Author Archives: javelin

Many Companies Include Arbitration Provisions in their Contracts with their Customers, Employees and Franchisees

Many companies include arbitration provisions in their contracts with their customers, employees and franchisees. Most of these provisions, which benefit customers and businesses alike, require that arbitration be conducted on an individual basis, expressly precluding arbitrators from conducting class arbitrations. The plaintiffs’ class action bar has successfully contravened the policy of the Federal Arbitration Act (FAA), which favors enforcement of arbitration agreements, by attacking class waivers under state law.

In AT&T Mobility v. Concepcion (No. 09-893), however, the United States Supreme Court held on April 27, 2011 that the FAA preempts state-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives, requiring the cases involved to be arbitrated individually as opposed to in a class-wide arbitration. The 5-4 decision written by Justice Scalia, is an important victory for anyone opposing class-wide arbitrations.

Is Binding Arbitration Really Binding in Illinois?

In a recent Illinois Appellate Court case, the Second District determined that a party could seek reconsideration from the arbitrator regarding a binding arbitration award where the arbitration agreement entered into by the parties did not spell out when the binding arbitration award would be final. In Smola v. Greenleaf Orthopedic Associates, S.C., et al., 2012 IL App (2d) 111277, the arbitration agreement between the plaintiff and the defendant did not note there was finality of the arbitrator award once provided, and the plaintiff sought reconsideration of the arbitrator’s award against him before the Trial Court confirmed the award. Pursuant to a motion by the defendant, and noting that the Illinois Uniform Arbitration Ace (“Act”) was silent as to whether there could be reconsideration, the Trial Court denied plaintiff’s request for reconsideration by the arbitrator. The Second District Appellate Court reversed stating that since the Act was silent, and the parties did not note a specific agreement as to the “finality” of any award, the arbitrator should have been allowed to determine whether his award was final or capable of being “reconsidered.”

Tip for practitioner: The result in the Smola case may have been averted by providing verbiage in the arbitration agreement noting the arbitrator’s award to be final.

This decision may be found at:
http://www.state.il.us/court/Opinions/AppellateCourt/2012/2ndDistrict//2111277.pdf