The author of this article was a member of Judge Byrne’s first training class for arbitrators in the Eighteenth Judicial Circuit’s mandatory court-annexed arbitration program in 1989; and since that time has participated in numerous arbitration hearings as a lawyer representing litigants and as an arbitration panel member. Over the life of the program, the conduct of arbitrators and litigants has not always been pretty, and the performance of the lawyers representing litigants at arbitration hearings has not always been of a high caliber. Unfortunately, similar observations can be made for some of the arbitrators. Why is this so? It appears to be a combination of factors: perhaps the participants do not take the process seriously; perhaps law firms assign their least experienced lawyers to conduct these hearings; and perhaps not all lawyers conducting these hearings are properly prepared. There are undoubtedly lawyers who are not familiar with the process and therefore do not handle the arbitration case at the level their litigation ability would otherwise allow. In light of the above, this article is intended to offer an introduction to and review of the arbitration process, and will hopefully be useful to those who handle arbitration cases and those who would like to.
The Mandatory Court-Annexed Arbitration program in the Eighteenth Circuit encompasses tort and contract cases with ad damnums from $5,000 to $50,000. This is quite a spread. One of the first things a practitioner must do when such a case comes into the office is to evaluate how complicated the fact pattern is and whether there are any difficult issues of law. On the lower end of this damages spectrum, there are quite a few cases whose complexity outweighs the potential recovery. Are there a lot of complicated facts that will take many witnesses to prove? The author has handled cases involving the lease, operation and repair of heavy equipment. A lot of these cases involve numerous witnesses who used, observed or repaired the machines over a period of time. Will the witnesses and evidence be difficult to track down? The author is currently handling a case where two witnesses now live in Kazakhstan. Will expert opinion be necessary? Frequently expert opinion can be offered under Rule 90 but not always. It may become necessary to hire an expert and the cost of deposition and trial testimony could be prohibitive.
Once the lawyer decides to take a case, the intake should be handled like any other tort or contract case. The substantive law does not change. The Rule 137 diligence is the same. The preparation of the case should be the same as well. The difference resides in the fact that before going to trial in front of the court or a jury, you have to negotiate the detour of the arbitration hearing. In most cases that detour resolves the matter and trial becomes unnecessary. That, of course, is the point. The whole process of arbitration is to establish a streamlined way of resolving disputes short of trial in court.
As will be seen, the arbitration rules create some tension for the lawyer preparing such a case. You can get ready for an arbitration hearing and conduct it effectively with less preparation than you would for a trial, particularly with regard to expert testimony. At least some of the evidence at the arbitration hearing comes in more quickly and more easily than at a trial. Yet, you cannot do any more discovery after the arbitration hearing is over. If the arbitration award is rejected, you may end up less prepared for trial than you would like. More on this below.
Arbitration cases are governed by the 80’s and 90’s series of Supreme Court Rules and Article 13 of the Eighteenth Circuit Rules. Read them and heed them. There are traps for the unwary. There are significant differences from regular litigation. Here are some of the important things to look for.
