with that choice.”

Id. at 651, 653.
- 13 -

Likewise, the district judge in Banc of Am. Secs. LLC v.
Indep.

Tube

Corp.,

found

that

Independence

Tube

had

“acted

inconsistently with its right to arbitrate by choosing to file
and pursue a complaint in federal court when it could have filed
an arbitration claim.”

Banc of Am. Secs. LLC, No. 09 C 7381,

2010 U.S. Dist. LEXIS 43278, at *23-25 (N.D. Ill. May 4, 2010).
The judge faulted Independence Tube for delaying in moving for
arbitration,

noting

that

“[i]t

was

only

when

it

faced

the

prospect of dismissal of one of its claims – potentially with
prejudice – that Independence Tube halted its efforts in the
federal courts and pursued its claim in arbitration.”

Id. at

*24-25.
In this case, as in Grumhaus, LCI knew of its right to
arbitrate.

The arbitration provision that LCI now relies on is

found in the very contract that LCI attached to its original
complaint.

Just

as

in

Grumhaus

then,

LCI

made

selection of one forum over another.” Id. at 651.

a

“knowing
But worse

than the plaintiffs in Grumhaus, LCI did not give up after just
one dismissal.

Instead, it filed three subsequent Complaints,

appeared in court to argue various and sundry motions related to
those complaints, and necessitated yet more briefings from its
counterparties

and

rulings

from

the

Court

on

contractual claim that it now seeks to arbitrate.
- 14 -

the

same

More still,

LCI delayed for even longer than Independence Tube.
did

not

move

dismissal

for

with

arbitration

prejudice.

when

it

Instead,

faced

LCI’s

the

The company
prospect

earliest

move

of
for

arbitration came after a dismissal with prejudice, and LCI’s
latest

Motion

comes

ruling

denying

a

after

stay

two

pending

dismissals

with

arbitration,

prejudice,

and

a

denial

a
to

reconsider that ruling.
Given these facts, the Court must decline to find that LCI
did not waive its right to arbitrate.

Cf., Kawasaki, 660 F.3d

at 995-96 (finding that no waiver occurred when the defendant
“did not file a claim or motion” in front of the district court
and “mentioned its desire to arbitrate at every turn”); Halim v.
Great Gatsby’s Auction Gallery, Inc., 516 F.3d 557, 562 (7th
Cir.

2008)

(affirming

that

there

was

no

waiver

when

the

defendant “Gatsby did not participate in any pretrial activities
prior

to

invoking

the

arbitration

clause,

nor

did

Gatsby

unreasonably delay its arbitration demand”); Sharif v. Wellness
Int’l Network, Ltd., 376 F.3d 720, 727 (7th Cir. 2004) (finding
that the defendant did not waive its right to arbitrate when
“[a]ll

that

had

occurred

was

a

motion

to

dismiss

under

Rule 12(b)(6) and 28 U.S.C. § 1406(a)”); Welborn, 301 F.3d at
637

(agreeing

with

the

lower

court

that

the

defendant

acted

“entirely consistent with a firm commitment to arbitrate” when
- 15 -

it

“never

sought

to

litigate

this

case

in

either

state

or

federal court, never resisted any demands by Welborn to submit
to arbitration, and moved to compel arbitration less than two
months after the lawsuit was filed”).
In light of unambiguous facts and clear Seventh Circuit
precedent, LCI advances only one reason for the Court to allow
it to go to arbitration:
tribunal.

it has so far failed in this judicial

As LCI phrases the problem, “[w]ithout a lift of the

Stay of Arbitration, LCI’s underutilization issue will not be
addressed

by

any

forum.”

ECF

No.

194

¶

8.

But

this

is

a

consequence of the Court dismissing LCI’s contract claim with
prejudice.
outcome,

While LCI is understandably disappointed with that

preventing

a

party

from

trying

its

luck

elsewhere

because it is unhappy with a decision rendered by its firstchoice

forum

is

the

purpose

of

the

waiver

doctrine.

