Arbitration Law Mark Rouleau Alternative Dispute Resolution Arbitration

Arbitration Law Mark Rouleau© Alternative Dispute Resolution: Arbitration and Mediation Issues Chicago - February 11, 2011 Civil Practice Section

Overview n Why this is important to us n Increase in Arbitration n Financial Industry Regulatory Authority (FINRA) n There was an increase of 43% in filings between 2008 and 2009.

Overview n Why this is important to you n Increase in Arbitration

Overview n Why this is important to you n Bureau of Labor Statistics

Overview n Occupational Handbook 2010 Job Outlook

Overview

Overview

Overview n US Bureau of Labor Statistics n The Chicago – Naperville – Joliet MSA is the 3 rd highest paying metropolitan areas n Illinois is the 3 rd highest paying states n Illinois is not in the top 5 states for highest concentration of arbitrators n Chicago – Naperville – Joliet MSA is not in the top 5 states for highest concentration of arbitrators BLS Occupational Employment and Wages, May 2009 23 -1022 Arbitrators, Mediators, and Conciliators

Overview n Good News n Arbitration is going to continue to increase n More arbitration jobs will be available in Illinois & Chicagoland

Overview n Why else is this important to us? n Commercial clients will continue to demand ways to reduce litigation expenses.

Overview n Bad News n Arbitrators make less than judges n Arbitrations can be outsourced jury trials can’t n Some jurisdictions allow non-lawyers represent parties in arbitration § Ohio Industrial Commission 70% of the time parties are represented by lay representatives. Cleveland Bar Assn. v. Comp. Management, Inc. (2004), 104 Ohio St. 3 d 168 (not UPL). n Claims adjusters in UM & UIM

Overview n Bad News n Foreign attorneys n An out-of-state attorney's representation of a client in an arbitration in Illinois does not violate the rules prohibiting the unauthorized practice of law. Colmar, Ltd. v. Fremantlemedia North America, Inc. , (Ill. App. 1 Dist. 2003) 801 N. E. 2 d 1017, 344 Ill. App. 3 d 977.

Overview n Bad News n Forum Rules can circumvent UPL § AAA Commercial Arbitration Rule R-26 (Jan. 1, 2003) ("Any party may be represented by counsel or other authorized representative"). Alexander v. Gardner --Denver Co. , 415 U. S. 36, 57 -58, 94 S. Ct. 1011, 1024, 39 L. Ed. 2 d 147, 163 (1974)

Overview n Bad News n Arbitration forums can be offshore Brooke Group Ltd. v. JCH. Synidcate, 87 N. Y. 2 d 530, 640 N. Y. S. 2 d 479, 663 N. E. 2 d 635 (1996); Whirlpool Corp. v. Certain Underwriters at Lloyd's of London, 278 Ill. App. 3 d 175, 214 Ill. Dec. 901, 662 N. E. 2 d 467 (1996); In re Delta Am. Re Ins. Co. , 900 F. 2 d 890 (6 th Cir. ), cert. denied, 498 U. S. 890, 111 S. Ct. 233, 112 L. Ed. 2 d 193 (1990); and Mc. Dermott Int'l Inc. v. Lloyd's Underwriters of London, 944 F. 2 d 1199 (5 th Cir. 1991).

Overview n Bad News n Due Process is questionable n The arbitration system is essentially structured without due process, rules of procedure, rules of evidence, or any appellate procedure--thus, while certain acts might present a serious issue in trial court proceedings, they may be of no consequence in arbitration proceedings. Hawrelak v. Marine Bank Springfield, 316 Ill. App. 3 d 175, 181, 249 Ill. Dec. 241, 735 N. E. 2 d 1066 (2000).

