Douglas L. Toering on the role of Michigan’s business courts
By Steve Thorpe
Legal News
Douglas L. Toering is a partner at Mantese Honigman PC. He was in-house counsel for General Motors Corporation, then a partner at a national litigation firm, and then principal at his own firm. His practice includes commercial litigation, shareholder disputes, insurance litigation, and business mediation. Toering has presented on business courts to the Business Law Section, Michigan’s Institute for Continuing Legal Education, and the Michigan Association of Certified Public Accountants. He has also authored articles on business courts for the ABA’s Business Law Today, the National Judicial College, Michigan Bar Journal, and Michigan Business Law Journal.
Thorpe: What were the origins of Michigan’s business courts?
Toering: The origins of the business courts in Michigan go back to about 2001. Implementing the concepts eventually embodied in the business courts required considerable effort through various committees in the State Bar of Michigan as well as on the legislative side. Diane L. Akers did much to spearhead this. Fast forward to 2011 and 2012. Two specialized business dockets were established, one in November 2011 (Macomb County; Hon. John C. Foster) and another in March 2012 (Kent County; Hon. Christopher P. Yates).
The business dockets in both Macomb County and Kent County emphasized active case management, such as initial pretrial disclosures (with a follow-up pretrial report) along with an early court conference and a detailed case management plan. Oakland County developed its own plan for processing business cases.
The idea of business dockets gained traction. Finally, in October 2012, the business court statute, MCL§ 600.8031, was signed by Governor Snyder. It was effective January 1, 2013. Subsection (3) of the statute specifically codified the purpose and function of business courts. MCL§ 600.8033. In general, the goals of the business courts are to increase efficiency and to enhance the consistency and predictability of decisions in business and commercial cases.
The statute limits jurisdiction to “business or commercial disputes,” and generally excludes claims involving individual consumers.
The business courts are not separate courts. Rather, the business courts are separate dockets assigned to existing circuit court judges.
For a more in-depth discussion of the history of business courts in Michigan, see http://apps.americanbar.org/buslaw/ blt/content/2013/01/article-03-toering.shtml.
Thorpe: How have the business courts evolved since their inception?
Toering: Since the business court legislation was passed in October 2012, a total of 17 Michigan counties have business courts. Each business court has an administrative order. Different courts have different protocols and policies.
The Michigan State Court Administrative Office (SCAO) has an excellent resource for the business courts.https://courts. michigan.gov/Administration/admin/op/Business-Courts/Pages/ Business-Courts.aspx
Thorpe: How have the business courts sped up the judicial process?
Toering: Efficiency is one of the key goals of the business courts. Two of the main ways that business courts are able accomplish this goal are with early and active judicial involvement and early ADR (typically, early mediation). Regarding the former, many business court judges convene an early status conference. At that conference, the judge will often review a summary of the plaintiff’s claims, the defendant’s defenses and counterclaims, and counsel’s proposed discovery schedule. The court will also inquire about the status of settlement negotiations and whether a “business solution” is possible (“I will agree to sell you more steel but at a lower price, and you will agree to buy all your steel from me”). Often, the court will issue a customized scheduling order.
In addition, the court typically requires early mediation. Early mediation has often proven effective at either settling cases early in the litigation or narrowing the issues. In cases where the early mediation does not resolve the case, it can set the stage for a renewed settlement discussion later. In a mediation setting, the mediator can remind the parties that money is fungible: Whatever they spend on legal fees, accountants, experts, and court reporters is money that is not available to invest in their business, save for retirement, or help pay for their children’s college education.
Business courts also enhance predictability. Decisions of the business court judges are published at the SCAO website. https://courts.michigan.gov/opinions_orders/businesscourtssearch/pages/default.aspx. There, anyone can search opinions from a particular business court on one of 24 different topics, from agriculture; to directors, officers, managers, and shareholders; to organizational structure; to the Uniform Commercial Code. Accessing the opinions allows attorneys to understand how a particular business court judge is likely to rule on a particular topic. Armed with this information, an attorney might recommend against filing a motion to a client (because the judge is unlikely to grant the motion) or against opposing a motion (because the judge is likely to grant the motion.)
Thorpe: Is discovery different in the business courts?
Toering: When early mediation is ordered, the court will typically allow the parties a limited amount of time (usually, 90-120 days) to conduct initial discovery. This usually is sufficient to provide enough discovery for a meaningful early mediation. If mediation does not settle the case, then discovery can resume.
Some business courts also emphasize proportional discovery. Other business courts require initial disclosures. See, e.g., the Oakland County Business Court Case Management Protocol. https://www.oakgov.com/courts/businesscourt/Documents/ocbc-pro-case-management.pdf. The best practice is to check the administrative order for the particular business court and the protocol for a particular business court judge. The Michigan Business Law Journal also includes a regular column on business courts. For example, the Fall 2018 issue includes a discussion on the Wayne County Business Court with Judge Lita M. Popke, Judge Edward Ewell, Jr., and Business Court Presiding Judge Brian R. Sullivan. https://higherlogicdownload.s3.amazonaws.com/MICHBAR/ebd9d274-5344-4c99-8e26-d13f998c7236/UploadedImages/pdfs/journal/Fall2018.pdf#page=10. An upcoming issue will feature a discussion with Judge James M. Alexander and recently retired Judge Wendy L. Potts of the Oakland County Business Court.
Another discovery innovation utilized in the business courts is discovery facilitation. In this process, volunteer attorneys meet with counsel before the hearing on a discovery motion. The discovery facilitator will help counsel reach an agreement on the discovery dispute. In Oakland County, for example, this has proven to be an effective way of resolving many discovery disputes. (Oakland County’s general civil docket also uses volunteer discovery facilitators.) Other courts have found that discovery facilitation is not necessary. That’s fine. What works in one county might not in another county.
Thorpe: Are there ever jury trials in business court?
Toering: Yes, the business court statute does not affect the right to a jury trial. But in some courts, a jury trial is requested in only about 20% of the cases. In other courts, jury demands may be more common. That being said, SCAO’s most recent data are that only about 1% of civil cases filed in Michigan go to verdict (either by a judge or jury). The remainder are settled, dismissed, go to arbitration, or are otherwise resolved.
Thorpe: What changes, if any, might be on the horizon for business courts?
Toering: Perhaps the biggest issue here is jurisdiction. In recent amendments to the business court statute, declaratory judgment actions among no fault insurers were eliminated from the business court’s jurisdiction. Other refinements of the business court jurisdiction are likely.
On a related issue, some of the practices from the business courts are likely to be included in upcoming amendments to the Michigan Court Rules. These include proportional discovery. https://courts.michigan.gov/Courts/MichiganSupremeCourt/rules/court-rules-admin-matters/Court%20Rules/2018-19_2018-11-28_publish%20order.pdf.
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