Texas joins the ever-expanding roster of jurisdictions that have created specialized business and commercial courts or dockets. While we know Texans swell with Lone Star Pride, we have been blessed with professional careers that have allowed us to practice primarily in Delaware’s Court of Chancery—as the youth today would call it: “the OG of business courts.” Delaware’s Court of Chancery has a history spanning over two centuries. In the last thirty years, though, over two dozen states have worked to recreate in their jurisdictions various forms of business and commercial courts (or, more often, specialized dockets in existing courts) seeking to replicate the traits that have often been cited as the driving force behind the Delaware Court of Chancery’s more than 225 years of success. Those traits include predictability, stability, and the ability to move cases forward promptly to disposition. The key trait among those, however, is “predictability.”
The other articles in this symposium address various aspects of the history behind, the anticipated benefits of, and the potential challenges to the new Texas Business Courts getting started. This article will focus on how a few states that have trod this path before have tackled the task of creating a statewide business or commercial court that both works in that jurisdiction and provides the type of predictability and stability that drive counsel and their clients to bring their disputes to these venues. In observing the relative successes (and, sometimes, failures) of those states’ efforts, such successes appear to be attributed to, among other things, how those states: (a) staff the bench with trusted jurists; (b) succeed in the development of a body of precedential, written opinions by the court; and (c) allocate resources to and provide support within the court. Below we highlight how four states with statewide business courts have addressed these issues. Two have been in existence for enough time to have an observable track record—Delaware and North Carolina. The others are of relatively recent vintage—Georgia and Wyoming.
Trusted Jurists
The single most important trait of a business court that instills confidence in sophisticated corporate and commercial parties involved in complex business disputes is the level of predictability that can be brought to bear on that dispute by the assigned fact-finder and ultimate decision-maker. In most states, that will be a judge who has been appointed or elected (or maybe both). In advising directors or C-suite officers in our daily practice, almost invariably one of the early discussions will center on the assigned judge and how likely it is for the client to obtain a predictable and legally stable decision from that judge, with as much certainty as is reasonably possible in litigation. Many judicial character traits go into that calculus but key among them are how those business court judges are identified and placed on the bench. Indeed, these sophisticated clients question whether there is an element of partisanship or perceived bias built into the process and like to explore the assigned judge’s depthoof knowledge into the business realities underlying their disputes. Thus, whether the judges are elected or appointed, the length of their terms, and their legal acumen are critical to providing the desired predictability and stability.
There is no “one size fits all” for designating trusted jurists. In Delaware, the seven jurists of the Court of Chancery—a chancellor and six vice-chancellors—are appointed by the governor and approved by the state senate to serve a twelve-year term. When a seat on that court opens up, a judicial nominating commission accepts applications from members of the Delaware Bar and selects two or three potential appointees for consideration by the governor. From there, the governor selects his or her appointee from that list and presents the candidate to the state senate for final consideration and approval. Delaware has another unique feature of the nomination and appointment process where there is a constitutional requirement that no more than a bare majority of the judges on a particular court can be from a single political party. In North Carolina, the governor also appoints the state’s business court judges. Georgia also apparently recognized the potential value of staffing the court via an appointment process (as opposed to popular elections) and, in creating its business court, amended its constitution to allow the governor to appoint judges to its business court. Somewhat similar to Delaware’s process, Georgia-court hopefuls seeking five-year terms on the bench must also obtain approval from the Judiciary Committees of both the House and Senate. By way of another example, Wyoming employs a hybrid approach for seating jurists on its Court of Chancery. There, and similar to Delaware, a judicial nominating commission sends the names of candidates to the governor and the governor selects an appointee from that list. The judge appointed via this process will serve for six years, but at the conclusion of the first year, that judge must stand for a state-wide, non-partisan retention vote.