Overview n Bad News n Due Process is questionable n “'Parties should be aware that they get what they bargain for and that arbitration is far different from adjudication’”; Tim Huey Corp. v. Global Boiler & Mechanical, Inc. , 272 Ill. App. 3 d 100, 111, 208 Ill. Dec. 697, 649 N. E. 2 d 1358 (1995), quoting Stroh Container Co. v. Delphi Industries, Inc. , 783 F. 2 d 743, 751 n. 12 (8 th Cir. 1986)

Overview n Bad News n Due Process is questionable n Arbitration is a substitute for a court proceeding and form of settlement for litigation, but not a trial; the purpose of arbitration is the disposition of litigation in an easier, quicker, and more economical manner than by litigation; to hold that arbitration was equivalent to a trial or hearing would extend the meaning of those terms beyond their intended meaning and would be contrary to the purpose of arbitration. Perez v. Leibowitz, 215 Ill. App. 3 d 900, 902 -03, 159 Ill. Dec. 487, 576 N. E. 2 d 156 (1991)

Overview n Bad News n Due Process is questionable - NAF debacle n n The NAF held itself out to the public, courts and consumers as a neutral third party arbitration service. In fact the NAF is closely tied to the credit and debt collections industries. Specific allegations against the NAF include: § The NAF conspired with several major creditors to mandate binding arbitration clauses in the term and condition of sale in standard consumer contracts to eliminate consumer access to the court system. § The NAF concealed its link to the credit agencies through extensive affirmative representations, material omission and complex and opaque corporate structuring. § The NAF and co-defendants have profited unfairly from this biased process. (See, Complaint State of Minnesota v. National Arbitration Forum http: //www. ag. state. mn. us/PDF/Press. Releases/Signed. Filed. Complaint. Arbitration. C ompany. pdf; see also In re: National Arbitration Forum Trade Practices Litigation, Civil No. 09 -1939 (MDL USDC Minn. )

Overview Reprinted with permission of Alex Steuart Williams Author of "Lawyers Uncovered“ & "101 Ways to Leave the Law"

Overview n Pre-dispute Arbitration Clauses are everywhere n n n n lease contracts credit card contracts warranty contracts motor vehicle financing agreements home remodeling contracts mortgage loan agreements rebate offers satellite television service agreements video rental agreements real estate purchase agreements wireless telephone service agreements long distance telephone service agreements employment contracts computer purchase agreements software license agreements

Overview n. Any contractual transaction can be the subject of mandatory contractual arbitration.

Overview n. The likelihood of a client of yours being required to arbitrate a dispute is GREAT

Overview n Death of Consumer Class Actions? n Stolt-Nielsen SA v. Animalfeeds International, 130 S. Ct. 1758 (2010)

Statutory Law n The Federal Arbitration Act (9 USC § 1 -14) n Interstate Commerce n Purpose n Congress enacted the FAA to replace judicial indisposition to arbitration with a ‘national policy favoring it and placing arbitration agreements on equal footing with all other contracts. Hall Street Associates, L. L. C. v. Mattel, Inc. , 128 S. Ct. 1396, 1402 (2008)

Statutory Law n The Federal Arbitration Act (9 USC § 1 -14) n Arbitration Contracts on equal footing n n “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. ” 9 USC § 2 Attacks on an arbitration clauses must be based on a principle that applies equally to all contracts

Statutory Law n Uniform Arbitration Act (Illinois 710 ILCS 5/1 -23) n Subject to Federal Supremacy n n No express preemption provision n n Preston v. Ferrer, 2008, 128 S. Ct. 978, 169 L. Ed. 2 d. 917 Carter v. SSC Odin Operating Co. , LLC, (Ill. 2010) 927 N. E. 2 d 1207, 237 Ill. 2 d 30 No congressional intent to occupy the entire field of arbitration. n Carter v. SSC Odin Operating Co. , LLC, (Ill. 2010) 927 N. E. 2 d 1207, 237 Ill. 2 d 30

Statutory Law - Comparison The Federal Arbitration Act (9 USC § 10) Vacate awards only if (1) “procured by corruption, fraud, or undue means; ” (2) “evident partiality” is present in one or more of the arbitrators; (3) “the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced”; or (4) “the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. ” (9 USC § 10) Uniform Arbitration Act (710 ILCS 5/12 ) (1) The award was procured by corruption, fraud or other undue means; (2) There was evident partiality by an arbitrator appointed as a neutral or corruption in any one of the arbitrators or misconduct prejudicing the rights of any party; (3) The arbitrators exceeded their powers; (4) The arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of Section 5, as to prejudice substantially the rights of a party; or (5) There was no arbitration agreement and the issue was not adversely determined in proceedings under Section 2 and the party did not participate in the arbitration hearing without raising the objection; but the fact that the relief was such that it could not or would not be granted by the circuit court is not ground for vacating or refusing to confirm the award.

