An Introduction to Georgia's Statewide Business Court
Georgia's Statewide Business Court (SBC) began operations on Aug. 1, 2020. Holland & Knight has been closely monitoring developments related to the new court, which is intended to provide an efficient and specialized forum for complex commercial cases, similar in certain respects to Delaware's Complex Commercial Litigation Division (CCLD). This article highlights key pointers and potential tradeoffs for parties and practitioners who may be interested in litigating their Georgia commercial disputes in the SBC.
Business courts in some other states, including Delaware's CCLD, were stood up as divisions of their state superior court systems, but Georgia's SBC constitutes a new constitutional class of court. Accordingly, it has not supplanted the ability of local jurisdictions to create their own business court divisions. For example, Fulton County Superior Court continues to operate the Metro Atlanta Business Case Division. Parties with actions pending in the state superior court systems retain their ability to refer those matters to the particular business divisions of those courts. Following are key pointers related to practice in the SBC. In brief, the court has broad subject matter jurisdiction to hear high-dollar commercial disputes and will prioritize efficiency and swift disposition of complex matters by leveraging technology and making its judges available to parties and counsel through a "hands-on" approach.
When Did the SBC Begin Operations?
The SBC began taking cases on Aug. 1, 2020, and held its first in-person hearing on May 11, 2021. Its operative rules of practice, the Business Court Rules (BCR), became effective Aug. 1, 2021, and are available on the SBC website.
Where Does the SBC Sit?
The SBC is formally housed in the new Nathan Deal Judicial Center in Atlanta, which also houses the Supreme Court of Georgia and Georgia Court of Appeals. However, the court's first presiding judge, Hon. Walter W. Davis, will "ride circuit," hearing cases in localities throughout the state.
Venue for all pretrial proceedings in SBC matters will remain where the case was originally filed or removed from, or where the matter could have been filed originally under Georgia's standard venue provisions, which have not been disturbed by the SBC's enabling legislation. Where a party initiates a matter directly in the SBC and more than one venue is proper, the party will be required to designate its preferred venue at the time of filing. Judge Davis has publicly emphasized that the SBC is intended to have truly statewide operations and not be physically restricted to the Atlanta metro area.
What Types of Cases Can the SBC Hear?
The SBC's enabling legislation is codified at O.C.G.A. § 15-5A-1, et seq. The legislation is modeled after the Delaware Court of Chancery and other state business courts, with an eye toward efficiency and responsiveness (e.g., a policy of issuing orders on motions within 90 days of the close of briefing). The SBC has expansive subject matter jurisdiction over 17 categories of commercial disputes, including those arising under the Uniform Commercial Code, Georgia Business Corporation Code, Uniform Partnership Act and Uniform Limited Liability Company Act – provided that the following amount-in-controversy requirements are met:
- real property disputes, $1 million
- all others, $500,000
O.C.G.A. § 15-5A-3.
The SBC does not have jurisdiction over cases involving physical harm, threats of physical harm, emotional injury, domestic relations, family farming, residential landlord and tenant disputes, foreclosures, or individual (as opposed to potential mass or class action) consumer claims. Id.
Importantly, the SBC shares equity jurisdiction with the state's Superior Courts over all matters for which it has subject matter jurisdiction. There is no amount-in-controversy requirement for such claims. Id.
Example: A party seeking a temporary restraining order to enforce a noncompete agreement will not be required to show potential damages above either of these thresholds, so long as the case is tied to one of the subject matter jurisdiction prongs.
The SBC also has broad supplemental jurisdiction over "related" claims that might not otherwise fall within the express scope of the court's subject matter jurisdiction. Id.
Appeals are made to the Court of Appeals, unless otherwise taken by the Supreme Court.
How Can I Have My Case Heard in the SBC?
There are three ways into the SBC: direct filing, transfer from state or superior court, or agreement (e.g., contractual forum-selection clauses designating the SBC). The SBC requires a $3,000 filing fee be paid by the filing party or parties (or an equal allotment where the matter is transferred by joint consent). The filing fee, coupled with the court's categories of subject matter jurisdiction, are intended to reserve its capacity for true complex litigation matters. E-filing is available through PeachCourt, and existing PeachCourt accounts work in the SBC.
There is an important nuance in BCR vernacular to be aware of with regard to distinction between "transfer" and "removal."
- Transfer (unilateral and initiated by a defendant): A defendant may petition to transfer a case into the SBC within 60 days after service on all defendants of a lawsuit. – BCR 2-4(a).
