Upset shareholder in Company X sues the company and its shareholders and directors claiming breach of fiduciary duty and judicial dissolution. The case is distracting the directors, managers, and employees and affecting the company’s long-term viability. In the circuit court where the suit is filed, the case vies with all other cases for the judge’s attention. The judge has no experience in this type of dispute and adjourns the matter instead of setting it for trial, with the hope that the case will resolve itself and the judge will not need to address the scores of pretrial motions the parties filed before trial – a trial scheduled to last four weeks. Based on the court’s docket, the judge does not anticipate the matter going to trial for three years.
gov Michael.Aprahamian wicourts Michael Aprahamian, Yale 1992, is a Waukesha County Circuit Court judge. Before taking the bench, he was a partner at Foley & Lardner LLP.
Recognizing how complex commercial disputes affect court’s calendars and how judges experienced or trained in handling them can facilitate their efficient and timely resolution, the Wisconsin Supreme Court recently established a pilot project to address certain types of commercial disputes.
On April 11, 2017, the supreme court entered an order1 formally granting a petition filed by the Business Court Advisory Committee appointed by Chief Justice Patience Drake Roggensack in August 2016.2 The petition, filed on Oct. 26, 2016, requested that the supreme court create a three-year pilot project establishing large-claim commercial case dockets in the Waukesha County Circuit Court and the circuit courts of the Eighth Judicial Administrative District (the circuit courts surrounding Green Bay, including Brown, Door, Kewaunee, Marinette, Oconto, Outagamie, Door, and Waupaca counties). The order set the pilot project to start on July 1, 2017.
Since July 1, several qualifying cases have come into the pilot project. Each, however, was filed as a standard civil case and was later assigned to the commercial court docket after a judge or clerk identified it as appropriate for the pilot project. Despite the best efforts of the committee and the bench, many lawyers are still not aware of the pilot project and the cases that are assigned to it.
This article might increase awareness and lead to assignment of more cases to the commercial docket. Doing so will enable lawyers and their clients to benefit from the efficient and effective handling of their complex commercial cases and provide a fulsome sample for the supreme court to consider in evaluating the pilot project when it concludes in 2020.
What Is a Business Court?
A business court is a court with a specialized docket of cases involving certain types of commercial or business disputes.3 Like other courts with dedicated dockets – and there are many in Wisconsin and elsewhere (think treatment courts, domestic violence courts, felony courts) – the goal is to increase efficiency and the experience of judges in handling a certain diet of cases.
More than 27 jurisdictions have created dedicated courts to resolve complex commercial cases.4 In fact, all of Wisconsin’s neighboring states (Minnesota, Iowa, Illinois, Indiana, and Michigan) have some form of dedicated commercial court to resolve such disputes.
The committee determined that it was in the public interest to proceed with a pilot project to explore the working of a dedicated commercial court docket to resolve complicated commercial disputes expeditiously and cost-effectively. In doing so, the committee specifically considered the Business Court project in Milwaukee from the 1990s (the Milwaukee Business Court).5 That project was drastically underused because, among other things, it was not well received by lawyers.
At the end of the pilot,
the supreme court should
be able to assess and
determine how the docket
was managed in each
location and consider
that experience in any
proposal for expansion of
Members of the committee shared their objections to that project and highlighted its failings. First, in the Milwaukee Business Court, all parties had to agree to opt in, and it can be difficult to get parties in litigation to agree to anything, particularly in the early stages of the dispute. Second, there were limitations on discovery of a kind parties often are uncomfortable accepting when a case is first filed. Finally, the parties had no ability to move for summary judgment, thereby ensuring a trial in the event the matter did not settle. These factors, along with others, doomed the Milwaukee experiment, and the committee considered those lessons in moving forward with the structure of the commercial court docket it proposed.
The goals of a dedicated commercial court docket are to:
improve the quality and predictability of justice in connection with business disputes;
improve parties’ access to justice;
make repeat disputes less likely to occur due to guidance provided by ongoing decisions; and
make Wisconsin a desirable forum for resolving business disputes.
Cases Assigned to the Commercial Court Docket
The first matter the committee addressed was whether to base the assignment of cases on the general nature of the dispute, such as “complex commercial cases,” with little or no definition of the case types that would be assigned to the docket, or whether the committee should specifically identify the types of cases that would be assigned to the commercial court docket.
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The committee decided that identifying the specific types of cases to be assigned to the docket was the better approach because it would provide some predictability for the court and lawyers regarding the cases assigned to the commercial court docket. The committee also agreed that it would be best to take an “under-inclusive” approach to avoid the risk of overwhelming the dockets and undermining the pilot project.
