By Linda G. Burwell and Kellen Myers
Michigan recently enacted legislation creating specialized ‘business courts’ effective January 1, 2013. These courts will look to streamline the judicial process and maximize efficiency for many business related matters. This is a welcome change for owners who would prefer to spend less time dealing with costly litigation and more time running their business.
According to the statute, conflicts falling under the jurisdiction of the business courts (and that meet the minimum claim amount of $25,000) include, but are not limited to: disputes between businesses; disputes between businesses and current or former owners, managers, shareholders, members, directors; and, disputes regarding the organizational structure, governance, or finances of a business or nonprofit. Also included are actions arising out of commercial bank transactions, insurance policies, or commercial real property. Additionally, the statute provides that an action shall be assigned to a business court if all or part of the action includes a business or commercial dispute, even if the dispute also involves claims that are not business or commercial. Further, actions that do not initially include a business or commercial dispute, but subsequently include such a claim, may be reassigned to the business court.
The statute limits employment related matters that can be brought within the purview of these courts. It expressly excludes employment related disputes from its jurisdiction that are:
• personal injury actions
• employment discrimination claims and civil rights actions
• workers’ compensation claims
• wrongful discharge claims (except for actions involving corporate officers or directors)
There may be avenues by which some employment claims could be brought into the jurisdiction of the business courts and prove advantageous in certain matters. However, how the courts will interpret the provisions of the statute remains to be seen. The omission of employment matters from the purview of the new business courts is likely based on the human element involved in employment matters. To be certain, traditional business disputes involving transactional matters are often litigated differently than employment cases, but it will be interesting to see if more broad-based employment issues are ultimately allowed in the business courts. Because of the potential for reduced litigation costs, there may be a movement by employers to seek greater opportunities to use the business court for employment claims such as breach of contract, non-competes or whistleblowing.
Although the law creates a new business docket, the courts would be staffed by current judges and administration. The statute also requires the Michigan Judicial Institute to provide training for business court judges. Hopefully, the specialized docket and judiciary will increase judicial expertise and familiarity with business issues, create a more consistent body of case law, and thus, improve the quality and speed of business related decisions and resolutions. The statute should have an effect on non-business courts as well, allowing judges to focus more time and energy on their existing docket. The sponsor of the legislation, Rep. John Walsh, states that the business courts will “foster an environment in which job creators can flourish,” and the creation of the specialized docket will “establish a speedier method by which to adjudicate disputes between businesses, ensuring job creators will not be tied up for years in court cases.”
There is currently little guidance provided on the operation of these new courts; however, the statute requires most circuit courts (those with 3 or more circuit court judges) to submit a plan for the operation of the courts to the state court administrative office as well as the Michigan Supreme Court for approval. In the meantime, Nemeth Burwell, P.C. will continue to monitor their implementation.
Linda G. Burwell is a founding partner at Nemeth Burwell, P.C., which specializes in employment litigation, traditional labor law and management consultation for private and public sector employers. Ms. Burwell can be reached at lburwell@nemethburwell.com. Kellen Myers is an associate attorney and can be reached at kmyers@nemethburwell.com.
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