Courting Business

Courting Business

law by Mark Gordon | Managing Editor

Executives and entrepreneurs seeking to get in and out of court before seasons - and sometimes years - change, have found their spot in Hillsborough County. Other Gulf Coast courts could follow.

Dueling Gulf Coast business owners and senior executives with a dispute that ends up in court can agree on one thing: A court proceeding or a trial, even one where they end up on the winning side, can be a siphon on time, profits and many times both.

And not only can the cases themselves drag on, but the typical Gulf Coast civil courtroom can in of itself be a drag, with backlogs as deep as six months in some places.

With those potential delays in mind, a group of Hillsborough County attorneys and a few Tampa-area executives met with Judge Manuel Menendez, Jr. late in 2006. The goal was to get Menendez, the chief judge of the 13th Judicial Circuit Court in Hillsborough County, to sign off on a complex business litigation court.

The court would be set up to handle cases that are business versus business with at least $75,000 at stake, in addition to other business-centric disputes, such as employee contract injunctions and non-compete agreements.

The model for the Tampa court would be the federal business court system, which puts an emphasis on paperwork over in-person hearings and focuses on long-term case management. It would also be modeled on the 9th Judicial Circuit Court in Orlando, which had been operating a business-only court since 2004.

Menendez approved the business-only court experiment early last year, both because he saw the need but also because several new judges were entering the system in 2007 and he thought the timing was right. He put Judge Richard A. Nielsen, a one-time Tampa commercial litigator who had most recently served as a juvenile court judge in the county, in charge of the new business court.

Just over one year and 550 cases later, the verdict is clear: The business court works. So much so that a few lawyers in the Sarasota-Bradenton region are researching the feasibility of implementing a business litigation court for the 12th Judicial Circuit Court, which includes DeSoto, Manatee and Sarasota counties.

Attorneys in Jacksonville are trying to bring one to North Florida, too, and a few attorneys are in the early discussion stages to see if one is needed in the Lee and Collier county area.

"I think it's a really good thing," says Chris Griffin, a commercial litigator with the Tampa office Foley & Lardner, who has argued several real estate and non-compete contract law cases in the 13th Circuit's business court over the last year. "It has been hugely positive."

Indeed, the court has worked out so well, Nielsen calls it a "victim of its own success." Adds Nielsen, who was appointed to the bench by Gov. Jeb Bush in 2000 and was elected in 2003: "Now we are very busy with paperwork."

Complex disputes

Embedded in that paperwork are the stories of hundreds of business conflicts in Tampa Bay. But while the particulars of each case are crucial, and sometimes mean sheer survival to the litigants, Nielsen readily admits his downtown Tampa courtroom isn't filled with spectators or newspaper reporters.

But then again, the court wasn't designed as a place for John Grisham to dream up his next novel idea.

So while a few cases have involved well known Gulf Coast businesses and entities - Outback Steakhouse and Tampa radio host Bubba "The Love Sponge" Clem, to name a few - most of the cases during the first year of the court could be split into two groups: One for employee contract disputes that usually revolve around company secrets and the enforcement of non-compete agreements and one for construction litigation, either over defects in a finished product or payment issues.

The Outback case, heard by Nielsen early last year, was closely followed by the national business community both because of the popular brand name and the legal issues at stake. Outback's parent, OSI, was trying to complete a buyout offer valued at $40 a share so it could become a private firm. But some shareholders were suing to get a higher return on the shares.

The dispute was ultimately settled after Nielsen made a few rulings. The $3.5 billion buyout offer the company closed on June 14 was worth $41.15 a share.

Most of the cases heard in the court aren't as contentious or worth as much money, say Nielsen and some of the attorneys who have represented clients in the court.

Michael Carey, an attorney with the Tampa firm Carey, O'Malley, Whitaker & Manson, has represented several construction firms in the court and as of early March he had about 10 active cases before Judge Nielsen. In one case, Cleary is representing a subcontractor who has done roadwork on the Lee Roy Selmon Crosstown Expressway and claims he hasn't been paid. Another case Cleary is working on involves contractors who allege they haven't been paid for work on a condo project on Treasure Island.