Types of Cases Assigned to Commercial Court. The committee reviewed the types of cases assigned to commercial courts in other jurisdictions and identified the following categories of cases to direct to the commercial court docket, as reflected in Interim Rule 4 of Appendix A of the Order:
Class Code 35001 – Internal Business Organizational Claims. Cases involving the governance or internal affairs of business organizations, including claims between or among owners or constituents of a business organization; claims against officers, directors, or managers of a business organization; claims involving the indemnity of owners, officers, directors, or managers of a business organization; claims involving the interpretation of the rights and obligations under the law governing the business organization, such as Wis. Stat. chapters 178, 179, 180, 181,183, 185, 214, 215, 221, 222, and 223 (or any similar statute or law from another jurisdiction); claims involving the interpretation of the rights and obligations under the agreements governing the business organization, such as the articles of incorporation, articles of organization, bylaws, operating agreements, membership agreement, or partnership agreement of the business organization;
Class Code 35002 – Prohibited Business Activity. Cases involving tortious or statutorily prohibited business activity, unfair competition, or antitrust, including claims under Wis. Stat. chapter 133; claims under Wis. Stat. section 100.30(5m) & (5r); claims under Wis. Stat. section 134.01; claims of tortious interference related to a business organization; claims involving restrictive covenants and agreements not to compete or solicit; claims involving confidentiality agreements;
Class Code 35003 – Business Sale/Consolidation/Merger. Cases involving the sale, consolidation, or merger of a business organization, conversion, share exchange, or the sale of substantially all of the assets of a business organization;
Class Code 35004 – Sale of Securities. Cases involving the sale of securities, including claims for securities fraud under Wis. Stat. chapter 551 or any similar statute or law from another jurisdiction;
Class Code 35005 – Intellectual Property Rights. Cases involving intellectual property rights, including claims to determine the use, ownership, or status of trademarks, trade secrets, or copyrights; claims under Wis. Stat. section 134.90; claims involving any agreement relating to the licensing of any intellectual property right, including patent rights;
Class Code 35006 – Franchisor/Franchisee Claim. Cases involving the relationship between a franchisor and franchisee or similar distribution relationship, including claims arising from Wis. Stat. chapter 135 or any similar statute from another jurisdiction; claims arising from Wis. Stat. section 134.93 or any similar statute or law from another jurisdiction; claims arising from Wis. Stat. chapter 553 or any similar statute from another jurisdiction; and
Class Code 35007 – UCC Claims Greater Than $100,000. Cases involving claims or disputes under Wis. Stat. chapters 402, 403, 404, 405 and 409 (or any similar statute or law from another jurisdiction, that is, the Uniform Commercial Code) when the amount in controversy exceeds $100,000 in damages, exclusive of interest, costs and attorney fees.
Types of Cases Not Assigned to Commercial Court. In addition, taking the lead from other jurisdictions, the committee identified the following cases that would typically not be assigned to the commercial court docket, as reflected in Interim Rule 6 of Appendix A to the Order:
Cases involving small claims under Wis. Stat. chapter 799;
Cases involving a governmental entity or political subdivision seeking to enforce a statutory or regulatory restriction or prohibition; and
Cases involving consumer contracts or transactions; landlord-tenant disputes; domestic relations claims; labor claims; receivership, insolvency, or liquidation cases; malpractice claims; personal injury claims; product liability claims; civil rights claims; tax disputes; cases seeking to compel arbitration or to affirm or disaffirm an arbitration award; construction claims; or environmental claims – unless the claim or dispute identified in this subsection is ancillary and incidental to a case assigned to the commercial court because it qualifies as a case type assigned to the commercial court docket.
Finally, the committee thought it important to include a way for the parties to request that a case be assigned to the commercial court docket even if it did not qualify under Interim Rule 4. Accordingly, Interim Rule 5 provides a procedure for discretionary assignment of cases to the commercial court docket.
Location of the Commercial Court Docket
Because the chief justice made clear that the committee should be proposing a pilot project, the committee recommended and the supreme court approved two locations of the courts hearing cases assigned to the commercial court docket – one a circuit court and the other a judicial administrative district. That way, at the end of the pilot, the supreme court should be able to assess and determine how the docket was managed in each location and consider that experience in any proposal for expansion of the project.
The committee selected Waukesha County because of its perceived ability to supply an appropriate sampling of the various types of cases assigned to the commercial docket. This is due to its size and proximity to the population and commercial center in the state. The committee rejected Milwaukee County because of concerns with the management of the pilot there and the negative reception it might receive because of the prior, unsuccessful Milwaukee Business Court.
The committee also agreed that the second location should be in the Eighth Judicial District, that is, the circuit courts surrounding Green Bay, including Brown, Door, Kewaunee, Marinette, Oconto, Outagamie, Door, and Waupaca counties. The Eighth Judicial District was selected for its geographic distinctions from southeastern Wisconsin and its perceived ability, like Waukesha, to supply an appropriate sampling of cases to the commercial docket due to its population and commercial activity. The supreme court adopted these recommendations in its order.
Guidelines and Practices Applicable to the Cases Assigned to the Commercial Court Docket
The committee recognized that the success of the pilot project will depend on the judges assigned to hear the cases and their management of cases. Accordingly, the committee agreed that the commercial courts should have leeway in creating rules or standing orders to address matters based on the nature of each case.
Nonetheless, the committee identified several topics and guidelines for judges to consider and address with the parties as part of the pilot. These include addressing early on in the case 1) electronically stored information (ESI), and taking a proactive role during the case to address proportionality and expense; 2) mediation, specifically when and how it should occur in the case; and 3) protective orders regarding the production and use of documents and information produced in the case, as well as orders relating to the sealing of documents filed with the court.
