UTAH LEGISLATURE WATCH: TORTIOUS ACT ARBITRATION (S.B. 52)
One of my goals with the “Practice Pointers” section of Black’s Blawg is to look at bills passed by the 2011 Utah Legislature. I’ve already looked at bills dealing with Negligent Credentialing and Expedited Jury Trials. Now I’ll examine S.B. 52, Tortious Act Arbitration.
This bill is patterned after U.C.A. § 31A-22-321, which establishes procedures for arbitration in third-party automobile accident cases. Tim Dalton Dunn and I recently wrote an article examining these so-called “321 Arbitrations” for the Utah Trial Journal. As initially introduced, S.B. 52 mirrored U.C.A. §31A-22-321. Opposition from the insurance lobby, however, resulted in a number of amendments. As enacted, the bill has the following provisions:
- It creates a new chapter in U.C.A. Title 78B, § 78B-10a-101 et seq., to promoted arbitration in torts cases.
- The act does not extend to automobile accident case, medical malpractice cases, or cases involving governmental liability claims (all of these types of cases have their own procedures). It only applies to personal injury or property damage claims resulting from tortuous conduct.
- Like Subsection 321, before entering the arbitration process, the plaintiff must file a lawsuit. A notice to submit the claim to arbitration must be filed within 14 days of the complaint being answered.
- Unlike Subsection 321, both parties must either agree or refuse to move the case into the arbitration process (in Subsection 321, once the plaintiff files a notice to submit the case to arbitration, the case automatically moves into arbitration). Approval must take place within 30 days of the notice of arbitration being filed. If both parties agree to the arbitration, the following provisions apply:
- (A) No punitive damages can be sought, even if the case is later resolved via trail de novo.
- (B) Either party may rescind the agreement to arbitrate within 90 days after the agreement to arbitrate is entered. The decision to rescind cannot be made less than 30 days before the scheduled arbitration hearing.
- Unless otherwise agreed upon by the parties in writing, all discovery will be completed within 150 days after the date arbitration is elected and agreed upon. In addition, the Utah Rules of Civil Procedure and Utah Rules of Evidence will be applied, with the intent of concluding the claim in a timely and cost-efficient manner. Dispositive motions will be filed, heard and decided by the district court prior to the arbitration hearing, rather than by the arbitrator(s).
- The arbitration hearing shall be heard by a single arbitrator, agreed upon by the parties. If the parties cannot agree on a single arbitrator, a panel of three arbitrators shall hear the case. Each party shall choose one arbitrator, and these arbitrators shall choose the third member of the panel. The fees for the arbitrator(s) shall be shared equally by the parties.
- Either party may request a trial de novo once an arbitration award has been entered. Such a request must be filed within 20 days after service of the arbitration award. This request may also include a request for a jury trial. Upon the filing of a trial de novo request, an additional 90 days of discovery time will be allowed.
- In the trial de novo, the moving party must improve his or her position by at least 30%, or else they are responsible for the other party’s attorney fees and costs, up to $6,000.00. In other words, if the plaintiff is the moving party, the verdict at trial must be at least 30% greater than the arbitration award. If the defendant is the moving party, the verdict must be at least 30% less than the arbitration award.
- If the court determines that the moving party has used the trial de novo in bad faith, the court may award reasonable attorney fees and costs to the non-moving party.
- If the plaintiff is the moving party in the trial de novo process, the verdict may not exceed $50,000.00. If the defendant is the moving party, the total verdict at trial may not exceed $15,000.00 above the available limits of the insurance policy, up to a maximum of $65,000.00.
Neophyte Lawyer’s Thoughts
Many attorneys, both plaintiff and defense, are reluctant to opt for the arbitration process. Many fear that arbitrators may fall prey to the “repeat player” syndrome. In other words, individual plaintiffs are likely to require the services of an arbitrator only once in their lives, while defendant insurance companies may have several arbitrations per year. This means that arbitrators might have a financial incentive to grant favorable arbitration awards to the defendants, as they will be hired more often by the defendants than by plaintiffs.
I have yet to see any hard evidence that this “repeat player” syndrome actually occurs. But it may have a chilling effect on the decision to arbitrate. In the case of S.B. 52, the arbitration process is not mandatory. The plaintiff is not required to choose to arbitrate the claim. Likewise, the defendant does not have to agree to arbitrate the claim. I would not be surprised to see few torts cases choose arbitration.
There are many potential benefits to arbitrating these kinds of tortuous claims. The process is much faster than a traditional trial. Consequently, it is also much cheaper, so less of the award will be eaten up by attorney fees and costs. For smaller cases, this can be very beneficial. In addition, removing these smaller cases from the court system may help ease crowded court calendars, speeding up the process for all cases, not just these torts cases.
As with the expedited jury trial process I discussed earlier, I am guardedly optimistic about the effects of S.B. 52. If it works, it will be beneficial to the entire process. It will provide attorneys with another tool to use in resolving their clients’ problems. If it doesn’t work, it doesn’t really create any new problems. It will be interesting to see just how many plaintiffs opt to resolve their cases through arbitration under this bill.
(Hat Tip to G. Steven Sullivan and the Utah Association for Justice for their discussion of the legislative history of the bill.)