We have been remiss in not posting on annual reports from the Philadelphia Court of Common Pleas in 2019 and 2020, addressing the Philadelphia Commerce Case Management Program (“Commerce Court”). Let’s just blame that on Covid.
These reports reflect the Commerce Court not only hearing cases within its traditional jurisdiction of business to business disputes, but its taking on greater responsibilities inside the Court system, with non-business class actions and other unique litigation types.
Among other things, we note that the 2019 Report provides a detailed chart of all Commerce Court case statistics. Of some interest is the fact that of the case inventory pending as of January 7, 2019, 212 were jury demand cases and 382 were non-jury cases. Without the benefit of the details of each case, it may still be fair to surmise that the majority of the time, litigants want the business court judges to decide the case. There are still a significant number of cases, however, where at least one party chooses to present its case to the jury. This belies the notion that business courts somehow strip litigants of the right to a jury trial, while still reinforcing the notion that business litigants more typically want experienced business court jurists to decide their cases.
As set forth in the 2020 Report:
The Commerce Court is a specialized court focused on resolving commercial disputes brought by local, national, and international companies doing business in the Philadelphia metropolitan area. Each case filed in the Commerce Court is assigned to one of three experienced judges, who then presides over the case from commencement to resolution.
The Commerce Court judges hear cases involving diverse parties and issues, including but not limited to: corporate shareholders, company members and partners; sales, mergers and dissolutions of businesses; commercial real estate transactions; construction and other business contracts; mechanics liens; commercial insurance policies; legal, accounting, and other professional (non-medical) malpractice; covenants not to compete, unfair competition, corporate fraud, and theft of trade secrets; malicious prosecution; and negotiable instruments.
A major objective of the Commerce Court is vigorous case management with a view towards early resolution of the dispute. Each Commerce Court judge has an individual docket and is responsible for management of his/her cases, including resolving all discovery disputes, deciding all substantive motions, scheduling all conferences, exploring settlement alternatives, setting a trial date, as well as conducting the trial.
More specific to 2020, the Report states:
A dedicated team of five Court Administrative Officers and Law Clerks assists the Judges and their chambers staff in the management and resolution of cases assigned to the Commerce Court. In addition, more than 120 qualified members of the commercial bar serve as court appointed settlement Judges Pro Tempore, receivers, and discovery masters in Commerce Court cases. In 2020, the Commerce Court continued to work closely with the Business Litigation Committee of the Philadelphia Bar Association to identify experienced, and diverse, members of the bar to serve as Judges Pro Tempore.
The Commerce Court also manages several specialized court programs, not all of which involve true business disputes. For example, all consumer and other Class Actions are assigned to the Commerce Court Judges because Class Actions are procedurally more complex and require more hands-on case management than many other civil actions.
In addition, the Commerce Court Judges hear all motions to open or strike confessed judgments. Due to its work with the confessed judgments, the Court discovered that more than 100 cases involving defaults on taxicab medallion loans had been filed with the Philadelphia Court of Common Pleas. As a result, in December 2017, the Court created the Taxicab Medallion Loan Program within the Commerce Court to handle these unique cases. The majority of these cases are never contested by the defendants. However, in those cases where the defendant appeared, and which resolved during 2020, slightly more than half resulted in settlements between the lender and the taxicab company.
The Commerce Court also handles Petitions to Appoint Sequestrators for commercial properties against which tax liens have been filed. In the 7.5 years of the Commerce Court’s Sequestration Program, the City has collected over $110 million dollars in back taxes from the persons and entities against whom it filed Petitions with the Court, including more than $7.7 million in 2020, even though the City stayed its enforcement actions in March 2020, due to COVID-19 restrictions. More than half of the money collected through the Tax Sequestration program goes to the Philadelphia School District, which helps alleviate its funding shortfall.
Due to the success of the Real Estate Tax Sequestration Program, in 2019, at the City’s behest, the Commerce Court created a Water/Sewer Sequestration Program, through which the City files Petitions to Appoint Sequestrators for commercial properties against which liens for unpaid water and sewer charges have been filed by the Philadelphia Water Department. In 2020, the City collected more than $2.8 million in unpaid water and sewer charges through the Sequestration Program, even though the City stayed its enforcement actions in March 2020, due to COVID-19 restrictions.