Finally, the committee thought it important that judges handling cases from the commercial docket schedule regular status conferences to ensure the efficient prosecution of cases toward trial, with a goal of having cases tried within 12-18 months. The committee noted that frequent periodic conferences have the additional salutary effect of deterring questionable discovery practices or actions by gratuitously difficult litigants.
Class Codes and Forms
In the months following entry of the order, committee members met with the chief justice and court operations employees to facilitate the beginning of the project by July 1, 2017. This included preparing various class codes for cases assigned to the commercial court docket (noted above) and standardized forms for lawyers and judges to use as part of the project.
The class codes, as well as the various proposed forms – including Forms CV-950 (Commercial Docket Cover Sheet), CV-955 (Order on Assignment to Commercial Docket), CV-970 (Joint Petition for Discretionary Assignment to Commercial Docket), CV-975 (Order on Discretionary Assignment to Commercial Docket), CV-980 (Standing Order for Cases in the Commercial Docket and Scheduling Order), CV-985 (Management Report by Parties and Proposed Scheduling for Case), and CV-986 (Order on Proposed Timeline and Discovery) – are found on the wicourts.gov website on a page dedicated to the commercial docket pilot project.6
Written decisions from cases assigned to the commercial docket will be located on that page, and eventually on Westlaw and Lexis, and can be cited and relied on for their persuasive authority.
Judges Assigned to Commercial Court Docket
Before the start of the project on July 1, 2017, Chief Justice Roggensack selected the judges assigned to hear cases from the commercial docket. They are:
Waukesha: Judge Michael Bohren, Judge William Domina, and the author, Judge Michael Aprahamian; and
Eighth Judicial District: Chief Judge James Morrison (Marinette County), Judge Michael Judge (Oconto County), and Judge William Atkinson and Judge Tammy Jo Hock (Brown County).
These judges met at the beginning of the project to coordinate consistent practices for the project and committed to participating in monthly conference calls to discuss the handling of cases and the operation of the project. It is also anticipated that judges assigned to the commercial court docket will obtain specialized training to assist them in addressing these cases, including training from the American College of Business Court Judges affiliated with the Antonin Scalia Law School at George Mason University, Fairfax, Va.
The order contemplates reviewing the pilot project three years after the effective date. Presumably, the assessment of the pilot project will address both quantitative and qualitative information. Accordingly, the committee will solicit and welcome feedback regarding the project from parties and lawyers.
The pilot is off to a good start, with several cases assigned to the commercial court docket, and judges working closely with the lawyers in status conferences held every 30-60 days. In addition, two written decisions are already published on the wicourts.gov website for lawyer reference. Nonetheless, there is room for more cases on the dockets. When filing the next case, consider whether the suit is appropriately assigned to the commercial court docket.
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I grew up in Black River Falls and then moved to the mean streets of Brookfield, Wis., when I was 10. Suffice it to say, I had a relatively cloistered upbringing. In ninth grade, my English teacher had the class read To Kill a Mockingbird by Harper Lee. The racial injustice explored in the novel incensed me. But one person – Atticus Finch – stood against the tide, and stood for what was right and just. He did so at great personal risk. My English teacher had the class enact the courtroom scene, and she asked me to play Atticus. In that moment, I knew what I wanted to be when I grew up.
I currently teach a class called Law Governing Lawyers at Marquette Law School, and a recurrent theme is, “With great power comes great responsibility.” Despite the relatively low esteem in which they currently are held in our society, lawyers are in many respects the guardians of liberty and our ideals of justice. Lawyers at all stages in their careers will find themselves in high-pressure predicaments about what to do and how to act. Perhaps the simplest advice I can offer is to picture Atticus in that situation, and ask yourself, “What would Atticus do?”
gov Michael.Aprahamian wicourts Michael Aprahamian, Waukesha County Circuit Court, Waukesha.
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1 SCO No. 16-05, In re creation of a pilot project for dedicated trial court judicial dockets for large claim business and commercial cases.
2 The Business Court Advisory Committee is comprised of Judge James Morrison, Marinette County, Chief Judge of the Eighth Judicial District; Judge Michael Fitzpatrick, formerly on the Rock County Circuit Court and now on the Wisconsin Court of Appeals; and attorneys Michael Brennan, Gass Weber Mullins LLC, Laura Brenner, Reinhart Boerner Van Deuren s.c., Nora Gierke, Gierke Frank Noorlander LLC, and Lon Roberts, formerly secretary of the Wisconsin Department of Financial Institutions and now with the Public Service Commission. It is chaired by John Rothstein, Quarles & Brady LLP.
3 See generally Mitchell L. Bach & Lee Applebaum, A History of the Creation and Jurisdiction of Business Courts in the Last Decade, 60 Bus. Law. 147 (2004).
4 See American Bar Association, Business and Corporate Litigation: Business Courts Subcommittee.
5 See generally Bach & Applebaum, supra note 3, at 275.