Posted: April 25, 2024
Utah Rules of Business and Chancery Court Procedure – Comment Period Closed June 9, 2024
NEW Rules of Business and Chancery Court Procedure – These rules were drafted using the Utah Rules of Civil Procedure as their base line. Thus, the Committee determined that the Rules of Civil Procedure were adequate for the Business and Chancery Court, these rules simply incorporate them by reference rather than repeat the identical language. For example, although these rules include significant modifications to Utah Rule of Civil Procedure 26, necessitating a distinct Rule 26 for the Business and Chancery Court, the Committee concluded that Utah Rule of Civil Procedure 37, including its mechanisms for enforcing the parties’ discovery obligations under Rule 26, could be adopted into these rules without modification and is therefore incorporated by reference. The Rules of Civil Procedure that do not apply in Business and Chancery Court are explicitly excluded by reference in Appendix A.
URBCP001.NEW — General provisions.
URBCP008.NEW — General rules of pleadings.
URBCP010.NEW — Form of pleadings and other papers.
URBCP013.NEW — Counterclaim and crossclaim.
URBCP014.NEW— Third-party practice.
URBCP016.NEW— Pretrial conferences.
URBCP018.NEW— Joinder of claims and remedies.
URBCP019.NEW— Joinder of persons needed for just adjudication.
URBCP020.NEW— Permissive joinder of parties.
URBCP022.NEW — Interpleader.
URBCP024.NEW— Intervention.
URBCP026.NEW — General provisions governing disclosure and discovery.
URBCP038.NEW— Jury trial of right.
URBCP042.NEW — Consolidation and separate trials.
URBCP063.NEW — Disability or disqualification of a judge.
URBCP065A.NEW— Injunctions.
URBCP065B.NEW — Extraordinary relief.
URBCP077.NEW — Business and chancery court; clerks.
URBCP085.NEW— Title.
URBCP086.NEW — Licensed paralegal practitioners.
Appendix A Rules of Civil Procedure excluded from Rules of Business and Chancery Court Procedure
Congratulations to the committee for the creation of these rules.
This comment relates to Proposed Rule 1.
For subsection (b), I would suggest Utah R. Bus. & Ch. P. I recognize that the abbreviation is considerably longer than what the drafters have proposed. However, it is more consistent with the Bluebook (See, for example, BB R. 12.9.3, T.1 (no abbreviation of “Utah”), T.6 (abbreviation of “Business” and the use of the ampersand), T.7 (abbreviation of “Chancery”)).
It is also more consistent with other Utah rules that suggest an abbreviation, such as the Utah Rules of Appellate Procedure, and the Utah Rules of Juvenile procedure.
Finally, it would also avoid confusion, especially for people who are not aware of, or do not regularly practice in the Business and Chancery Court. The shorter abbreviation may be confused with the rules of civil or criminal procedure, especially if the writer has any typographical errors deviating from the abbreviation.
For subsection (f), I would suggest the following language, to replace the second sentence of subsection (f): “A party must provide a copy of the decision to the court and all parties if the decision is not available in a publicly accessible electronic database, or if requested by the court or an opposing party.”
Most cases in Business and Chancery Court will likely be litigated by sophisticated parties represented by counsel who will have access to reported and unreported decisions through commercial electronic databases. Requiring the parties to attach all decisions of the Business and Chancery court will waste time and resources when the decisions can be quickly and easily accessed by the court and all parties.
This proposed change strikes a balance in the rare circumstances where a decision may not be readily available. It will also be consistent with the practice in federal court, as reflected in DUCivR 7-2(c).
(These comments are mine only and do not necessarily represent the opinion of my employer or any other organization with which I am associated.)
I appreciate Mr. Kaiser’s concerns relating to the proposed requirement to provide copies of the decisions cited for this Court. I endorse his recommendation that copies of such decisions only be provided when not readily available in a publicly accessible electronic database or if requested by the court or an opposing party. If the court or opposing party requests a copy of a decision, the rules should provide an acknowledgement that an extension of time may be necessary for responsive briefs, an opinion from the Court, or the dates stipulated in the pretrial conferences.
