Governor's Task Force on
Civil Justice Reform

Task Force Co-Chairs and Governor's Counsel

Rebecca A. Koppes Conway, Esq. - Co-Chair
Timothy M. Tymkovich, Esq. - Co-Chair
Troy A. Eid, Esq. - Counsel to the Governor
Britt Weygandt, Esq. - Deputy Counsel to the Governor

Anthony van Westrum, Esq. - Reporter

     A meeting of the Business Courts Committee of the Governor's Task Force on Civil Justice Reform was held on Thursday, December 2, 1999, at the offices of the Colorado Bar Association. Present were co-chairs Annita Menogan, Esq. and Trish Nagel, Esq. and members Justice Michael L. Bender, Miles Cortez, Esq., Dale R. Harris, Esq,. Mr. David Paul, Mr. Michael V. Shoop, Representative Tambor Williams, and Anthony van Westrum, Esq. Members Representative Gayle Berry and Karen Howard, Esq. were absent. Also in attendance at the request of Justice Bender was Chris Ryan, statistician for the State Judiciary.

     Ms. Menogan and Ms. Nagel chaired the meeting, and Mr. van Westrum kept the minutes.

     Ms. Menogan and Ms. Nagel distributed a meeting agenda and a list of consideration items. Mr. van Westrum distributed a copy of minutes of the initial meeting of the Committee, as well as of the initial meeting of the whole Task Force, both of which were held on November 10, 1999. There were no comments upon the meeting, although Mr. van Westrum notes here that the minutes as distributed incorrectly referred to Mr. Paul as being in attendance and incorrectly identified the day of the initial meeting as Thursday instead of Wednesday.

     Ms. Menogan invited the Committee members to introduce themselves, again, to each other. Mr. Paul, who had not been in attendance at the initial meeting held on November 10, 1999, noted that he was not a lawyer but worked for a technology company that provided technical services to the courts, so that he had substantial experience with the operations of the courts. Mr. Shoop noted that he is also not a lawyer but works for a collections company and as such has frequent contact with the court system.

     Ms. Nagel reported that she had spoken with Robert Haig, Esq., the attorney who had spearheaded the development of the business court in New York, and had learned that the proponents there had not actually conducted a survey of business's interest in a business court but had received a resolution from the American Corporate Counsel Association (a group comprising only in-house legal counsel, not business persons in general) supporting the formation of a business court. Ms. Nagel stated that she would provide the committee members with a copy of the New York survey. Ms. Nagel also reported that she will meet with Troy Eid, the Governor's Counsel, on Wednesday, December 8, 1999, to develop a survey of Colorado businesses with respect to business courts. That meeting had been arranged at the instigation of Mr. Eid, who indicated that the Governor wished to take the initiative with regard to such a survey. The Committee discussed, both at this point and later in the meeting the nature of such a survey, how it might be formulated and to whom it might be directed.

     Mr. Cortez commented that it was good that New York had directed its survey to in-house legal counsel, as they would be most knowledgeable about the need of business generally for a business court. He noted that any such survey that was directed to a manager of a business would likely be passed over to in-house counsel for response.

     Ms. Nagel referred the meeting to the list of consideration items that she had distributed and noted that the Governor's charge does not encompass only the question of whether there should be a business court or not but also the question of what other initiatives might be taken to enhance the effectiveness of the justice system with respect to business cases. She had listed a number of considerations in an effort to spark the Committee's development of such other initiatives. For instance, she suggested that the Committee consider the special procedural rules applicable to other specialty courts such as the U.S. Tax Court. Mr. van Westrum noted that Justice Gregory K. Scott had practiced before the U.S. Court of Claims and has referred favorably to that experience in his comments on the concept of a specialized Colorado business court.

     Ms. Nagel referred also to the idea of insertion of some sub-court agency prior to the commencement of a business case, noting that business cases are often filed to get the attention of the opposing party, and that function might be served by some preliminary agency for notification of a dispute. Ms. Nagel also suggested consideration of the model of medical peer review and consideration of the use of some administrative agency, such as the Department of Labor, for the diversion of breach of employment contract cases. And she referred to the "rocket docket" that has gained some fame from the United States District Court for the Eastern District of Virginia. She mentioned, too, the enhanced procedures for sanctions under Rule 11 of the Federal Rules of Civil Procedure with respect to the problem of "frivolous litigation," and the prospect of judges sua sponte acting to cut short cases without perceived merit. Lastly, she noted the possibility that the attorney discipline system could be engaged to deal with frivolous litigation.

