Michigan Update – Changes in the Case Evaluation Process and Its Impact on Litigation
As of January 1, 2022, The Michigan Supreme Court eliminated the mandatory case evaluation requirement for all tort cases in Michigan courts, per its amendments to Michigan Court Rule 2.403. Most notably, the parties can opt-out of the case evaluation process, and instead agree to use a private Alternative Dispute Resolution (ADR) process, such as facilitation. The new rule requires only that the parties stipulate to and identify the ADR process to be used and indicate the timing of said process in relation to the other discovery deadlines. Regarding timing, the rule requires that the chosen ADR process be completed within sixty days of the close of discovery. Nevertheless, it should be noted that case evaluation remains the default ADR process for Michigan courts, and a judge may still assign a case to go through case evaluation if no ADR plan is in place by the parties.
Moreover, as a result of the above rule change, The Michigan Supreme Court also eliminated Michigan Court Rule (MCR) 2.403(O), i.e., the rule that imposed case evaluation sanctions. MCR 2.403(O) stated:
“If a party has rejected an evaluation and the action proceeds to verdict, that party must pay the opposing party’s actual costs unless the verdict is more favorable to the rejecting party than the case evaluation. However, if the opposing party has also rejected the evaluation, a party is entitled to costs only if the verdict is more favorable to that party than the case evaluation.”
However, there is no longer any liability for an opposing party’s costs when a party rejects the case evaluation and proceeds to trial, even if they fail to obtain a result more favorable than the case evaluation award.
For many on both sides of the bar, the above changes are a welcome sight, as the benefit of compulsory case evaluation was often doubted. The new rules will almost certainly allow parties more control and flexibility regarding their litigation strategies. In addition, the elimination of case evaluation sanctions will likely give rise to the use of Offers of Judgements under MCR 2.405, which allows a party to make a formal offer of settlement to an opposing party. However, like the aforementioned case evaluation sanctions under MCR 2.403(O), if the offer is rejected, then the opposing party risks responsibility for payment of the offering party’s court costs and its reasonable attorneys’ fees if a more favorable result is not obtained at trial. In the past, Offers of Judgment were rarely used because they were inapplicable in cases with a unanimous case evaluation award under the previous Court Rules. However, with the elimination of case evaluation sanctions, it appears that MCR 2.405 will sufficiently replace MCR 2.403(O) and its primary purpose.
Ultimately, it is anticipated that the changes to the case evaluation process will help facilitate (no pun intended) a faster resolution of cases, as parties will be more motivated to engage in settlement discussions and private ADR. Consequently, litigation costs could potentially be reduced for all parties involved.