Regarding Mr. Kaiser’s suggestion to change the manner in which the rules for the Business and Chancery Court are cited, I note that the Delaware Court of Chancery has developed its own local usage for citations of the Court’s rules, dropping reference to the state and simply citing to Ct. Ch. R. ___. Given that the length of the Utah Business and Chancery Court name would suggest a need for economy and that the proposed acronymic uniqueness eliminates confusion, I see no compelling reason to change Utah Rule of Business and Chancery Procedure 1(b).
Thank you to the Committee for their diligence and efforts in creating these rules.
Rule 38(b)(7) indicates that the Business and Chancery Court will order the transfer of all issues to be tried by jury to the district court as set forth in Utah Code § 78A-5a-104. This section of the code discusses the timing of the transfer and pre-transfer adjudication. The code does not discuss venue questions that may arise. Is the Business and Chancery Court responsible for determining the venue, i.e. district court, to which the case must be transferred? Perhaps it would be best if there was a requirement within Rule 38 to require not only a demand for trial by jury, but also within that demand a designation of the appropriate venue for the transfer. If that requirement is imposed, the parties can, if necessary, contest the venue before the Business and Chancery Court alongside the right to trial by jury.
Thank you.
This comment relates to Rule 8 and how it relates to the preliminary statutory hurdle under Utah Code § 78A-5a-103(1)(a); that jurisdiction lies within the Business and Chancery Court for an action that seeks either monetary damages of at least $300,000 or solely equitable relief. To facilitate the expeditious adjudication envisioned for the Business and Chancery Court, Rule 8 could be modified to require the complaining party to specifically state how it meets the preliminary jurisdictional hurdle for the Business and Chancery Court.
Similar to URCP Rule 8 requiring a pleading to at least state “damages are such as to qualify for a specified tier,” the Committee might consider requiring a claim to state that either the damages are in excess of $300,000 or indicate the specific form of equitable relief being sought. This would assist the Court in quickly determining whether jurisdiction is appropriate and, if not, potentially dismissing the case sua sponte without prejudice or transferring the claim to the district court.
It might be more efficient for the Business and Chancery Court to transfer such cases to the district court rather than dismissing them, but the venue choice may not be clear. The rules could also contemplate this situation. In instances where the Business and Chancery Court finds jurisdiction does not lie within that Court, that upon such a finding the claiming party shall have an opportunity to indicate the appropriate venue for transfer.
It appears that part of the intent of these new rules is to push cases along quicker. The proposed Rule 16 requires, for example, an initial pretrial conference and an initial planning conference. And then the proposed Rule 26(c)(4) would require court approval and a finding of good cause (not just a stipulation of the parties) in order to obtain extraordinary discovery beyond the “presumptive” limits. All this seems designed to force the parties to set a discovery plan and stick to the presumptive schedule, so that cases move quickly without excessive extensions. So I do not understand the purpose of the proposed changes to the expert disclosure rules, which would take us back to having both reports and depositions. The proposed rule 26(a)(3) requires every expert to produce a report at the time of disclosure, and then allows the opposing party to also depose that expert, and it removes the language about the expert being bound by the contents of the report. (Compare URCP 26(a)(4)(B) “A report must be signed by the expert and must contain a complete statement of all opinions the expert will offer at trial and the basis and reasons for them. Such an expert may not testify in a party’s case-in-chief concerning any matter not fairly disclosed in the report.” This language is stricken from the proposed Rule 26(a)(3)). The practical effect of removing that language is that parties will now feel the need to depose every expert witness in order to pin down their opinions. Thus, we would be back to the days of needing both an expert report and a deposition in every case. Plus, the depositions under the proposed rule, could go up to 6 hours instead of the current 4 hours.
My sense is that this change, if implemented, would slow cases down and drive up expert costs. The existing Rule 26(a)(4) election of either a report or a deposition is better structured to save time and costs, especially when a party can rest assured that the expert will be precluded from offering testimony at trial that was not fairly disclosed in the report. I encourage the committee to reject the proposed changes to the expert discovery rules.
