Ohio Practical Business Law : Columbus Ohio Business Lawyer & Attorney : Teri Rasmussen : Plunkett Cooney Law Firm : Commercial Law, Creditors, Business Formation : Columbus, Central Ohio

So now that Ohio has specialized business courts in the form of pilot "commercial dockets", how does it work?  For a concise overview of the impetus for business courts/commercial dockets and how they are being implemented in Ohio, view this unattributed PowerPoint presentation to the Cleveland Bar Association. 

     Q. 1.  What sort of cases will be handled?

In general, cases must involve issues between business entities (can include sole proprietorships, common law general partnerships, or joint ventures) or between individuals involved in a business dispute of some kind. NO CONSUMER OR PERSONAL DISPUTES.    Basically, cases must fall into, and focus primarily on, one of the following categories:

• Corporate Governance - formation, governance, dissolution, or liquidation of a business entity.  Could include receiverships.

• Shareholder/Ownership Disputes - rights or pb;ligations between or among the owners, shareholders, partners, or members of a business entity or between them and the business entity.

• Trade Secrets, Confidentiality, Non-Competes and Similar Employment Related Agreements - Must be between business entity and officer or owner.  Involves business related aspects only.  NO DISCRIMINATION OR LABOR UNION CASES.

• D & O Liability - Rights, obligations, liability, or indemnity of an officer, director, manager, partner, etc. of a business entity owed to or from that business entity.

• Miscellaneous Business Disputes - Disputes between two or more business entites or individuals regarding their business or investment activities and relating to contracts, transactions or relationships between or among them.  Commercial foreclosures, receiverships, and collection cases would qualify.  NO DISCRIMINATION, WAGE, WORKERS COMP, LABOR UNiON, or PERSONAL INJURY CASES.

    Q.  2.  What courts are involved in Ohio?

Several months ago I posted about the origins and scope of business courts and the coming pilot project in Ohio.  At that time, only Hamilton County (think Cincinnati) actually had a pilot program, which had only begun in September 2008, up and running.  Now, Franklin County (which includes Columbus and Central Ohio where I live and practice law)l, Cuyahoga County (Cleveland area), and Lucas County (Toledo) also have pilot programs, all of which started earlier this year.  Montgomery County (Dayton) is reportedly also a possiblity, but apparently has not yet taken formal steps to adopt a pilot program.  No other courts in Ohio are involved. 

According to the Ohio Supreme Court website, the following Common Pleas Judges are overseeing the pilot projects in their courts:

Cuyahoga County Court of Common Pleas:

• Judge Richard McMonagle
• Judge John O'Donnell

Franklin County Court of Common Pleas (provides this short overview of its commercial docket program)

• Judge John Bessey
• Judge Richard Frye

Hamilton County Court of Common Pleas

• Judge Steven Martin
• Judge Beth Myers

Lucas County Court of Common Pleas

• Judge Gary Cook
• Judge Gene Zmuda

     Q.  3.  Are there specific rules concerning commerical dockets?

Yes and No.  the Ohio Supreme Court has added Temporary Rules 1.01 to 1.11  to the Rules of Superintendence for the Courts of Ohio to remain in effect until July 1, 2012.  In addition, the Lucas County Court of Common Pleas has adopted Local Rule 5.08 and Franklin County Court of Common Pleas has adopted Local Rule 94.  Cuyahoga County and Hamilton County do not appear to have adopted any specific local rule.  The Ohio Supreme Court has also posted a sample Pretrial Order on its website.   Except as limited by these rules (mostly procedural and adminstrative provisions), all other rules of evidence, civil procedure, and pleading remain the same as with any other case filed in an Ohio state court.

     Q. 4.  How does a case get assigned to the "commercial docket"?

Cases are originally assigned to judges in the same manner as they have been.  There are THREE possible ways for a case to find its way to the commercial docket:

• The Plaintiff files a Motion for Transfer of the case at the time the Complaint is filed which is hopefully granted.  Ruling on Motion is supposed to be made within TWO days.   That ruling can be appealed to the Court's Administrative Judge within three days and the Administrative J8udge must rule on any appeal within TWO DAYS.  The decision of the Administrative Judge is FINAl and may not be appealed. 

• The Defendant files a Motion for Transfer  whenever it files its initial pleadingwhich is hopefully granted.  Ruling on Motion is supposed to be made within TWO days.  That ruling can be appealed to the Court's Administrative Judge within three days and the Administrative Judge must rule on any appeal within TWO DAYS.  The decision of the Administrative Judge is FINAL and may not be appealed. 

