Finding IP Value
How the Tennessee Business Court Affects the Business Community
When business disputes cannot be resolved by negotiation or arbitration, the parties involved often turn to litigation. However, these business disputes frequently involve complex, time-consuming and costly proceedings that would be more appropriate in a specialized forum.
To better serve the litigation needs of Tennessee businesses, the Tennessee Supreme Court recently joined 26 other states in creating Tennessee’s first Business Court to focus exclusively on such difficult and complex business litigation.
The Davidson County Business Court pilot project started in May with the goal of attracting and retaining businesses throughout Tennessee by facilitating business litigation efficiently and effectively with more predictable and consistent results. Although the Business Court is located in Davidson County, any case in Tennessee that meets certain criteria can be transferred to that court.
There are a number of requirements for a case to be eligible for the Business Court. First, taking a case to the Business Court is voluntary, thus the parties to the action must consent to the transfer of an eligible case and waive venue in the local forum. Although there is no Tennessee geographical requirement, a civil case is only eligible if it was filed on or after May 1, 2015. Additionally, the case must either involve compensatory damages of at least $50,000, or seek primarily injunctive of declaratory relief.
There are also subject matter requirements. Thus, the case must: relate to the internal affairs of a business; involve a breach of contract, fraud, misrepresentation or a breach of fiduciary duty or statutory violations between business; constitute a shareholder derivative or commercial class action; involve commercial real estate property disputes other than residential landlord-tenant disputes and foreclosures; involve business claims between or among two or more business entities or individuals relating to their business investment activities; arise from technology licensing agreements or intellectual property rights licensing agreements; allege violations of a non-compete, non-solicitation, or confidentiality agreement, or an antitrust, trade secret, or securities-related action; or involve commercial construction contract disputes and defect claims. Certain cases are explicitly excluded from the Business Court, such as ones involving personal injury or wrongful death or health care liability.
When initially exploring the idea of creating a Business Court in Tennessee, Tennessee Chief Justice Sharon Lee observed that this type of court has proven to be an effective tool for business retention. In addition, she said, it furthers economic development and enhanced effectiveness of the judicial system by removing complex business cases from the general docket.
Creation of the state’s first Business Court is an important addition to Tennessee’s court system should it meet its stated goals of providing cost-effective disposition of business cases and developing a body of rulings from which lawyers and litigants can better predict and assess outcomes in business cases. As Tennessee Gov. Bill Haslam said when referring to the Business Court’s creation: “Now we can all say that Tennessee’s court system is open for business.”