Michigan’s Business Courts: An Overview

There is a reason that the phrase “time is money” is a cliché in business. Anything that causes delays, such as dealing with a lawsuit slowly winding its way through our clogged courts, is costly for companies of any size. At the same time, disputes are part of running an enterprise and commercial litigation is often the best and only way to resolve conflicts so a company can get on with what they do best – operating their business.

Recognizing that companies require a quick and efficient resolution of their disputes, the state of Michigan put in place a separate set of courts in 2012 that only handle business disputes. Under Michigan’s Public Act 333 of 2012, every state circuit court with three or more judges must have a specialized business court docket. Any case involving a business or commercial dispute with a value of more than $25,000 must be placed on that docket.

The Jurisdiction of Michigan’s Business Courts

Disputes handled by the docket are either between two businesses as parties, or between a commercial entity and present or former owners, managers, shareholders, members, directors, agents, employees, suppliers or competitors. The claims at issue must come from those relationships. The business docket will also take cases involving a nonprofit organization if the dispute stems from its organizational structure, governance, or finances.

Disputes arising out of the sale, merger, purchase, combination, dissolution, liquidation, organizational structure, governance, or finances of a company are also placed on the business docket.

The judges who hear cases on the business docket have a background in commercial disputes, and usually focus on specific industry sectors. They hear a range of cases, including those involving

  • Information technology and software, including website development, maintenance, and hosting
  • Disputes between shareholders, partners, members, owners, officers, directors, and managers
  • Breach of contract issues
  • Intellectual property issues such as licensing, non-compete and non-solicitation agreements, trade secrets
  • Antitrust
  • Confidentiality agreements
  • Commercial transactions
  • Insurance
  • Commercial real estate

A Focus on Alternative Dispute Resolution

One of the ways in which the Michigan business courts work to make the process more efficient and less expensive is to ensure parties make use of alternative dispute resolution (ADR). Judges hearing cases in the business court expect the lawyers appearing before them to have significant familiarity with ADR and how it could be used to resolve a client’s case without the need for a trial.

It is not uncommon for business docket judges to order early mediation in all of their cases before nearly anything else happens. If initial mediation fails, the judge may ask the parties to try again.

Even if that second attempt at mediation does not resolve the case, it may help focus the parties on the real issues and also help bleed off some of the emotional baggage that accompanies any dispute, no matter how small. The case that then goes to trial will have been pared down to its essentials, eliminating the need for unnecessary – and expensive – discovery, and requiring, perhaps, fewer pre-trial motions. Though the case may still go to trial, it will likely be a far more efficient and cost-effective process than if the judge had not ordered mediation at the outset.

Advice for Companies on Working with the Michigan Business Courts

The Michigan business courts have largely been successful in making commercial litigation in the state more efficient and less costly. There are some idiosyncrasies to the system, however, that business litigators should be aware of.

First, because each circuit court runs its own business docket, procedures can vary from one to the next. Even if a litigant has been through a similar case in one business court, it does not mean that it will proceed in exactly the same manner in another. It is always best to review the business court’s specific procedures, and look to experienced commercial litigation counsel for advice.

Second, it is important to research the judges who take cases on the business docket. As noted above, each will have specific areas of interest and specialty. Matching your case with the right judge is important.

Third, expect to engage in ADR, particularly mediation, early on in the case, and perhaps more than once. This is an important part of the process and should be taken seriously. It is also often a very efficient way to resolve a dispute. One of the benefits of resolving a dispute through mediation is it often preserves the relationship between the parties, so they can continue doing business going forward. The benefit of this can be significant.

Posted in Commercial Litigation.