See,

Kawasaki, 660 F.3d at 994-95 (“This [waiver] policy prevents
parties from waiting to see how they fare in a judicial forum
before

choosing

arbitration,

prevents

the

duplicative

adjudication of disputes, and prevents the undue prejudice that
results from a party spending time and money on litigation that
will not ultimately resolve a case.”); Welborn Clinic, 301 F.3d
at 637 (“[W]e do not want parties to forum shop, taking a case
to the courts and then, if things go poorly there, abandoning
- 16 -

their suit in favor of arbitration.”); St. Mary’s, 969 F.2d at
589 (“A party may not normally submit a claim for resolution in
one forum and then, when it is disappointed with the result in
that forum, seek another forum.”); Winforge, Inc. v. Coachmen
Indus., No. 1:06-cv-00619-SEB-JMS, 2009 U.S. Dist. LEXIS 120050,
at *4 (S.D. Ind. Dec. 22, 2009) (going so far as to state that
“[u]nder no circumstances . . . should a court permit a party to
rescind its waiver when the evidence shows that the party simply
wanted to play ‘heads I win, tails you lose,’ in other words
wanting to see how the case was going in federal district court
before

deciding

whether

it

would

be

better

off

there

or

in

arbitration”) (internal alteration and quotation marks omitted)
(citing Cabinetree, 50 F.3d at 391).
In sum, by bringing this lawsuit in the district court and
litigating the case for a year and a half, LCI has waived its
right to arbitrate.
B.

The

Court

No Extraordinary Circumstance Exists to
Allow LCI to Rescind the Waiver
next

considers

if,

despite

having

right to arbitrate, LCI may rescind that waiver.

waived

its

As the Seventh

Circuit explained, rescission is justified only in “abnormal” or
“extraordinary” circumstances, including when there are “doubts
about

arbitrability,”

“unexpected

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developments

during

discovery,” and other factors making it “obvious that the party
should be relieved from its waiver.”

See, Cabinetree, 50 F.3d

at 390-91.
No such extraordinary circumstance exists here.

According

to LCI, there never was any doubt about the arbitrability of its
underutilization claim.
even

“Defendant

See, ECF No. 194 ¶ 5 (asserting that

Republic

continues

to

arbitration rights under Section 5.9”).

agree

that

LCI

has

Cf. Iowa Grain, 171

F.3d at 510 (affirming that because a class action claim cannot
normally be arbitrated, there was no inconsistency between the
plaintiffs bringing a putative class action and moving to compel
arbitration on an individual basis).

Moreover, there has not

been any unexpected development in this case; as far as the
Court can tell, no new facts or authorities have emerged in the
year and a half since LCI filed the lawsuit.

And of course,

nothing has made it “obvious” that LCI should not be held to its
voluntary and knowing choice to litigate the case.
In addition, two factors weigh heavily against allowing LCI
to rescind its arbitration waiver.
diligent in pressing for arbitration.
F.3d

at

756-57

(stating

that

First, LCI has not been
See, Ernst & Young, 304

“diligence

or

the

should weigh heavily in the [waiver] decision”).

lack

thereof

As mentioned

previously, LCI waited 257 days after filing the Complaint to
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tender its demand for arbitration.

The company dragged its feet

despite knowing that the contract under which it was bringing a
claim contained a mandatory arbitration provision.

Under these

circumstances, LCI can hardly be said to have been diligent, or
to have done “all it could reasonably have been expected to do
to

make

the

earliest

feasible

determination

proceed judicially or by arbitration.”

of

whether

to

Cabinetree, 50 F.3d at

391.
Second, LCI’s dilatory conduct resulted in prejudice to the
parties

it

now

(explaining

wants

that

to

haul

“prejudice

to

into
the

arbitration.
other

See,

party,

the

id.

party

resisting arbitration, should weigh heavily in the decision to
send the case to arbitration”).
moved

beyond

the

motion

to

Although the parties have not

dismiss

stage

and

so

have

not

propounded discovery, LCI has nonetheless caused Defendants to
incur substantial costs in the year and a half since this case
has been ongoing.
Court

the

See, ECF No. 104 at 6 (representing to the

“hundreds

of

hours”

as

well

as

the

“significant

attorneys’ fees and costs” that Republic and Allied have sunk
into the case).

As in Ohio-Sealy Mattress Mfg. Co. v. Kaplan

then, it is difficult to understand how LCI “can contend that
[Defendants] would not [be] prejudiced if [LCI] were permitted
to insist on its right to arbitration after [Defendants] had
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embarked on protracted litigation.”

Ohio-Sealy Mattress Mfg.

Co. v. Kaplan, 712 F.2d 270, 273 (7th Cir. 1983).
On these facts, the Court finds that LCI has waived the
right

to

arbitrate

its

contractual

claim

and

that

no

ground

exists to allow the company to rescind that waiver.
III.

CONCLUSION

For the reasons stated herein, LCI’s Motion to Lift the
Stay on Arbitration [ECF No. 194] is denied.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Dated: June 16, 2017

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