The Commerce Court further fulfilled its mandate to provide guidance on issues of Pennsylvania commercial law by issuing opinions in cases involving novel or complex claims. Since its inception, Commerce Court judges have published more than 1,400 opinions on the Commerce Court’s website, including over 30 new ones in 2020. Also in 2020, the Commerce judges and staff presented two continuing legal education seminars regarding practice in the Commerce Court during the COVID-19 pandemic. Furthermore, in light of the difficulties the pandemic imposed on the First Judicial District generally, Commerce judges and staff volunteered to handle several emergency matters arising outside of Commerce Court’s jurisdiction, including a hotly contested election petition
During 2020, the Commerce Court judges disposed of 593 commercial cases; 1069 Sequestration cases; 18 Taxi Cab Medallion cases; and 30 Class Actions, for a grand total of 1710 actions disposed. As of January 1, 2021, there were 856 commercial cases, 782 Sequestration cases, 40 Taxi Cab Medallion cases, and 31 Class Actions, for a total of 1,709 cases pending in the Commerce Court.
The 2019 report includes the following regarding the Commerce Court, among other conclusions.
In addressing the non-Commerce case types in the program, the Report states:
Commerce Court manages both commerce and non-commerce class actions. In 2019, no new Commerce Class Actions were assigned to this program. Commerce Class Actions pending at the beginning of the year was cleared by the close of the year.
Taxicab Medallion Program
In the course of working with petitions to open or strike confessed judgments, Commerce Court noticed an influx of cases—more than 100 in a year—involving defaults on taxicab medallion loans. In December 2017, the Commerce Court created the Taxicab Medallion Loan Program to ensure equitable of access to justice. Of the cases in which the defendant participated, 60% resulted in settlements between the lender and the taxicab company.
Commerce Court processes Petitions to Appoint Sequestrators for commercial properties against which tax liens have been filed. In 2019, Commerce Court received 3,122 newly filed petitions, a 65% from the year prior; a 1,035% increase since its inception. Since the fall of 2013, the City has added more than $100 million dollars to its coffers through this program. More than $17 million was collected in 2019. Monies go to the Philadelphia School District to alleviate funding shortfall.
Due to the success of the Real Estate Sequestration Program, at the City’s behest, the Commerce Court created a Water/Sewer Sequestration Program in 2019. Petitions to Appoint Sequestrators are filed for commercial properties with liens for unpaid water and sewer charges. During 2019, the City collected over $3 million in unpaid water and sewer charges through this program.
In 2019, Commerce Court disposed of 3,199 cases. Of the total number resolved, 88% were resolved within six months of commencement; 97% within 25 months.
As of January 5, 2020, Commerce Court 2,038 pending matters: 670 commercial cases, 1,289 Sequestration cases, 55 Taxi Cab Medallion cases, and 24 Class Actions.
In 2018, the Commerce Court became a member of the Standing International Forum of Commercial Courts, SIFoCC. SIFoCC facilitates conversation among business court judges from all over the world. In 2019, the SIFoCC working group, of which Supervising Judge Glazer is a member published the International Best Practices in Case Management. This document describes best practices for case management in commercial litigation. All working group members advocated for active judicial involvement through the life of the case with a focus on settlement—a hallmark of the Trial Division’s Commerce Court.
In 2019, Commerce Court continued to work with the Business Litigation Committee of the Philadelphia Bar Association to identify experienced, diverse members of the bar to serve as JPTs. Also, in 2019, the Commerce Judges and staff presented several continuing legal education seminars on serving as a Receiver, and Discovery or Special Master. The seminars were well attended and have generated a broader pool of JPTs from which the Commerce Judges may make appointments.
Also in 2019, Commerce Court further fulfilled its mandate to provide guidance on issues of Pennsylvania commercial law by issuing opinions in cases involving novel or complex claims. Since its inception, Commerce Court judges have published more than 1,400 opinions – over 50 in 2019. Lastly, the Commerce Court continued to identify and educate future leaders of the commercial bar through the Honorable Albert W. Sheppard Scholarship Fund and the Temple State Court Honors Internship Program.