Boom or Bust: Ensuring the Georgia State-wide Business Court Fulfills Its Constitutional Promise

• Jurisdiction: Georgia,United States
• Citation: Vol. 56 No. 1
• Publication year: 2021

Boom or Bust: Ensuring the Georgia State-wide Business Court Fulfills Its Constitutional Promise

Roya Naghepour
University of Georgia School of Law, rn62605@uga.edu

Boom or Bust: Ensuring the Georgia State-wide Business Court Fulfills Its Constitutional Promise

Cover Page Footnote
* J.D. Candidate, 2022, University of Georgia School of Law; B.A. 2019, University of Georgia. The author expresses sincere gratitude to Judge Walter W. Davis for his helpful insight into the development and inner workings of the Georgia State-wide Business Court and for his advice in developing and editing this Note and to Professor Usha Rodrigues, M.E. Kilpatrick Chair of Corporate Finance and Securities Law at the University of Georgia, for her support and guidance in developing this Note.

BOOM OR BUST: ENSURING THE GEORGIA STATE-WIDE BUSINESS COURT FULFILLS ITS CONSTITUTIONAL PROMISE

Roya Naghepour^*

[Page 423]

The United States judiciary includes specialized court systems within its baseline civil and criminal justice structure that provide more efficient and expert adjudication in a wide variety of areas. Since the creation of the Delaware Court of Chancery in 1792, many states have established specialized business courts with jurisdiction over commercial and corporate disputes. Today, many states have business court models, all choosing to employ some version of a specialized forum for corporate and commercial issues for the sake of judicial efficiency. The Georgia State-wide Business Court was established in 2019 with limited jurisdiction over narrow categories of commercial disputes. This Note explores the issues that business courts are intended to resolve and ultimately argues that the Georgia General Assembly should amend the Georgia State-wide Business Court's enabling statute to allow courts to decide sua sponte whether a case should be assigned to the business court, as opposed to a general state or superior court.

[Page 424]

Table of Contents

I. Introduction....................................................................425

II. Specialized Business Courts: A League of Their Own ..........................................................................................431

A. HOPPING ON THE DELAWARE BANDWAGON...............431
B. OFF AND RUNNING: SPECIALIZATION AT THE TRIAL COURT LEVEL...........................................................433
C. THE REASONABLE CORPORATION STANDARD: ADDRESSING JURY-COMPETENCE CONCERNS............434

III. Overview of the Georgia State-wide Business Court .........................................................................................437

A. THE TIP-OFF: EARLY GOALS OF CERTAINTY & PREDICTABILITY.......................................................437
B. A LONG SHOT: ACHIEVING JOINT CONSENT & OVERCOMING JURISDICTIONAL LIMITATIONS............441

IV. Ensuring the Enabling Statute Does Not Frustrate the Georgia State-wide Business Court's Purpose . 445

A. A FAILURE OF CONTRACTUAL PLAY- CALLING: TURNER BROADCASTING SYSTEM, INC. V. MCDAVID................445
B. ELIMINATING THE MONDAY MORNING QUARTERBACK: THE SUA SPONTE SOLUTION......................................449
C. THE GSBC AS A BENCH, NOT A BENCHWARMER..........453

V. Conclusion......................................................................454

[Page 425]

I. Introduction

On January 2, 2009, the Atlanta Hawks traveled to East Rutherford, New Jersey, to play the New Jersey Nets, who at the time had lost seven of their last eight home games.¹ The Hawks were poised to win their seventh game straight, for the first time since 1999.² Early on, the Nets had a rough game: the team consistently missed open shot after open shot, Coach Lawrence Frank received two technical fouls and was ejected from the game, and the Nets were one for seven from three-point range by the half.³ But as the Nets entered the second half, the tide turned, and they put thirty-two points on the board in the third quarter.⁴ Then, in the fourth quarter, Devon Harris drained a three-pointer, overcoming a twenty-point halftime deficit to give the Nets a two-point lead.⁵ In overtime, the Hawks enjoyed a one-point lead with 5.3 seconds left on the clock, but the Nets had possession.⁶ The final in-bounds pass intended for Vince Carter was deflected into the backcourt, putting him too far from the basket.⁷ Carter recovered the ball, planted himself at thirty feet, and put up a long three-pointer at the buzzer to seal the deal.⁸

