Heatherly v. Rodman & Renshaw, Inc.

• Decision Date: 18 March 1997
• Docket Number: No. 1-96-2240,1-96-2240
• Citation: 678 N.E.2d 59,287 Ill.App.3d 372,222 Ill.Dec. 652
• Parties: , 222 Ill.Dec. 652 Dennis W. HEATHERLY, Plaintiff-Appellant, v. RODMAN & RENSHAW, INC., Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 59

678 N.E.2d 59

287 Ill.App.3d 372, 222 Ill.Dec. 652

Dennis W. HEATHERLY, Plaintiff-Appellant, v. RODMAN & RENSHAW, INC., Defendant-Appellee.

No. 1-96-2240.

Appellate Court of Illinois,

First District, Second Division.

March 18, 1997.

Peter S. Lubin, McConnell & Mendelson, Chicago, for Plaintiff-Appellant.

Baker & McKenzie, Chicago (Michael A. Pollard, John M. Murphy, of counsel), for Defendant-Appellee, Rodman & Renshaw, Inc.

Justice DiVITO delivered the opinion of the court:

Plaintiff Dennis Heatherly filed a petition in the circuit court of Cook County, seeking to confirm a portion and vacate a portion of an arbitration award. At issue in this appeal is whether the circuit court erred in dismissing his petition. For the reasons that follow, we affirm.

In June 1994, plaintiff submitted a claim for arbitration to the National Association of Securities Dealers, Inc., contending that defendant Rodman & Renshaw, Inc., violated his employment agreement by not paying commissions and salary he was owed. In November 1995, following a hearing, the arbitrator awarded plaintiff $27,236.95 in unpaid wages but provided that each party was to bear its own costs, expenses, and attorney fees.

In December 1995, plaintiff filed this action, a petition to confirm the actual damages portion of the arbitration award and to vacate or modify the portion of the award denying costs and attorney fees. Plaintiff contended that he was entitled to attorney fees under the Attorneys Fees in Wage Actions Act (the Wage Actions Act) (705 ILCS 225/0.01 et seq. (West 1994)), which provides that where an employee "establishes by the decision of the court or jury" that he is owed wages, he is entitled to attorney fees. 705 ILCS 225/1 (West 1994). In March 1996, finding that the Wage Actions Act did not apply to arbitration proceedings, the circuit court granted defendant's motion to dismiss with prejudice. Plaintiff subsequently filed a motion for reconsideration, providing additional documentary evidence and citing additional authority. That motion was denied on June 20, 1996. Plaintiff appeals the circuit court's dismissal of the petition and the denial of the motion for reconsideration.

As a preliminary matter, defendant asserts that because plaintiff failed to provide a record of the arbitration proceedings, this court must presume that the judgment of the arbitrator was correct. Blue Cat Lounge, Inc. v. License Appeal Comm'n, 281 Ill.App.3d 643, 645, 217 Ill.Dec. 465, 667 N.E.2d 554 (1996). Although it would be preferable to have a record of the arbitration proceedings, because we have a complete record of the proceedings before the circuit court, whose judgment is the basis of this appeal, we have a sufficient basis for review.

In contending that the circuit court erred in failing to vacate the portion of the arbitration award denying him attorney fees, plaintiff intermingles three distinct issues--whether the arbitrator's award was manifestly erroneous, in excess of her authority, or violative of public policy. We address each in turn.

It is well settled that judicial review of an arbitrator's award is extremely limited. American Federation of State, County & Municipal Employees v. Department of Central Management Services, 173 Ill.2d 299, 304, 219 Ill.Dec. 501, 671 N.E.2d 668 (1996) (hereinafter AFSCME v. DCMS ). Because the parties have agreed to have their disputes settled by the arbitrator, it is her view that the parties have agreed to accept, and the court will not overrule an award simply because its interpretation differs from that of the arbitrator. AFSCME v. DCMS, 173 Ill.2d at 305, 219 Ill.Dec. 501, 671 N.E.2d 668. To do otherwise would substitute the judgment of the court for that of the decisionmaker chosen by the parties and " 'would make an award the commencement, not the end, of litigation.' " Rauh v. Rockford Products Corp., 143 Ill.2d 377, 395, 158 Ill.Dec. 523, 574 N.E.2d 636 (1991), quoting Burchell v. Marsh, 58 U.S. (17 How.) 344, 349, 15 L.Ed. 96, 99 (1855). Thus, a court must construe an award so as to uphold its validity, if possible. American Federation of State, County & Municipal Employees v. State of Illinois, 124 Ill.2d 246, 254, 124 Ill.Dec. 553, 529 N.E.2d 534 (1988) (hereinafter AFSCME v. Illinois ).

