As published in the September 1, 2010 Toledo Business Journal
Judge Gene Zmuda
Lucas County Court of Common Pleas
Commercial docket to aid business development
Toledo Business Journal recently spoke with Judge Gene Zmuda at the Lucas County Court of Common Pleas. He shared the following thoughts.
Toledo Business Journal: Can you discuss the Ohio Supreme Court’s initiative concerning a commercial docket and the pilot program in Lucas County?
Gene Zmuda: Lucas County was asked by the Ohio Supreme Court whether or not it would be interested in participating in a pilot program for a specialized docket related to a commercial docket or commercial cases. That is an outgrowth of a study that commenced in 1994 with the Ohio State Bar Association about a need from some attorneys’ perspectives to have a specialized docket geared only toward business or commercial litigation.
After some discussions, the Supreme Court of Ohio authorized the establishment of a task force in 2007 to study the issue. The task force studied the issue, then they came up with this pilot program. They asked the five most populated counties whether or not they’d be willing to participate in this pilot program: Lucas, Cuyahoga, Franklin, Hamilton, and Montgomery Counties. Of those five, all but Montgomery County agreed.
For the pilot program that we have instigated here in Lucas County, two of the ten general division judges have been selected by the Supreme Court to serve as the commercial docket judges for the County. I am one of them, and the other is Judge Gary Cook.
The rules of assignment and the nuts and bolts of how the program operates have been promulgated by the Supreme Court. The sense behind the commercial docket and this pilot program is to study whether or not, on a statewide basis, Ohio should create a specialized docket for commercial cases.
The reason for looking into whether or not a commercial docket should be established as a specialized docket recognizes that, in terms of businesses, the mechanism and the procedures employed by our court system to handle disputes can take too long. That the resolution ultimately achieved doesn’t help the pressures a particular business has with respect to the dispute.
Some states have created specialized dockets. The first and probably the most experienced state would be Delaware. The state of Delaware has created what’s known as chancery courts. Those are business courts, and that’s all that court does in Delaware.
Some will argue that, of all the states in the US, the one with the highest number of incorporations is Delaware. The state has laws for the creation of corporations, and when those corporations find themselves in dispute, the mechanism for resolving them is a little more efficient than the typical court process.
We’re charged with monitoring the efficiency with which we can resolve cases; but, there is also an outreach into the community to let business persons know that, with a specialized docket, the issues can be resolved promptly and efficiently. By allowing the courts to again play a role in the resolution of disputes, we have something that binding arbitration and private mediation don’t have… When you come into this court and you ask the court to make a decision on a legal issue, a ruling is rendered. That ruling becomes law, because it’s part of the basis of our court system.
There really hasn’t been a growth of case law and commercial litigation for a long time because businesses have been avoiding the courts. The problem with binding arbitration is that there’s not precedent value. There is a precedent value being set in any case that we decide.
We are in our second year, and we maintain statistics and keep track of [our process]. Because [the program is] in conjunction with the Ohio Supreme Court, our decisions are all being published through the Supreme Court website. Other courts, even if they’re not commercial docket courts, have access to the information.
TBJ: What specific types of cases are assigned to this docket? What business cases are the most appropriate?
GZ: Once the decision was made to create this trial program, we had to determine what constitutes a commercial docket case. The rules that have promulgated by the Supreme Court clearly identify what is and is not a commercial case.
A commercial docket judge shall accept a civil case, including any jury; non-jury; injunction, including any temporary restraining order; class action; declaratory judgment; or derivative action into the commercial docket of the pilot project court if the case is within the statutory jurisdiction of the court and the gravamen of the case relates to any of the following:
- The formation, governance, dissolution, or liquidation of a business entity;
- The rights or obligations between or among the owners, shareholders, partners, or members of a business entity, or rights and obligations between or among any of them and the entity;
- Trade secret, non-disclosure, non-compete, or employment agreements involving a business entity and an owner, sole proprietor, shareholder, partner, or member thereof;
- The rights, obligations, liability, or indemnity of an officer, director, manager, trustee, partner or member of a business entity owed to or from the business entity; and
- Disputes between or among two or more business entities or individuals as to their business or investment activities relating to contracts, transactions, or relationships between or among them.
