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The right of a party to compel arbitration is waived when that party fails to respond to an adverse party's requests for arbitration, according to a federal district court in Illinois.
In Dawson v. Gillespie Chrysler, L.L.C., No. 07 C 2581, 2007 WL 2088598 (N.D. Ill. July 18, 2007), Dawson alleged that Gillespie fraudulently sold her a vehicle, with actual knowledge that the vehicle had a false odometer reading. Pursuant to an agreement to arbitrate, Dawson contacted the proper arbitration administrator to start proceedings. Gillespie failed to respond to any of the administrator's inquiries on the matter, and the administrator was unable to proceed. Dawson then filed a lawsuit against Gillespie, which Gillespie met with a motion to compel arbitration. Dawson opposed the motion, alleging Gillespie had waived its right to compel by failing to respond to the arbitration administrator before she had filed the lawsuit.
The Court found that Gillespie had waived its right to arbitrate through its inaction before Dawson filed the lawsuit. Under the totality of the circumstances, the Court found that Gillespie had acted inconsistently with the right to arbitrate. Specifically, the Court observed that Gillespie had failed to respond to the administrator upon Dawson's request for arbitration, frustrating the process. According to the Court, Gillespie "cannot have it both ways" by ignoring the request for arbitration and then seeking it when the courts become involved.
The Court was also unpersuaded by Gillespie's explanation for its silence to the prior requests for arbitration; that an employee had failed to forward the complaint to the proper person within the organization. The Court reminded Gillespie that it was bound by the actions of its agents, and that it was "not a proper excuse" for its failure to respond.
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