Utah businesses get their own court
With the stroke of a pen, Utah’s Governor has created a seismic shift in how business disputes may be litigated in Utah. During the 2023 General Session of Utah’s 65th Legislature, Utah’s legislators promulgated and unanimously passed H.B. 216, which “addresses the establishment of the Business and Chancery Court” in Utah. On March 20, 2023, Governor Cox signed the bill into law and officially established a Business and Chancery Court in Utah. The Business and Chancery Court is specifically tailored to offer business litigants a swift resolution to commercial lawsuits through many unique features built into the Business and Chancery Court by Utah’s legislature. Businesses, professionals and legal practitioners should all be aware of the Business and Chancery Court and its inevitable effects on business litigation in Utah.
What is a business court?
Several states have a court, or a division of a court, that specialize in hearing corporate and commercial disputes. These specialized courts are often referred to as “business courts” or “chancery courts.” Perhaps the most notable, and certainly the oldest, business court in the United States is Delaware’s Court of Chancery. The Court of Chancery was created in 1792 and today is recognized by many legal practitioners as one of the finest forums in the nation for litigating corporate and business disputes. Several other states have followed in Delaware’s footsteps by creating specialized courts that hear corporate disputes, including, North Carolina, which established a Business Court in 1996; and Georgia, which began operating a state-wide Business Court in 2020. Though the business courts of Delaware, North Carolina and Georgia have several unique rules and procedures, they are all aimed at providing business litigants with a specialized forum in which business disputes may be quickly resolved. Utah’s Business and Chancery Court was created with the same goal.
Why did the Utah Legislature create the Business and Chancery Court?
The legislative history of the Business and Chancery Court reveals that Utah’s legislators created the Court to spur commercial activity in Utah by making business litigation easier and more consistent. During legislative session floor debates, Utah State Representative Brady Brammer who sponsored H.B. 216 explained why he believes Utah will benefit from the Business and Chancery Court. In his explanation, Representative Brammer made several references to how he believes the Delaware Court of Chancery has furthered Delaware’s economic development, stating:
[O]ver half of the Fortune 500 companies are incorporated in Delaware. Over half of the publicly-traded companies are incorporated in Delaware. In fact, that level of incorporation leads to 25% of the Delaware state budget. Now, one of the big reasons why they all incorporate in Delaware is because [Delaware has] a Business and Chancery Court.
Just as the Delaware Chancery Court benefits Delaware, Representative Brammer stated that Utah’s Business and Chancery Court will “be an asset for the state.” State Senator Kirk Cullimore who also sponsored H.B. 216 echoed Representative Brammer in Senate floor debates stating that establishing the Business and Chancery Court “will encourage businesses to register and litigate in Utah, which has the potential of increasing revenue and economic activity in [Utah], expediting the judicial process for business litigation, and … relieving the [non-business] courts of these types of lawsuits.” Representative Steven Lund also spoke favorably of the Business and Chancery Court, stating “I want to encourage our support of [the Business and Chancery Court]. Utah is a business-friendly state … anything we can do to increase that, we should.”
Before H.B. 216 was passed, in addition to Utah’s legislators, some stakeholders in Utah’s legal industry also expressed why they believe the Business and Chancery Court will benefit Utah. Erik A. Christiansen president-elect of the Utah State Bar and a shareholder at Parsons Behle & Latimer heartily endorsed the Business and Chancery Court when it was being considered by the Utah Senate Judiciary, Law Enforcement and Criminal Justice Committee. In a February 2023 hearing before the Committee, Mr. Christiansen stated that H.B. 216 was “pro-business” and was “going to put Utah on the map.” He further stated that the legislation “helps Utah corporations have the protections they need so that when they have complex issues […] they’re before a specialized court that understands this area of the law, that has a judge committed to this.”
Key features of the Utah Business and Chancery Court
Utah’s Business and Chancery Court will have several unique key features that are aimed at making it an attractive forum for business litigation.
Limited statewide jurisdiction
The Business and Chancery Court will have a limited jurisdiction that extends throughout Utah. The Court’s jurisdiction will be limited to disputes that are 1) seeking monetary damages of at least $300,000 or seeking solely equitable relief, like an injunction; and 2) with a claim arising from one of several enumerated causes of action, which are all related to commercial activities. This means that the Business and Chancery Court will not hear disputes that involve small amounts of money, nor will it address lawsuits that are unrelated to business, like criminal lawsuits or personal injury lawsuits.
Venue and location
Unlike other trial-level courts in Utah, the normal rules for establishing proper venue, or the proper physical location of a lawsuit, do not apply to the Business and Chancery Court. Rather, the Business and Chancery Court will be located in Salt Lake City and may perform any of the Court’s functions in any location within the state.
Business and Chancery Court judges
The judges who serve on the Business and Chancery Court will be entitled to elect a member of Utah’s Judicial Council, a policy-making body that adopts rules for the administration of Utah’s courts.
