Illinois General Assembly - Full Text of SB0983
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Full Text of SB0983  100th General Assembly




State of Illinois
2017 and 2018


Introduced 2/7/2017, by Sen. Daniel Biss


New Act
710 ILCS 5/1  from Ch. 10, par. 101
815 ILCS 505/2Z  from Ch. 121 1/2, par. 262Z
815 ILCS 505/10e new

    Creates the Limitations on Forced Arbitration Act. Defines terms and contains statements of findings, purpose, and policy. Places conditions limiting the use of forced arbitration agreements on entities doing business with the State. Creates a rebuttable presumption that specified contract terms relating to forced arbitration agreements are unconscionable. Prohibits arbitration agreements in specified situations. Provides that, with specified exceptions, appellate courts do not have jurisdiction to review a trial court's interlocutory order denying a motion to compel arbitration or otherwise concluding that an arbitration agreement is unenforceable or does not apply to a particular claim. Makes other changes, including a corresponding change in the Uniform Arbitration Act. Amends the Consumer Fraud and Deceptive Business Practices Act. Provides that a person may initiate on behalf of the State an action alleging violations of the Act to recover civil penalties on behalf of the State and to seek injunctive, declaratory, or other equitable relief that the State would itself be entitled to seek. Allows such a person a percentage of the recovery. Adds provisions governing: the State's opportunity to intervene and proceed with the action; discovery; prohibition of duplicative actions; settlement; limitations on State actions initiated by a private party; res judicata; relationship to forced arbitration; and severability.

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SB0983LRB100 07368 HEP 17432 b

1    AN ACT concerning business.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
Article 1. General provisions.

5    Section 1-5. Short title. This Act may be cited as the
6Limitations on Forced Arbitration Act.
7    Section 1-10. Definitions. As used in this Act:
8    "Consumer" has the meaning provided in subsection (e) of
9Section 1 of the Consumer Fraud and Deceptive Business
10Practices Act.
11    "Employee" means any person employed by another as defined
12by State law, and any person who is not classified by a
13business as an employee but who claims to be an employee and
14whose claims against the purported employer relate to this
15alleged misclassification.
16    "Forced arbitration agreement" means an agreement to
17subject disputes between the parties to a binding dispute
18resolution procedure separate from federal or State judicial or
19administrative process if the agreement:
20        (1) is a condition of entering into a relationship with
21    the party that presented the agreement or is presented in
22    such a way that a reasonable person would consider it to be



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1    a condition of entering into a relationship with the party
2    that presented it; and
3        (2) was not negotiated by a labor union through
4    collective bargaining.
5    "Forced arbitration agreement" includes: circumstances in
6which a business retaliates against a consumer or employee for
7failing to assent to the agreement or the consumer or employee
8reasonably fears that the business would retaliate against the
9consumer or employee for failing to assent to the agreement;
10and agreements that either contain or do not provide the right
11to opt-out of the agreement at a later time.
Article 5. Conditions on entities
doing business with the State.

14    Section 5-5. Findings. To ensure that the State spends its
15limited funds in the most efficient manner possible, this
16Article prohibits the State from doing business with entities
17that form or enforce forced arbitration agreements with their
18consumers or employees. The secret nature of forced arbitration
19agreements between entities doing business with the State and
20their consumers or employees undermines the efficient
21management of State funds in the following ways:
22        (1) It prevents the State from learning whether goods
23    or services provided by entities doing business with the
24    State are the subject of consumer grievances concerning the



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1    quality of the goods or services or whether the employees
2    producing the goods or providing the services complain of
3    unfair and illegal treatment that might interfere with the
4    quality of the goods or services.
5        (2) It obscures the extent to which entities doing
6    business with the State violate the legal rights of
7    consumers or employees, and therefore whether the entities
8    are breaching their obligations to the State or concealing
9    from public scrutiny conduct that interferes with the
10    quality of a good or service provided to the State.
11        (3) It obscures the extent to which entities doing
12    business with the State might be destabilized by the
13    entity's conduct as to consumers or its employees and such
14    destabilization increases the likelihood that the entity
15    will defraud the State or be unable to perform under a
16    contract with the State.
17    Section 5-10. Definition. As used in this Article:
18    "Doing business with the State" means an entity or any of
19its subsidiaries or parent entities receiving State funds
20exceeding $100,000 in exchange for goods or services provided
21to the State or a third party. "Doing business with the State"
22includes, but is not limited to, persons or entities performing
23public work on State contracts, merchants of goods or services
24purchased by the State, and persons or entities providing
25services to third parties in exchange for funds provided