IMPROVING JUDICIAL EFFICIENCY THROUGH SHARING DISCOVERY EXPENSES:
A RULE PROPOSAL FOR THE UTAH BUSINESS AND CHANCERY COURT
Introduction
The creation of Utah’s Business and Chancery Court provides an opportunity for Utah businesses to have their cases heard in the State of Utah by a court system that is focused on efficient resolution of business disputes. As Rep. Brady Brammer acknowledged during the legislative debate, “over half of the publicly traded companies are incorporated in Delaware. Now, one of the big reasons why they all incorporate in Delaware is because they have a business and chancery court.”1 A Utah Business and Chancery Court “will encourage businesses to register and litigate in Utah…expedite the judicial process for business litigation, and reliev[e] [non-business] courts of these types of lawsuits.”2
To create greater efficiency, cost reduction, consistency, and confidence in the Utah Business and Chancery Court, Lawyers for Civil Justice (LCJ)3 proposes a cost-sharing rule in place at the outset of litigation that will reduce discovery disputes, contain discovery costs, and save judicial and party resources while expediting proceedings by focusing courts and parties on the information that is actually needed to adjudicate claims and defenses.
The Problem
The Utah Supreme Court has expressed that “[h]igh discovery costs and the expenses of a lengthy trial exert a ripple effect that can dissuade potential litigants from even bringing their cases. The prohibitive resources needed to try a case function as a limitation on access to justice for plaintiffs and defendants alike.”4 This problem is particularly exacerbated where litigants don’t have to pay the price of their discovery requests, and thus have no incentive to focus their demands on what they actually need to resolve the merits of their claims and defense, but instead ask for more. The ability to impose economic hardship on the opponent provides an incentive to demand more discovery than is necessary as a litigation strategy to force resolution through economic pressure rather than a resolution on the merits. Overexpansive discovery demands also reflect the basic economic principle that underpriced commodities are overconsumed. Excessive discovery not only delays resolution of matters, but also frequently consumes court resources to sort out motions to define the limits of the scope of discovery, to compel production, and to provide protective orders. A new cost-sharing rule in place at the time parties fashion their discovery requests will better align the parties’ incentives with the goals of efficiency and resolution based on the actual merits of the claims and defenses.
Electronic discovery is a key driver of litigation costs and delays. This is not surprising because the volume of ESI is greater than ever before due to the multitude of communication platforms and increasing informality of communications. These massive amounts of data are often dynamic in nature, and accessibility issues abound, resulting in lengthy and costly processes to retrieve data. The sharing and reviewing of this voluminous data also increases the likelihood of data leaks and other privacy-related issues. Unfortunately, the current producer-pays practice incentivizes excessive discovery demands that are neither cost-justified nor relevant to the core merits of the case.5 These issues trigger costly motion practice and increased resolution time that burden Utah dockets. A new approach is needed that builds upon the Utah courts’ efforts to “facilitate access to justice and promote proportionality in costs and procedures in civil litigation,”6 and fairly allocate “the costs, expenses, and attorney fees of discovery . . . as justice requires.”7
The Opportunity
The Utah Business and Chancery Court rules should encourage parties to focus their discovery requests on obtaining information that is actually needed to adjudicate or resolve the claims and defenses. Although Utah Rule of Civil Procedure 37(a)(7) provides an order in favor of cost allocation “as justice requires,”—for example to “protect a party or person from discovery being conducted in bad faith or from annoyance, embarrassment, oppression, or undue burden or expense, or to achieve proportionality…”—this analysis often occurs in the later stages of the litigation, after significant expenses and resources have already been consumed. And it typically requires considerable court time to determine what “justice requires” in the context of electronic discovery and a particular case. By contrast, a rule establishing cost sharing at the outset of the case would be self-executing: parties with “skin in the game” will focus their requests on information that is “worth it” to the case rather than exploring everything they might be “entitled to.” A “co-pay”-like incentive will reduce motion practice over the scope of discovery, the costs of litigation, and the time to resolution. Such a rule would align with the Rule 26(c)’s goal “to streamline the [litigation] process and enable[] both parties to . . . plan their litigation strategies and cost outlays accordingly.”8 A cost-sharing rule is particularly apt in the context of the business court which will be focused on “Tier 3” commercial disputes that involve alleged damages of $300,000 or more.
The Proposed Rule
The proposed change to the Utah Rules of Business and Chancery Court Procedure, attached as Exhibit A, contains three elements:
1. If any party requests discovery other than that required by initial disclosures, the requesting party shall bear a percentage—we suggest using either 50, 25, or 10 percent as a percentage for allocation—of the expenses of collection, review, and production of material within the scope and limits of discovery, as defined by Utah Rule of Business and Chancery Court Procedure 26(b) and allowed by the Business and Chancery Court.