Statutory Law - Comparison n Illinois has 5 th ground n “There was no arbitration agreement and the issue was not adversely determined in proceedings [in the Circuit Court to compel or stay arbitration] and the party did not participate in the arbitration hearing without raising the objection. ” (710 ILCS 5/2) n Federal might say – exceeded the scope of the agreement

General Principles n Scope of Arbitration n Pre-dispute Arbitration Clauses are creature of the parties n n Stolt-Nielsen SA v. Animalfeeds International, 130 S. Ct. 1758; Bahuriak v. Bill Kay Chrysler Plymouth, Inc. , (Ill. App. 2 Dist. 2003) 786 N. E. 2 d 1045, 337 Ill. App. 3 d 714; Salsitz v. Kreiss, 198 Ill. 2 d 1, 13, 260 Ill. Dec. 541, 761 N. E. 2 d 724 (2001) Parties are only required to arbitrate those issues that clear language of agreement, unextended by construction or implication, shows they have agreed to arbitrate. n Peterson v. Residential Alternatives of Illinois, Inc. , App. 3 Dist. 2010, 342 Ill. Dec. 110, 932 N. E. 2 d 1

General Principles n Scope of Arbitration n General All Encompassing Clauses “any dispute” n Agreements which provide that all claims "arising out of, or relating to" the agreement shall be settled in arbitration, are obligated to arbitrate any dispute that arises under agreement. § Ryan v. Kontrick, App. 1 Dist. 1999, 237 Ill. Dec. 588, 304 Ill. App. 3 d 852, 710 N. E. 2 d 11, rehearing denied, appeal denied 242 Ill. Dec. 150, 185 Ill. 2 d 666, 720 N. E. 2 d 1105, on remand 2001 WL 35836700; Donaldson, Lufkin, & Jenrette Futures, Inc. v. Barr, 124 Ill. 2 d 435, 447 -48, 125 Ill. Dec. 281, 530 N. E. 2 d 439 (1998); Caudle v. Sears, Roebuck & Co. , 245 Ill. App. 3 d 959, 963, 185 Ill. Dec. 627, 614 N. E. 2 d 1312 (1993)

General Principles n Scope of Arbitration n Who Decides – Gatekeeping n In Illinois, when the language of an arbitration clause is broad the question should initially be decided by the arbitrator. § Nagle v. Nadelhoffer, Nagle, Kuhn, Mitchell, Moss and Saloga, P. C. , App. 2 Dist. 1993, 184 Ill. Dec. 304, 244 Ill. App. 3 d 920, 613 N. E. 2 d 33 n This issue of may be waived § Salsitz v. Kreiss, 198 Ill. 2 d 1 at 17, 13, 260 Ill. Dec. 541, 761 N. E. 2 d 724 (2001); Anderson v. Golf Mill Ford, Inc. 383 Ill. App. 3 d 474, 322 Ill. Dec. 104, 890 N. E. 2 d 1023 (2008)

General Principles n Scope of Arbitration n Who Decides – Gatekeeping n Federal cases indicate that under certain circumstances the court may serve as a gatekeeper to determine the issues which are subject to the arbitration. § Rent-a-Center v. Jackson, 130 S. Ct. 2772 (2010); Granite Rock Co. v. Teamsters, 130 S. Ct. 2847 (2010); and Stolt-Nielsen SA v. Animalfeeds International, 130 S. Ct. 1758

General Principles n Scope of Arbitration n Who Decides – Gatekeeping n Unenforceable Contract vs. Unenforceable Arbitration Clause § There are two types of validity challenges under § 2 § One type challenges arbitration clause § The other challenges the contract as a whole (e. g. , the agreement was fraudulently induced), or on the ground of illegality rendering the whole contract invalid.