• Judge to whom the case is originally assigned sua sponte transfers the case.

     Q. 5.  What is the benefit of having a case assigned to a commercial docket?

It is hoped that funneling these sorts of cases to a limited number of judges will result in more knowledgeable rulings.  It is also contemplated that commercial docket judges will begin posting their decisions to a public website to promote consistency in decisions.  In addition, all motions in commercial docket cases are supposed to be ruled upon within sixty (60) days after being filed.  Decisions are required to be rendered within ninety (90) days after the c0nclusion of a bench trial.

Special masters can also be appointed with the consent of both parties, although the parties may be asked to pay for this.  Special masters would have the authority to conduct investigations, hold proceedings or enforce orders.

     Q.  6.  How long will the pilot program last?

Currently, it is contemplated that the pilot programs will run until June 30, 2012.  The Ohio Supreme Court has asked commercial docket judges to complete a supplement for commercial docket cases to gather certain statistical information. 

>>>>   It's not clear yet  whether the commercial docket concept is catching on or for that matter whether either lawyers or their clients are even aware of the option.   As with all new things it will take some time to be accepted and longer to evaluate.

>>>>  For many lawyers, myself include, it's hard to know whether commercial dockets can live up to their billing and thus hard to take that first step to make use of them. 

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If you wait long enough, all things old become new again. For a brief four year period over 150 years ago, Ohio had a statutory “commercial court” in which business oriented disputes were resolved. Now a new four-year pilot program will try the idea out again.

New Age of Business Courts

Ohio is among many jurisdictions experimenting with the concept of specialized courts for “business” disputes. One of the driving forces behind this trend seems to be the impression/assumption that having such a specialized court is instrumental in attracting and retaining businesses to a state.  This article about New Hampshire's recent jump on to the business court bandwagon gives you the flavor of this sentiment. 

The 200-year-old Delaware Court of Chancery is of course the grand-daddy of them all. However, Chicago, Manhattan, and North Carolina have had such courts for more than a decade and Rhode Island, Massachusetts, Las Vegas, Reno, Atlanta, Boston, and Pittsburgh have also instituted business courts in some form. Most recently Maine and South Carolina have implemented programs. Colorado and Michigan are currently giving serious consideration to the possibility.  For more information, visit the following:

• Terrific (!!!)  Mississippi Secretary of State Policy and Research Division June 2008 summary/survey of business courts throughout the United States and other resources, including this useful executive summary 
• Central Florida Complex Business Litigation Courts
• North Carolina Business Court
• Maine Business and Consumer Court
• 2005 University of Maryland School of Law survey of existing business and technology courts

Lee Applebaum has penned a very informative article published in the March/April 2008 issue of the American Bar Association’s Business Law Today magazine entitled “The ‘New’ Business Courts: Responding to Modern Business and Commercial Disputes” which provides an excellent overview of the new trend towards specialized business courts. As Lee explains, the new “business” courts tend to have jurisdiction extending beyond the traditional equity jurisdiction exercised by the Delaware Court of Chancery. In addition to the variety of procedural approaches various jurisdictions have taken in establishing “business” courts and/or “commercial dockets”, the scope of cases accepted differs from one court to another.  

• The same issue also has a number of other articles focusing on business/commercial and other specialized courts, both in the U.S. and elsewhere in the world.

Ohio's New  "Business" Courts 

About a year ago, Ohio Chief Justice Thomas Moyer appointed a Task Force to study the best method for establishing commercial litigation dockets in Ohio’s trial courts.  The Ohio Supreme Court has now approved a pilot program permitting Common Pleas Courts in five counties to voluntarily institute business courts pursuant to new temporary rules 1.01 to 1.11 of the Rules of Superintendence of the Courts. Carolyn Kobus, a law clerk at my law firm this summer, prepared an excellent summary of these rules.

Business First (which continues to persist in  requiring paid access to its archives) gave this update as to Ohio generally and Hamilton County in particular.  Hamilton County has already moved forward with the plan and Franklin County is currently considering how to implement business courts. The Ohio Supreme Court's Temp. Sup R. 1.03 sets out the sorts of cases that will be accepted; they are:

1. formation, governance, dissolution, or liquidation of a business entity
2. rights or obligations between or among the owners, shareholders, partners, or members of a business entity, or rights and obligations between or among any of them and the entity
3. Trade secret, non-disclosure, non-compete, or employment agreements involving a business entity and an owner, sole proprietor, shareholder, partner, or member thereof
4. rights, obligations, liability, or indemnity of an officer, director, manager, trustee, partner, or member of a business entity owed to or from the business entity
5. Disputes between or among two or more business entities or individuals as to their business or investment activities relating to contracts, transactions, or relationships between or among them, including without limitation the following:

