Editor: Please tell our readers about the Philadelphia Commerce Court.
Sheppard: The Commerce Court program began in 2000 and has proven to be very successful since that time. That success is attributed to the fact that the judges provide predictable, consistent and timely resolutions to all matters. We have endeavored to make ourselves accessible to the bar so that the whole process is very lawyer-friendly. I have been with the court since its inception, hearing cases on various commercial matters including intra-corporate disputes, Uniform Commercial Code-based actions, surety bonds, trade secrets, non-compete agreements, business torts, securities transactions, corporate trust affairs, declaratory judgment claims against insurers, and third-party claims against insurers.
Editor: Has the jurisdiction of the court expanded either geographically or in terms of subject matter?
Sheppard: Our court is still the only business court in the state. In terms of subject matter jurisdiction, our program has undergone certain changes over time. For instance, we no longer hear class action cases unless they deal with business-to-business issues. Generally, few businesses file class action cases against other businesses so we have not seen as many class action cases as we once did. At the same time the scope of cases has expanded into other areas. At the beginning we were reluctant to hear complex landlord/tenant issues but we are now hearing more of those cases. Aside from that, we try to adhere to the protocols that were established when the program was implemented.
Editor: How does a case come before the Commerce Court?
Sheppard: The parties involved in a case elect whether or not they want the case heard by us. Obviously, if both parties are located here and the case involves a commercial dispute, our jurisdiction would be mandatory. However, most large companies are situated so that they can file a claim in almost every jurisdiction in the U.S. If a party believes that a case should be heard by the Commerce Court but it has not been marked as such, that party can file a notice of program management dispute to have the case heard by our court. I would then review the notice and determine whether the case involves a matter which the court has jurisdiction to hear.
Editor: Does the court hear specialized business cases involving intellectual property, antitrust or employment law?
Sheppard: We hear intellectual property and trade secrets cases to the extent that a dispute is not governed by federal law which would preempt our jurisdiction. With respect to antitrust disputes, Pennsylvania has a state antitrust code but not too many companies base a claim on that code. They rely more on federal antitrust statutes. There has been a recent growth in the number of employment cases being filed which has resulted in some parties trying to bring their claims before our court. Since this is not the focus of the court, most of these cases are removed to a court that has jurisdiction over employment cases.
Editor: What is the average case load for the court?
Sheppard: There are three judges presiding over the Commerce Court: Judge Mark Bernstein, Judge Howland Abramson, and myself. During a year we will typically hear between 600 and 700 cases, meaning that each judge handles between 200 and 250 cases.
Editor: Are the Commerce Court judges specialized?
Sheppard: Both of my fellow judges are very good at what they do. Judges should be able to hear any type of case that come before them. Nevertheless, since the beginning we have tried to bring in people with business-oriented experience who are eager to work in this environment. Judge Abramson has a master's degree in business, and Judge Bernstein has handled various commercial cases. He also published a book on Pennsylvania's rules of evidence.
The common factor in the cases we hear is that they are all very paper intensive. Therefore, it is important for our judges to be attuned to how to manage large volumes of information. We have also learned how to adapt quickly when faced with disputes in areas we have not worked on in the past. These situations are best resolved when judges are willing to listen and learn and counsel does a good job of educating them on the case.
Editor: If a transaction that requires a fast resolution is pending, are judges able to move that case forward on the calendar?
Shepard: This is the only program in our court system where judges have the flexibility to manage their individual calendars. It is up to the individual judge to determine whether a case should be moved forward on his calendar. If faced with that situation, I would move the case up if both lawyers agreed with the request and the request made sense to me.
Editor: Does the court address declaratory judgments?
Sheppard: We receive a lot of motions for declaratory judgments which can be very difficult in complex cases. Because of the complexity involved in many of the insurance-policy coverage issues we handle, we hear a significant amount of declaratory actions concerning them.
Editor: Do you work with parties to achieve a resolution before going to trial?