General Principles n Scope of Arbitration n Who Decides – Gatekeeping n Where the attack is directed to the “arbitration clause” it is decided by the court. § Rent-a-Center v. Jackson, 130 S. Ct. 2772 (2010) n Where the attack is against the entire contract it must be decided by an arbitrator § Rent-a-Center v. Jackson, 130 S. Ct. 2772 (2010)

General Principles n Who is bound to arbitrate? n Persons who are not parties to an arbitration agreement cannot be compelled to participate in arbitration n n Mid-America Regional Bargaining Association v. Modern Builders Industrial Concrete Co. (1981), 101 Ill. App. 3 d 83, 86, 56 Ill. Dec. 606, 427 N. E. 2 d 1011 Third parties and estates are not bound in wrongful death claims n Curto v. Illini Manors (3 rd Dist. December 7, 2010, Doc. 3 -10 -0260)

Forum Selection & Rules n Pre-dispute arbitration clauses may designate a specific arbitration forum n (i. e. , American Arbitration Association, National Arbitration Forum etc. ) n Defunct Specified Forum n A designated forum is integral to agreement to arbitrate. n It is appropriate to refuse to compel arbitration where the forum no longer exists. n Carr v. Gateway, Inc. , (Ill. S. Ct. Feb. 3, 2011. ) Doc. 109485

Forum Selection & Rules n Forum’s Rules & Remedies n Punitive Damages n National Association of Securities Dealers (NASD replaced by Financial Industry Regulatory Authority (FINRA)) § NASD arbiter ’s manual provides for the consideration of punitive damages. § Choice-of-law provision stated New York law would govern § New York law prohibited arbitrators from awarding punitive damages n The US Supreme Court held the forum’s rules were followed allowing the award of punitive damages to stand. Mastrobuono v. Shearson Lehman Hutton, Inc. , 514 U. S. 52 (1995). § See also Cerajewski v. Kunkle, App. 1 Dist. 1996, 220 Ill. Dec. 786, 285 Ill. App. 3 d 222, 674 N. E. 2 d 57, rehearing denied, appeal denied 223 Ill. Dec. 193, 172 Ill. 2 d 548, 679 N. E. 2 d 378.

Forum Selection & Rules n Forum’s Rules & Remedies n Jurisdiction & Venue n Jurisdiction to confirm award governed by American Arbitration Association rules § Idea Nuova Inc v. Gm Licensing Group Inc, 617 F. 3 d 177 (2 nd Cir. , 2010); see also Daihatsu Motor Co. , Ltd. v. Terrain Vehicles, Inc. , 13 F. 3 d 196 (C. A. 7 (Ill. ), 1994); See also L. R. Foy Construction Co. v. Dauley, 547 F. Supp. 166 (D. Kan. 1982) n Locale – Venue § The AAA rules for determining the locale hearings is binding on the parties and courts. § Stancioff v. Hertz, 10 Mass. App. Ct. 843, 406 N. E. 2 d 1318 (1980)

Conduct of the Hearings n Rules of procedure, evidence or discovery of legal proceedings are optional. n Christian Dior, Inc. v. Hart Schaffner & Marx, App. 1 Dist. 1994, 202 Ill. Dec. 7, 265 Ill. App. 3 d 427, 637 N. E. 2 d 546, appeal denied 205 Ill. Dec. 158, 157 Ill. 2 d 497, 642 N. E. 2 d 1275. Drinane v. State Farm Mut. Auto. Ins. Co. , 1992, 180 Ill. Dec. 104, 153 Ill. 2 d 207, 606 N. E. 2 d 1181. n Examination & Investigation - an arbitrator has right to ask questions, including leading questions. n Saville Intern. , Inc. v. Galanti Group, Inc. , App. 1 Dist. 1982, 63 Ill. Dec. 578, 107 Ill. App. 3 d 799, 438 N. E. 2 d 509. n Forum can establish it’s own rules of procedure n See, Mastrobuono v. Shearson Lehman Hutton, Inc. , 514 U. S. 52 (1995) (punitive damages)

Conduct of the Hearings n American Arbitration Association Rules http: //www. adr. org/sp. asp? id=22440 n Biased Nature of Arbitrator’s Jurisdiction n Hourly Basis Incentive to Keep Case

Awards – Enforcement or Challenge n Enforcement n FAA anytime within one (1) year n n (9 U. S. C. § 9) Illinois anytime n 710 ILCS 5/11; United Steelworkers of America, AFL-CIO-CLC v. Danly Mach. Corp. , N. D. Ill. 1987, 658 F. Supp. 736. n Challenge n FAA must file and serve motion within 90 days n n n 9 U. S. C. § 6. Health Servs. Mgmt. Corp. v. Hughes, 975 F. 2 d 1253, 1257 -58 (7 th Cir. 1992) This applies to counterclaims as well Illinois must file to vacate within 90 days n Hough v. Howington, App. 1 Dist. 1993, 193 Ill. Dec. 877, 254 Ill. App. 3 d 452, 627 N. E. 2 d 36.

