On December 2, 2021, the Michigan Supreme Court issued an administrative order radically changing the case evaluation process that is currently in place in all Michigan state courts. Case evaluation is an alternative dispute resolution procedure that the Michigan Court Rules previously required in nearly all civil cases after the close of discovery.
Pursuant to ADM File No. 2020-06, the Michigan Supreme Court amended MCR 2.403, MCR. 2.404, and MCR 2.405. The amended rules become effective January 1, 2022.
The amendments permit parties to bypass case evaluation entirely by stipulating to a different alternative dispute resolution, such as facilitation. Such a stipulation must be filed within 120 days of the first responsive pleading, and must state that the agreed upon alternative dispute resolution will be completed within 60 days of the close of discovery.
Arguably the biggest change set forth in ADM File No. 2020-06 is the deletion of the former MCR 2.403(O), which removes sanctions from the case evaluation process. Previously, if a party rejected a case evaluation award and did not improve its position by at least 10 percent at trial, that party would be liable for the opposing party’s costs from the date of the case evaluation through trial. These costs included attorney fees, which were often quite substantial.
Under the new amendments, parties cannot be sanctioned for failing to accept a case evaluation award. In practice, this will likely render the case evaluation process futile. While the Supreme Court notes that parties may stipulate to reinstating sanctions for rejecting case evaluation, it is unclear how often parties will agree to this in practice.
The elimination of case evaluation sanctions will likely lead to a rise of facilitations and a significant lengthening of the time cases are pending in litigation. Additionally, we may begin to see matters in which there is concurrent jurisdiction between state and federal courts, such as certain maritime or railroad personal injury matters, more frequently litigated in state court. Previously, some attorneys in such matters avoided litigating in Michigan state court because of the risk of case evaluation sanctions and the unpredictability of the case evaluation process. These amendments may prompt those attorneys to consider filing their cases more frequently in state court, which, for plaintiffs, generally provides a more favorable jury pool than federal court.
We expect several legal challenges to these amendments based on Michigan statutory provisions. As always, we will continue to monitor this issue and provide an additional update once more information is available.
The Supreme Court Opinion can be found here.
If you have questions, please contact us.