Sheppard: Definitely. We actively try to get the parties to consider alternative dispute resolution like mediation and arbitration. That has been working well. We work with about 100 experienced business lawyers who serve as volunteers during settlement conferences. They are also available to provide mediation services. The judges in the court do their best to encourage people to take advantage of ADR services. For instance, if someone requested a hiatus to attempt to resolve a dispute through an ADR process, I would certainly grant that request.
Editor: Do parties have the option to request a jury for their trial?
Sheppard: Yes. Some people insist on a jury trial, but we do not get too many of them. We tend to encourage non-jury trials, even though they are more difficult for judges who are required to issue findings of fact and conclusions of law. In a jury trial a judge has to pay attention, know the rules of evidence and provide an honest charge but the jury is responsible for findings of fact. Some non-jury trials can be incredibly difficult and complex so issuing both findings of fact and conclusions of law can require much more effort than cases presented before a jury.
Editor: How does the court manage large disputes?
Sheppard: I recently heard a case involving a dispute between SEPTA (Southeastern Pennsylvania Transportation Authority) and another company over a section of the elevated-train lines. This was a difficult case that lasted two years, with an evidentiary hearing on documents taking place on a weekly basis. The case was eventually resolved when the parties agreed to mediate the dispute and work out a sensible resolution. The majority of the issues raised during those evidentiary hearings arose out of concerns with electronic discovery.
Editor: Does electronic discovery increase the time and money needed to resolve a dispute?
Sheppard: I have two views on it. Sometimes it is better to keep it simple and treat electronic discovery the same way as discovery of hard copy documents. The increased reliance on email as an informal method of communication and the expense associated with establishing proper retention policies can cause problems for companies. Production requests often result in huge monetary expenses, which attorneys will argue impose undue burdens on their clients. However, email often contains information that is critical to the outcome of a case so there needs to be a proper balance between accessing relevant information and not imposing burdensome costs on the party that has to produce the evidence.
Editor: Have the Pennsylvania courts adopted procedural rules similar to the federal rules that require a judicial conference to discuss electronic discovery?
Sheppard: No. We handle those requests on a case-by-case basis based on the lawyers' wishes. Our clerks hold a case management conference 90 days after the case is filed to discuss the case's timetable and any problems that might exist. I will request a meeting with the parties when a significant issue, including one related to electronic discovery, is raised.
Editor: Would you tell our readers about the Commerce Court's track case management system.
Sheppard: That system has been working very well. We assign each case to one of three tracks - expedited, standard, or complex - depending on how long it will take the case to go to trial. We aim to complete expedited cases within 13 months, standard cases in 18 months, and complex cases in 24 months. Within each track, we set further deadlines that must be met. For example, in an expedited case discovery must be finished by the seventh month and any dispositive summary judgment motions must be made by the ninth month. The American Bar Association suggests that cases should be finished within two years and we adhere to those standards to the extent we can through the track case management process.
Editor: Except for New Jersey, states close to Philadelphia have a commerce court. To what extent do you cross-fertilize with these courts?
Sheppard: States interested in establishing business courts have looked to our program and Chief Judge Kaye's program in New York to serve as a guide. Indeed there are commerce courts all over the country - New York, Arizona, California, Chicago, and Delaware. Every year the American College of Business Court Judges hosts a very good, three-day conference with speakers on a lot of issues concerning our field. Judges from all around the country attend.
Editor: Does the court receive support from corporate counsel?
Sheppard: Yes. At times we have worked with DELVACCA. At times we also have corporate counsel come in to represent their clients on matters. For example, I had a case a couple of months ago where Sonoco's in-house counsel represented the company and an in-house counsel from KPMG recently participated in a mediation conference.
Editor: Do you believe that Pennsylvania should establish Commerce Court programs through the state?
Sheppard: Absolutely. I think that this type of court is very worthwhile. I believe that there are other Pennsylvania judges who would agree with that sentiment. Even though our court is still the only business court in Pennsylvania, the state has many excellent judges who provide sound decisions for commercial disputes. For example, Justice Stan Wettick in Pittsburgh has a superior reputation. Ultimately, the Pennsylvania Supreme Court or the state legislature will have to decide whether this program should be expanded to other regions in the state. There has been talk about this expansion but no definitive proposals have been made.