The elephant in the room for business courts working to establish a trusted bench with stable and reliable precedent is the jury. It would appear, at least to these authors, that using juries as the ultimate arbiters of complex corporate and commercial disputes is antithetical to the concept of injecting predictability and stability into a process that is purportedly designed to provide just that. In Delaware’s Court of Chancery and in North Carolina’s business court matters are ultimately decided in a bench trial. Wyoming also adopted that convention and, therefore, matters in its new Court of Chancery are tried to the judge rather than a jury. In Georgia, however, while the presumption is that it proceedings will be decided in bench trials, any party to the litigation may request that the matter be tried to and decided by a jury. We note that the Complex Commercial Litigation Division of the Delaware Superior Court adopts a convention similar to that of Georgia and provides for jury trials upon request of a party.
Development of a Body of Precedential Case Law
Directly related to the quality of the judges that sit on a business court will be the manner in which their daily efforts—whether in deciding pre-trial motions or deciding cases post-trial—contribute to a robust body of precedential case law that legal counsel can draw upon in advising their clients. A deep body of well-reasoned written opinions is critical to providing the predictability and stability that lawyers and their clients seek in coming to a business court.
It is here where Delaware’s Court of Chancery shines brightest. Its body of work on all matters of corporate and commercial law has been over two hundred years in the making. Delaware and other business courts across the country add to their respective bodies of law at a staggering rate. In 2022, over 1,100 new cases were filed in the Delaware Court of Chancery, it conducted over 1,200 hearings and its seven judges issuedover 300 opinions—an increasing number of which are over 70 pages in length. In North Carolina, in 2022, there were 110 new cases filed, and its five judges issued 84 written opinions. In addition, while the business courts of Georgia and Wyoming are in their formative years, these authors are hopeful they will see the type of activity that will have those courts filling their reporters with an abundance of written decisional law in short order. In the future, when looking back at the relative success of the business and commercial courts created since the 1990s, we suspect that this metric will be key to evaluating success. We readily admit to bias for our native state of Delaware and its Court of Chancery, but the numbers above back us up. The sheer intellect, grit and determination that the judges of that court bring to bear every day in working through that many hearings and writing so many well-reasoned opinions is absolutely critical to its “gold standard” status among business courts.
For jurisdictions where matters in their business courts are tried to a jury, it would seem difficult for that jurisdiction to develop a robust body of case law. While the business court judges in those jurisdictions will likely author written decisions for pre-trial motions, particularly dispositive motions, that jurisdiction may struggle to develop the robust body of post-trial and appellate case law necessary to provide the predictability that sophisticated litigants crave.
Allocation of Resources and Support
Also critical to the ultimate success of the newly formed Texas Business Court will be the resources and support the court system receives (both political and financial) and the ultimate buy-in from the bar (both plaintiff and defense sides) that having their complex business dispute heard in the new court will be best for all.
In Wyoming the state legislature voted overwhelmingly and in a bipartisan manner to create its new Court of Chancery. In Georgia, the governor and legislature felt so strongly about the benefits of having a statewide business court that they went out to the citizens and amended the state’s constitution. In Delaware, the governor and the state legislature are keenly aware of how important the Court of Chancery is to Delaware maintaining the “First State’s” status as the first choice for incorporations and the franchise fees that those filings bring to Delaware’s treasury. When the case load for the Delaware Court of Chancery began to explode, the state approved funds for each of the then five judges to have two law clerks. When that additional support proved insufficient, the state added two more vice-chancellors and two additional magistrates to the bench to support the needs of the bench and the expectations of the litigants appearing before it.
We close by noting that the ultimate success of the new Texas Business Court will likely be determined on how well the new judges, the state government, and the citizens of Texas navigate through these issues now and in the future. As discussed in other articles in this symposium, the topics of appointment vs. election of judges, and jury vs. bench trials have been some of the hotly debated issues in the formation of the new Texas Business Court. Hopefully the experiences of the four states described here can help shine a light on the path to success for this new court.
Richard L. Renck is a partner in the Wilmington, DE, office of Duane Morris LLP and has practiced primarily in Delaware’s Court of Chancery for twenty-five years. He is also a past chair of the American Bar Association’s Section of Business Law’s subcommittee on Business Courts and is the author of multiple articles on the topic of business courts.
Mackenzie M. Wrobel is a partner in the Wilmington, DE, office of Duane Morris LLP and regularly practices in the Delaware Court of Chancery as well as the Complex Commercial Litigation Division of the Delaware Superior Court.
Reprinted by permission.