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1directly from the State.
2    Section 5-15. Prohibitions.
3    (a) An entity that includes forced arbitration clauses in
4any of its contracts with consumers or employees is prohibited
5from doing business with the State, unless 180 days before
6doing business with the State, the entity or its parent entity
7or subsidiary provides reasonable notice to its consumers or
8employees that it will cease enforcing forced arbitration
9clauses in consumer or employment contracts if the clauses
10exist in consumer or employment contracts.
11    (b) An entity or any of its parent entities or subsidiaries
12is prohibited from doing business with the State if that entity
13or any of its parent entities or subsidiaries enforces forced
14arbitration agreements against any of its employees or
16    Section 5-20. Enforcement.
17    (a) Before the privilege of doing business with the State
18is granted to any entity, the State agency representing the
19State in the business relationship shall confirm that the
20entity, its parent entities, and its subsidiaries do not form
21or enforce forced arbitration agreements with consumers or
22employees and shall ensure, when appropriate, that a contract
23between the State and the entity includes a provision
24prohibiting that entity, its parent entities, and its



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1subsidiaries from forming or enforcing forced arbitration
2agreements. A person or its parent entities or subsidiaries
3forms forced arbitration clauses in its contracts with
4consumers or employees under this Article if current contracts
5with consumers or employees include forced arbitration
6clauses, unless, 180 days before doing business with the State,
7the entity or its parent entity or subsidiary provides
8reasonable notice to its consumers or employees that it will
9cease enforcing forced arbitration clauses in consumer or
10employment contracts.
11    (b) If the Attorney General, after giving an entity doing
12business with the State notice and an opportunity to be heard,
13concludes that the entity has violated Section 5-15, the
14Attorney General shall notify all State agencies doing business
15with the entity about the violation and may seek actual damages
16caused to the State by the violation.
17    (c) If a State agency receives notice from the Attorney
18General that an entity with whom the agency does business has
19violated Section 5-15, the agency shall terminate its business
20dealings with the entity as soon as practical.
21    Section 5-25. Severability. The provisions of this Article
22are severable under Section 1.31 of the Statute on Statutes.
Article 10. Unconscionable terms.




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1    Section 10-5. Findings. The inclusion of unconscionable
2terms in standard form contracts regarding dispute resolution
3is unfair not only because any resulting dispute resolution
4proceeding is unfair to the party forced to agree to the
5unconscionable terms, but also because the unconscionable
6terms discourage valid claims. Furthermore, when the
7provisions are challenged, courts may simply strike the
8unconscionable terms but enforce the remainder of the agreement
9regarding dispute resolution. As a result, businesses have
10little incentive not to include these terms. Finally, in the
11context of form contracts, it is unlikely that there is any
12meeting of the minds over a dispute resolution agreement that
13does not include severed unconscionable terms.
14    Section 10-10. Unconscionable terms. There is a rebuttable
15presumption that the following contractual terms are
16unconscionable if they are included in a standard form contract
17to which only one of the parties to the contract is an
18individual and that individual does not draft the contract:
19        (1) A requirement that resolution of legal claims take
20    place in an inconvenient venue. As used in this Article,
21    "inconvenient venue" means for State law claims a place
22    other than the county in which the individual resides or
23    the contract was consummated, and for federal law claims a
24    place other than the federal judicial district in which the
25    individual resides or the contract was consummated.



