Pennsylvania Legislature Adopts Statewide Appellate and Trial Level Commerce Court Bill, and Submits Proposed New Law to the Governor

Pennsylvania’s House of Representatives has approved legislation that would permit the creation of a statewide Commerce Court Program in the Commonwealth’s Superior Court (an intermediate appellate court), and in its Courts of Common Pleas. This would make Pennsylvania the first state with a specialized appellate business court.  The legislation is embodied in amended Senate Bill 976, a copy of which can be found here.

The bill was unanimously passed in both the House and Senate, and presented to Governor Wolf on October 26, 2020. If signed, the law is to take effect in 60 days.

The Senate bill adopted proposed House amendments prior to final passage.  The vote in the House was 201-0 and 47-0 in the Senate, clearly marking a strong bipartisan position in a time of considerable partisan strife in Pennsylvania.

The clear inspiration for this bill is the Philadelphia Court of Common Pleas Commerce Case Management Program.

Notably, the same bill also includes an amendment giving county Courts of Common Pleas and Municipal Courts the power to establish Veterans Courts, an even stronger bipartisan issue.

The bill’s short title is “An Act amending Title 42 (Judiciary and Judicial Procedure) of the Pennsylvania Consolidated Statutes, in jurisdiction of appellate courts, providing for commerce court program; and, in organization and jurisdiction of courts of common pleas, further providing for problem-solving courts and providing for commerce courts.”

As stated, the new law would establish the first specialized appellate business court in the United States. Establishing a Commerce Court Program, however, remains within the Superior Court’s discretion. On the trial level, the Courts of Common Pleas likewise have discretion to set up Commerce Courts. In both instances, the Courts must create the programs out of “available funds”, i.e., the Legislature is not creating a separate budget item to fund Commerce Courts.

Each Court can establish Commerce Court Rules, though these rules cannot conflict with existing rules.  Nor does establishing a Commerce Court expand any court’s jurisdiction. Rather, these are specialized dockets within an existing jurisdiction.

The legislation identifies two general areas for Commerce Court subject matter jurisdiction: (1) internal business disputes; and (2) “disputes between or among two or more business enterprises relating to a transaction, business relationship or a contract.” Thus, the new law does not drill down into the jurisdictional detail used to define the Philadelphia Commerce Case Management Program’s mandatory jurisdiction.  Those detailed categories can be found here, and in the Order defining Philadelphia’s Commerce Case Management Program, which can be found here.

The new law should have no effect on Philadelphia’s twenty-year-old program, which has been operational since January 1, 2000.

The legislation adds that Pennsylvania’s Supreme Court may establish an advisory committee and the position of a “statewide commerce courts coordinator”.  Again, it appears there will be no separate budget provided to the committee or the coordinator.

The coordinator’s role would be to “(1) encourage and assist in the establishment of commerce courts in each judicial district. (2) develop model guidelines for the administration of commerce courts and their related services. (3) establish procedures for monitoring commerce courts and for evaluating the effectiveness of commerce courts.”

If signed by the Governor, the new law would provide:

SECTION 1. TITLE 42 OF THE PENNSYLVANIA CONSOLIDATED STATUTES IS AMENDED BY ADDING A SECTION TO READ:

743. COMMERCE COURT PROGRAM.

(A) APPEALS.–THE SUPERIOR COURT MAY ESTABLISH FROM AVAILABLE FUNDS A COMMERCE COURT PROGRAM THAT SHALL HAVE SPECIALIZED JURISDICTION. IN A COMMERCE COURT PROGRAM ESTABLISHED UNDER THIS SECTION, THE SPECIALIZED JURISDICTION OF APPEALS RELATING TO THE FOLLOWING MATTERS MAY BE VESTED IN THE PROGRAM:

(1) THE INTERNAL AFFAIRS, GOVERNANCE, DISSOLUTION ,LIQUIDATION, RIGHTS OR OBLIGATIONS BETWEEN OR AMONG OWNERS AND LIABILITY OR INDEMNITY OF MANAGERS OF BUSINESS CORPORATIONS, PARTNERSHIPS, LIMITED PARTNERSHIPS, LIMITED LIABILITY PARTNERSHIPS, PROFESSIONAL ASSOCIATIONS, BUSINESS TRUSTS, JOINT VENTURES OR OTHER BUSINESS ENTERPRISES, INCLUDING ANY ACTIONS INVOLVING THE INTERPRETATION OF THE RIGHTS OR OBLIGATIONS UNDER THE ORGANIC LAW, ARTICLES OF INCORPORATION, BYLAWS OR AGREEMENTS GOVERNING THESE ENTERPRISES.

