Dispute Resolution The Need For A Commercial And Technology Part In New Jersey

Monday, August 1, 2005 - 01:00

Editor: What are the benefits of the creation of a Commercial and Technology Part?

Hoberman: We believe the prompt enactment of this legislation will improve the economic climate in New Jersey. One of the primary reasons why the NJSBA endorsed the creation of a Commercial and Technology Part was to create a cadre of judges with experience in handling not just complex litigation, but commercial litigation of all types. Such action is necessary to expedite review of these matters. The enactment of this bill will enable New Jersey to begin the process of establishing greater predictability in decisions affecting business issues while also streamlining the case management, reducing delay, and promoting the resolution of this type of litigation. These events will make New Jersey a more competitive business environment rivaling the States of Delaware and New York, which already provide for the specialized treatment of commercial litigation. It is important that the State begin this process as soon as possible.

Editor: Who supports this initiative?

Hoberman: The NJSBA recommendations are based on a 1998 report of our Ad Hoc Committee on Business Courts, chaired by Michael R. Griffinger, a principal with the firm of Gibbons, Del Deo, Dolan, Griffinger & Vecchione in Newark, and had a membership including attorney representatives from our Banking Law Section (former NJ Commissioner of Banking Geoffrey M. Connor of Reed Smith), Corporate and Business Law Section (Peter D. Hutcheon, Norris McLaughlin), Dispute Resolution Section, Insurance Law Section, Judicial Administration Committee (former U.S. Magistrate Judge James F. Hammill), NJ Corporate Counsel Association (former President of NJ Corporate Counsel, Richard Jeydel), and a sitting federal magistrate judge who were supportive of the matter.

In addition, since the NJSBA has taken its position in support of a Commercial and Technology Part, other organizations have joined our efforts, including the National Federation of Independent Businesses-NJ, the NJ Bankers Association, the NJ Business and Industry Association, the NJ Cable Telecommunications Association, the NJ Corporate Counsel Association, the NJ State Chamber of Commerce and the NJ Retail Merchants Association. We are also working to secure the support of other business associations.

Editor: Last June, the Supreme Court announced that it had approved a pilot program in four vicinages - Burlington, Hudson, Mercer and Ocean - for handling complex commercial cases in General Equity. Does this address the problem?

Hoberman: No. A common misconcepztion is that a problem exists with complex commercial litigation. Since 1996, the Supreme Court established a complex commercial subtrack to handle difficult cases in Essex and Bergen Counties. In 2000, Track IV was expanded to all vicinages for all complex cases regardless of subject matter. In 2004, the pilot program was established to further address complex commercial cases. The NJSBA applauds the Judiciary's handling of complex cases. The problem arises, though, for "run of the mill" commercial cases which are handled like complex cases because a judge may not be familiar with the legal issues involved and as a result treats the case a "complex" one. This adds delay and unpredictability to the case. To the best of my knowledge, there have been only 77 cases which have applied for the new pilot program. Part of the reason for the low application rate is because of the requirements that the parties waive trial by jury and make other stipulations that may impact upon their ability to proceed in a manner they deem most appropriate.

Editor: Are business courts elitist because they provide special treatment for corporations and business litigants?

Hoberman: No. Family law cases are heard by judges with an expertise in family law. Criminal law cases are heard by judges with a familiarity with criminal law. Mass tort cases in New Jersey are referred to a special set of judges with familiarity in handling "mass tort" cases. Drug cases are also afforded specialized treatment in New Jersey. The NJSBA does not propose "favorable treatment" for certain parties. Rather, we are seeking judges with expertise in business and financial matters to hear commercial cases. Such judges need not be biased in favor of business corporations or financial institutions, but rather, give due regard to the arguments and facts presented by both sides in the context of applicable law. Judges are more likely to avoid error and move a case expeditiously if they have a day to day familiarity with the subject matter and with business civil law.

Editor: Do other states provide for the specialized treatment of commercial cases?

Hoberman: New Jersey is surrounded by jurisdictions in the Northeast which provide for the specialized treatment of commercial cases. Delaware, Maryland, New York, North Carolina, Pennsylvania, Massachusetts, Connecticut and Rhode Island all provide for such treatment of business cases.

Editor: Will the Commercial and Technology Part eliminate the judiciary's flexibility that it has to assign judges to appropriate matters known commonly as "judicial rotation"?