Griffin's cases in the business court have been on the employee-employer dispute side, as opposed to straight-up construction litigation. He also recently settled a major real estate transaction that had started out in the business court.

A realistic plan

Griffin and Carey say one of the keys to the business court's success is the case management system monitored by Nielsen.

The case management starts with both attorneys and clients meeting with the judge to go over the particulars of the case. It's not a deposition, no testimony is heard and it doesn't serve as a settlement conference. Instead, Nielsen comes up with a game plan for the entire case, looking at all of the potential pitfalls.

"It forces [the attorneys] to think through all aspects of the case early on," says Nielsen. "They can plan everything out."

While Nielsen likes the case management process for its tidy and thorough planning process, the attorneys like it because of its predictability and consistency. And over the past year, the case management system has been refined to include only the most important issues. Says Griffin: "The court isn't revisiting the same issues and the same problems."

What's more, Griffin says having the clients in the case management meetings is a good way for them to see how the judicial process works. "It's a known quantity," says Griffin. "You can be much more realistic with your clients."

Case management meetings are regularly held in federal court, but the practice is pretty rare in state and civil courts, save for business-only operations. Another aspect of the business litigation court that separates it from standard civil proceedings is the reliance on paperwork, from motions to dismiss a case to witness lists objections.

While the paperwork can become bulky and tedious, Nielsen says it's far better than having to schedule a hearing for every issue that comes up with all the attorneys and clients. "Motions can bog down a complex business case," says Nielsen.

The judge hopes to see the entire civil court in Hillsborough County implement an e-filing system, which could help ease the paperwork burden. And last summer, when the paperwork continued to pile up, Nielsen was given permission to hire a full-time staff attorney to lighten the load.

The final validation that the court is working, says Nielsen, doesn't come from lawyers or judges. Indeed, it's the speed in which the clients can get results. It might not be as fast, or as judicious, as they would like, but it's a big improvement on what it has been.

"The client," says Nielsen, "wants to get back to business."

Judge Richard A. Nielsen

Presiding judge of the 13th Judicial Circuit Complex Business Litigation Court

Judicial background: Gov. Jeb Bush appointed Nielsen to the bench in 2000 and he was elected to a full term in 2003. He worked in the general civil division and in juvenile delinquency before being named the initial complex business litigation court judge early in 2007.

Legal background: Was a name partner and a commercial litigator with Tampa-based Salem, Saxon & Nielsen for 18 years.

Education: Graduated from the University of New Mexico in 1971 and the University of Florida Law School in 1973. Served as editor of the Law Review at UF.

Source: 13th Judicial Circuit Court, Hillsborough County

Business

Litigation Court

There are four established complex business litigation courts in Florida, including the one in 13th Judicial Circuit Court in Hillsborough County, which covers Tampa Bay.

The first jurisdiction in the state to implement one was Orlando, in 2004, followed by Miami-Dade and Tampa in 2007. The Broward County Circuit Court launched a complex litigation unit earlier this year, where a three-judge panel will hear cases with complex discovery and extensive pre-trial motions.

Florida is one of 14 states nationwide to have some type of business-only court.

The specific rules change for each court, but there are some basic rules that apply to all the courts, including:

• The amount of money in dispute needs to be above $75,000. Otherwise it would be heard in regular civil or small claims court;

• The case must be a business versus a business or a business against an entity once connected to that business. Cases include disputes over trade secrets, non-compete agreements, intellectual property and corporate governance issues;

• Cases that are going to be trials that will last more than two weeks are normally transferred to a regular civil court. Medical malpractice lawsuits and consumer liability cases, which could stretch into months, also aren't held in business courts.

REVIEW SUMMARY

Trend: The 13th Judicial Circuit Court in Hillsborough County is the third in Florida to launch a "business-only" court.

Industry. Commercial litigation

Key. The court, which has been operating for just over a year, is modeled after several facets of the federal court system.