(2) DISPUTES BETWEEN OR AMONG TWO OR MORE BUSINESS ENTERPRISES RELATING TO A TRANSACTION, BUSINESS RELATIONSHIP OR A CONTRACT.

(B) RULES.–THE COURT MAY ADOPT RULES FOR THE ADMINISTRATION OF THE PROGRAM ESTABLISHED UNDER THIS SECTION. THE RULES MAY NOT BE INCONSISTENT WITH THIS SECTION OR ANY RULE ESTABLISHED BY THE SUPREME COURT.

(C) JURISDICTION.–NOTHING UNDER THIS SECTION SHALL BE CONSTRUED TO AFFECT THE JURISDICTION OF AN APPELLATE COURT AS PROVIDED BY LAW OTHER THAN THIS SECTION.

916.1. COMMERCE COURTS.

(A) ESTABLISHMENT.–THE COURT OF COMMON PLEAS OF A JUDICIAL DISTRICT MAY ESTABLISH FROM AVAILABLE FUNDS A COMMERCE COURT THAT SHALL HAVE SPECIALIZED JURISDICTION. IN A COURT OF COMMON PLEAS THAT HAS ESTABLISHED A COMMERCE COURT UNDER THIS SECTION, THE EXCLUSIVE JURISDICTION OF CASES RELATING TO THE FOLLOWING MATTERS MAY BE VESTED IN THE COMMERCE COURT:

(1) THE INTERNAL AFFAIRS, GOVERNANCE, DISSOLUTION, LIQUIDATION, RIGHTS OR OBLIGATIONS BETWEEN OR AMONG OWNERS AND LIABILITY OR INDEMNITY OF MANAGERS OF BUSINESS CORPORATIONS, PARTNERSHIPS, LIMITED PARTNERSHIPS, LIMITED LIABILITY PARTNERSHIPS, PROFESSIONAL ASSOCIATIONS, BUSINESS TRUSTS, JOINT VENTURES OR OTHER BUSINESS ENTERPRISES, INCLUDING ANY ACTIONS INVOLVING THE INTERPRETATION OF THE RIGHTS OR OBLIGATIONS UNDER THE ORGANIC LAW, ARTICLES OF INCORPORATION, BYLAWS OR AGREEMENTS GOVERNING THESE ENTERPRISES.

(2) DISPUTES BETWEEN OR AMONG TWO OR MORE BUSINESS ENTERPRISES RELATING TO A TRANSACTION, BUSINESS RELATIONSHIP OR A CONTRACT.

(B) RULES.–THE COURT MAY ADOPT LOCAL RULES FOR THE ADMINISTRATION OF COMMERCE COURTS ESTABLISHED UNDER THIS SECTION. THE LOCAL RULES MAY NOT BE INCONSISTENT WITH THIS SECTION OR ANY RULE ESTABLISHED BY THE SUPREME COURT.

(C) STATEWIDE COMMERCE COURTS COORDINATOR.–TO THE EXTENT THAT FUNDS ARE AVAILABLE, THE SUPREME COURT MAY APPOINT A STATEWIDE COMMERCE COURT COORDINATOR. THE COORDINATOR MAY:

(1) ENCOURAGE AND ASSIST IN THE ESTABLISHMENT OF COMMERCE COURTS IN EACH JUDICIAL DISTRICT.

(2) DEVELOP MODEL GUIDELINES FOR THE ADMINISTRATION OF COMMERCE COURTS AND THEIR RELATED SERVICES.

(3) ESTABLISH PROCEDURES FOR MONITORING COMMERCE COURTS AND FOR EVALUATING THE EFFECTIVENESS OF COMMERCE COURTS.

(D) ADVISORY COMMITTEE.–THE SUPREME COURT MAY ESTABLISH, FROM AVAILABLE FUNDS, AN INTERDISCIPLINARY AND INTERBRANCH ADVISORY COMMITTEE TO ADVISE AND ASSIST THE STATEWIDE COMMERCE COURTS COORDINATOR IN MONITORING AND ADMINISTRATING COMMERCE COURTS STATEWIDE.