If the basis for transfer is not apparent until after the initial complaint is filed, a defendant may transfer within 60 days after receipt of a "copy of an amended pleading, motion, order, or other document from which the party petitioning to transfer may first ascertain that the action is transferable." - BCR 2-4(f). This is similar to the familiar rule for federal removal.
The petition to transfer should contain "a short and plain statement of the grounds for the transfer, together with a copy of all process, pleadings, and orders served upon each party." See BCR 2-4(f). A party opposing transfer must file an objection to jurisdiction within 30 days of the filing of the petition to transfer. Id.
- Removal (mutual consent): If the parties agree that a case originally filed in superior or state court may be heard in the SBC (where SMJ is present), the parties may file a "petition for removal" within 60 days of the action being filed. – BCR 2-4(a); O.C.G.A. § 15-5A-4(a)(2).
A petition for removal must contain "a short and plain statement of the grounds for removal and all parties' agreement to remove the action, together with a copy of all process, pleadings, and orders served upon each party." – BCR 2-4(e).
Parties file a notice of transfer or removal with the clerk of superior/state court. – BCR 2-4(j).
What if One Party Does Not Consent to Having Its Case Heard in the SBC?
A unique feature of the SBC, which resulted from legislative compromise while its enabling legislation was being debated, is that proceeding before the SBC requires joint consent of the parties. O.C.G.A. § 15-5A-4(a)(1).
A defendant has 30 days to object by filing an objection to jurisdiction with a proposed order transferring the case to a venue-appropriate court, which must be granted. – BCR 2-4(b). A possible exception exists if the parties jointly selected the SBC through a contractual forum-selection clause (although in these cases, joint consent is present in the contractual designation).
This feature has been the subject of much controversy, and Judge Davis has publicly called on the General Assembly to modify the SBC's enabling legislation to eschew the joint consent requirement, reasoning that numerous cases otherwise appropriate for resolution in the SBC never have the opportunity to benefit from the court's specialization.
A recent report on the SBC's first full year of operations revealed that 17 of 43 (approximately 40 percent) of directly filed cases in the SBC between Aug. 1, 2020, and Aug. 1, 2021, were met with transfer petitions that automatically removed them from the SBC's docket.
A similar consent rule was removed from the legislation authorizing creation of the Metro Atlanta Business Case Division of Fulton County Superior Court when that court experienced difficulty building a full case load. Holland & Knight continues to closely monitor the status of SBC procedures and enabling legislation, which may similarly eschew the joint consent requirement for the SBC.
How Does Practice in the SBC Differ from Georgia's Other State Courts?
The SBC is intended to have streamlined operations oriented around the needs of sophisticated business litigants.
- The SBC's focus is on efficiency and swift resolution of disputes (e.g., the 90-day order policy).
- Judge Davis will hold regularly scheduled status conferences, likely including a monthly date for the parties to come in and discuss issues in the litigation, with a focus on resolving logjams ahead of these conferences.
- The SBC is focused on maximizing the use of technology and will prioritize being available to the parties for swift action as needed.
- The SBC's enabling legislation presumes that trials held in the court will be bench trials; however, the legislation has not disturbed each party's rights to request a jury.
- The Rules Committee has been informed by best practices of the Delaware Chancery Court, Federal Rules of Civil Procedure and Metro Atlanta Business Court.
- The SBC will regularly report its decisions and opinions to Westlaw and LexisNexis in an effort to promote predictability in matters of Georgia business law and to develop a body of law for Georgia's courts of review to work with on appeal.
How Will the SBC Be Staffed?
For its first few years, the SBC will operate with a single judge, who is appointed by the governor and confirmed by the Georgia House and Senate. Judge Davis is a former business litigator who practiced with a prominent international law firm and has experience in securities litigation, shareholder disputes and corporate governance matters. Judge Davis was appointed by Gov. Brian Kemp on July 15, 2019, and confirmed to a five-year term.
SBC judges will employ two term law clerks and one staff attorney. The SBC clerk of court is subject to the same appointment and confirmation process as the court's judges.
Holland & Knight continues to monitor and will provide updates regarding the SBC as the court continues to flesh out its docket and begins to report decisions. Our Atlanta attorneys are fully prepared to assist business clients in evaluating whether filing in or transferring to the SBC is a suitable approach for particular Georgia complex business disputes.
For more information on a specific situation involving your organization, contact author Patrick Reagin or another member of Holland & Knight's Atlanta litigation team, which has deep experience counseling clients in high-stakes commercial litigation across the state and country.