Court Opinion

ID: 3142177
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:55:46.803752+00
Date Added: 2024-06-11T15:05:39.105246
License: Public Domain

NO. 4-05-0900      Filed: 6/1/06

                     IN THE APPELLATE COURT

                            OF ILLINOIS

                          FOURTH DISTRICT

NESTLE USA, INC.,                       )    Appeal from
          Plaintiff-Appellant,          )    Circuit Court of
          v.                            )    Morgan County
DONALD DUNLAP and THE INDUSTRIAL        )    No. 04CH72
COMMISSION OF ILLINOIS,                 )
          Defendants-Appellees,         )
          and                           )    Honorable
FREDERIC NESSLER and MICHAEL McDONALD, )     Richard T. Mitchell,
          Defendants.                   )    Judge Presiding.
_________________________________________________________________

          JUSTICE COOK delivered the opinion of the court:

          Plaintiff, Nestle USA, Inc. (Nestle), brought an action

seeking declaratory relief from a ruling by arbitrator Ruth White

of the Illinois Workers' Compensation Commission (Commission)

(formerly the Illinois Industrial Commission) regarding rein-

statement of Donald Dunlap's workers' compensation claim.

Plaintiff also sought to enjoin the Commission from further

hearing Dunlap's claim.   Plaintiff presented a motion for summary

judgment on the undisputed facts.   The Attorney General of the

State of Illinois, acting as counsel for the Commission, pre-

sented a motion to dismiss the case.   The trial court granted the

Commission's motion to dismiss.   Nestle appeals.   We affirm.

                           I. BACKGROUND

          On January 13, 2000, Donald Dunlap filed a workers'

compensation claim with the Commission claiming he had a heart

attack on September 4, 1999, while employed by Nestle.    When he

filed the claim, Dunlap's attorney was Frederic Nessler.    Accord-

ing to the Commission's records, Nessler has been noted to be
Dunlap's counsel of record through 2004.

            On November 15, 2000, attorney Michael McDonald wrote

to Nessler that Dunlap's wife asked him to pursue her husband's

claim and that McDonald would protect Nessler's fee on any

ultimate settlement or verdict.

            On July 23, 2001, McDonald sent Nessler a "Stipulation

to Substitute Attorneys" form for Nessler to sign and return to

McDonald.   Three days later, Nessler returned the signed

substitution-of-attorney form.
            On October 1, 2002, Nessler wrote to Eugene Keefe,

Nestle's attorney, saying that he received a notice of a motion

and order concerning Dunlap's case.      Nessler stated he no longer

represented Dunlap as of July 26, 2001, when a signed

substitution-of-attorney form was sent to McDonald.     Also, on

October 1, 2002, Nessler sent the notice to McDonald and re-

quested a file-stamped copy of the approved substitution-of-

attorney form.

            On May 20, 2003, a paralegal with Nessler's firm,

Lorrie Foor, sent McDonald a letter stating that in "December of

2001, we had a hearing regarding the unsigned Substitution of

Attorney" and requesting the signed and filed form.     The letter

concluded that if the Nessler firm did not hear from McDonald

within 10 days, they would be setting the Dunlap case for hearing

again on July 19, 2003.   Also on May 20, 2003, Foor sent a letter

to arbitrator Ruth White stating that Dunlap has retained McDon-

ald as counsel and a hearing was conducted in December 2002, to

                                 - 2 -
have the substitution entered.    Foor asked that the matter be

continued because Nessler is still the attorney of record on the

docket but Nessler's firm is unaware of the status of the Dunlap

case.

          On October 16, 2003, White issued an order dismissing

Dunlap's case for want of prosecution because the petitioner

failed to appear at a status call or trial date.    Notices of

dismissal dated November 7, 2003, which were addressed to Nessler

and Keefe, stated that unless a petition to reinstate was filed
with the Commission within 60 days of receipt of the dismissal,

the case could not be reopened.