2. Although this rule will be largely self-executing and not require judicial
resources, it provides an option for the Business Court quickly and efficiently to resolve any disputes between the parties as to the amount to be reimbursed: a “baseball-arbitration-style” process which requires each party to submit a proposed expense amount knowing that the Business Court will select without modification one of the parties’ submissions, providing a strong incentive to suggest a reasonable number while avoiding any need for the court to delve into the minutiae.
3. The rule encourages a cooperative approach by allowing the parties to stipulate to another arrangement for sharing discovery expenses.
Utah Leadership in Efficiency and Innovation
The proposed rule would not only help this Court handle its docket more efficiently, but also would further establish Utah courts as an innovative leader in efficient and effective case management. Incentivizing efficient discovery is an important cutting-edge topic among judges,9 academics, and practitioners,10 and has been codified into several state rules.11 This is particularly true in Utah, which employs a tiered discovery procedure where the amount of discovery allocated is proportional to the amount in controversy. Utah has also noted the value of proportionality in ensuring discovery costs do not eclipse the goals of obtaining a “speedy and inexpensive resolution.”12 Recent judicial opinions nationwide demonstrate a growing adoption of “a more favorable approach to cost-sharing,”13 and the adoption of rule providing cost-sharing at the outset of litigation by this Court would provide leadership for the rulemaking process of other states.
Conclusion
The sentiments expressed by the Utah legislature when creating the Business and Chancery Court mirror those of U.S. Supreme Court Chief Justice John Roberts, who stated that “civil litigation has become too expensive, time-consuming, and contentious, inhibiting effective access to the courts.”14 The Chief Justice explained that the significant 2015 amendments to the Federal Rules of Civil Procedure would: “(1) encourage greater cooperation among counsel; (2) focus discovery… on what is truly necessary to resolve the case; (3) engage judges in early and active case management; and (4) address serious new problems associated with vast amounts of electronically stored information.”15 The Utah Business and Chancery Court now has a compelling opportunity to reduce the costs and burdens of litigation by helping parties focus on the information they actually need for their claims and defenses.
By adopting a proactive cost-sharing rule for discovery, the Utah Business and Chancery Court would further strengthen Utah’s legal system and encourage businesses to litigate complex disputes within the state by providing an efficient, self-executing means of reducing the expense and delay of modern discovery without compromising parties’ procedural rights. Such a rule will reduce the demands on court resources by focusing parties on the information needed for the dispositive issues and avoiding extraneous discovery and related motion practice. This rule will also enhance Utah’s already strong reputation as an innovative leader in practical solutions to today’s litigation challenges.
Exhibit A
Rule 26. General provisions governing disclosure and discovery.
(c) Methods, sequence, and timing of discovery; limits on standard fact discovery; extraordinary discovery; sharing discovery expenses.
…
(5) Sharing discovery expenses.
(A) Initial and supplemental disclosures. Each party shall bear all reasonable costs, expenses and attorney fees incurred in complying with Rules 26(a)(1) and 26(d)(5).
(B) Discovery. If any party requests discovery other than that required by Rules 26(a)(1) and 26(d)(5), the requesting party shall reimburse the producing party for [50/25/10] percent of the reasonable costs, expenses and attorney fees incurred in responding reasonably to such discovery requests.
(C) Determining requesting party’s share of discovery expenses.
(i) Absent exceptional circumstances, within 14 days following receipt of a discovery request, the producing party shall provide to the requesting party a good faith preliminary estimate of the reasonable costs, expenses and attorney fees necessary for compliance with the
request.
(ii) Within 7 days following receipt of the preliminary estimate, the requesting and producing parties shall meet and confer in good faith to agree on the amount the requesting party shall pay of the reasonable costs, expenses and attorney fees to be incurred in complying with the discovery request.
(iii) If, within 14 days following receipt of the preliminary estimate, the parties are unable to agree on the amount the requesting party will pay under this Rule, each party shall submit to the court a proposal for allocating the reasonable costs, expenses and attorney fees among the parties, and the court shall select and order one of the proposals.
(D) Nothing in this rule alters the scope and limits of discovery as defined by Rule 26(b).
(E) The absence of an agreement or order allocating the reasonable costs, expenses and attorney fees incurred in compliance with a discovery request shall not excuse the timely performance of any discovery obligation.