In DuPage, all arbitration cases are assigned to Room 2018, presided over by Judge Abraham. All proceedings are conducted there except for the arbitration hearings themselves which take place in the Arbitration Center. Like small claims, arbitration summons have a return day. You must appear on the 9:00 call in 2018 on that day. If there is no service, Judge Abraham will assign a diligence day. You must diligently attempt to serve all defendants before that day arrives. Once all defendants are served and the parties are at issue, Judge Abraham will set an arbitration hearing date. He will set a status or motion date if motions or other pretrial proceedings are anticipated. All motions must be disposed of before the arbitration hearing. Be certain to get Judge Abraham courtesy copies of all motion papers. These include the motions, the supporting affidavits and other documents and the pleadings pertaining to the motion if any. Failure to get him the courtesy copies in advance will delay ruling on the motion. Judge Abraham will read the motion papers and will be prepared to rule on the motion hearing date. No argument will be permitted. There is simply no time for motion argument on this busy call. Be prepared, however, to answer any questions Judge Abraham may have. Motions to advance or postpone the arbitration hearing date must be properly noticed and heard by the judge in Room 2018. An arbitration panel or the Arbitration Administrator can not rule on such a motion even if by agreement. (Local Rule 13.03 (d))
You may conduct discovery just as in other civil proceedings with some important exceptions. Beware! Rule 89 forbids conduct of discovery after the arbitration hearing except for good cause shown. A desire not to bother with discovery until you think you will go to trial is not good cause. This rule is one of several designed to make litigants take the arbitration hearing seriously and to avoid looking at is as just a way station on the way to the real trial. Rule 222 governs discovery in arbitration cases. It requires disclosure of the essentials of your case to the other side. Be sure to calendar the Rule 222 deadlines. In the author’s experience, Rule 222 and its deadlines are frequently ignored. Be careful. Discovery violations including Rule 222 are subject to Rule 219 sanctions about which more later. Rule 222 disclosure statements must be filed with the court. (Local Rule 13.04). All other discovery avenues are available subject to the limitations of Rule 222. See Kapsouris v. Rivera.1
Historically, some lawyers have attempted to use the arbitration hearing itself as a discovery device in preparation for trial. This will not be permitted. Unless you have a good reason, you should complete all necessary discovery before the arbitration hearing. This rule results in the tension referred to above about how much discovery to undertake. This tension is greatest in relation to expert opinion. As will be seen, the written report of an expert can be admitted at the arbitration hearing without authentication if the practitioner complies with Rule 90. This will not be the case at trial. Do you spend the money to take the expert’s deposition? It’s probably not necessary to do so at the arbitration hearing. If there is a trial, the expert will have to be called unless there is a stipulation to admit the written report. Is the report enough to cross him or her on the stand? Will there really be a trial? This dilemma also occurs in relation to other Rule 90 documents. The lawyer must make a tactical decision taking into account the likelihood of going to trial, the likelihood that the expert or other witness will be needed at trial, the extent of cross examination that will be required. The decision you make will of course be influenced by where your case lies on the monetary spectrum. In any case, if you want to be sure, do all the discovery you need before the arbitration hearing.
There is a special consideration in Dupage County with regard to whether a case is likely to go to trial. Any reader of the Arbitration Quarterly is aware of the gap between relatively generous awards in injury cases made by arbitration panels and the stingy awards for which Dupage County juries are famous. For this reason, it is likely that the defense in such cases will reject the award and go to trial if the case is not settled.
At The Arbitration Hearing
For the most part, the rules of evidence apply at an arbitration hearing. Objections are made and ruled on by the panel chairperson just as the judge would at trial. The exception to the general rules of evidence is Rule 90. This rule is a handy dandy way to streamline the proceedings and get the necessary evidence to the arbitration panel quickly and inexpensively. Rule 90 says you can get various documents into evidence including expert opinion reports if you submit the documents and tell your intention to offer them into evidence to your opponent 30 days in advance of the arbitration hearing. A recent amendment to the rule requires that your Rule 90 package have a table of contents. This makes a big difference to the arbitration panel. You should have three copies, one for each arbitrator. You already will have served the Rule 90 package on opposing counsel. For expert opinions, you have to give the qualifications of the expert and comply with Rule 222. Your opponent then has the right to depose or interview the maker of any document in your Rule 90 package and call that person as a witness if he or she desires to do so.
Hearings are conducted on the second floor of the Bar Center at the corner of Manchester and County Farm, kiddy-corner from the County Complex. Get there on time or call the Arbitration Center. Be sure your clients and witnesses know where to go. You don’t want them showing up at the courthouse when they need to be at the Arbitration Center. See Local Rule 13.05 (e). If you’re 15 minutes late and don’t call, an award could be entered against your client. The panels are usually pretty reasonable but you should not test their patience.
