News & Events

The Tennessee Business Court Matures From Start-Up To Growth

In 2015, to much fanfare, the Tennessee Supreme Court created the Davidson County Business Court Pilot Project (“Business Court”).  Tennessee joined over half of the states in the union with the establishment of a court dedicated solely to handling complex business cases, with the goal of providing a specialized forum for the expedited resolution of business cases.  A synopsis of the Supreme Court’s March 16, 2015 Order can be found here.

From its creation in 2015 through March 2017, the Business Court has received 107 requests to handle cases and granted 89 of those requests.  As is evident in the attached Report, the vast majority of the Business Court cases originated in Davidson County (Nashville); however, the Business Court has handled 8 cases that originated outside of Davidson County and were designated to the court by the unanimous consent of all parties.  The Business Court has disposed of 53 of the 89 total cases, or approximately 60%.  Consistent with its initial goals, the Business Court maintains a catalogue of significant decisions, which can be found at https://www.tncourts.gov/node/3938267.

Like many of the businesses that the Business Court was created to serve, the Business Court itself is now moving from its start-up phase into a period of growth and maturity.  To much less fanfare than accompanied the original creation of the Business Court, the Tennessee Supreme Court entered an Order on April 4, 2017 establishing Phase II of the Business Court Pilot Project.  This Order makes some significant changes in the Business Court, and will govern all cases filed on or after May 1, 2017.  Leaving aside certain amendments regarding the timing and process to designate a case to the Business Court, the most significant changes involve eligibility of cases for designation and include the following:

  • Jurisdictional Amount: Originally, the Business Court was empowered to hear otherwise eligible cases that sought damages in excess of $50,000 and/or primarily injunctive or declaratory relief.  Going forward, however, the jurisdictional minimum will be at least $250,000 in damages, but will still include cases seeking primarily injunctive or declaratory relief.
  • Narrower Universe of “Business” Cases: In addition to raising the jurisdictional damage minimum, the Supreme Court has narrowed certain of the types of cases that may qualify for designation to the Business Court.  Such changes appear to be designed to eliminate from the Business Court’s docket routine cases that, although they do involve businesses, may not necessitate the expertise and procedures embodied by the Business Court, including the following:
     

    • simple breach of contract, fraud, or misrepresentation claims;
    • commercial real property disputes;
    • standard actions for violations on noncompete, nonsolicitation, and/or confidentiality agreements; and
    • professional malpractice claims, even when they involve professional services rendered to a business.
  • More Flexibility in the Designation of Appropriate Cases to the Business Court: Although the Supreme Court has constricted the list of the types of cases appropriate for the Business Court, it has also granted the Business Court much more flexibility to ensure that truly complex “business cases” can find their way to the court.  For Phase II, the Supreme Court has included an eligibility catch-all for any “claims that present sufficiently complex commercial issues that would have significant implications for the larger business community,” even if such types of cases (g., breach of contract, fraud, violations of noncompete agreements, etc.) would otherwise be excluded from eligibility.  This change, coupled with other amendments, appears to be designed to ensure that the Business Court stays true to its predominant purpose.

In short, like any successful business, the Business Court continues to tweak its core focus and service to ensure that its best satisfies the needs of its customers – businesses in Tennessee and the State of Tennessee.  The Business Court appears to be on a path to becoming an entrenched institution in Tennessee and a valuable resource for business litigants.

 

by Charles I. Malone

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