Arbitration deadline rule gets formal OK

The 1st District Appellate Court on Thursday upheld the shortened time frame the Cook County Circuit Court’s mandatory arbitration program gives parties to reject an award and demand a trial.

Since 1997, the Illinois Supreme Court has given parties 30 days to reject an award reached in a mandatory arbitration system. But in 2014, Cook County created its own program that gives parties only seven business days to object.

At issue is a lawsuit plaintiff Terrell Jones filed against State Farm Mutual Automobile Insurance Co. after the insurance company denied his stolen car claim. Jones’ case was referred to the circuit court’s mandatory arbitration program for certain commercial cases worth $75,000 or less.

The arbitrator entered an award in favor of State Farm on Dec. 2, 2016. Jones didn’t file his rejection of the award until Dec. 21. On Dec. 30, he tried to voluntarily dismiss his complaint. Then-Circuit Judge John C. Griffin ruled Jones’ rejection of the arbitration award was untimely, and that he no longer had the right to dismiss his complaint.

Jones on appeal argued the 30-day time limit codified in Supreme Court Rule 93 overrode Cook County’s seven business day window. But the 1st District panel found that the Illinois Supreme Court has the authority to approve programs that contradict its own rules. Additionally, the high court signed off on the Cook County program twice, in 2014 and 2016, and both times, it took no issue with the seven-day window.

“The [S]upreme [C]ourt, in that 2016 order, could have directed Cook County to follow the Illinois Supreme Court rules directly, or to adopt rules that were consistent with the relevant [S]upreme [C]ourt rules to the letter,” Justice David W. Ellis wrote.

“If the [S]upreme [C]ourt had been concerned with the fact that certain of these local rules were inconsistent with the [S]upreme [C]ourt mandatory arbitration rules, it defies belief that the court would have passed on the opportunity to say so at that time.”

This is the third time since February the 1st District panel has ruled on similar challenges to the Cook County Circuit Court’s mandatory arbitration program, said Florence M. Schumacher, a senior associate at Sudekum, Cassidy & Shulruff Chtd. who represented State Farm on appeal.

The prior two cases — Maura Ann McBreen v. Mercedes-Benz USA LLC, et al., 2018 IL App (1st) 171415-U and Magic Island Daycare Inc., et al. v. Chateau Elite LLC, et al., 2018 IL App (1st) 172303-U — were adjudicated through Rule 23 orders.

“I think the court felt there needed to be some finality on this issue, because they felt it could potentially become a repeating issue,” Schumacher said.

The seven-business day window is codified in Cook County Circuit Court Rule 25.11. That rule also prohibits parties from withdrawing their lawsuits if they failed to reject an arbitration award within seven business days, which is another aspect Jones challenged on appeal.

Jones argued that local Rule 25.11 is trumped by Section 2-1009 of the Illinois Code of Civil Procedure, which allows parties to dismiss their lawsuits at any point. While local court rules cannot contradict state statutes, the Illinois Supreme Court’s “authority over court procedure supersedes any conflicting statutory provision on the same subject,” Ellis wrote.

“It makes no difference whether the [S]upreme [C]ourt exercised its authority to adopt a rule of its own on this subject or whether, as here, it entered an order approving a local rule on that subject. The [S]upreme [C]ourt’s word in this regard is the final one,” Ellis continued.

Ellis added that going along with Jones’ argument would render the mandatory arbitration program worthless, as any party could voluntarily dismiss their lawsuit — and thus, dodge the consequences of an adverse arbitration award — at any time.

“The traditional rule of waiver for failure to timely reject would have no teeth, easily thwarted by a non-suiting of the action,” Ellis wrote. “It would also render the process quite one-sided, as a disappointed plaintiff would possess a statutory ‘out’ to avoid an unfavorable arbitration award while leaving a defendant — having no similar ability to voluntarily dismiss — without the same option. When the [S]upreme [C]ourt approved these local rules, we cannot imagine it would have countenanced such a result.”

State Farm denied Jones’ stolen vehicle claim “based on what it alleged to be intentional misrepresentations and concealments made by plaintiff concerning the claim.” The panel in its opinion did not state what kind of award State Farm won at arbitration.

State Farm was also represented by Frederick J. Sudekum III of Sudekum, Cassidy & Shulruff. Schumacher said both her firm and State Farm are satisfied with the appellate court’s decision.

“I felt the issue was straight forward because of the Supreme Court approval of the rule. I think the reason why they issued an opinion in our case was to have some finality on this issue, to have some binding precedent on the issue,” she said.

Jones was represented by Michael O’Malley Kurtz of Kurtz & Augenlicht LLP. He did not return a request for comment.

Justices Eileen M. O’Neill Burke and Robert E. Gordon concurred with the opinion.