     Mr. Harris asked how the matter of jury trial or trial to the court is to be handled in the business court context. A perceived benefit of the business court is the development of a body of written decisions, but that is most likely to occur if trials are to the court without a jury. [The operating statement proposed by the Colorado Bar Association Business Law Section Business Courts Task Force does not appear to address this question; the 1997 report of the American Bar Association Ad Hoc Committee on Business Courts noted, "[T]he question of whether a jury trial or bench trial is the appropriate, or preferable, approach will also vary from jurisdiction to jurisdiction."]

     Ms. Menogan suggested that the Committee bifurcate its efforts, with one group undertaking to consider further the specific merits of a business court and the other group looking into alternatives and other considerations such as Ms. Nagel has suggested.

     Justice Bender responded to Ms. Menogan's suggestion by stating that the operating statement that the CBA's Business Courts Task Force has proposed is a viable proposal and that he felt there was no need for this Committee to re-invent the concept of the business court itself, if the Committee's determination is that it should promote the establishment of a business court. However, he noted, the CBA task force's proposal for such things as more intense case management is applicable to the courts generally and not just to a business court. He suggested that the Committee should press the question of whether there is a perceived need for a business court by surveying the consumer - businesses - as has been suggested. As to the actual prospect of the formation of a business court, Justice Bender stated his belief that would be inappropriate because the Judiciary is currently in a crises and has more immediate priorities to attend to than the formation of a business court, which would be, therefore, ad distraction and diversion from more pressing needs. On the other hand, he indicated, it is likely that the case for a business court will be developed over the next five years or so, and can be accommodated on that time scale; he feels that a business court should be included in a five year plan for the Judiciary. But, again, the Judiciary is presently in a crisis mode, and a business court would be a distraction at present.

     Justice Bender characterized the procedural proposals contained in the CBA task force's operating statement as being logical and modern - the idea of up-front, hands-on case management by the judge ought to be applicable to any case, business or otherwise. But, without more judges, the metropolitan Denver area courts - where the case for a business court can best be made initially - do not now have the resources for that kind of case management.

     Justice Bender challenged the proposition that there are sufficient business cases in the Denver metropolitan area to justify a business court at present, even though Denver handles twenty-five percent of all the cases in the state. But he noted that the available information is not in fact good enough to draw any firm conclusion, and he noted that he has urged the CBA task force to develop the numbers to show the actual extent of the need, the actual number of cases that are business cases. But it is his belief that there are not enough business cases at present to outweigh other pressing needs of the judicial system, whereas five years from now it might be clearer that the need for a business court had grown to the extent that one should then be formed. He analogized to domestic relations cases, where the number of cases - twenty-three percent of all cases - has grown to such an extent that a domestic relations court is now justified. Crowded criminal and juvenile dockets also justify specialty courts. Again, it is a matter of numbers, and for this Committee and the CBA task force, the need to develop the statistics is clear.

     Mr. Cortez said he could accept the proposition that there is presently a low number of business cases in the system, but he pointed out that low number may be deceptive because case complexity may be as important as number of cases, and business cases may typically involve more complexity - and thus a greater burden on the judiciary - than other types of cases.1 In short, a case that may take two months to try should be counted differently from one that would consume just two days of trial time.

     Justice Bender indicated his agreement with the concept that the complexity of cases is important and stated that the Judiciary is improving its available statistics so that information on complexity should be available next year. He suggested that ninety-five percent of the "complex" cases will be found in the Denver courts. Justice Bender said that he and statistician Chris Ryan believe that an accurate yardstick is that five percent of all case filings are "complex" - whether business cases or other types, such as a case involving a regulatory matter before the Public Utilities Commission. That works out to about 330 "complex" cases in the Denver courts each year.