Awards – Enforcement or Challenge n Basis for Challenging Award n Burden of Proof n On the party seeking to vacate. § First Health Group Corp. v. Ruddick, App. 1 Dist. 2009, 331 Ill. Dec. 971, 393 Ill. App. 3 d 40, 911 N. E. 2 d 1201. n By clear, strong, and convincing evidence. § In re Raymond Professional Group, Inc. , Bkrtcy. N. D. Ill. 2008, 397 B. R. 414, supplemented 400 B. R. 621. improper.

Awards – Enforcement or Challenge n Basis for Challenging Award n Burden of Proof "[W]herever possible" uphold the award. Salsitz v. Kreiss, 198 Ill. 2 d 1, 13, 260 Ill. Dec. 541, 761 N. E. 2 d 724 (2001); see also Anderson v. Golf Mill Ford, Inc. 383 Ill. App. 3 d 474, 479, 322 Ill. Dec. 104, 890 N. E. 2 d 1023 (2008)

Awards – Enforcement or Challenge n Basis for Challenging Award n Burden of Proof Presume that arbitrator did not exceed their authority. n Galasso v. KNS Companies, Inc. , 364 Ill. App. 3 d 124, 130, 300 Ill. Dec. 968, 845 N. E. 2 d 857 (2006); Herricane Graphics v. Blinderman Construction Co. , 354 Ill. App. 3 d 151, 155, 289 Ill. Dec. 843, 820 N. E. 2 d 619 (2004).

Awards – Enforcement or Challenge n Basis for Challenging Award n Burden of Proof Extraordinary circumstances are necessary to overturn an arbitration award. First Health Group Corp. v. Ruddick, (Ill. App. 1 Dist. 2009) 911 N. E. 2 d 1201, 393 Ill. App. 3 d 40.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (1) The award was procured by corruption, fraud or other undue means;

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (1) The award was procured by corruption, fraud or other undue means; Ex parte contact creates a presumption of fraud, corruption, or other undue means. Rosenthal-Collins Group, L. P. v. Reiff, App. 1 Dist. 2001, 254 Ill. Dec. 783, 321 Ill. App. 3 d 683, 748 N. E. 2 d 229.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (2) There was evident partiality by an arbitrator appointed as a neutral or corruption in any one of the arbitrators or misconduct prejudicing the rights of any party; § Award size is insufficient to establish evident partiality. § Sweet v. Steve's Cartage Co. , App. 3 Dist. 1977, 8 Ill. Dec. 724, 51 Ill. App. 3 d 913, 365 N. E. 2 d 1110

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (2) There was evident partiality by an arbitrator appointed as a neutral or corruption in any one of the arbitrators or misconduct prejudicing the rights of any party; § Arbitrator’s retracted comment is insufficient. § Del Bianco Associates, Inc. v. Adam, App. 1972, 6 Ill. App. 3 d 286, 285 N. E. 2 d 480, certiorari denied 93 S. Ct. 1421, 410 U. S. 955, 35 L. Ed. 2 d 688.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (2) There was evident partiality by an arbitrator appointed as a neutral or corruption in any one of the arbitrators or misconduct prejudicing the rights of any party; § Illogical or inconsistent decision is insufficient. § Perkins Restaurants Operating Co. , L. P. v. Van Den Bergh Foods Co. , App. 1 Dist. 1995, 212 Ill. Dec. 740, 276 Ill. App. 3 d 305, 657 N. E. 2 d 1085.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (2) There was evident partiality by an arbitrator appointed as a neutral or corruption in any one of the arbitrators or misconduct prejudicing the rights of any party; § Financial Interest in subject of dispute is sufficient. § In re Heirich, 1956, 10 Ill. 2 d 357, 140 N. E. 2 d 825.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Deciding matters not submitted § Himco Systems, Inc. v. Marquette Electronics, Inc. , App. 1 Dist. 1980, 41 Ill. Dec. 515, 86 Ill. App. 3 d 476, 407 N. E. 2 d 1013.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Scope governed by the agreement § Cook County v. American Federation of State, County and Mun. Employees, Dist. Counsel 31, Local 3315, AFL-CIO, App. 1 Dist. 1998, 229 Ill. Dec. 304, 294 Ill. App. 3 d 985, 691 N. E. 2 d 777, appeal denied 232 Ill. Dec. 846, 178 Ill. 2 d 574, 699 N. E. 2 d 1031.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Joinder or Consolidation without written consent § Ure v. Wangler Const. Co. , Inc. , App. 1 Dist. 1992, 173 Ill. Dec. 785, 232 Ill. App. 3 d 492, 597 N. E. 2 d 759.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Class Arbitration where agreement is silent § Stolt-Nielsen SA v. Animalfeeds International, 130 S. Ct. 1758