Carter delivered the Hawks a disappointing buzzer-beater that night. But each team played the game by its rules, and the Nets, with the help of Vince Carter, fairly took their place as winners, ending the Hawks' six-game winning streak.⁹ The next year, in a different type of court, the Georgia Court of Appeals delivered the Hawks another epic loss. In Turner Broadcasting System, Inc., v. McDavid, the court held that the expiration of a letter of intent

[Page 426]

executed by the parties addressing David McDavid's intent to purchase the Atlanta Hawks, Atlanta Thrashers, and certain operating rights at Philips Arena did not preclude McDavid from holding Turner Broadcasting System, Inc. (TBS) liable for breach of an oral agreement.¹⁰ This time, the Hawks thought that they were on the winning side of a buzzer-beater deal, and the ultimate loss felt like the referee just missed a few contractual interpretation play calls.¹¹ Nothing foreign to Georgia sports fans.¹² While in sports it is a loss on a team's record, a missed chance at a national title, or a missed bonus on salaries, for TBS it was $281 million in damages.¹³

In the deal world, material terms are constantly in limbo. It is imperative that the parties are able to negotiate and can appropriately bargain to meet the demands of each side so that all are satisfied in the end.¹⁴ Months-long negotiations and puffery are commonplace, and the understanding that material terms are not

[Page 427]

final until written and signed in an agreement is routine, especially in high-value transactions¹⁵ like the sale of two major league sports teams and the operating rights to an arena in the commercial capital of the Southeast.¹⁶

Many factors impact the trajectory of a given case: the questions of law at issue, the scope of discovery, the necessity of expert evidence—the list goes on.¹⁷ In matters of complex commercial and corporate disputes, complicated legal issues and extensive discovery are consistently in the frontcourt.¹⁸ Accordingly, to better address the complex issues embedded in business disputes, many states have incorporated specialized business courts within their state legal systems.¹⁹ The American specialized business court model

[Page 428]

originated with the Delaware Court of Chancery,²⁰ the nation's leading forum for corporate matters.²¹ Accordingly, every business court in the country is geared toward accomplishing one goal: providing an efficient, specialized forum for complex business disputes.²² But these courts differ significantly in jurisdictional reach, creating a high degree of variation in the number and kind of cases that reach each court's docket every year.²³ Some courts annually accept cases in the low hundreds, while other courts, such as the Circuit Court of Cook County's Chancery Division in Chicago, accept up to 3,700 cases a year.²⁴ Some courts mandate particular subject matter requirements, certain amount-in-controversy

[Page 429]

thresholds, or more specific criteria and duties outlined in enabling legislation and local rules.²⁵

The basic limitations outlined in the different jurisdictional models employed by American business courts can be summarized in three categories: (1) courts with specific subject matter requirements and a specified amount-in-controversy requirement (the Baseline Model), (2) courts with complex business or commercial subject matter classification requirements (the Gatekeeping Model), and (3) courts following rules as outlined by enabling legislation and corresponding authority but with discretion to allow non-mandatory business cases onto the docket (the North Carolina Model).²⁶

The Georgia State-wide Business Court (GSBC) received approval from Georgia voters through a constitutional referendum in 2018.²⁷ Shortly thereafter, the Georgia General Assembly crafted and passed the GSBC's enabling statute, and the court began officially hearing cases on August 3, 2020.²⁸ The GSBC loosely follows a fusion of the Baseline Model and the North Carolina Model.²⁹ The GSBC mandates specific subject matter requirements but provides supplemental jurisdiction over claims falling outside the statute's defined limitations, as well as an established amount-in-controversy requirement.³⁰

At the time of the Turner decision, Georgia did not yet have a statewide business court. Years later, in a joint hearing of the

[Page 430]

Georgia House and Senate Judiciary Committees on August 14, 2019, the committees unanimously, and with bipartisan support, confirmed the appointment of Judge Walter W. Davis as the inaugural judge of the GSBC.³¹ Judge Davis began his term on January 1, 2020, making history as the first and, to date, only judge of the GSBC,³² a court with statewide, but limited, jurisdiction.³³ The Georgia General Assembly included many restrictions within the GSBC's enabling statute "aimed at ensuring that smaller, less complex cases, among others," do not land on the court's docket.³⁴ In creating the GSBC, the Georgia legislature intended for the court to balance having the "objectivity and predictability" of hearing cases focused on the enumerated subject matter requirements with the "subjectivity and flexibility" of determining which cases are "complex" commercial matters falling within its discretion.³⁵ While the GSBC strikes a balance in terms of jurisdictional limitations encompassed by the three basic business court models, the GSBC deviates from the North Carolina Model on one foundational element: the Georgia court is a voluntary...