Wyoming Supreme Court Adopts Draft Rules for Chancery Court, Pending Comment and Adoption of Final Rules

On December 30, 2019, Wyoming’s Supreme Court adopted draft rules of civil procedure for Wyoming’s new Chancery Court.  The order provides for a period of comment before the rules are finalized, and indicates the rules will not become effective until November 15, 2020.  A copy of the order and draft rules can be found here.  A copy of the draft rules with tracked changes can be found here.  A previous post on Wyoming’s Chancery Court statute can be found here.

Following the enabling statute, proposed Rule 1 sets the tone:

“These rules govern the procedure in all civil actions and proceedings in the State of Wyoming chancery courts, except as stated in Rule 81. They should be construed, administered, and employed by the court and the parties to secure the just, effective, and expeditious resolution of every action and proceeding. In order to effectuate the expeditious resolution of disputes, it is a goal of the chancery court to resolve a majority of the actions filed in its court within one hundred fifty (150) days of the filing of the action. Accordingly, the chancery court staff shall be active in the management of the docketed cases.”

Rule 2 leads into a principal design feature aimed at meeting these goals, limited jurisdiction: “The chancery court shall be a court of limited jurisdiction for the expeditious resolution of disputes involving commercial, business, trust and similar issues.” Rule 2(b) gives the details of the Chancery Court’s limited jurisdiction, providing for a $50,000 minimum amount-in-controversy, and listing 18 specific case types setting clear parameters to the Chancery Court’s jurisdiction.

Proposed Rule 2(e) lists 10 excluded case types.  Of note here is that “professional malpractice” claims are excluded, raising the question of whether the intent is to exclude not only medical malpractice type actions, but, e.g., accounting malpractice or legal malpractice claims by corporate plaintiffs arising out of commercial matters. Compare the jurisdictional inclusion of certain professional malpractice claims in, e.g., Florida, Tennessee, New York, and Georgia business courts.

Draft Rule 3 provides two optional versions of proposed rules for initiating Chancery Court cases and removing a case from the District Court to the Chancery Court (Option A and Option B). As currently proposed, the rules are not wholly clear on what happens if a plaintiff initiates a case in the Chancery Court, the case falls within the proper scope of the Chancery Court’s jurisdiction, but the defendant does not want to be in the Chancery Court. For example, there is a $250,000 damage claim for breach of contract filed in Chancery Court, but the defendant wants a jury trial, which can only be had in District Court. [The absence of jury trials in Chancery Court is discussed below.]

Under Rule 3, Option A, there is no express mechanism for a defendant objecting to Chancery Court jurisdiction if the case is filed in Chancery Court. Under Option B, however, “[i]f any party files an objection to having the matter proceed in chancery court on or before the date its first pleading is due, the chancery court shall enter its order dismissing the case.” Under this proposed version of Rule 3, the defendant’s objection does not appear to require either party to establish that the case falls inside or outside the Chancery Court’s jurisdictional limitations. If so, the right to object gives the defendant an absolute veto power over the Chancery Court exercising its jurisdiction.

Under both Option A or Option B, removing a case from the District Court to Chancery Court requires the parties’ consent. This indicates that submission to Chancery Court jurisdiction must be mutual and voluntary. Further, the Chancery Court statute, W.S. 15-13-103(b), 15-13-115(d), gives Chancery Court judges concurrent jurisdiction with District Court judges on matters within the Chancery Court’s jurisdiction. There is no language giving the Chancery Court exclusive jurisdiction over the matters that fall within its jurisdictional limits. This likewise indicates that Chancery Court jurisdiction is not mandatory, even for matters within the Chancery Court’s express jurisdictional limits.

The remaining 83 proposed rules give detailed address to all aspects of civil litigation, as one would expect to see in any general state or federal rules of civil procedure, e.g., covering service, time, pleadings, motion practice, amendment, joinder, discovery, class actions, judgments, etc. The formatting follows the Federal Rules of Civil Procedure to a large degree.

One innovation includes proposed Rule 16(c)(3), providing for “Accelerated Adjudication Matters” in the new Chancery Court. This must be selected through the parties’ written consent, and requires certain mandatory waivers (personal jurisdiction, forum non conveniens, punitive damages, and interlocutory appeals), strict limitations on discovery, and specific directives on how to proceed with electronic discovery.

Under proposed Rules 39 and 39.1 there are no jury trials. While it is not unusual for traditional chancery courts or divisions, e.g., in Delaware or New Jersey, to preclude jury trials, these tribunals have a limited equity jurisdiction. Wyoming’s Chancery Court explicitly encompasses non-equity matters solely for monetary damages, which traditionally fall on the law side and can go to juries. Assuming that all parties must consent to Chancery Court jurisdiction, then all parties agree to forego a jury trial in favor of the Chancery Court’s benefits, even in non-equity matters.  [This comports with the idea asserted by some that judges with expertise and experience with business and commercial matters should be deciding business and commercial cases, not inexperienced juries.  That being said, other than Delaware’s Chancery Court, virtually all modern business courts in the United States maintain the right to a jury in non-equity matters.]

Proposed Rule 53 covers the Chancery Court’s ability to appoint masters, who appear to have a wide range of potential functions and powers, depending on the scope of the appointment. The proposed rule states, “[a]s used in these rules the word ‘master’ includes, but is not limited to, a referee, an auditor, or an examiner.”

There is a distinct rule covering Alternative Dispute Resolution, proposed Rule 40. This addresses non-binding ADR, and indicates the Chancery Court “may” assign the case for non-binding ADR, sua sponte, but “shall” assign the case to non-binding ADR if “any” party requests that. This is consistent with Chancery Court statute, W.S. 5-13-115(f), stating “[a] chancery judge may order mediation in any matter pending in chancery court.” The proposed rules also make clear that “[a]ssignment of a case to alternative dispute resolution shall not suspend any deadlines or cancel any hearings or trial. The chancery court retains jurisdiction for any and all purposes while the case is assigned to any alternative dispute resolution.”

Again, a draft of the proposed rules can be found here, and a tracked copy can be found here.

Posted by Lee Applebaum