Endnotes
1 Hearing on HB0216 Before the Utah State Leg. 2023 General Legislative Session (statement of Brady Brammer, Rep.), https://le.utah.gov/av/floorArchive.jsp?markerID=120727.
2 Id. (statement of Kirk Cullimore, Sen.), https://le.utah.gov/av/floorArchive.jsp?markerID=121802.
3 Lawyers for Civil Justice (“LCJ”) is a national coalition of corporations, law firms, and defense trial lawyer organizations that promotes excellence and fairness in the civil justice system to secure the just, speedy, and inexpensive determination of civil cases. For over 36 years, LCJ has been closely engaged in reforming procedural rules in order to: (1) promote balance and fairness in the civil justice system; (2) reduce costs and burdens associated with litigation; and (3) advance predictability and efficiency in litigation. Learn more here: http://www.lfcj.com.
4 Pilot v. Hill, 437 P.3d 362, 364 (Utah 2019).
5 See Jonathan Remy Nash and Joanna Shepherd, Aligning Incentives and Cost Allocation in Discovery, 71 VAND. L. REV. 2015, 2026 (November 2018) (citing an LCJ study where “an average of 4.9 million pages of documents were produced in discovery requests in major cases at trial. Only one-tenth of one percent of those documents, however, were actually used in trial.”)
6 Pilot v. Hill, 437 P.3d 362, 364 (Utah 2019).
7 Utah Rule of Civil Procedure 37(a)(7)(J).
8 Pilot v. Hill, 437 P.3d 362, 366-67 (Utah 2019).
9 Hon. Paul Grimm and David Yelion, A Pragmatic Approach to Discovery Reform: How Small Changes Can Make a Big Difference in Civil Discovery, 64 S.C.L. Rev. 495, 523-224 (Spring 2013) (“allocat[ing] some or all of the costs of discovery to the requesting party is neither radical nor unfair, if properly undertaken.”)
10 John H. Beisner, Discovering a Better Way: The Need for Effective Civil Litigation Reform, 60 DUKE L. J. 547-596 (2010).
11 Emphasizing proportionality in discovery has been a focus of several state courts. See, e.g., Utah R. Civ. P. 26(c)(3) (eff. May 4, 2022), which provides for tiered discovery based on the amount in controversy, and Ariz. R. Civ. P. 26.2 (eff. Dec. 6, 2023), which provides for tiered discovery based on the complexity of the case. Both rules allow discovery resources to be appropriately allocated by providing for more fact deposition hours, interrogatories, requests for production, and days to complete fact discovery in cases that are likely to warrant such commitment of resources.
12 “In the past, the scope of discovery was governed by ‘relevance’ or the ‘likelihood to lead to discovery of admissible evidence.’ These broad standards may have secured just results by allowing a party to discover all facts relevant to the litigation. However, they did little to advance two equally important objectives of the rules of civil procedure–the speedy and inexpensive resolution of every action.” The Advisory Notes to Utah State Court Rule 26 (General Provisions Governing Discovery).
13 See e.g., Joseph v. Rassi, 2024 N.Y. Slip. Op. 30101(U) at *3-4 (Sup. Ct. Jan. 2, 2024) (“If Plaintiffs’ counsel has confidence in the merits of its case, they should not object to making an investment in the cost of securing documents from Defendant and sharing costs with Defendant”) (quoting Boeynames v. LA Fitness International LLC, 225 F.R.D. 331 (E.D. Pa. 2012)). See also In re Tasigna (Nilotinib) Products Liab. 2023 WL 3563615 (M.D. Fla. Mar. 31, 2023) (ordering plaintiffs to pay certain discovery costs where plaintiffs demanded costly data anonymization despite failing to take available steps to determine whether that data would be useful to them); Lawson v. Spirit AeroSystems, Inc., 2020 WL 3288058 (D. Kan. June 18, 2020), aff’d, 2020 WL 6939752 (D. Kan. Nov. 24, 2020) (ordering that plaintiff should cover 80% of the costs of a largely nonresponsive review of certain ESI that it insisted on).
14 See 2015 Year-End Report on the Federal Judiciary, pg. 4.
15 Id. 4-5.
Utah Code 78A-5a-104 refers to the Business & Chancery Court transferring to the district court “actions” and “claims” for which there is a requested right to a trial by jury. By contrast, proposed Rule 38 refers to transferring “issues.” This appears to be an inconsistency.