          On February 3, 2004, Keefe faxed Nessler a copy of his

notice of dismissal dated November 7, 2003, and stated that

Nestle has closed the file on the Dunlap case as the Commission's

records indicate that the case was dismissed without reinstate-

ment.

          On February 26, 2004, Nessler faxed the notice of

dismissal to McDonald.

          On April 26, 2004, McDonald filed a petition to rein-

state Dunlap's case.   In the motion to reinstate, McDonald stated

that he did not receive the October dismissal order until it was

faxed to him on February 26, 2004, by Nessler after Nessler

received the notice from Keefe on February 3, 2004.    The motion

stated that Nessler withdrew as counsel on March 13, 2001, and

McDonald entered his appearance on that date.    McDonald claims

that he had appeared before White in the matter.    In Nestle's

                                 - 3 -
complaint for injunctive relief, Nestle acknowledged that "McDon-

ald has occasionally attended Industrial Commission status

hearings and otherwise claimed to represent *** Dunlap as coun-

sel," but that Nestle had always objected and pointed out that

McDonald failed to file an appearance of counsel or a substitu-

tion of counsel on Dunlap's behalf.

          On September 8, 2004, White allowed McDonald to appear

as counsel for Dunlap and argue his motion to reinstate.   White

reinstated the case after accepting McDonald's assurances, as an
officer of the court, that he, at some point in the past, filed a

substitution-of-counsel form despite the fact that the Commission

never showed him to be counsel of record.

          On December 8, 2004, Nestle filed a complaint for

injunctive relief in the circuit court of Morgan County.   In the

complaint, Nestle alleged that Nessler is Dunlap's counsel of

record, and he never filed a motion to reinstate within 60

working days from the date Nestle's attorney faxed a copy of the

dismissal to Nessler.   In its first-amended complaint for declar-

atory judgment and permanent injunction, Nestle sought a declara-

tory judgment because the arbitrator and Commission "have inno-

cently refused to follow Illinois law in the claim below and are

now acting outside the powers granted to the Workers' Compensa-

tion Commission by our legislature to the irreparable detriment

of Plaintiff Nestle."   Nestle claimed that if it is forced to

continue to defend a claim that was finally dismissed by rule of

law, Nestle's due-process and equal-protection rights under

                               - 4 -
Illinois law would be violated.    Nestle asked that the circuit

court permanently enjoin the Commission and White from further

adjudicating Dunlap's claim.

           The Commission filed a motion to dismiss under sections

2-615 and 2-619(a)(1) and (a)(9) of the Code of Civil Procedure

(Code) (735 ILCS 5/2-615, 2-619(a)(1), (a)(9) (West 2004)).    The

Commission alleged that the circuit court lacked jurisdiction

because Nestle had not exhausted its administrative remedies and

was improperly seeking judicial review of the arbitrator's
nonfinal decision through its declaratory-relief action.   Dunlap,

through attorney Norbert Goetten, filed a motion to dismiss,

arguing that the complaint was premature because the Commission

had not entered a final order in the case.   Nessler and McDonald

were dismissed as defendants and are no longer parties to this

matter.   Nestle responded and filed a motion for summary judg-

ment.

           On September 30, 2005, the circuit court granted the

Commission's motions to dismiss, finding that the court's juris-

diction under section 19(f) of the Workers' Compensation Act

(Act) (820 ILCS 305/19(f) (West 2004)) is limited to review of

final decisions.

           This appeal followed.

                           II. ANALYSIS

           First, Nestle filed a motion with this court to "Append

Abstract of Record," seeking leave to supplement the record with

the transcript of the September 8, 2004, hearing before White;

                               - 5 -
White's decision granting Dunlap's motion to reinstate the case;

and a Commission "Stipulation to Substitute Attorney" form dated

March 13, 2001, and signed by Dunlap, Nessler, and McDonald.     The

Commission responded that this court should not allow the motion

because the documents were not certified by the Commission in

accordance with section 14 of the Act (820 ILCS 305/14 (West

2004)) and because the documents were not part of the record in

the circuit court.   Because the three documents' inclusion in the

record will not affect the outcome of this case, we see no harm
in granting the motion.