     Mr. Cortez suggested that 330 "complex" cases would seem to justify a specialty court. Justice Bender agreed, if all of those cases proceeded to trial; the number is, in fact, however, only case filings, not trials. Justice Bender understands that only two percent of all classes of Colorado cases go to trial.

     Mr. Paul stated that, as a businessman, he would ask of a court procedure: Is it cheaper? Is it faster? Is it likely to give the right answer? He would not be apt to ask, how does it affect the number of cases per judge? He noted the tendency of business persons to choose arbitration, such as before the American Arbitration Association, to gain these benefits, as well as to secure secrecy. Justice Bender responded that the judicial system needs more judges in order to be able to achieve the goals that Mr. Paul listed.

     Mr. Paul also noted that Colorado has experience with other specialty courts, such as the seven water courts; the participating judges in these courts also serve as regular trial court judges. Justice Bender responded that the bulk of the work done in the water courts is done by magistrates; he doubted that business persons would settle for resolution of their disputes by magistrates.

     Rebecca Koppes Conway, co-chair of the Task Force, spoke briefly to thank the members for attending the meeting and participating on the Business Courts Committee. She also noted that she will be meeting soon with a member of the Governor's staff to get an Internet website set up for the Task Force, on which can be posted meeting minutes, notices, and the like.

     Mr. Cortez asked Justice Bender whether it would be a mistake to assume that this Committee's decision whether there is presently a need or a lack of need for a business court will merely be inserted into existing budgets and resources. He noted that we have been directed to think "out of the box" and perhaps we should consider the merits of a business court independently of whether there are presently sufficient resources and budgetary margins to enable it.

     Justice Bender responded that Mr. Cortez's suggestion is the only way to make sense of the CBA business courts task force's proposal. But, he predicted, the Judiciary will say no, now is not the time for the Judiciary to undertake to establish a business court. Accordingly, any proposal to establish a business court at this time would necessarily include a proposal to the General Assembly for legislation - or even a constitutional amendment - to create that court. But, he noted, that drastic action would cater only to a small segment of the constituencies interested in the Judiciary; it would not be of interest to the whole court system. That is, it would be a diversion from other, larger, needs.

     Justice Bender suggested, however, that the concept of a business court could be included in a larger package for improvement of the judicial system, a component that would be identified for later formation, after other matters are attended to.

     Mr. van Westrum stated that the CBA task force would not favor the present formation of a business court if it did indeed divert resources from other, more pressing needs. He noted, however, that Justice Bender has indicated a belief that the business court is a worthy idea, at the right time.

     Rep. Williams stated that now would be a good time to go to the General Assembly with something new, such as a business court, instead of just more of the same old message, "we need more judges." She feels that there is a new receptivity in the General Assembly, which is business oriented and working with a new governor who is like-minded. In this atmosphere, the business court concept may be a useful one to secure more funding for the Judiciary; it provides a good basis for a request for additional money.

     Ms. Menogan asked why Justice Bender is suggesting that the business court proposal might be more viable in five years time. He responded that it is a matter of population growth: case load, including business cases as well as other cases, is a function of population, and one can extrapolate Colorado's population growth to a point where the number of business cases will justify a business court in five years. He added that it is conceivable that the case load in the Denver courts would justify a business court there even now.

     Mr. Cortez noted that arbitration of business cases is in the ascendency. Ms. Menogan pointed out that clients are not satisfied with arbitration but rely on it because of the perceived deficiencies in the court system. Mr. Paul commented that arbitration provides expertise in the selected arbitrators, which is a benefit that could be secured in a business court, also.

     Mr. van Westrum indicated that he has no personal concern with the alleged problem that arbitration provides for "private justice" - businesses can purchase many things that are not available to most citizens, and there is no particular cost to another litigant, or to society at large, because business disputes are resolved in private arbitrations. [It might also be noted that society at large uses innumerable mechanisms in addition to the courts to resolve disputes, including counselors, clergy, and neighbors over backyard fences; none of these mechanisms diminishes the importance of the courts or constitutes a deprivation of the rights of others.] Arbitration does pose this cost to the judicial system, however, which cost could be diminished by the establishment of a business court that would recapture the resolution of business cases: No body of case law is developed by the private dispute resolution mechanisms, whereas a business court could provide a written body of decisions as stare decisis.