Hoberman: No. When the Tax Court was created in 1977 it required the appointment of judges with a particular expertise in tax. As a result, on November 16, 1998, the Administrative Office of the Courts represented before the Assembly Judiciary Committee that, when given the choice between a Tax Court-like system and a system creating a then-Business Part (and now Commercial and Technology Part), it would prefer the Business Part because such a part would allow the Judiciary to retain flexibility that it would lose if a separate court were created. The Judiciary would retain the same authority which it presently has regarding the assignment of judges. In addition, this legislation, by creating a system where judges familiar with business issues hear business cases, would improve the efficiency and flexibility in the Civil Part of the Law Division to manage and move cases forward. In fact, not only have many Tax Court judges been reassigned to the Superior Court, but some have never sat in that court. Finally, unlike the Tax Court, this legislation has no mandate that judges with a "business law" expertise be assigned to this court.

Editor: Is it inappropriate to create a Commercial Technology Part which might be subject to the same or different rules of court, or rules which have yet to be created?

Hoberman: The rules applicable in Part IV apply to "civil actions in the Superior Court, Law and Chancery Divisions, the surrogate's courts and the Tax Court, except as otherwise provided." Most likely, these rules may be able to apply to a new Commercial and Technology Part, as well. Indeed, we have separate parts governed by the same rules now. In addition, specific rules are tailored to the issues facing each court. It is only natural that a Commercial and Technology Part would develop its own manner of doing business. The Tax Court is an inferior court created by legislation. In addition, no applicable rules of court were in existence when the Tax Court, Family Part or Special Civil Part were created. Such rules were proposed and adopted after the courts were established. In addition, New Jersey's municipal courts, partially funded by municipalities, are governed by rules of court as well.

Editor: Does the enactment of legislation creating a Commercial and Technology Part create an "ethical" issue because of the appearance that the same individuals may appear before the same judges?

Hoberman: Attorneys throughout the state appear before the same judges on a regular basis. Some attorneys reserve their practice to a county or vicinage in a particular area of the law. There is no difference between New Jersey judges who might deal with family law practitioners and judges who might deal with commercial issues. State judges are held to strict ethical standards including compliance with the Code of Judicial Conduct. We do not believe this legislation raises any ethical issues at all. New Jersey judges are well aware of the ethical rules regarding their conduct. As mentioned, the special treatment being proposed in this legislation exists in the jurisdictions of North Carolina, Maryland, Delaware, New York, Connecticut, Rhode Island, Massachusetts, and Pennsylvania without raising such difficulties. While the approaches taken in those jurisdictions differ somewhat from New Jersey's the American Bar Association Section of Business Law has endorsed the "business court" concept. We believe it is highly unlikely that they would do so if an ethical breach might occur.

Editor: Would additional training be necessary to members of the bar who might practice before the Commercial and Technology Part? Would this require Judiciary participation?

Hoberman: Any incidental costs to the bar regarding the establishment of a commercial court in New Jersey would be borne by the commercial bar. Members of the commercial bar have expressed a desire to even pay increased filing fees for such cases if it would help to establish specialized treatment of commercial cases in New Jersey. The reason for this is that additional fees outweigh the additional expense built in to the system because of delay and unpredictability within the present system.

Editor: What is the status of the legislation?

Hoberman: On February 14th, Assembly Bill 3544 was released from the Assembly Judiciary Committee. On June 22, the legislation was released from the Assembly Budget Committee. On June 30th the bill was passed in the General Assembly 78-0 with 1 abstention. It is currently waiting consideration by the Senate Judiciary Committee.

Editor: How can I help advance this legislation?

Hoberman: You could help advance the bill by contacting the following persons to urge the legislation's posting in committee and passage: Hon. Richard Codey, Governor; Hon. Bernard Kenny, Senate Majority Leader; Hon. John Adler, Senate Judiciary Committee Chair; and Hon. Wayne Bryant, Senate Budget and Appropriations Committee Chair. Contact information is available at www.njleg.state.nj.us. However, time is short since this is an election year and substantial grass roots support is necessary between now and November to assure the legislation is considered in the lame duck session of Legislature.

Editors Note: As President this year of the New Jersey State Bar Association, Mr. Hoberman has as his theme "The New Jersey State Bar Association: Back To Business." One component of this is the desire to advance initiatives which secure the mutual interests of the bar and the business community in New Jersey. He believes that Assembly Bill 3544, sponsored by Assemblypersons Patrick Diegnan (D-Middlesex), Peter Barnes (D-Middlesex), Linda Greenstein (D-Mercer/Middlesex) and David Russo (R-Bergen), which creates a Commercial and Technology Court in the Law Division of the Superior Court of New Jersey fits squarely within this mission. The Editor interviews Mr. Hoberman about this legislation.