A commercial docket judge cannot accept a civil case into the commercial docket of the pilot project court if the gravamen of the case relates to any of the following:
- Personal injury, survivor, or wrongful death matters;
- Consumer claims against business entities or insurers of business entities, including product liability and personal injury cases and cases arising under Federal or State consumer protection laws;
- Matters involving occupational health or safety, wages or hours, workers’ compensation, or unemployment compensation;
- Environmental claims, except those arising from a breach of contractual or legal obligations or indemnities between business entities;
- Matters in eminent domain;
- Employment law cases, except those involving owners described in division (A)(3) of this rule;
- Cases in which a labor organization is a party;
- Cases in which a governmental entity is a party;
- Discrimination cases based upon the US constitution, the Ohio constitution, or the applicable statutes, rules, regulations, or ordinances of the US, the state, or a political subdivision of the state;
- Administrative agency, tax, zoning, and other appeals;
- Petition actions in the nature of a change of name of an individual, mental health act, guardianship, or government election matters;
- Individual residential real estate disputes, including foreclosure actions or non-commercial landlord-tenant disputes;
- Any matter subject to the jurisdiction of the domestic relations, juvenile, or probate division of the court;
- Any matter subject to the jurisdiction of a municipal court, county court, mayor’s court, small claims division of a municipal court or county court, or any matter required by statute or other law to be heard in some other court or division or a court; and
- Any criminal matter, other than criminal contempt in connection with a matter pending on the commercial docket of the court.
TBJ: How long has the program been in operation in Lucas County? What have been the results to date?
GZ: We’re in our second year, and it’s a five-year program. The task force meets annually now, and we report our experiences. On a monthly basis, the task force is keeping statistics in terms of the cases that are assigned and the cases that were resolved.
At the end of this pilot program, the task force will make a recommendation to the Supreme Court as to whether or not they should maintain and make permanent the specialized docket with commercial litigation. So, it will be up to the task force based, in part, on what we provide to the task force in Lucas County as well as the brothers and sisters who are doing it in the other communities.
I see a lot of business lawyers now on a regular basis, and they uniformly indicate how much they enjoy and think it’s a good idea that there is this commercial case docket here in Lucas County.
If we do nothing else, we expedite and bring in the parties on a far faster basis than has typically been the norm in litigation filed in courts. We are charged by our rules to process and handle the case as expeditiously as possible. Although we do things a little bit differently, Judge Cook and I are each committed to narrowing the issues as quickly as we can and determining the opportunities of resolution, which issues cannot be resolved and therefore must be decided by the court, and the time and mechanism by which both sides are given the time necessary to make the informed decision the court would ultimately render.
The parties and the lawyers are both happy with the process, but they have to answer whether or not they are comfortable with this mechanism and whether or not it’s worth the effort to maintain a specialized docket in the future for business matters.
Before Chief Justice (Thomas) Moyer’s untimely death, he had been working closely with Governor (Ted) Strickland, because Strickland is interested in promoting this specialized docket as an additional tool to attract businesses to Ohio to incorporate, locate, and remain here. His office was assisting the Supreme Court in shepherding this specialized docket concept through the business sectors and promoting it from a non-judicial, political aspect.
TBJ: With the difficult economy, has there been an increase in litigation and an increase in the activity of the commercial docket?
GZ: As you know, there is a significant increase in the amount of foreclosures that have been filed across the country, and clearly here in Lucas County as well. I don’t think it’s unreasonable to suggest that – with respect to commercial litigation, commercial foreclosures, and commercial collection cases – [the numbers are] also up.
TBJ: Are there any other issues you would like to discuss?
GZ: It’s important to understand that, if a case filed in Lucas County is clearly designated or defined as a commercial docket case, it is mandatory that the case be assigned to the commercial docket. There is no discretion.
That creates another issue, because there are 10 general division judges and only two commercial docket judges. We randomly assign cases, and we have to each have the same number of cases. The impartiality and the randomness have to be guaranteed.
Although Judge Cook and I have agreed to serve as the commercial docket judges for this trial period, it doesn’t exclude our other responsibilities. And we have a full criminal docket. I have about 400 cases pending on my docket a month: about 40 are criminal, and 360 are civil. Of the 360, 70 are commercial docket cases. So, I still maintain non-commercial civil cases and I still maintain a full criminal docket caseload, but I have 70 commercial docket cases pending. And Judge Cook has about the same number as well.
We agreed to essentially impose on us the obligation of trying to maintain an expedited docket within the framework of the larger dockets that we are obligated by statute to manage.
The 10 of us have over 4,000 cases pending in Lucas County.