     Mr. van Westrum added that the CBA business courts task force would be opposed to legislative action forming a business court. In the interest of the separation of powers, that task force believes that the business court concept should be implemented, if at all, by action by the Judiciary. On the other hand, that task force believes that the business court concept could be a vehicle for financial support from the Legislature; in short, the Judiciary could say, we have instituted a business court which we believe will free up judicial resources as has been done in New York, where fewer judges, specializing, are handling more business cases, leaving more judges to handle other cases. Accordingly, we are more efficient as a system and more deserving of financial support.

     Justice Bender noted that the Judiciary would have to make its case to the Joint Budget Committee, as to why there is a need for a business court. The Judiciary would do well to assume the CBA task forces' model for such a court, but the case would have to be supported by statistics showing that the number of business cases justifies the proposal. That is, the survey of cases that we have discussed should be performed.

     Mr. Paul noted that the Owens Administration is pushing, around the world, the idea that Colorado is a good place for the establishment of high tech companies. Surely in that effort it would be good for the Governor to be able to say, we have business courts in Colorado.

     Mr. Cortez asked Justice Bender about the matter of judge rotation in connection with business cases. As he understands it, the judges to whom the matter of a business court has been mooted have disfavored the idea. Mr. van Westrum said that Justice Gregory Hobbs has told the CBA business courts task force that the judges seem to prefer a mix of types of cases and have indicated to him that they would not want to handle just business cases.

     Justice Bender also commented on the existing practice by which a single case is rotated among a number of judges, so that one judge may hear a motion for a temporary restraining order, a second judge the matter of a preliminary injunction, and a third judge the case in chief. This is a long-standing tradition, which is much disliked by litigators and litigants, and as to which there is no logic. Perhaps it is ripe for changing, he suggested. But these are matters that are not specific to a business case but, rather, affect cases of all types. Justice Bender suggested that one step this Committee might take is to send to the Court a list of problems in civil procedure that need fixing.

     Mr. Cortez asked what could be done to stop the flow of disputes away from the courts. Justice Bender noted that this diversion of cases from resolution at trial is not limited to business or even civil cases: as he noted earlier, only a very small percentage - two percent - of all Colorado cases go to trial, the balance being settled.

     Mr. van Westrum undertook to report back to the Committee on the steps being undertaken by the CBA business courts task force to develop the statistics regarding the number of case filings that can be classified as business cases. He expects that that task force will in fact soon commence that project, so that this Committee need not do so, and that it will utilize the services of one or more students from the University of Colorado School of Law. What is envisioned is an examination of all 9,000 case filings in the Denver District Court over a year's time, with each case classified in a variety of ways, including subject matter, number of parties, number of lawyers, and the like.

     Ms. Nagel brought the Committee back to the matter of what it will propose. First, what would a business court look like? Further, what else might the Committee propose? She noted that we have been instructed to be creative and that we are not to refuse to consider solutions that might require action by the General Assembly. Maybe, she suggested, we should pursue Ms. Menogan's initial suggestion that the Committee divide its attention between business courts on the one hand and improvements in the current court system on the other hand.

     Mr. van Westrum suggested that one recommendation to the General Assembly is clear: Colorado's courts need more money. He stated his understanding that Colorado's expenditure on the judicial system per capita, is something like forty-fifth in the nation. Justice Bender noted that this statistic is readily available to us.

     Mr. Paul noted that the original and underlying purpose of the judicial system is to protect the rights of the citizens. That deserves funding.

     Rep. Williams commented that good ideas take time to develop.

     Ms. Menogan returned to the question of this Committee's activities. Those on the table include a survey of the need for the business court. Rep. Williams commented that we should not get bogged down in questions of implementation of a proposal for a business court. Mr. Harris characterized it another way: We should tackle specifics - such as a determination of what businesses think about a business court - and not get bogged down in the big picture.

     Mr. van Westrum challenged the notion of a survey of businesses. He did not believe that business persons would have the expertise to determine whether a business court would be preferable to other processes for dispute resolution. It is likely that the results of any such survey would merely turn on the formation of the questions and would not actually add to our understanding of what ought to be done.