          As to the merits of the appeal, the circuit court

dismissed Nestle's complaint after determining the court lacked

jurisdiction.   The court never addressed the merits of the case.

 Thus, the only issue before this court is whether the circuit

court correctly determined that it lacked jurisdiction.   See

Kemp-Golden v. Department of Children & Family Services, 281 Ill.
App. 3d 869, 879, 667 N.E.2d 688, 695 (1996) (when the circuit

court dismissed the complaint based on lack of standing, this

court only reviewed the judgment granting the motion to dismiss

and refused to review the merits of the plaintiff's claim).     We

review a circuit court's decision to grant motions to dismiss

under sections 2-615 and 2-619 of the Code (735 ILCS 5/2-615, 2-

619 (West 2004)) under the de novo standard.   Morris v. Williams,

359 Ill. App. 3d 383, 386, 834 N.E.2d 622, 626 (2005).

          Nestle argues that the trial court had either original

or concurrent jurisdiction to state the rights of the parties as

                               - 6 -
the issue involved undisputed facts and questions of law regard-

ing the arbitrator's power to reinstate the claim.     Nestle claims

it should not be required to follow the normal procedures for

appealing an arbitrator's decision in a workers' compensation

claim to the five-member appellate panel of the Commission.

According to Nestle, the arbitrator acted outside of her statu-

tory authority and, therefore, without jurisdiction when she

reinstated Dunlap's claim after more than 60 days had passed from

the date Dunlap's attorney of record received notice of the
dismissal.

             The Commission urges that the Commission has exclusive

jurisdiction in this matter.    According to the Commission,

Dunlap's claim against Nestle involves a determination of bene-

fits and "circuit courts have no original jurisdiction over

workers' compensation proceedings, wherein benefits are deter-

mined, under the Act" (Hartlein v. Illinois Power Co., 151 Ill.
2d 142, 158, 601 N.E.2d 720, 727 (1992)).     Because the Commission

has exclusive jurisdiction, the court must apply the "exhaustion

of administrative remedies doctrine."     Under the exhaustion

doctrine, a party claiming to be wronged by an administrative

action must first pursue all available administrative remedies

before seeking review in the courts.     Illinois Health Maintenance
Organization Guaranty Ass'n v. Shapo, 357 Ill. App. 3d 122, 130,

826 N.E.2d 1135, 1142-43 (2005).     Alternatively, the Commission

claims that even if the trial court had original or concurrent

jurisdiction, the court correctly deferred jurisdiction under the

                                 - 7 -
doctrine of primary jurisdiction as the Commission is better

suited to resolve the dispute than the court.

          The Supreme Court of Illinois has determined that the

courts have no original jurisdiction in cases involving determi-

nation of workers' compensation benefits.   Hartlein, 151 Ill. 2d

at 158, 601 N.E.2d at 727.   In such compensation proceedings, the

court's role is appellate only.   Gunnels v. Industrial Comm'n, 30
Ill. 2d 181, 185, 195 N.E.2d 609, 611 (1964).   The supreme court

has also held, though, that the Commission's jurisdiction is

concurrent with the circuit court in some instances.   See Segers
v. Industrial Comm'n, 191 Ill. 2d 421, 426-27, 732 N.E.2d 488,

492 (2000) (jurisdiction is concurrent when the issue involves a

widow's application for death benefits after her husband had

previously settled for a lump sum); Employers Mutual Cos. v.

Skilling, 163 Ill. 2d 284, 286-87, 644 N.E.2d 1163, 1165 (1994)

(jurisdiction is concurrent when the issue involves an insurance-

coverage issue connected to a workers' compensation claim).

          We conclude that under these facts, the Commission had

exclusive jurisdiction and Nestle was required to exhaust all

administrative remedies before seeking judicial review.