Section 12 of the Uniform Arbitration Act (710 ILCS 5/1 et seq. (West 1994)) expressly authorizes five grounds for judicial vacation of an arbitration award, including that the arbitrator exceeded her powers. 710 ILCS 5/12 (West 1994). In addition to those statutory bases, a court may vacate an award where it is in contravention of paramount considerations of public policy. Department of Central Management Services v. American Federation of State, County & Municipal Employees, 222 Ill.App.3d 678, 686, 165 Ill.Dec. 138, 584 N.E.2d 317 (1991). A mistake of law or fact will not serve as a basis to vacate an award, unless the error is gross and apparent on the face of the award. Board of Education v. Chicago Teachers Union, Local No. 1, 86 Ill.2d 469, 477, 56 Ill.Dec. 653, 427 N.E.2d 1199 (1981); Water Pipe Extension, Bureau of Engineering Laborers' Local Union 1092 v. City of Chicago, 238 Ill.App.3d 43, 46, 179 Ill.Dec. 280, 606 N.E.2d 112 (1992).

Plaintiff's first contention is that the arbitrator exceeded the scope of her authority in denying him attorney fees. An arbitrator exceeds her authority when she decides matters that were not submitted to her. Perkins Restaurants Operating Co. v. Van Den Bergh Foods Co., 276 Ill.App.3d 305, 310, 212 Ill.Dec. 740, 657 N.E.2d 1085 (1995). Here, in arguing that the arbitrator should have awarded attorney fees, plaintiff necessarily concedes that she had the authority to decide that matter. It follows that, because plaintiff disputes only the result reached by the arbitrator, not her authority to act, we must reject his contention that the arbitrator exceeded her authority in deciding his claim for attorney fees.

Plaintiff's next contention is that the arbitrator committed manifest error in disregarding the provisions of the Wage Actions Act. That act provides:

"Whenever a mechanic, artisan, miner, laborer, servant or employee brings an action for wages earned and due and owing according to the terms of the employment, and establishes by the decision of the court or jury that the amount for which he or she has brought the action is justly due and owing, and that a demand was made in writing at least 3 days before the action was brought, for a sum not exceeding the amount so found due and owing, then the court shall allow to the plaintiff a reasonable attorney fee of not less than $10, in addition to the amount found due and owing for wages, to be taxed as costs of the action." (Emphasis added.) 705 ILCS 225/1 (West 1994).

The Wage Actions Act is mandatory in nature. Schackleton v. Federal Signal Corp., 196 Ill.App.3d 437, 446, 143 Ill.Dec. 309, 554 N.E.2d 244 (1989).

Plaintiff asserts that the arbitrator was required to award attorney fees because the statutory language, "the decision of the court or jury," includes the decision of an arbitrator. We need not address the validity of plaintiff's statutory construction because, assuming, arguendo, that the arbitrator erred in construing "the decision of the court or jury" to exclude arbitration awards, errors in law may vitiate an award only if gross and apparent on the face of the award. Water Pipe Extension, 238 Ill.App.3d at 46, 179 Ill.Dec. 280, 606 N.E.2d 112. An example of a gross mistake of law that would vitiate an award would be if the arbitrator "considered an old version of the workers' compensation statutes that had since been amended, unbeknownst to the arbitrator." Board of Education v. Chicago Teachers Union, 86 Ill.2d at 477, 56 Ill.Dec. 653, 427 N.E.2d 1199. Here, because the purported error is not apparent on the face of the award, it cannot serve as a basis for vitiation. See Chicago Transit Authority v. Amalgamated Transit Union Local 308, 244 Ill.App.3d 854, 866, 184 Ill.Dec. 919, 614 N.E.2d 120 (1993) (rejecting plaintiff's argument that award should be vacated as conflicting with Illinois worker's compensation law because no mention was made of worker's compensation on face of award). Accordingly, plaintiff's contention that the award should be vacated because it disregards the law must be rejected.

Plaintiff also contends that the arbitrator's award contravened the strong public policy manifested in the Wage Actions Act. Defendant responds that even assuming, arguendo, that the award was in violation of the Wage Actions Act, the error was simply a mistake of law that is not grounds for vacating an arbitrator's award.

The doctrine that courts may refuse to enforce arbitration awards that violate public policy "derives from the basic notion that no court will lend its aid to one who founds a cause of action upon an immoral or illegal act." United Paperworkers International Union v. Misco, Inc., 484 U.S. 29, 42, 108 S.Ct. 364, 373, 98 L.Ed.2d 286, 301 (1987) (hereinafter Misco ). In AFSCME v. DCMS, 173 Ill.2d 299, 219 Ill.Dec. 501, 671 N.E.2d 668, the Illinois Supreme Court recently revisited the public policy exception to limited judicial review of arbitration awards. There, the court noted that the public policy exception is a narrow one that is to be invoked only where the contravention of public policy is clearly shown. AFSCME v. DCMS, 173 Ill.2d at 307, 219 Ill.Dec. 501, 671 N.E.2d 668.

The AFSCME v. DCMS court provided a two-step analysis to be used in determining whether to vacate an award as violative of public policy considerations. First, a court must determine whether a "well-defined and dominant" public policy can be identified. AFSCME v. DCMS, 173 Ill.2d at 307, 219 Ill.Dec. 501, 671 N.E.2d 668. If that question is answered affirmatively, the court must decide whether the award violated the policy. AFSCME v. DCMS, 173 Ill.2d at 307-08, 219 Ill.Dec. 501, ...