Hearings last two hours. Sometimes a panel will let you go longer but you should be well-enough prepared so you don’t have to. Panels generally allocate the time equally between the parties. If you are late, the panel may deduct from your allocation the amount of time by which you are late. (Rule 13.05) If you want a court reporter, you have to get one yourself. If you ask for a writeup, notice must be given so that other parties can get copies. (Rule 13.05) If a hearing will take longer than two hours, ask the court in advance to set a longer time.
You should prepare for the arbitration hearing in the same way you prepare for trial. Rule 237 applies. If you want your opponent to bring anyone or anything to the hearing pursuant to that rule, be sure to send a notice. For reasons given later in this article, you should normally do a Rule 237 notice for the opposite party. Rule 90 also explicitly makes Section 2-1102 of the code of civil procedure applicable to arbitration hearings. You can do an adverse examination of the opposite party just as at trial. Be ready to give a concise opening statement.
Have your witnesses prepared and ready. The testimony of witnesses is one place in the hearing where the author has observed a lot of carelessness both on the part of the panel chairperson (rare) and the examining attorneys (frequent). The arbitration hearing is not a casual gathering where people get together and talk about the case. It is not the Peoples’ Court, Judge Judy or Judge Mathis. It is for all intents and purposes a trial and should be treated like one. The witness should be examined with leading questions on preliminary and uncontested matters. The examiner should them switch to non-leading questions and elicit those facts that are likely to be contested. The questions should be brief, pointed and simple. The examining attorney should not use legal or technical terms unless he or she is dealing with an expert. Objections should be made as at trial and ruled on by the chairperson. Examination should be well organized and easy to follow. Attorneys should avoid speaking to one another. Speak only to the chairperson or panel member as appropriate. A motion to exclude should be made where there are nonparty witnesses. It is a good idea to have the witness sit in the chair closest to the panel. These requirements are particularly important to keep an arbitration hearing from degenerating into a conversation or a People’s Court situation. Don’t forget to prove up attorneys’ fees if appropriate and costs. They form part of the arbitration award and cannot be awarded by the court later.
As a panel member, the author sometimes questions a witness if clarification on a point is needed. Naturally, panel members should avoid inserting themselves too far in the attorney’s case. Like any other trial, plaintiff goes first and rests. Defendant puts on his or her case and rests. Plaintiff has the right to rebuttal. Make sure it’s really rebuttal and not new material. Final arguments are given in the usual way. Again, clarity and concision are the watchwords. The panel then retires to consider a decision. You can leave your fax number and you will receive the award by fax. If the case is simple the arbitrators usually don’t take a lot of time deliberating. Many litigants just wait for the award.
After The Hearing
You already will have the order setting the matter in 2018 for post-arbitration status. You must appear. If there is a rejection of the award, the case will have to be set for trial. If there is no rejection, the attorney for the prevailing party must appear in order to obtain a judgment on the award. Once that happens, the judgment is like any other and may be enforced like any other. Post-judgment proceedings are conducted in Room 2018 at 8:30 a.m.
The arbitration hearing is a detour along the trial path. Frequently, the parties do not return to an actual trial from that detour. However, the cases subject to mandatory court-annexed arbitration are also subject to the constitutional right to a jury trial. Rule 93 therefore provides a right to reject the award. No reason need be given. In order to reject, you must file a notice of rejection with the clerk within 30 days of the award. You must pay a fee of $200 for awards of $30,000 or less or $500 for awards in excess of $30,000. One rejection is good for everybody. The case then proceeds to trial. As explained above, there is no more discovery absent good cause shown. If a jury demand was made in a timely manner, the case can be tried to a jury. If not, it is tried to the court.
When Can You Reject The Award?
