Case
evaluation is a process in Michigan to attempt to settle cases before trial. The court rules require the parties to submit written and oral statements of their positions to three case evaluators. The case evaluators then decide an amount of money at which the mediators believe the parties should be willing to settle. If both parties accept the amount then the case will be settled. If one or both parties reject, the case is not settled.
Courts give “teeth” to the case evaluation process by punishing parties that reject the offered amount and do not do at least 10% better at trial. If a party rejects the amount and does not do 10% better at trial, then they will have to pay the other sides costs and attorneys fees after the case evaluation. This is called “case evaluation sanctions.”
There is an exception to the requirement to pay case evaluation sanctions. MCR 2.403(O)(11) allows courts to avoid awarding case evaluation sanctions in the “interest of justice.”
In Fowler v. Detroit Symphony Orchestra, Inc., the trial court sought to assist the Detroit Symphony Orchestra (“DSO”) in avoiding the payment of case evaluation sanctions. The Court held in part that there was an interest of justice because the DSO is an indigent entity that provides a public service while being supported by corporations and donations. Further, the Court held that there was no misconduct on the part of the DSO in deciding not to accept the case evaluation amount.
The Court of Appeals rejected the trial court’s analysis and held that the trial court abused its discretion by declining to award case evaluation sanctions against the DSO. The Court of Appeals ruled that the DSO’s financial status, public service and DSO’s lack of misconduct were not sufficient factors to avoid case evaluation sanctions.
Instead, the Court of Appeals held that there must be an unusual circumstance to warrant the application of the interest of justice exception. Courts have found unusual circumstances to include: (1) where a legal issue of first impression is presented, (2) where the law is unsettled and substantial damages are at issue, and (3) where the effect on third persons may be significant. The common thread in the examples listed above is that there was a public interest in having the issue judicially decided rather than merely settled.
This article was written by Matthew Ehrlich, Legal Clerk at Demorest Law Firm.