• Transactions governed by the uniform commercial code, except for consumer product liability claims
• purchase, sale, lease, or license of, or a security interest in, or the infringement or misappropriation of, patents, trademarks, service marks, copyrights, trade secrets, or other intellectual property;
• purchase or sale of a business entity or the assets of a business entity;
• sale of goods or services by a business entity to a business entity
• Non-consumer bank or brokerage accounts, including loan, deposit, cash management, and investment accounts
• Surety bonds and suretyship or guarantee obligations of individuals given in connection with business transactions;
• purchase, sale, lease, or license of, or a security interest in, commercial property, whether tangible, intangible personal, or real property
• Franchise or dealer relationships
• Business related torts
• Cases under antitrust laws;
•  Cases relating to securities, or relating to or arising under federal or state securities laws
• Commercial insurance contracts, including coverage disputes.

There is also a specific list of cases which the “business” court will not hear; these are:

• Personal injury, survivor, or wrongful death matters
• Consumer claims against business entities or insurers of business entities, including product liability and personal injury cases, and cases arising under federal or state consumer protection laws;
• occupational health or safety, wages or hours, workers’ compensation, or unemployment compensation
• occupational health or safety, wages or hours, workers’ compensation, or unemployment compensation
• Matters in eminent domain;
• Employment law cases
• Cases in which a labor organization is a party
• Cases in which a governmental entity is a party
• Discrimination cases based upon the United States constitution, the Ohio constitution, or the applicable statutes, rules, regulations, or ordinances of the United States, the state, or a political subdivision of the state;
•  Administrative agency, tax, zoning, and other appeals;
•  Petition actions in the nature of a change of name of an  individual, mental health act, guardianship, or government election matters
•  Individual residential real estate disputes, including foreclosure actions, or non-commercial landlord-tenant disputes
• domestic relations, juvenile, or probate division of the court
• jurisdiction of a municipal court, county court, mayor’s court, small claims division of a municipal court or county court, or any matter required by statute or other law to be heard in some other court or division of a court
• Any criminal matter, other than criminal contempt in connection with a matter pending on the commercial docket of the court

Will Ohio's Business Courts Work?

One weakness I see in the pilot program is the assignment procedure for getting the case to a “commercial docket judge.” It relies upon the attorneys involved in the case to file appropriate motions to have the case transferred, and if they fail to do so, by the judge presiding over the case. To me it seems like it would have been a whole lot easier to have the case designated as a “commercial” case when filed and routed directly to the appropriate judge from there. In Franklin County, cases such as foreclosure, professional tort, and other particular sorts of cases are already separately designated by specific letter abbreviations included in the case number they are given. 

In addition, while the temporary rule requires a ruling on the transfer motion with two days, as well as decisions on other motions within 60 days, I’m a bit skeptical as to how often that will actually happen in reality.  

On balance, however, I support the concept of “business” courts. Throughout most of my career much of my litigation experience has occurred in federal bankruptcy court. I have always appreciated the fact that you could proceed to deal with the particular issue involved rather than having to begin each time by educating the judge as to the entire philosophical and structural framework of applicable law.  

In addition, over time, as a “regular” down at bankruptcy court, attorneys come to understand the likely range of results emanating from particular recurring fact patterns. This allows attorney to offer better counsel and advice to clients as to the relative merits of settling or pushing forward with the case. That in turn promotes judicial economy as more cases are resolved by the parties now that they have greater certainty as to possible outcomes.

I hope that the Franklin County Common Pleas judges agree to participate in the pilot program.

UPDATE: The Daily Reporter, the daily legal newspaper in Columbus, reports that Franklin County judges will join Hamilton County in a pilot commercial docket program.  Cuyahoga County, where Cleveland is located, is also expected to approve participation in the pilot program.  The pilot program is supposed to be implemented by early 2009 and would remain in effect through July1, 2012.

UPDATE: The University of Maryland School of Law Journal of Business and Technology's website has an up to date  summary of  Recent Developments in State Business and Technology Courts which briefly explains the status in more than twenty states and also has some interesting recent news briefs.  (Hat tip to Rush Nigut of Rush on Business for this link.)

UPDATE:  The Cuyahoga Common Pleas Court is now on board for the pilot program.  Check out this informative Q & A on business courts appearing in The Cleveland Plain Dealer. 

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