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Taking a hard look at business courts

Taking a hard look at business courts

Senior Editor

A new Business Law Section task force could be paving the way for a statewide network of business courts, possibly with one in each of Florida’s five appellate districts.

The “Business Courts Task Force” is co-chaired by Jon Polenberg, a shareholder in Becker & Poliakoff, and retired 11th Circuit Judge Gill Freeman, who served as Miami-Dade County’s first business court judge.

Polenberg, a member of the Business Law Section’s Executive Council, stressed that the task force’s first assignment is a need determination.

“Our expectation is we’re going to start from scratch,” Polenberg said. “We’re going to, within the confines of the Florida Constitution, develop a business court system, if it makes sense.”

At an August 31 meeting, task force members divided themselves into a series of subcommittees and adopted a mission statement that calls for evaluating the need “for a business court system throughout the state.”

The mission statement goes on to say, “If that evaluation suggests there is a need, then design and provide a draft structure for the business courts, identify and secure appropriate resources, support, and funding to implement a business court system throughout the state.”

Versions of business or complex litigation courts already exist in Miami, Ft. Lauderdale, Tampa, and until recently, Orlando.

Polenberg said that while the task force has a wide-open agenda, organizers expect the panel to consider a statewide system with permanent funding.

“There are business courts that work on a statewide basis in other states, so we will be benchmarking some of those to see if there’s any system that they have put in place that we could model,” Polenberg said.

According to a study last year by the National Center for State Courts, 23 states have some form of business or complex litigation courts, including California, New York, and Delaware, where many of the nation’s businesses are incorporated.

Proponents say business courts offer big advantages. Business litigants say outcomes are more predictable when a single judge presides over their case, and general civil dockets run more smoothly when they aren’t weighed down by time-consuming business disputes.

When she was assigned to Miami-Dade’s first business court, Judge Freeman said some cases transferred to her division had been languishing on the general civil docket for 15 years. The biggest challenge in business disputes is case management, Freeman said.

For example, Freeman said, legal disputes over alleged construction defects that involve mechanics’ liens can feature 10 to 15 parties.

“If you had motions for summary judgment, it would take a day, and if the case was going to go to trial, it was three to four weeks, and what that does to a regular civil calendar is just wreak havoc,” Freeman said. “Some of these cases were so big, nobody wanted to try them.”

Over time, as business court rulings pile up, litigants learn to anticipate decisions and narrow their disputes — and the system becomes more efficient, Freeman said.

“In fact, there were lawyers who told me that we had issues and motions that we simply didn’t bring because we knew how you would rule on them,” Freeman said.

Businesses will look more favorably on any state that can settle their disputes in 18 to 24 months, Polenberg said. New York features its business courts in an economic development video, he said.

“It’s certainly not the biggest issue a business considers,” he said. “But when you have an efficient business court system, businesses are more comfortable having their business disputes decided there, which means you have more businesses willing to locate there.”

Florida lawmakers had economic development in mind in 2010 when they enacted the International Commercial Arbitration Act. Based on the United Nations Commission on International Trade Law, or UNCITRAL, the Florida law was designed to enhance the state’s reputation as a hub of international trade by allowing Latin American companies, for example, to arbitrate their disputes in Florida.

Florida courts have been struggling to better manage large commercial disputes and complex civil litigation for more than a decade.

In 2006, then Florida Supreme Court Chief Justice Fred Lewis created the “Task Force on Management of Cases Involving Complex Litigation.”

“Mass torts, class actions, product liability cases, intellectual property disputes, cases involving advanced scientific evidence, and cases involving multiple parties, among others, are managerially and substantively intricate and may require considerably more resources and effective management of techniques than other cases,” Lewis wrote.

Lewis’ task force, chaired by now retired Second Judicial Circuit Judge Thomas Bateman, issued a series of recommendations, including greater use of technology, the creation of an order designating a “complex case,” and the adoption of time standards, among other things.

The new Business Courts Task Force still has many questions to answer, Polenberg said.

Chief among them will be defining what a business court is, and what thresholds a dispute will have to reach before being transferred to it. Another question will be how to deal with the appeals process.

Venue is another issue. Freeman said there might not be as big a need for business courts in some rural areas, so it might make sense to establish one court for each of Florida’s five state appellate districts.

Florida House Judiciary Chair Chris Sprowls, a lawyer from Clearwater, is eager to see what the task force recommends. A fiscally conservative Republican, Sprowls said he likes the current system because it gives each chief circuit judge the power to determine the best fit for that circuit.

“Ideally speaking, we would hope that the chief judges have the power to respond to the needs of their circuits,” Sprowls said.

He also worries that a business court system would encourage more judge shopping.

“The interesting thing would be, how does venue cherry picking work?” Sprowls said. “Does that lend to a certain level of gamesmanship?”

Some critics claim business courts represent an attempt by industry to carve out a separate justice system for itself, or an attempt to gain more leverage over consumers. California rejected a business court model as elitist and adopted a complex litigation system instead, according to a NCSC study.

Business court proponents, however, point out that business courts arbitrate disputes between businesses, not disputes between businesses and consumers. Defenders say business courts allow judges to develop technical expertise and give businesses more consistent caselaw.

Polenberg said the Business Courts Task Force, despite its name, is not prejudiced toward any model and could follow California’s lead.

The primary goal is efficiency, Polenberg said.

“There will be people who say that this is an elitist court,” Polenberg said. “The true nature of what we’re trying to do is create an efficient civil justice system that will enable the courts to do more work with less resources so that in the end we are doing a better job serving the people.”

Along with Freeman and Polenberg, the other members of the task force include Doug Bates, Braxton Gillam, Judge Virginia Norton, Chris DeCort, John Emmanuel, Judge Edward LaRose, Judge Margaret O. Steinbeck, Melanie Damian, Rick Gross, Judge Jennifer Bailey, Michael Higer, Michelle Suarez, Judge Meenu Sasser, Patricia McConnell, Carrie Ann Wozniak, Judge Frederick Lauten, Jr., and Judge Donald Myers.