MARICOPA COUNTY SUPERIOR COURT TO PROVIDE SPECIALIZED VENUE FOR BUSINESS DISPUTES
You undoubtedly value predictable costs and minimal disruption as you operate your company, although litigation over your commercial and corporate disputes can generate big, volatile expenses.
Currently, your business cases are assigned to judges with general civil litigation dockets, housing matters that range from motor vehicle accidents to complex antitrust claims. The civil rules treat many of these dissimilar matters alike. And your judge may be well-versed at divorce proceedings rather than derivative actions.
The net result for you is added months or years in court and greater cost.
To approach this issue, the Superior Court of Maricopa County is embarking on a three-year Commercial Court pilot program, beginning on July 1, 2015. This pilot will test the hypothesis that a commercial court in Arizona would: (a) process commercial cases efficiently, (b) reduce the cost of commercial litigation and (c) provide access to judges with business acumen.
What Cases Are Permitted in Commercial Court?
In a commercial case, at least one plaintiff and one defendant are business organizations — or the case concerns a business organization, contract or transaction.
Further, certain cases will qualify, regardless of the amount in controversy. For example, cases concerning the internal affairs, governance, dissolution, receivership or liquidation of a business organization — or those concerning trade secrets or misappropriation of intellectual property or arises from an agreement not to solicit, compete or disclose — are properly brought in commercial court.
Additionally, the commercial court will hear other categories of cases, when the amount in controversy is at least $50,000, including: claims in connection with the sale of services by, or to, a business organization — or claims concerning a surety bond, or arising under any type of commercial insurance policy purchased by a business organization, including an action involving coverage, bad faith or a third-party indemnity claim against an insurer.
A complete list can be found in the new Rule 8.1(b) and (c) in the Arizona Rules of Civil Procedure.
What Cases Are Excluded?
The commercial court is not the proper venue for “consumer contracts or transactions,” defined as those primarily for personal, family or household purposes. Moreover, the commercial court will not hear motor vehicle or personal injury torts or employees’ claims for wrongful termination, among others enumerated in Rule 8.1(d).
Unique Items of Procedure and Case Management
As a practical update for attorneys: the Arizona Rules of Civil Procedure will now include Rule 8.1 about the assignment and management of commercial cases. And you can find updated forms under Rule 84, Forms 14(a) and (b).
To request assignment of a case to the commercial court, the plaintiff must include in the initial complaint’s caption the words “commercial court assignment requested.” At the time of filing the initial complaint, the plaintiff must also complete a civil cover sheet that indicates the action is an eligible commercial case. Otherwise, the defendant can file a motion to transfer the lawsuit to commercial court, as well.
Under this new Rule 8.1 framework, counsel must confer and report to the court about additional issues, including the paramount issue of the disclosure and production of electronically-stored information. Also, counsel must report on any agreements between the parties concerning evidence subject to the attorney-client privilege, proposed protective orders, and any other assertions of evidentiary privilege under the Rules of Evidence.
For example, each party must identify an “e-discovery liaison,” someone knowledgeable about a party’s IT system — and must disclose the location and types of IT systems and media, their efforts to preserve electronically-stored information, and search protocols and methods, and the document formats to be used in their production of documents. Early on, the parties also must work out the allocation of costs between them to preserve and retrieve such evidence. And so, discovery of electronically-stored information, a common issue in commercial cases, will be procedurally streamlined and routinely addressed in the commercial court.
In sum, early decisions on these discovery issues are designed to reduce litigation expenses.
Who Are the Judges?
The lynchpin to the commercial court is the quality of judges assigned to its bench. The three judges named to the new program for the pilot period are Judges Dawn Bergin, Roger Brodman and Christopher Whitten.
To deliver a series of short biographies: Judge Dawn Bergin has served on the bench of the Maricopa County Superior Court since 2007 and previously was a partner at Lewis and Roca, LLP. Judge Roger Brodman has also served on the bench since 2007 and founded the firms Holden Brodman PLC and Brockelman & Brodman after he practiced with Gallagher & Kennedy and Latham & Watkins. Judge Christopher Whitten is the current Presiding Tax Court Judge for Maricopa County Superior Court. He moved to the bench in 2006, after his private practice with Whitten Berry, P.L.L.C. and Holloway, Odegard & Sweeney.
What Should We Expect?
If the Commercial Court Pilot succeeds and is permanently implemented, it will be a main ingredient in Arizona’s ever-improving business environment. Judges with excellent business law experience will preside over cases that demand their skill-set. Better judicial opinions will be written, leading to greater certainty on new or novel issues. Overall, our body of corporate and commercial law will grow.
Practitioners should follow the news on the commercial court pilot and consider specifying this venue in their forum selection provisions. The Arizona Supreme Court will monitor the commercial court pilot through the end of 2018, receiving data on cases assigned to the court, the level of litigant satisfaction, and the views of judges and attorneys.