WHAT YOU NEED TO KNOW ABOUT ARBITRATION

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1 WHAT YOU NEED TO KNOW ABOUT ARBITRATION Presented and Prepared by: Scott G. Salemi Rockford, Illinois Prepared with the Assistance of: Bhavika D. Amin Rockford, Illinois The cases and materials presented here are in summary and outline form. To be certain of their applicability and use for specific claims, we recommend the entire opinions and statutes be read and counsel consulted. Heyl, Royster, Voelker & Allen PEORIA SPRINGFIELD URBANA ROCKFORD EDWARDSVILLE 2009 Heyl, Royster, Voelker & Allen F-1

2 WHAT YOU NEED TO KNOW ABOUT ARBITRATION I. WHAT IS IT?... F-3 II. WHICH COUNTIES HAVE MANDATORY ARBITRATION?... F-3 III. WHICH CASES MUST BE ARBITRATED?... F-4 IV. WHO ARE THE ARBITRATORS?... F-4 V. CAN I CHOOSE THE ARBITRATORS?... F-4 VI. CAN I ASK TO CHANGE ARBITRATORS IF I THINK THERE IS PREJUDICE, A CONFLICT OR OTHER PROBLEMS?... F-4 VII. CAN ARBITRATORS HEAR MOTIONS?... F-5 VIII. HOW IS DISCOVERY CONDUCTED IN ARBITRATION CASES?... F-5 IX. CAN DISCOVERY BE CONDUCTED AFTER THE HEARING?... F-5 X. HOW LONG DOES AN ARBITRATION HEARING LAST?... F-6 XI. WHAT HAPPENS IF ONE PARTY DOES NOT SHOW UP?... F-6 XII. XIII. WHAT HAPPENS IF ONE OF THE PARTIES DOES NOT PRESENT A CASE?... F-6 WHAT CONSTITUTES PARTICIPATION IN GOOD FAITH AND IN A MEANINGFUL MANNER?... F-6 XIV. HOW IS AN ARBITRATION HEARING CONDUCTED?... F-7 XV. WILL A DETERMINATION OF THE AWARD BE MADE THE SAME DAY AS THE HEARING?... F-7 XVI. IS THE AWARD BINDING?... F-8 XVII. WHAT IS THE COST OF REJECTING AN ARBITRATION AWARD?... F-8 XVIII. HOW DOES THE ARBITRATION AWARD BECOME FINAL?... F-8 F-2

3 WHAT YOU NEED TO KNOW ABOUT ARBITRATION I. WHAT IS IT? Court-annexed arbitration was established in Illinois as a mandatory, non-binding form of alternative dispute resolution. The program is a deliberate effort on the part of the judiciary, bar and public to reduce the length and cost of litigation in Illinois. Though the result is technically non-binding, a failure by one party to participate in good faith can result in that party losing its right to reject the award, thus making the arbitration award binding. Court-annexed arbitration is governed by Illinois Supreme Court Rules II. WHICH COUNTIES HAVE MANDATORY ARBITRATION? 3rd Judicial District Madison County Wood River, IL 11th Judicial District Ford and McLean Counties Bloomington, IL Amount in Dispute: $5,000 - $50,000 12th Judicial District Will County Joliet, IL 14th Judicial District Henry, Mercer, Rock Island and Whiteside Counties Rock Island, IL Amount in Dispute: $5,000 - $50,000 16th Judicial District DeKalb, Kane and Kendall Counties Geneva, IL Circuit Court of Cook County Chicago, IL Amount in Dispute: less than $30,000 17th Judicial District Winnebago and Boone Counties Rockford, IL 18th Judicial District DuPage County Wheaton, IL 19th Judicial District Lake County Waukegan, IL 20th Judicial District St. Clair, Perry, Monroe, Randolph and Washington Counties Belleville, IL Amount in Dispute: $5,000 - $50,000 22nd Judicial District McHenry County Woodstock, IL F-3

4 III. WHICH CASES MUST BE ARBITRATED? Civil actions seeking only money damages between $5,000 and $50,000, depending on the county. In addition, some counties permit arbitration of small claims cases. Supreme Court Rule 86(d) provides that cases not assigned to the arbitration calendar may be ordered to arbitration at a status call, pre-trial or case management conference when it appears to the court that no claim in the action has a value in excess of the monetary limit (generally $50,000). On the other hand, if it is determined prior to the arbitration hearing that the potential damages exceed the jurisdictional limit, the case may be transferred to the law division through the filing of an appropriate motion. Eissman v. Pace Suburban Bus Div. of Regional Transp. Authority, 315 Ill. App. 3d 574, 734 N.E.2d 940, 248 Ill. Dec. 649 (1st Dist. 2000). IV. WHO ARE THE ARBITRATORS? A panel of three arbitrators presides over each arbitration hearing. Rule 87 states that arbitrators must be members of the bar engaged in the practice of law or retired judges within the circuit. The panel must be chaired by a member of the bar who has practiced law for at least 3 years. Local rules generally further limit the eligibility of attorneys and retired judges to act as arbitrators. Many jurisdictions provide training programs for attorneys and judges to certify them to act as arbitrators. V. CAN I CHOOSE THE ARBITRATORS? No. Arbitrators are chosen at random prior to the hearing date in order to insure against prejudice or bias. Parties will not know who the arbitrators are until the panel members introduce themselves at the beginning of the hearing. Panel members are advised of the parties and witnesses in the case prior to the hearing and are expected to recuse themselves from any case in which they have a conflict. VI. CAN I ASK TO CHANGE ARBITRATORS IF I THINK THERE IS PREJUDICE, A CONFLICT OR OTHER PROBLEMS? No. As noted above, under Supreme Court Rule 87(c), arbitrators may recuse themselves if they believe there may be a conflict or if grounds appear to exist for disqualification***. There is, however, no provision made in the rules for a substitution of arbitrators or change of venue from the panel or any of its members. The remedy of rejection of an award and the right to proceed to trial has been deemed a sufficient response to any perceived bias or prejudice. F-4