          The only arbitrator's decision on appeal is White's

decision to reinstate Dunlap's claim.   As a result of White's

reinstating his claim, Dunlap may be entitled to benefits.     While

the issue does not involve an arbitrator's traditional determina-

tion of benefits, exclusive jurisdiction should apply for two

main reasons.   First, the arbitrator's decision resolved a

                               - 8 -
factual dispute.    Second, a jurisdictional determination should

not be dependent upon the merits of a claim.

           First, Nestle urges that the Commission, as an adminis-

trative agency, only has the powers granted by the Illinois

legislature and White's reinstatement of Dunlap's claim was not

authorized by the legislature because the petition for reinstate-

ment came after 60 days from notice to Dunlap's counsel of

record.   Nestle cites Business & Professional People for the

Public Interest v. Illinois Commerce Comm'n, 136 Ill. 2d 192, 555
N.E.2d 693 (1989), Segers, 191 Ill. 2d 421, 732 N.E.2d 488, and
Daniels v. Industrial Comm'n, 201 Ill. 2d 160, 775 N.E.2d 936

(2002), to support its contention that courts can render declara-

tions on interpretations of Illinois's administrative agencies'

procedures, powers, and rules based upon undisputed facts without

first exhausting administrative remedies.   Nestle's argument and

the application of the three cases rest on the premise that the

trial court was presented with only undisputed facts.   Despite

Nestle's assertion to the contrary, the arbitrator's decision

resolved a factual dispute.

          Nestle claims that the facts are undisputed because

Nessler, not McDonald, was Dunlap's attorney at all relevant

times as he was listed as Dunlap's counsel of record at all

relevant times.    White concluded, though, that McDonald had been

Dunlap's attorney since 2001 when he sent a substitution-of-

attorney form to the Commission office in Chicago.   Based on her

belief that McDonald would not lie to her, White concluded that

                                - 9 -
the Commission must have made an error that kept McDonald from

appearing as the attorney of record.    While McDonald could not

produce any documentation proving that he ever filed the form,

Nestle produced documents that showed Nessler and others continu-

ally requested that McDonald file the appropriate forms.    Nestle

claims that White's conclusion did not rest on a determination of

"disputed facts," but was a "hopeful and generous conclusion by a

forgiving hearing officer without a shred of evidence to support

it."
          However Nestle chooses to characterize White's determi-

nation, this matter clearly arose over a factual dispute.      Nestle

claims that McDonald never filed the substitution-of-attorney

form and that McDonald lied to White.    McDonald claims he filed

the form and the Commission made an error.    White chose to

believe McDonald despite the documents Nestle produced.    White

made her decision based upon her familiarity with the specific

facts of the case and her observation of the parties.    The

parties disagreed as to when the 60 days began to run based upon

a dispute over who should have received the notice of dismissal.

 White resolved the factual dispute and applied the time limit

according to her determination.

          According to the Act, whenever a disputed question of

law or fact exists, the Commission shall first designate an

arbitrator who shall investigate claims and hear evidence.     820

ILCS 305/19(a), (b) (West 2004).   The arbitrator's decision may

then be reviewed by the Commission.    820 ILCS 305/19(b) (West

                             - 10 -
2004).    The Act provides for review of final Commission decisions

in the trial court.    See 820 ILCS 305/19(f)(1) (2004) (proceeding

for review in trial court shall be commenced within 20 days of

the receipt of notice of the decision of the Commission); see

also Pace Bus Co. v. Industrial Comm'n, 337 Ill. App. 3d 1066,

1069, 787 N.E.2d 234, 237 (2003) (jurisdiction to review final

decision of the Commission is vested in the trial court).      Nestle

should follow the procedures outlined in the Act before the

courts interfere.

             Further, in concluding that the trial court had

original or concurrent jurisdiction, Nestle assumed its claim was

meritorious.    In the trial court, Nestle essentially sought a

determination that the arbitrator acted outside of her statutory

power.    Nestle then claimed that the court had jurisdiction

because the arbitrator acted outside her statutory power.      Under

Nestle's theory, in order for the court to have jurisdiction, the

court first had to determine Nestle would succeed on the merits.