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1        (2) A waiver of the individual's right to assert claims
2    or seek remedies provided by State or federal statute.
3        (3) A waiver of the individual's right to seek punitive
4    damages as provided by law.
5        (4) A provision limiting the time that an individual
6    may bring an action to a period shorter than the applicable
7    statute of limitations.
8        (5) A requirement that the individual pay fees and
9    costs to bring a legal claim substantially in excess of the
10    fees and costs that this State's courts require to bring a
11    State law claim or that federal courts require to bring a
12    federal law claim.
13    Section 10-15. Relation to common law and the Uniform
14Commercial Code. In determining whether the terms described in
15Section 10-10 are unenforceable, the court shall consider the
16principles that normally guide courts in this State in
17determining whether unconscionable terms are enforceable.
18Additionally, the common law and Uniform Commercial Code shall
19guide courts in determining the enforceability of unfair terms
20not specifically identified in Section 10-10.
21    Section 10-20. Severability. There is a rebuttable
22presumption that a term in a standard form contract that is
23found to be unconscionable is not severable from the agreement
24in which it is situated. In determining whether this



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1presumption has been rebutted, the court shall consider general
2State law principles regarding the severability of
3unenforceable terms.
4    Section 10-25. Violation. It is an unlawful practice under
5the Consumer Fraud and Deceptive Business Practices Act to
6include one of the presumptively unconscionable terms
7identified in Section 10-10 in a standard form contract in
8which only one of the parties to the contract is an individual
9and that individual does not draft the contact. Notwithstanding
10any other State law to the contrary, a party who prevails in a
11claim under this Section is entitled to $1,000 in statutory
12damages per violation. An action under this Section may be
13maintained by an employee against his or her employer
14regardless of whether the Consumer Fraud and Deceptive Business
15Practices Act otherwise allows for such a claim.
Article 15. Prohibition of
forced arbitration agreements.

18    Section 15-5. Findings; policy. Forced arbitration
19agreements binding upon consumers and employees are contrary to
20the public policy of this State. Because employees and
21consumers are forced to assent to these agreements as a
22condition of being an employee or consumer before any dispute
23has arisen with the employer or merchant, these agreements do



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1not offer employees and consumers a meaningful choice about how
2to resolve disputes with the employer or merchant. In addition,
3forced arbitration agreements prevent employees and consumers
4from effectively enforcing their rights under State law. For
5these reasons, except when inconsistent with federal law, it is
6the policy of this State to prohibit the formation and
7enforcement of forced arbitration agreements in employment and
8consumer contracts.
9    Section 15-10. Arbitration clauses in insurance
10agreements. A forced arbitration agreement that is part of any
11written contract for insurance with a consumer or other written
12agreement involving the offering of insurance to a consumer is
13invalid, unenforceable, and void. Any such forced arbitration
14agreement shall be considered severable, and all other
15provisions of the contract for insurance shall remain in effect
16and be given full force.
17    Section 15-15. Arbitration clauses in employment
18contracts. A forced arbitration agreement that is part of any
19written contract of employment of seamen, railroad employees,
20or any other class of workers engaged in foreign or interstate
21commerce or otherwise exempted from the Federal Arbitration Act
22is unenforceable and void. Any such forced arbitration
23agreement shall be considered severable, and all other
24provisions of the employment contract shall remain in effect



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1and given full force.
2    Section 15-20. Arbitration clauses not governed by federal
3law. Any forced arbitration agreement or portion thereof in an
4employment or consumer contract is invalid, unenforceable, and
5void if the enforceability of the forced arbitration agreement,
6or the portion at issue, is governed by State law. Any such
7forced arbitration agreement shall be considered severable,
8and all other provisions of the employment contract shall
9remain in effect and given full force.
10    Section 15-25. Severability. The provisions of this
11Article are severable under Section 1.31 of the Statute on
Article 20. Appellate jurisdiction.

14    Section 20-5. Jurisdiction. Appellate courts do not have
15jurisdiction to review a trial court's interlocutory order
16denying a motion to compel arbitration or otherwise concluding
17that an arbitration agreement is unenforceable or does not
18apply to a particular claim. Appellate review of the denial of
19a motion to compel arbitration may be had after a final
20judgment has been issued. An interlocutory appeal is allowed if
21the trial court orders arbitration and dismisses the suit or
22orders arbitration and stays the litigation.



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Article 90. Amendatory provisions.