Tentative rulings and published orders
The Business and Chancery Court must publish all final decisions and orders and must make all final decisions and orders public on the Utah Courts’ website. In a January 2023 House Judiciary Committee hearing, Representative Brammer explained why the Business and Chancery Court has this requirement: “[w]hen you publish orders, you gain consistency in predictability with how courts will handle things… [so] our businesses will be better able to … analyze risk.”
In addition to publishing its final decisions and orders, the Business and Chancery Court must provide the parties with a proposed ruling on each of their motions 48 hours before the day on which oral argument is held on the motions.
The Business and Chancery Court will not conduct jury trials. Rather, the Business and Chancery Court itself will be the fact finder in any trial that takes place in the Business and Chancery Court. If a party requests a jury trial in the Business and Chancery Court, then the lawsuit must be transferred to one of Utah’s district courts.
How will the Business and Chancery Court affect business disputes?
While only time will tell how the Business and Chancery Court will affect Utah business disputes, members of Utah’s legal community who were not involved in the Court’s creation have a mixed view of the impact the Business and Chancery Court will have on corporate litigation in Utah. When asked his opinion of the new Business and Chancery Court, Michael Zimmerman former Chief Justice of the Utah Supreme Court and a sought-after appellate attorney stated his belief that the Court could create some unintended challenges. He suggested that the Business and Chancery Court may lead to forum shopping, where litigants attempt to strategically bring their lawsuit before a court that will likely rule in their favor. Zimmerman also proposed that because there is no requirement that the Business and Chancery Court judges have judicial experience, there is a potential that a novice judge will sit on the Business and Chancery Court, which could “undermine the advertising value of the court.” Finally, though he recognizes the potential benefits for litigants, Zimmerman expressed concern that the Business and Chancery Court is required to issue tentative rulings on motions before they are argued. “This seems to me an unfortunate and intrusive reaching into a judge’s chambers to manage the details of the judge’s workload management based on some lawyer’s idea of good practice,” says Zimmerman. While Zimmerman identified several concerns, he also stated “[t]hat legislators might think a business court will attract new businesses to the state is understandable,” and “I hope my concerns will not be realized, and that the court will fulfill the sponsor’s best intentions.”
Along with Zimmerman, V. Lowry Snow who served in the Utah House of Representative for 11 years and is a former president of the Utah State Bar was also willing to express his opinion about the Court, stating Utah’s legislators “should have done this 10 years ago.” Snow said he was “very excited about this turn of events,” and stated that the Court will go a long way in providing a comfortable business climate to corporations that call Utah home. Along with expressing his general support of the Court, Snow suggested that the unique features of the Business and Chancery Court would likely benefit business litigation in Utah by directing time-consuming, complex business cases away from courts of general jurisdiction, which must prioritize other time sensitive cases, like criminal matters, to the new specialized Court. Snow stated that he is “in favor of the $300,000 jurisdiction threshold” imposed on the Business and Chancery Court, as he believes it is an appropriate demarcation between the types of cases that should be handled by the Business and Chancery Court and courts of general jurisdiction.
Moreover, Snow spoke favorably of the tentative rulings that the Business and Chancery Court must issue. “The biggest hurdle in litigating business disputes is time and expense,” said Snow. He suggested that early indications of courts’ proclivities contained in the tentative rulings could help facilitate quick settlements to business disputes and save clients time and money.
Finally, Snow noted that though he was surprised H.B. 216 contains no requirements related to a Business and Chancery Court judge’s prior experience, he was not overly concerned that a novice jurist will be nominated to sit on the Court. Mr. Snow stated that the nominating commission that will be responsible for advancing judicial candidates to fill the open seats on the Court “will vet candidates that have the type of experience necessary to sit on these [complex business] cases and decide them” and that it “would be anti-productive to put a novice judge in the position.” Snow’s comments suggest that the Business and Chancery Court will strengthen Utah’s courts’ ability to handle business disputes effectively and efficiently.
Utah’s Business and Chancery Court represents a tremendous change in how business disputes may be litigated in Utah. If you are interested in learning more about how Utah’s new Business and Chancery Court could affect you or your business, please do not hesitate to reach out to one of Parsons Behle & Latimer’s seasoned business litigation attorneys.
About Benjamin D. Perkins
Benjamin D. Perkins is an associate attorney at Parsons Behle & Latimer who helps clients successfully navigate complex commercial disputes in both state and federal courts. Ben is particularly well-equipped to protect clients’ intellectual property assets and regularly helps clients safeguard their professional reputations and relationships. He is licensed in Utah and Georgia. To reach Ben, call 801.536.6779 or send an email to [email protected].
About Julianne P. Blanch
Julianne offers more than the nationally-recognized skills she has honed as a trial lawyer to bring complex commercial disputes to resolution. Clients realize her skills also make her well-equipped to advise on pending lawsuits, serve as an expert in legal malpractice cases, advise product manufacturers and draft tailored business contracts.