Editor: Why was a Complex Commercial Litigation Division needed within the Superior Court?
Steele: Before we created this division, complex commercial cases were assigned within a broad mix of diverse cases filed in the Superior Court. We thought that identifying complex commercial litigation cases and sending them to the new division would allow for more uniform and streamlined case administration.
Editor: What qualifies a case to be handled by the CCLD?
Steele: First the amount in controversy must exceed $1 million or be a case involving an exclusive choice of court agreement or a judgment that results from an exclusive choice of court agreement. What we don't include in the category is almost as important as what we include, because we want to make sure that our focus is on genuine commercial disputes between heavy-weight litigants. We exclude claims for personal, physical or mental injury. We exclude mortgage foreclosures. We exclude mechanics' liens or condemnation proceedings and any claim that is brought by an individual that is primarily for personal, family or household purposes or cases that involve agreements for an individual that relate to collective bargaining or a contract of employment.
Editor: Will CCLD involve cases that might have otherwise gone to the Court of Chancery?
Steele: No. The CCLD is focused on cases that are at law and not cases that would involve an equitable claim or seek an equitable remedy, which would remain in Chancery - although Chancery would have the option under our statute to transfer cases to the CCLD if they are in both law and equity. The focus of the CCLD is basically on contract disputes and mass complex litigation.
Editor: Would class actions be included?
Steele: Yes. But, the class action has to arise out of law and not equity. If it's under the corporate code or if it seeks an equitable remedy, it would still be in Chancery.
Editor: What are the jurisdictional requirements with respect to eligible parties?
Steele: At the present time, the jurisdictional requirements are the same as they currently exist. You would have to be able to file a claim that would entitle you to jurisdiction over the defendant. After Congress implements legislation under the Hague Convention on Choice of Courts Agreements, we probably will see Delaware legislation adopted as soon as we see what Congress is going to do and what the Commission on Uniform State Laws suggests the states do. At that time, Delaware courts would probably expand the opportunity for disputes to come to them by not requiring any tie to Delaware if the parties agree to select Delaware as the choice of court.
Editor: Will the judgments of the court be enforceable outside Delaware?
Steele: Yes, to the extent the other country gives U.S. judgments full faith and credit and comity - the same as any other judgment.
Editor: How were the judges in the CCLD selected? What qualifications do they have?
Steele: The president judge of the Superior Court has already exercised his discretion as assignment judge and selected three judges, two of whom come from extensive private practice in commercial and complex litigation and the other is a very experienced judge whose track record on the court demonstrated to the president judge that he was eminently well qualified to handle these cases. Like the selections for the Court of Chancery, the judges that were selected are people with a business law background or a demonstrable record of understanding complex civil litigation.
Editor: Will the same judge be used throughout a case in the CCLD?
Steele: Yes. It is very important that the same judge sticks with the case from beginning to end. From a case management point of view, the judge who starts at the beginning of the case determines the path the case is supposed to follow, keeps the parties under control, assures efficient management, cuts costs and increases the speed of the resolution of the complaint. If you bounce cases around from judge to judge you've got multiple calendars that you have to take into consideration. If a judge sticks with the case from the very beginning, the judge has only one calendar to manage. If you bounce a motion to dismiss to one judge, a motion for summary judgment to another judge, trial to another judge and the original case scheduling order to a different judge, you've got four different calendars you have to manage. It is obvious that using a single judge throughout a case is more efficient and expeditious.
Editor: How does the CCLD deal with the issue of getting judges to decide cases promptly?
Steele: We have guidelines throughout the Delaware court system (including the CCLD) for when a case should come to trial, but most importantly, we also have a 90-day rule throughout the system that says the case must be decided by the judge within 90 days of the final submission. Whenever judges fail to do this, they are put on what we call the "90-day list" and are required to explain the delay and set a target date for when their decision will be rendered. Fulfillment of this commitment is very closely monitored by the presiding judge of their court and then ultimately is brought to my attention. This year, the Supreme Court changed its administrative directive to say that after July 1, if a judge fails to decide within 90 days, and if the judge doesn't have an explanation for why that makes sense and the parties agree, then the judge will be referred to the court on judiciary for whatever discipline may be appropriate under the willful neglect standard.
Editor: I understand that promptly after all responsive pleadings have been filed, the judge will hold an early Rule 16 scheduling conference.