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Failure to award Attorney Fees where mandated § Spencer v. Ryland Group, Inc. , App. 1 Dist. 2007, 309 Ill. Dec. 938, 372 Ill. App. 3 d 200, 865 N. E. 2 d 301, appeal denied 314 Ill. Dec. 837, 225 Ill. 2 d 677, 875 N. E. 2 d 1124.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Deciding issues not raised, briefed, or argued § Rauh v. Rockford Products Corp. , App. 1 Dist. 1990, 147 Ill. Dec. 73, 201 Ill. App. 3 d 361, 559 N. E. 2 d 73, appeal allowed 149 Ill. Dec. 336, 133 Ill. 2 d 572, 561 N. E. 2 d 706, affirmed in part, reversed in part 158 Ill. Dec. 523, 143 Ill. 2 d 377, 574 N. E. 2 d 636

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Demand for arbitration untimely § Country Mut. Ins. Co. v. National Bank of Decatur, App. 1969, 109 Ill. App. 2 d 133, 248 N. E. 2 d 299.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Punitive Damages § Express Agreement or Stipulation § Edward Elec. Co. v. Automation, Inc. , App. 1 Dist. 1992, 171 Ill. Dec. 13, 229 Ill. App. 3 d 89, 593 N. E. 2 d 833, appeal denied 176 Ill. Dec. 796, 146 Ill. 2 d 625, 602 N. E. 2 d 450.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Punitive Damages § Forum Rules – consideration of punitive damages § Cerajewski v. Kunkle, App. 1 Dist. 1996, 220 Ill. Dec. 786, 285 Ill. App. 3 d 222, 674 N. E. 2 d 57, rehearing denied, appeal denied 223 Ill. Dec. 193, 172 Ill. 2 d 548, 679 N. E. 2 d 378.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Manifest Disregard of the Law § Illinois – requires that the arbitrators deliberately disregarded what they knew to be the law. § First Health Group Corp. v. Ruddick, App. 1 Dist. 2009, 331 Ill. Dec. 971, 393 Ill. App. 3 d 40, 911 N. E. 2 d 1201.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Manifest Disregard of the Law § Federal – Questionable viability after Hall Street Associates, L. L. C. v. Mattel, Inc. , 128 S. Ct. 1396 (2008) which limited basis to those in the statute. Stolt-Nielsen SA v. Animalfeeds International, 130 S. Ct. 1758 (2010) refused to consider if it continued after Hall Street.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (3) The arbitrators exceeded their powers; n Broad Clause “any and all disputes” § Himco Systems, Inc. v. Marquette Electronics, Inc. , App. 1 Dist. 1980, 41 Ill. Dec. 515, 86 Ill. App. 3 d 476, 407 N. E. 2 d 1013.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (4) The arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of Section 5, as to prejudice substantially the rights of a party; or

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (4). . . refused to hear evidence. . . n Excluded evidence – must be of record § Johnson v. Baumgardt, App. 2 Dist. 1991, 159 Ill. Dec. 846, 216 Ill. App. 3 d 550, 576 N. E. 2 d 515; and Canteen Corp. v. Former Foods, Inc. , App. 1 Dist. 1992, 179 Ill. Dec. 342, 238 Ill. App. 3 d 167, 606 N. E. 2 d 174, appeal denied 183 Ill. Dec. 16, 148 Ill. 2 d 640, 610 N. E. 2 d 1260.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (5) There was no arbitration agreement and the issue was not adversely determined in proceedings under Section 2 and the party did not participate in the arbitration hearing without raising the objection; but the fact that the relief was such that it could not or would not be granted by the circuit court is not ground for vacating or refusing to confirm the award.

