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Bishop v. We Care Hair Development Corp.

Case Date: 09/29/2000
Court: 1st District Appellate
Docket No: 1-00-0528 Rel

FIFTH DIVISION

September 29, 2000

No. 1-00-0528

LELA BISHOP, BARBARA WINGO,
RINDA YEAGER, PAMELA DUTTON,
RAYMOND GREEN, BARBARA GREEN,
KAREN STILLWELL,
MICHELLE SCHROER, GEORGE HORNBOSTEL,
and DIXIE HORNBOSTEL,

         Plaintiffs-Appellants and Cross-Appellees,

                    and

MICHAEL CASTLEMAN,

          Plaintiff and Cross-Appellee,

                    v.

WE CARE HAIR DEVELOPMENT CORPORATION,
DOCTOR'S ASSOCIATES, INC., FREDERICK
DELUCA, PETER BUCK, FRANCHISE WORLD
HEADQUARTERS, INC., JOHN F. AMICO &
COMPANY, JOHN AMICO, SR. FREDERICK
FLORIO, J'AMI INTERNATIONAL, INC., and
FRANCHISE REAL ESTATE LEASING
CORPORATION,

          Defendants-Appellees and Cross-Appellants.

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)		 Appeal from the
Circuit Court of
Cook County

 

 


No. 99-L-00223

 

 

 

 

The Honorable
Richard A. Siebel,
Judge Presiding

 

JUSTICE GREIMAN delivered the opinion of the court:


A number of individuals, hereinafter franchisees, filed a complaint against franchisor WeCare Hair Development Corporation (We Care Hair). We Care Hair and its affiliates filed motionsto compel the franchisees to arbitrate their claims and to stay the proceedings pending arbitration. The trial court granted the motions as to all franchisees except Michael Castleman. The remainingfranchisees appealed, arguing that (1) We Care Hair waived its right to compel them to arbitrate; and(2) the arbitration clauses are unconscionable, illusory, and violate public policy. Defendants alsoappealed, arguing that they did not waive their right to arbitrate with Castleman.

FACTS

On February 4, 1997, a group of We Care Hair franchisees filed a class action lawsuit inMadison County, Illinois circuit court against We Care Hair, Doctor's Associates, Inc. (DAI),Frederick DeLuca, Peter Buck, John Amico, and several others.(1) The lawsuit alleged that defendantsbreached their fiduciary duty in the management of the franchise advertising fund; that defendantscommitted fraud in the franchising and promotion of the franchises; that defendants violated theIllinois Franchise Disclosure Act of 1987 (815 ILCS 705/1 et seq. (West 1996)) and Consumer Fraudand Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1996)) in the promotion andmarketing of the franchises; and that defendants violated the Illinois anti-trust statute (740 ILCS10/2, 3 (West 1996)) by engaging in illegal price fixing. Each franchise agreement contained anarbitration clause, which the defendants asserted as an affirmative defense.

The plaintiffs filed a motion for partial summary judgment on the issue of the enforceabilityof the arbitration clause. On May 15, 1997, the trial court granted the motion after a hearing andentered a judgment under Supreme Court Rule 304(a) (134 Ill. 2d R. 304(a)), finding the arbitrationclauses to be illusory, unconscionable, void against public policy, and, therefore, unenforceable. Thetrial court also found that the defendants waived their right to compel arbitration under both theFederal Arbitration Act (FAA) (9 U.S.C.A.