5 VII. CAN ARBITRATORS HEAR MOTIONS? The arbitrators authority to hear motions is limited. Their authority and power exist only in relation to the conduct of the hearing at the time it is held. Therefore, arbitrators can hear and determine motions to exclude witnesses, motions in limine, rulings on the admissibility of evidence and motions of directed finding. Any other motions must be brought before the arbitration judge and should generally be noticed up well in advance of the hearing. Arbitrators may not hear and determine motions seeking to continue the hearing. VIII. HOW IS DISCOVERY CONDUCTED IN ARBITRATION CASES? Supreme Court Rule 89 indicates that discovery shall be conducted in accordance with Supreme Court Rule 222, except that timelines may be shortened by local rules. Rule 222 provides for quicker and more limited discovery. Rule 222 mandates that the parties make initial disclosures of various facts, claims, defenses, witnesses and documents within 120 days after the filing of a responsive pleading to the complaint unless otherwise dictated by local rules. In most counties, judges presiding over arbitration cases require the filing of what is known as the Rule 222 Disclosure Statement within 30 days or less after the first appearance or status date. Parties are under a continuing duty to supplement these disclosures as new information becomes available. Rule 222 also limits the number of interrogatories propounded and depositions taken by the parties. Evidence depositions are not allowed without leave of court for good cause shown. IX. CAN DISCOVERY BE CONDUCTED AFTER THE HEARING? In most instances, no. Supreme Court Rule 89 provides that no discovery shall be permitted after the hearing, except by leave of court and good cause shown. Some courts rarely, if ever, permit additional discovery. The prohibition of discovery after the arbitration hearing helps force cases to a quicker resolution and prevents abuse of the arbitration system by those who do not take the arbitration seriously or intend to use the arbitration as a tool to discover his or her adversary s case while preparing for an eventual bench or jury trial. The Committee Comments following Rule 89 describe the courts attitude towards this rule: An early and timely disposition of arbitrable matters must be doomed by courts that are tolerant of late attention to discovery. Firmness of the courts in the implementation of this rule will help to insure the successful results that are available from this procedure. Prohibiting discovery after award places a premium on as early, and as thorough, a degree of preparation as is necessary to achieve a full hearing on the merits of the controversy. F-5

6 The Comments do indicate some leeway may be forthcoming: If the lapse of time between an award and a requested trial is substantial or if in that period there has been a change in the circumstances at issue, additional discovery would appear to be appropriate and should be granted. X. HOW LONG DOES AN ARBITRATION HEARING LAST? Most arbitration hearings are limited to two hours. In most jurisdictions, the local rules allow for up to four hours but only after the court has approved such a request on good cause shown. XI. WHAT HAPPENS IF ONE PARTY DOES NOT SHOW UP? If a party fails to appear at the hearing, the hearing will proceed ex parte. Pursuant to Supreme Court Rule 91(a), the non-appearing party waives the right to reject the award and consents to entry of a judgment on the award. XII. WHAT HAPPENS IF ONE OF THE PARTIES DOES NOT PRESENT A CASE? Rule 91(b) provides that all parties to an arbitration hearing must participate in good faith and in a meaningful manner. If the panel unanimously finds that a party has failed to participate in the hearing in good faith and in a meaningful manner, they may so state on the appropriate Rule 91(b) form or on the award along with the factual basis therefor. The court can then impose sanctions against the non-good faith participant, including an order prohibiting that party from rejecting the award. XIII. WHAT CONSTITUTES PARTICIPATION IN GOOD FAITH AND IN A MEANINGFUL MANNER? In order to satisfy the requirement of good faith participation in the arbitration hearing, a party must subject the case to the type of adversarial testing that would be expected at a trial. Government Employees Ins. Co. v. Smith, 355 Ill. App. 3d 915, 824 N.E.2d 1087, 291 Ill. Dec. 837 (1st Dist. 2005). A party may be found to have participated in bad faith in an arbitration hearing due to inept preparation or intentional disregard of the process. Anderson v. Mercy, 338 Ill. App. 3d 685, 788 N.E.2d 765, 273 Ill. Dec. 174 (3d Dist. 2003). Even if the arbitrators do not include a written finding that a party participated in bad faith, the trial court may still bar rejection of an award based on lack of good faith. State Farm Mut. Ins. Co. v. Koscelnik, 342 Ill. App. 3d 808, 795 N.E.2d 1001, 277 Ill. Dec. 333 (1st Dist. 2003). F-6

