Specialized courts handling business matters have existed in the United States in various forms for over 200 years. More recently, the growing complexity of commercial litigation has prompted many states to fill this need with business courts. With a specialized business court, companies can benefit from the knowledge that experienced judges have in the matters presented. The overall court system gains from the improved efficiency of removing these complex, calendar-clogging cases from the dockets.
The move toward court specialization, coupled with the desire for greater efficiency, led GNO, Inc. to propose legislation in the 2019 Regular Legislative Session to evaluate the issue. A resolution introduced by Sen. Jack Donahue created a 20-member task force to make recommendations to the Legislature on the advisability of creating a statewide business court. The Task Force is comprised of representatives from the Louisiana Supreme Court, the District Judges Association, Louisiana’s four schools of law, the Council for a Better Louisiana, the Public Affairs Research Council and other stakeholder groups. Its recommendations are due to the Legislature in February 2020.
SUCCESS STORIES
As of 2018, 23 states had functioning business courts in cities, counties or statewide. These courts handle disputes governing corporations, large contract and business tort cases and other complex commercial litigation. Consumer cases or those involving personal injury are not handled by business courts. Additionally, many states set monetary thresholds for business court cases, going from $750,000 in Florida to a zero-dollar threshold in other territories.
One of the most recent states to implement a statewide business court is Georgia, where legislators aimed to improve efficiency and prioritize judicial expertise in complex commercial litigation. The proposal was popular with the public, with nearly 70 percent of voters in Fall 2018 approving a constitutional amendment establishing a statewide business court. The constitutional amendment was a recommendation of the Court Reform Council formed by Georgia Gov. Nathan Deal. The Council reviewed the track records of the Fulton and Gwinnett County business courts, including a survey of lawyers and litigants who had cases before those courts. They found cases were resolved 50 to 60 percent faster than similar cases on the regular docket and an 80 percent satisfaction rate among practitioners.
In North Carolina, the business court is a specialized forum of the Superior Court Division. Cases involving complex issues of corporate and commercial law are assigned by the Chief Justice of the Supreme Court of North Carolina to a special superior court judge who oversees resolution of all matters in the case through trial. A similar model has been successful in Arizona, where a three-year Commercial Court Pilot Program was established within the Maricopa County Superior Court. It was established with the intent of processing commercial cases efficiently, reducing the cost of commercial litigation and providing companies with access to judges knowledgeable about business issues. The Arizona Supreme Court made this Commercial Court permanent effective in 2019. Two driving factors for this decision were the support of attorneys litigating in the pilot program, along with support of its judges; and to address the fact that Commercial Court cases require more time than other civil cases, particularly at the front end.
In Florida, which has had popular business courts in several counties, a task force is exploring whether to expand statewide. As Florida business court Judge Donald A. Myers was recently quoted by the Orange County Bar Association, “The business court is a great example of what adequate resources allow the courts to accomplish…As a result, business litigants experience a higher level of predictability and certainty, two key elements that are required for successful business planning and serve to attract business to the region.”
HOW LOUISIANA COULD BENEFIT
Tort costs in Louisiana are among the highest in the nation. The 2019 Lawsuit Climate Survey, conducted by Harris Poll and released by the U.S. Chamber Institute for Legal Reform, ranked Louisiana 49th out of 50 nationally. Additionally, Louisiana ranked 48th for “Overall Treatment of Tort and Contract Litigation” in the survey. Respondents were senior litigators and other executives at companies with annual revenue of at least $100 million. Respondents had to have first-hand experience with cases in the states they evaluated — and nearly 90 percent of them reported that a state’s litigation environment is likely to impact major business decisions such as where to locate or expand.
A 2018 survey of GNO, Inc. investors yielded similar findings, with more than half of respondents reporting the cost and efficiency of resolving cases in Louisiana courts was worse than in other states.
WHAT’S NEXT
Following issuance of recommendations by Louisiana’s Business Court Task Force, the state will need to determine whether and how to decide issues such as the types of cases that would be decided by a business court, how cases are assigned, and the process for selecting judges and their qualifications. During its meetings, Task Force members have suggested pilot programs in Orleans and East Baton Rouge parishes. Establishing pilot programs could help Louisiana address these issues, and also gauge the efficiency of cases in the pilot business court, relative to the regular docket.
With the potential for expert judicial attention, reduced resolution time and hence, lower litigation costs, business courts in Louisiana are an idea worth exploring. From an economic development perspective, when you have an efficient business court system, companies are more comfortable having their disputes decided there — which will be a valuable tool in strengthening our business climate and driving future prosperity for our state.