     Mr. Harris and Mr. Cortez responded that a survey could determine whether the business community believes that there is not now a proper system available for resolution of business disputes, and whether that community believes there is a need for a business court. Mr. van Westrum restated his belief that there would be obvious answers to these questions - yes and yes - and that it would be a waste of time to ask them. Ms. Nagel commented, however, that the survey could ask whether the business community believes there should be a body of case law to provide consistency in results and, further, whether the business community approves of the way cases are presently handled. Mr. van Westrum replied that we should, then, take the survey and see what it indicates. Ms. Nagel noted that she and Mr. Eid have indeed scheduled a meeting to develop that survey, as she had reported at the beginning of the meeting.

     Rep. Williams pointed out that many disfavor arbitration because of a perception of partiality in the selected arbitrators.

     Mr. Shoop raised the question of the cost of business cases: can businesses be made to pay more for access to a business court? The implication of his question was that he thought businesses would be willing to do so if given the opportunity to get into a specialty court. Justice Bender replied that the TABOR amendment precludes special fees for a business court.

     Ms. Nagel and Ms. Menogan summarized the Committee's activities as follows: (1) Ms. Nagel will work with Mr. Eid to formulate a survey of businesses with regard to the perceived need for a business court. (2) The CBA business courts task force will likely provide the needed information regarding the number of business cases presently in the courts system. (3) Each of the Committee members will brainstorm other proposals for Committee action.

     Mr. van Westrum undertook to ask Franklin Balotti, the reporter for the American Bar Association's 1997 business courts project, for an update of activities in other states, and to report the results to Mr. Harris.

     Mr. Cortez and Rep. Williams undertook to gather what information is available regarding the number of disputes that are now being resolved through the arbitration and mediation services, outside the court system. Mr. van Westrum suggested that they contact Lance Tanaka, Regional Vice President of the American Arbitration Association, located in Denver, and Judge William Neighbors, of the Judicial Arbiter Group in Denver, who is himself a member of this Task Force and a participant on its Alternative Dispute Resolution System Committee. Someone also noted that Mr. Cortez and Rep. Williams should contact that Committee to coordinate activities. [Thomas L. Kanan, Jr. and Merrill Shields are the co-chairs of that Committee.]

     Mr. Shoop undertook to consider the "rocket docket" that is in use in the United States District Court for the Eastern District of Virginia. As to this, however, others expressed the concern that the Executive Branch of government should not be directing the Judicial Branch with respect to its administration of cases; neither the General Assembly or the Executive Branch should get involved in Judiciary administration. Justice Bender commented that he thought the rocket docket is a good idea but that it is not a proper matter for inclusion in a report from this Governor's Task Force. He added that the rocket docket gets good marks from judges, litigators, and litigants alike because it leads to better advocacy. The question for the Judiciary is how to inculcate this change into the Colorado court culture, for judges and lawyers alike.

     Ms. Menogan asked Justice Bender to comment on the matter of choice of venue between the Federal courts and the Colorado courts. He replied that, until four or five years ago, litigants tried to get all cases in the Federal system if possible, but that has now changed, perhaps because of a perceived slowdown in the handling of cases in the Federal system and a belief that the Federal bench is not incrementally better than the Colorado bench. Ms. Menogan asked whether a Colorado business court would divert more cases from the Federal system. Justice Bender responded that it would likely do so, and he noted that there is that circularity in the matter: A better state court system (by the addition of a business court) would lead to increased usage of that system and, accordingly, to a larger case load. But, he pointed out, that circularity is not a reason not to improve the system when one can do so.

     Several members of the Committee expressed to Ms. Nagel their desire that the Committee have the opportunity to review the content of the business survey before it is actually sent to the business community.

     The next meeting of the Committee will be on Monday, December 13, 1999, at the offices of Colorado Bar Association CLE, Third Floor, 1900 Grant Street, Denver, Colorado (303-860-0608), commencing at 1:30 p.m., unless it is determined that another meeting is not needed at that time. A further meeting will be held on Thursday, January 13, 2000, at the same place and time.

Respectfully submitted,