While any party has a right to reject an award, that right is not absolute. Rule 91 governs the circumstances under which a party can be debarred from rejection. Quite a body of case law has grown up around this issue. The practitioner should familiarize him or herself with this law in advance of the arbitration hearing because the conduct of the parties at the hearing is the single most important factor in whether a rejection can be debarred. Rule 91 has two requirements for the conduct of the hearing by a party. A party must be present in person or by counsel and a party must participate in the hearing in good faith and in a meaningful manner. Let us look at these two requirements and their impact on whether a rejection of the award will be accepted by the court.
Rule 91 provides that the arbitration hearing must proceed in the absence of a party who received notice and the opposite party must present such evidence as the panel requires in order to make an award. A party who fails to appear in person or by counsel waives the right to reject the award. If judgment is entered on the award, the party who was absent still has the right to move to vacate the judgment under Section 2-1301 or 2-1401 of the code of civil procedure. If the court vacates the judgment, it may reset the matter for arbitration hearing and has discretion to impose costs and fees as a condition for granting the relief. The practitioner who finds him or herself in the unfortunate predicament of having missed the arbitration hearing should pay close attention to the procedure prescribed by this rule.
Someone Has To Show Up
A party does not necessarily have to be present at the hearing if his or her attorney is there. The First District Appellate Court has held that a subrogation plaintiff’s presentation of a Rule 90 package showing damages and adverse examination of the
defendant driver constituted good faith participation. State Farm Ins. Co. v. Harmon.2 However, a party must appear if required to do so by a Rule 237 request. Failure to do so may result in being debarred from rejecting the award. Kellett v. Roberts.3 But see State Farm Ins. Co. Inc. v. Harmon, cited above where the Rule 237 notice was held to be insufficiently clear to impose an obligation on the Plaintiff to bring its insured to the hearing. Also, if you have a good excuse for not appearing, a court can allow rejection. Johnson v. Saenz.4 In this case, the party showed up at the courthouse instead of the Arbitration Center. The court found her failure to appear was inadvertent and not a deliberate and pronounced disregard for the rules. Nationwide Mut. Ins. Co. ex rel. Mika v. Kogut5. In this subrogation case, the insurance company made reasonable efforts to have its insured driver there to testify including hiring an interpreter so she could testify in Polish. In light of these facts, the court allowed rejection. She just didn’t show up. This case also holds that a trial judge must make written findings when imposing a Rule 91 sanction. The standard of review on appeal is abuse of discretion.
On the other hand, if the court does find a deliberate and pronounced disregard, watch out. See the recent case of Anderson v. Pineda6. This case shows how Rule 91 and Rule 219 can work together. The defendant and his attorneys egregiously failed to comply with discovery before the arbitration hearing. The defendant was debarred from testifying at the arbitration hearing as a Rule 219 sanction. After the hearing resulted in an award for plaintiff, the court debarred the defendant from rejecting the award because he did not testify at the hearing. The defendant’s argument that he didn’t testify at the hearing because he was not permitted to do so did not impress the court. This case has several important lessons. First, comply with discovery requests. Second, take the arbitration hearing seriously. It is hard to believe that attorneys and litigants are still treating the arbitration hearing as if it were of no consequence after the 15 years that the program has been in existence.
If you believe your client need not be present, you can petition the court to excuse his or her appearance no less than 7 days in advance of the hearing or by stipulation if the other side agrees. (Rule 90 (g)) Defense lawyers in injury cases where liability is conceded frequently avail themselves of this rule.
Good Faith Participation
Good faith participation is a more complicated problem. The standard articulated in the case law is that the case must be subjected to the type of adversarial testing that would be expected at trial. Employer’s Consortium, Inc. v. Aaron.7 Plainly put, you should treat the arbitration hearing with the same seriousness you would treat a trial.