2    Section 90-5. The Uniform Arbitration Act is amended by
3changing Section 1 as follows:
4    (710 ILCS 5/1)  (from Ch. 10, par. 101)
5    Sec. 1. Validity of arbitration agreement. A written
6agreement to submit any existing controversy to arbitration or
7a provision in a written contract to submit to arbitration any
8controversy thereafter arising between the parties is valid,
9enforceable and irrevocable save upon such grounds as exist for
10the revocation of any contract, except: (1) as provided in the
11Limitations on Forced Arbitration Act; and (2) that any
12agreement between a patient and a hospital or health care
13provider to submit to binding arbitration a claim for damages
14arising out of (A) (1) injuries alleged to have been received
15by a patient, or (B) (2) death of a patient, due to hospital or
16health care provider negligence or other wrongful act, but not
17including intentional torts, is also subject to the Health Care
18Arbitration Act.
19(Source: P.A. 80-1012; 80-1031.)
20    Section 90-10. The Consumer Fraud and Deceptive Business
21Practices Act is amended by changing Section 2Z and by adding
22Section 10e as follows:



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1    (815 ILCS 505/2Z)  (from Ch. 121 1/2, par. 262Z)
2    Sec. 2Z. Violations of other Acts. Any person who knowingly
3violates the Automotive Repair Act, the Automotive Collision
4Repair Act, Section 10-25 of the Limitations on Forced
5Arbitration Act, the Home Repair and Remodeling Act, the Dance
6Studio Act, the Physical Fitness Services Act, the Hearing
7Instrument Consumer Protection Act, the Illinois Union Label
8Act, the Job Referral and Job Listing Services Consumer
9Protection Act, the Travel Promotion Consumer Protection Act,
10the Credit Services Organizations Act, the Automatic Telephone
11Dialers Act, the Pay-Per-Call Services Consumer Protection
12Act, the Telephone Solicitations Act, the Illinois Funeral or
13Burial Funds Act, the Cemetery Oversight Act, the Cemetery Care
14Act, the Safe and Hygienic Bed Act, the Pre-Need Cemetery Sales
15Act, the High Risk Home Loan Act, the Payday Loan Reform Act,
16the Mortgage Rescue Fraud Act, subsection (a) or (b) of Section
173-10 of the Cigarette Tax Act, subsection (a) or (b) of Section
183-10 of the Cigarette Use Tax Act, the Electronic Mail Act, the
19Internet Caller Identification Act, paragraph (6) of
20subsection (k) of Section 6-305 of the Illinois Vehicle Code,
21Section 11-1431, 18d-115, 18d-120, 18d-125, 18d-135, 18d-150,
22or 18d-153 of the Illinois Vehicle Code, Article 3 of the
23Residential Real Property Disclosure Act, the Automatic
24Contract Renewal Act, the Reverse Mortgage Act, Section 25 of
25the Youth Mental Health Protection Act, or the Personal



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1Information Protection Act commits an unlawful practice within
2the meaning of this Act.
3(Source: P.A. 99-331, eff. 1-1-16; 99-411, eff. 1-1-16; 99-642,
4eff. 7-28-16.)
5    (815 ILCS 505/10e new)
6    Sec. 10e. Delegation of State enforcement authority.
7    (a) Findings. Limits on the availability of public
8enforcement resources have deleterious effects on the
9marketplace by allowing abuses targeting consumers and workers
10to persist unprosecuted. To ensure the robust enforcement of
11this Act, while simultaneously minimizing the outlay of scarce
12State funds, this Section provides for private individuals to
13represent the State's enforcement interests in certain
14contexts in which the State does not have the means to fully
15enforce State consumer and worker protections.
16    (b) Civil penalties. Unless this Act or other State law
17provides a different amount as the civil penalty recoverable by
18the State for violations of this Act, a person who commits a
19violation of this Act is subject to a civil penalty as provided
20in Section 7 of this Act.
21    (c) Private party suits. A person may initiate on behalf of
22the State an action alleging violations of this Act to recover
23civil penalties on behalf of the State and to seek injunctive,
24declaratory, or other equitable relief that the State would
25itself be entitled to seek.