Steele: Yes. The rule explains explicitly what's supposed to happen, but the way it works in actuality is that the parties will meet and confer with the assigned judge about the progression of the case all the way through trial, and there will be at the end of the day the preparation of a case management order, which will establish a procedure for handling discovery disputes in dispositive motions. It will require early mandatory disclosures similar to those in the Federal Rule 26(a), and it will establish procedures for e-discovery and address other matters set forth in Rule 16.
Editor: How will e-discovery be handled?
Steele: Meet and confer is essential in cases involving e-discovery. Questions are answered in the E-Discovery Plan Guidelines, which is Appendix B of the Administrative Directive. After the meet and confer, the parties submit to the court a summary of an e-discovery plan with any disputes noted, as a basis for the entry of an order of the court. That order focuses on such things as the treatment of electronically stored Information (ESI) that is not reasonably accessible because of undue burden or expense. The order also provides for a safe harbor for the destruction of ESI not required by court order to be produced. It makes clear that inadvertent production of ESI does not constitute a waiver of the privilege if the party asserting the privilege promptly takes reasonable steps to recover the ESI.
Editor: How will expert witnesses be handled? What standards will be applied in determining their qualifications?
Steele: There are always issues that arise with respect to expert witnesses, particularly as to their command of the facts and whether or not their methodology for rendering their opinion meets the Daubert standard. The protocol for handling expert discovery is in Exhibit A2 to the Administrative Directive. It establishes procedures for deposing experts. In the absence of an agreement by the parties, depositions will take place in Wilmington. The parties will provide the other party with a list and copies of the documents reviewed or utilized by their expert. A party will be required to give the other party good faith estimates of the amount of time that it anticipates its testifying experts will require. Each party will bear its testifying experts' fees and expenses. As far as the standard for admissibility of expert witness's testimony, it will be under our Rule 702 and Daubert . Editor: Tell us about the efforts to expand the use of arbitration and mediation in both the Superior Court and the Court of Chancery.
Steele: Let me start with the Court of Chancery because Chancery was the first to offer arbitration services. Chancery requires that in order for a party to have arbitration in that court, it must have some jurisdictional tie to Delaware: either it or the other party must be chartered here or one of the parties must have its principal place of business here. Chancery also offers mediation without regard to whether a party has a tie to Delaware. The Chancery's mediation services have been a very successful program even though the upfront fee is something like nine times what an ordinary filing fee would be.
There is a bill drafted by the court that we expect to introduce in our legislature that will give the Superior Court statutory arbitration and mediation authority. This would expand the services that Superior Court can offer in both arbitration and mediation - more on a parallel with Chancery with one exception. As I mentioned earlier, it is likely that events following in the wake of the Hague Convention will permit the Superior Court to resolve disputes using arbitration where there is no tie to Delaware if the parties agree to select Delaware as the choice of court.
Editor: You have just returned from the Far East, including China. Reflecting on the opportunities offered by the Hague Convention to expand the jurisdiction of the CCLD to serve the needs of parties with no ties to Delaware, what role do you see for the CCLD in respect of serving the needs of companies doing business in China?
Steele: In the wake of the Hague Convention and the other actions I addressed earlier, if the parties to a joint venture or other business arrangement in any country arising out of a contractual relationship choose Delaware as the court system to resolve a dispute arising out of the contract, Delaware will be an appropriate choice of venue and would apply the law of the jurisdiction they had chosen to govern the relationship.
I learned from visiting China and talking to the various law firms there that the core issue is that no matter what choice of court or law you select, if the judgment is against the Chinese party to an agreement, you have an issue of getting that judgment enforced in the Chinese courts. That's a serious issue.
When Delaware judges make these trips abroad, we make it a point to talk to the courts in the cities we visit. When we talk to law firms in the cities we visit, we try to suggest to them that when in doubt, Delaware is always available as a place to charter and a place to resolve your disputes. I also visited the counterpart of our SEC and the legal department of the Shanghai Stock Exchange to find out what their issues were.
I found that their issues were the same as those that triggered litigation in our courts. They too were looking to improve corporate governance in a way that will improve performance and not just be political window dressing, which unfortunately is often the case in this country.
I came away from my visit with a feeling that the winds of positive change were blowing in China and that as Chinese companies come to the U.S. and set up businesses here, even the issue of enforcing judgments will be resolved over time - and Delaware courts will be ready.