Rule 91 (b) provides that a unanimous finding by an arbitration panel is prima facie evidence of failure to participate in good faith or a meaningful manner. Therefore, if you believe that an opposing party has not participated in accordance with Rule 91, you should ask the panel for such a finding. The panel’s finding of lack of good faith or meaningful participation is only prima facie evidence that this is so. It is up to a court to make a final determination. Hill v. Joseph Behr and Sons,8 A court may come to the opposite conclusion. It may also find lack of good faith or meaningful participation in the absence of such a finding by the panel. Sanchez v. City of Chicago9 In that case, there is no indication that the panel made any such finding. After the panel made an award to plaintiff, the City rejected the award and filed a Rule 137 motion for sanctions. The trial court held and the Appellate Court agreed that the plaintiff had violated Rule 137 by presenting witness statements at the arbitration hearing it knew to be false. The Appellate Court reversed only the trial judge’s sanction of barring the witnesses from testifying, a sanction it found to be too harsh. It remanded with instructions to impose a more appropriate sanction.
There is also some authority that failure to participate in good faith can consist of inept preparation. State Farm Mut. Ins. Co. v. Nasser10. Several cases mention this standard including Ruback v. Doss.11 A later case severely criticizes this formulation, Nationwide Mut. Ins. Co. ex rel. Mika v. Kogut, cited above. The Nationwide Mutual case is the better-reasoned authority.
A record of the arbitration hearing frequently is necessary for an informed decision on whether there has been good faith participation. In Anderson v. Mercy,12 the court held that cross examination by the defense attorney and argument could constitute good faith participation. In the absence of a record of the proceedings showing otherwise, rejection was allowed. Frequently there will be no dispute about the relevant parts of the arbitration hearing. If so, the court can make an informed decision. If finances allow and this issue might arise, the careful lawyer might want to consider getting a court reporter for the arbitration hearing.
In the Anderson v. Mercy case, cross examination and argument on the part of the defendant were enough. In State Farm Ins. Co. v. Harmon, cited above, a Rule 90 package regarding damages and adverse examination of the defendant were enough. Be careful though, you can go too far with a minimal presentation. In Employer’s Consortium, Inc. v. Aaron, cited above, the plaintiff sued on a series of promissory notes. The plaintiff’s attorney presented no evidence to the panel, only an opening statement and the unverified complaint with the notes attached. The defendant asked for and got a finding of failure to participate in good faith and meaningful manner from the panel. Judge Lucas barred the plaintiff’s rejection of the award. The Appellate Court affirmed.
If a rejection of the award is allowed as it usually is, the case is then set for trial. The detour is over and the case proceeds as it would have were there no Mandatory Court-Annexed Arbitration. The arbitration experience is done.
As an officer of the court, the lawyer must follow the rules of procedure required by that court. The arbitration program, if conducted properly by all concerned, reaps significant benefits to the court system, the public in general and to litigants. It resolves a large number of cases less expensively and more quickly than if they stayed in the court system. It frees up judges to handle other matters. All the participants in the system need to follow the procedures set forth in the rules and the case law and take the process seriously in order to make it work as best it can.
1 319 Ill.App.3d 844 (2d Dist. 2001).
2 335 Ill.App.3d 687 (1st Dist. 2005)
3 281 Ill.App.3d 461 (2d Dist. 1996)
4 311 Ill.App.3d 693 (2d Dist. 2000)
5 2004 WL 2584912 (1st Dist.2004)
6 819 N.E.2d 1157 (1st Dist. 2004)
7 298 Ill.App.3d 187 (2d Dist. 1998)
8 293 Ill.App.3d 814 (2d Dist. 1997)
9 352 Ill.App.3d 1015 (1st Dist. 2004)
10 337 Ill.App.3d 362 (1st Dist. 2003)
11 347 Ill.App.3d 808, (1st Dist. 2004)
12 338 Ill.App.3d 685 (3d Dist. 2003)
Timothy B. Newitt was one of two French majors in his entering class at Georgetown University Law Center where he received the J.D. in 1974. He studied foreign language at Wheaton College and the University of Illinois where he received the B.A. and M.A. degrees. He is a shareholder in Johnson, Westra, Broecker, Whittaker & Newitt, P.C. where he does mostly civil litigation.