New Jersey Looks to Restructure its Courts to Better Serve the Business Community

In April 2014 the Working Group on Business Litigation, formed in the fall of 2013 by New Jersey Chief Justice Stuart Rabner, issued its report and recommendations on the needs of business litigants. This process is a continuation of the steps the Judiciary has taken to improve New Jersey’s business friendliness. Previous steps have included:

  • The creation of the General Equity part in the Chancery Division.
  • A 1996 Bergen and Essex vicinage commercial pilot program where a judge with a business background is given discretion to handle complex commercial cases from start to resolution.
  • The 2000 Best Practices 4-track case management system.
  • The 2003 adoption of Rule 4:38A addressing Multicounty Litigation.
  • A 2004 pilot program permitting a party to complex commercial litigation to request a General Equity designation in lieu of one in the Law Division, Civil Part.

First, the working group first identified the commonalties typical to business and commercial litigation. It identified that these disputes are most often between businesses but sometimes can involve one or more individuals who have an interest in the company. Internal management disputes and power struggles for ownership and operational control also make-up a significant portion of commercial matters. Finally, enforcement of non-competes, no-poach, and other restrictive covenants intended to protect business interests comprise the final sizable portion of business litigation. Decorative Scales Of Justice In The Courtroom Representative for the business community provided the committee with insight into the needs and suggestions of New Jersey businesses. They stressed the effectiveness and importance of the judiciary providing a judge with a business background to handle litigated matters. Further they stressed the importance of a cost-conscious process, certainty in the state of the law, timely and speedy adjucation of matters, and reliance on decisions as providing finality. The committee analyzed the currents programs offered by New Jersey courts, the structure of the courts and the practices currently employed.   Public comment is currently being accepted by the judiciary. The following provides a brief summary of the committee’s recommendations with some brief comments regarding the committee’s recommendations.

Recommendations of the Working Group

First, in a victory for supporters of New Jersey’s unified court system, the committee decided that the creation of a separate business court was unnecessary. Rather the committee recommended to make changes to the current structure of the judiciary to better serve the needs of New Jersey businesses. First the committee has recommended the discontinuation of the 2004 pilot program. The committee’s stated reason for this determination includes that the program is, “drastically underutilized”. While the group stops short of definitively stating why this program has failed to gain traction, it does suggest two factors that may have played a role. First, it identifies the protocol and procedural burdens as a possible reason for its underutilization. Second, it states that the public may not have had knowledge of the program. In addressing the committee’s reasons for discontinuing the program in order of complexity, the latter issue of publicity hardly seems to be a strong justification for the program’s discontinuation.   A lack of public awareness can be cured by notices to the bar, publicity to the general public, or changes in procedure that can serve to familiarize attorneys with this option where it is available (Burlington, Mercer Hudson and Ocean Vicinages). The former likely provides a stronger justification for the pilot’s discontinuation because to avail oneself of the program procedure required:

  • A written request for entry into the program.
  • A written waiver of jury trial requiring the signature of counsel and all parties.
  • A written consent granting the court use of alternative dispute resolution techniques
  • A written request expediting discovery.
  • 30 days to submit the written requests following joinder of parties in a complex commercial matter

Even upon satisfying each of these requirements, the General Equity judge was permitted to deny entry into the program if he or she determined that the litigation was improperly classified as “complex commercial”. The numerous procedural requirements for this program likely dissuaded attorneys from recommending its use especially when the case could still be denied admittance despite mutual consent. Further, it is possible that when a matter could have been filed in the Bergen or Essex Vicinage, where the less onerous 1996 pilot was available, attorneys availed themselves of this opportunity to take advantage of the more familiar and more established program with less onerous procedural requirements. Two businessmen having a difference of opinion The committee’s second, and final, structural recommendation, and perhaps the actual but unstated reason for the discontinuation of the previously discussed program, is the dropping of the pilot designation from the Essex/Bergen and expanding the program sate-wide. The new program is recommended to be implemented by the following steps:

  • Each vicinage is to appoint one judge, with a complex commercial litigation background, to hear and decide commercial matters.
  • A protocol is to be developed to identify complex commercial matters (508).
  • Exemption from mediation and arbitration programs of complex commercial matters.
  • Both jury and non-jury trails can be addressed.
  • A proposed $200,000 threshold amount in dispute applies. In matters with a lesser amount in dispute, parties may move for inclusion in this program
  • Complex commercial judges must issue at least two opinions yearly. The opinions are to be publicized through the Judiciary’s website.

Overall, it appears that the state-wide expansion of the 1996 pilot program and recommended changes are fairly well-targeted to address many of the concerns raised by New Jersey’s business community. The appointment of judges who will specialize in this area is likely to improve the quality of analysis and, when appropriate, better inform jurors of the law. The more permissive and generally flexible procedural requires are likely to encourage the use of the program. Finally, the publication of complex litigation opinions is likely to better publicize the state of law in New Jersey. Such publication is likely to allow lawyers to provide clearer and more reliable advice. Businesses are likely to be able to proceed with operations with more certainty as the areas of legal uncertainty are clarified and elucidated. Public reaction to the plan has been positive and multiple representatives of the privately operated New Jersey Civil Justice Institute have spoken favorably about the plan. However interested parties are request to comment on the plan by June 6, 2014. All in all, it appears that as the courts become more sophisticated and better equipped to handle complex business litigation matters, the important of an experienced and knowledgeable complex commercial litigation attorney can only increase.