 If Nestle's claim is meritorious, the trial court has jurisdic-

tion.    Nestle agrees, though, that if its claim is not meritori-

ous and White acted within her statutory powers, the court does

not have jurisdiction.    Further, had White ruled Dunlap's peti-

tion could not be reinstated, Dunlap's only recourse would have

been an appeal to the Commission.    In that situation, Dunlap

could not have appealed to the courts because White's decision

was authorized by statute.    Nestle, though, could appeal to the

court because White acted without statutory authority.

                               - 11 -
          Jurisdiction should not be determined by a ruling on

the merits.   See Nelson v. Miller, 11 Ill. 2d 378, 391, 143
N.E.2d 673, 680 (1957) (rejecting the assumption that the trial

court lacks jurisdiction over a nonresident defendant who alleg-

edly committed a tortious act within the state unless all of the

elements that combine to spell ultimate liability in tort are

present); C&K Distributors, Inc. v. Hynes, 122 Ill. App. 3d 525,

529, 461 N.E.2d 560, 563 (1984) ("Jurisdiction is authority to

hear and decide a cause. [Citation.]   It does not depend upon the

correctness of the decision made and is not lost because of an

erroneous decision").   Based on Nestle's theory, any litigant

could skip Commission review and seek judicial review by alleging

that the arbitrator's decision was not authorized by statute.

Trial courts would be forced to first determine if arbitrators'

decisions were wrong in order to determine if they had jurisdic-

tion.

          Nestle should be required to exhaust all administrative

remedies before pursuing judicial review.   The exhaustion doc-

trine applies when an administrative agency has exclusive juris-

diction to hear an action.   Board of Education of Warren Township
High School District 121 v. Warren Township High School Federa-

tion of Teachers, Local 504, 128 Ill. 2d 155, 163, 538 N.E.2d
524, 528 (1989).   Courts have recognized several exceptions to

the exhaustion doctrine, and Nestle invokes three exceptions.

First, Nestle claims that the case involves undisputed facts.

See Castaneda v. Illinois Human Rights Comm'n, 132 Ill. 2d 304,

                              - 12 -
309, 547 N.E.2d 437, 439 (1989).    Second, the issue involves

statutory interpretation that falls within the expertise of the

court because the arbitrator acted outside her statutory author-

ity in seeking to continue to adjudicate a case that was finally

dismissed.    See Office of the Cook County State's Attorney v.

Illinois Local Labor Relations Board, 166 Ill. 2d 296, 306, 652
N.E.2d 301, 306 (1995).   Third, Nestle will suffer irreparable

harm from further administrative remedies.    See Illinois Bell

Telephone Co. v. Allphin, 60 Ill. 2d 350, 358, 326 N.E.2d 737,

742 (1975).

           As stated above, the case involves disputed facts.

Further, the issue does not involve statutory interpretation.

The issue revolves around the arbitrator's factual determination.

 Finally, Nestle claims it would suffer irreparable harm because

it would be forced to maintain reserves, retain evidence, relo-

cate witnesses, and defend a claim that was finally dismissed.

Once again, this argument assumes the merits of Nestle's claim by

assuming the case was finally dismissed.     None of the exceptions

excuse Nestle from exhausting administrative remedies.

           Nestle must first exhaust its administrative remedies

by appealing to the Commission before seeking judicial review.

This will give the Commission the chance to consider the argu-

ments of the parties and make its own factual determinations and

conclusions regarding the filing of the substitution of attorney

form.   The Commission may not agree with the arbitrator.   If the

Commission does agree with White, Nestle will have the opportu-

                               - 13 -
nity to present its appeal of the Commission's final decision to

the trial court.

                                III. CONCLUSION

          For the reasons stated, we affirm the trial court's dismissal.

          Affirmed.

          STEIGMANN and McCULLOUGH, JJ., concur.

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