7 XIV. HOW IS AN ARBITRATION HEARING CONDUCTED? Similar to a trial, the parties are permitted to give opening statements, present evidence, crossexamine witnesses and give closing arguments. Pursuant to Supreme Court Rule 90, a party can compel the appearance of a witness, subpoena the maker of an admissible document and crossexamine an adverse witness at the arbitration hearing. At the hearing, the established rules of evidence and procedure apply as they would in any civil trial with certain exceptions set forth in Supreme Court Rule 90. Since one of the principal goals of arbitration is to permit a party to present his or her case at a minimal expense, Rule 90(c) provides a method which focuses on the substance rather than the form of evidence. It creates a presumption of admissibility for medical bills, medical records, the written opinion of an expert, the deposition of a witness or the statement of a witness, repair bills or estimates, and other various documents. This rule eliminates the foundational requirement for the documents and overcomes the objection of hearsay so as to permit a party to get meaningful evidence before the panel without the traditional formal method of introduction. Regardless of the presumptive admissibility of documents, however, the arbitrators are required to apply the tests under established rules of evidence otherwise relating to admissibility and credibility and to determine the weight to be given to such evidence. In order to take advantage of presumptive admissibility, the parties seeking to offer the documents in evidence must, at least 30 days prior to the hearing, give notice to the other side of such parties intention to offer the documents accompanied by a copy of the document. Nothing in Rule 90 prohibits the non-offering party from bringing the author or maker of a document admissible under Rule 90 to the hearing under subpoena and examining that witness as if under cross-examination. XV. WILL A DETERMINATION OF THE AWARD BE MADE THE SAME DAY AS THE HEARING? Yes. The panel of arbitrators will make an award promptly upon termination of the hearing. The award cannot exceed the sum authorized by that particular circuit (generally $50,000). A majority of the arbitrators must sign the award. The award will dispose of all claims. (Rule 92(b).) The panel does not announce the award to the parties. Usually, the award is filed the day of the hearing with the clerk of the court who is responsible for serving notice of the award to all parties. F-7

8 XVI. IS THE AWARD BINDING? No. Supreme Court Rule 93 states that any party who was present at the hearing either in person or through counsel, except one that has been debarred from rejecting the award, may within 30 days of the filing of the award, file a rejection of the award with the clerk of the court. The party must pay the proper rejection fee and give notice to all parties. This 30-day period begins to run from the date the award is filed with the clerk. If one party files a rejection, any other party wishing to reject the award may rely on that notice and need not file his or her own notice of rejection. Rule 93 allows for rejection of the arbitration award, but there is no provision authorizing a party to withdraw that rejection later. Stemple v. Pickerill, 377 Ill. App. 3d 788, 879 N.E.2d 1042, 316 Ill. Dec. 654 (2d Dist. 2007). Note that Rule 93(b) indicates that an arbitrator cannot be called to testify at a subsequent trial nor can any reference be made to the fact that an arbitration hearing took place or that an award was made. XVII. WHAT IS THE COST OF REJECTING AN ARBITRATION AWARD? $200 for awards of $30,000 or less and $500 for awards greater than $30,000 as specified in Rule 93(a). XVIII. HOW DOES THE ARBITRATION AWARD BECOME FINAL? Pursuant to Supreme Court Rule 92(c), if no rejection is filed within the 30-day period after the hearing, any party may thereafter move the court to enter a judgment on the award. If the arbitration hearing was ex parte, Supreme Court Rule 91(a) allows the party appearing to move at any time after the award has been filed with the clerk of the court for an entry of judgment on the award. F-8

9 Scott G. Salemi - Partner Prior to joining Heyl Royster, Scott served as Senior Assistant State's Attorney in Rockford, Illinois, and later as an Assistant Illinois Attorney General, assigned to a statewide trial assistance division. Scott is an accomplished trial lawyer, having tried significant litigation to verdict throughout Illinois. Scott joined the firm in its Rockford office in January of 2003 and became partner in Scott concentrates his practice in the defense of complex civil litigation, with an emphasis on civil rights, medical malpractice and first-party and thirdparty property cases. Professional Associations Illinois Association of Defense Trial Counsel Illinois State Bar Association American Bar Association Winnebago County Bar Association Court Admissions State Courts of Illinois United States District Court, Northern District of Illinois (Trial Bar) Education Juris Doctor, Northern Illinois University College of Law, 1992 Bachelor of Arts-Political Science, DePauw University, 1989 F-9 Learn more about our speakers at

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