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1    In initiating an action under this Section, a person may
2allege multiple violations that have affected different
3consumers or employees, as long as those violations are of a
4sufficiently similar kind that they can be efficiently managed
5in a single action.
6    For the purpose of encouraging the enforcement of public
7protections, a court may award a person who initiates a claim
8under this Section an incentive award of up to 25% percent of
9the total monetary recovery if that person pursues the action
10to final judgment as the prevailing party, or up to 10% percent
11of the total recovery if the State intervenes in the action and
12pursues it to final judgment as the prevailing party, including
13after settlement. In deciding an appropriate incentive award,
14the court shall consider the complexity of the case, the
15resources dedicated to prosecuting the case, whether the
16private party obtained equitable relief on behalf of the State
17and the extent of the relief, and the importance of the case as
18measured by the extent of actual damages caused by the
19wrongdoing to consumers or employees.
20    If a private party or the State prevails in an action
21originally brought under this Section, the private party and
22the State shall each be entitled to reasonable attorney's fees
23and costs, based on their participation in the action.
24    (d) State's opportunity to intervene and proceed with the
25action. A person initiating an action under this Section shall
26serve a copy of the complaint and a letter describing the



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1action on the Attorney General, at which point the action shall
2be stayed for 30 days. The State may intervene in the action
3and proceed with any and all claims in the action:
4        (1) As of right within the 30-day stay; or
5        (2) For good cause, as determined by the court, after
6    the expiration of the 30-day stay.
7    (e) Discovery. Regardless of whether the State proceeds
8with the action, upon a showing by the State that certain
9actions of discovery by the person initiating the action would
10interfere with the State's investigation or prosecution of a
11criminal or civil matter arising out of the same facts, the
12court may stay the discovery for a period of not more than 60
13days. Such a showing shall be made in camera. The court may
14extend the 60-day period upon a further showing in camera that
15the State has pursued the criminal or civil investigation or
16proceedings with reasonable diligence and any proposed
17discovery in the action will interfere with the ongoing
18criminal or civil investigation or proceedings.
19    (f) Prohibition of duplicative actions. No action may be
20brought by a private party acting pursuant to this Section for
21any violations already alleged as the basis for an action
22brought by the State, or by another private party pursuant to
23this Section, and no action may be brought by the State for any
24violations already alleged as the basis for an action brought
25by a private party pursuant to this Section. Furthermore, when
26a person initiates an action under this Section, no person



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1other than the State may intervene or bring a related action
2under this Section based on the facts underlying the pending
4    (g) Settlement. The court in which the action is filed
5shall review and approve any proposed settlement of an action
6brought under this Section to ensure that the settlement
7provisions are reasonable in light of State law. The court
8shall also ensure that any incentive fees and attorney's fees
9or costs included in a settlement are reasonable and that the
10private party does not recover, as an incentive payment, more
11than 25% percent of the recovery remitted to the State under
12the proposed settlement. The proposed settlement shall be
13submitted to the Attorney General at the same time that it is
14submitted to the court. If the Attorney General opposes the
15settlement by filing a motion with the court, the court shall
16deny approval of the settlement.
17    (h) Limitations on State actions initiated by a private
18party. The State may make a motion to dismiss any action in
19which it decides to intervene under subsection (d) of this
20Section and the court shall grant the motion notwithstanding
21the objections of the person who initiated the action.
22    The State may settle any action in which it decides to
23intervene under subsection (d) of this Section notwithstanding
24the objections of the person who initiated the action.
25    (i) Res judicata. Notwithstanding any other provision of
26law, an action initiated by a private party under this Section



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1shall not bar that person or any other individual from filing a
2private action based on the same nucleus of operative facts,
3nor shall a prior private action based on the same nucleus of
4operative facts bar an action under this Section.
5    (j) Relationship to forced arbitration. Actions under this
6Section are prosecuted on behalf of the State and not an
7individual, and forced arbitration agreements between private
8parties do not apply to actions under this Section. No contract
9shall waive or limit a private party's right to act as a
10private party under this Section by waiving that party's right
11to bring such an action in a public forum or by preventing the
12party from being able to bring an action alleging multiple
13violations committed against multiple consumers or employees
14pursuant to subsection (c) of this Section.
15    (k) Severability. The provisions of this Section are
16severable under Section 1.31 of the Statute on Statutes.