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (5). . . no arbitration agreement and the issue was not adversely determined in proceedings. . . [to compel arbitration]. . . and the party did not participate in the arbitration hearing without raising the objection n Can be waived – objection must be timely § Salsitz v. Kreiss, 198 Ill. 2 d 1 at 17, 13, 260 Ill. Dec. 541, 761 N. E. 2 d 724 (2001); Anderson v. Golf Mill Ford, Inc. 383 Ill. App. 3 d 474, at 479, 322 Ill. Dec. 104, 890 N. E. 2 d 1023 (2008).

Awards – Enforcement or Challenge n Basis for Challenging Award n Illinois - 710 ILCS 5/12 UNIFORM ARBITRATION ACT (5). . . no arbitration agreement and the issue was not adversely determined in proceedings. . . [to compel arbitration]. . . and the party did not participate in the arbitration hearing without raising the objection n Is not a basis under the FAA

Awards – Enforcement or Challenge n Illinois n n Petition to Vacate file within 90 days Enter judgment anytime n Federal n n Petition to Vacate serve within 90 days Enter judgment within one (1) year

Class Action Developments n Silent Agreement n Federal – questionable Stolt-Nielsen SA v. Animalfeeds International, 130 S. Ct. 1758 n Several Circuits & other states – find does not apply to consumer cases See, Fensterstock v. Education Finance Partners, 611 F. 3 d 124 - Court of Appeals, (2 nd 2010); and Brewer v. Mo. Title Loans Inc (Mo. , 2010, No. SC 90647). n State – still good in Illinois and many other states n Kinkel v. Cingular Wireless, LLC, 223 Ill. 2 d 1, 306 Ill. Dec. 157, 857 N. E. 2 d 250 (2006); see also Keefe v. Allied Home Mortg. Corp. , (Ill. App. 5 Dist. 2009) 912 N. E. 2 d 310, 332 Ill. Dec. 124.

Class Action Developments n Does Federal Arbitration Act preempt states from conditioning the enforcement of an arbitration agreement on the availability of class-wide arbitration? n United States Supreme Court in AT&T Mobility v. Concepcion, 09 -839, which was argued on November 9 th 2010. See http: //www. scotusblog. com/case-files/cases/att -mobility-v-concepcion/

Class Action Developments n Theories n Forum Rules n n State Law n n n AAA has extensive rules and decisional law for class actions Unconscionability Statutory Enactments Contract n Contract is not truly silent because it adopts state law and forum rules

Class Action Developments n Consequences n Disputes are not subject to arbitration n Any contract based relationship can be shielded from class action treatment n Costs of arbitrating has increased n Time involved in arbitration has increased

Other Developments n Biased Forums, Rules & Procedures n NAF indictment n n n Collection lawyers (firms), accountants & banks (credit card companies) allegedly owned NAF Agreements of the Banks required arbitration in NAF American Arbitration Association n n Ceased accepting new consumer cases Has reviewed its procedures and added new protocols for consumers

Other Developments n Unavailability of Forum n Integral or Ancillary to Agreement n n n Where the agreement expressly calls for hearing by a specific forum it is integral. Carr v. Gateway, Inc. , (Ill. S. Ct. Feb. 3, 2011. ) Doc. 109485. Merely calls for rules of forum to apply it ancillary. Carr v. Gateway, Inc. , (Ill. S. Ct. Feb. 3, 2011. ) Doc. 109485. Where agreement calls for current rules n Question if forum no longer accepts cases does it have current rules? § Unanswered by Carr.

Questions

Thank You. Mark A. Rouleau 4777 E. State St. , Unit #7 Rockford, Illinois 61108 (815) 229 -7246 rouleau-law. com