Civil litigation is the generic term used to describe the vast majority of lawsuits that are filed in the Court system (non-criminal). Civil litigation generally involves a dispute between two or more parties, seeking to enforce or defend a legal right. In many of these cases, the plaintiff is seeking compensation in the form of money damages from the defendant, however, some civil lawsuits seek injunctive relief—to force another party to do or refrain from doing a particular act. Many different types of lawsuits fall under the broad umbrella of civil litigation.
When civil disputes involve businesses or companies, the lawsuit is generally described as “commercial litigation.”
Types of Commercial Litigation
There are many types of commercial litigation, including the following:
- Restrictive Covenant
- Securities Litigation
- Shareholder Disputes and Derivative Actions
- Tax Disputes
- Trade Secret and Unfair Competition
- Negligence and other torts
- Partnership Disputes
- Privacy, Cybersecurity and Data Breach
- Product Liability
- Real Estate, Land Use and Environmental Litigation
- Aviation Disputes
- Breach of Contract
- Breach of Fiduciary Duty
- Business Torts
- Class Actions
- Employment and Labor
- Fraud and Misrepresentation
- Insurance Coverage
- Intellectual Property and Patent Infringement
- LLC Member Disputes
The above is not an exhaustive list of the types of commercial litigation. Instead, it merely highlights some of the more prevalent types of disputes that can arise in the business context. Commercial disputes among or involving companies arise with increasing frequency in today’s business environment. Because business disputes can quickly escalate, it is important to map out a strategy at the outset of any case, regardless of whether the party involved is a plaintiff or defendant. This involves setting specific goals and managing the party’s realistic expectations. In doing so, it is necessary to understand the different possible outcomes and probabilities of success. The definition of a successful outcome, however, varies from situation to situation and company to company, depending on the company’s particular objectives.
When a business faces litigation or the threat of a lawsuit, seeking the advice of an experienced commercial litigation attorney early in the process is critical. Having a commercial litigator coordinate and oversee the gathering of evidence, the retaining of experts (if needed), and the preserving of relevant electronically stored information (“ESI”), among other things, is often the key to a successful outcome. If you would like further information on any type of commercial litigation, please do not hesitate to reach out to any of the litigation attorneys at Sanders Law Group.
The Commercial Litigation Process
Starting the Lawsuit
Each party in a lawsuit files initial papers, known as “pleadings.” The pleadings explain each party’s side of the dispute.
Complaint: Litigation begins when the plaintiff files a complaint with the Court and delivers a copy to the defendant as required by the applicable rules. The complaint is the plaintiff’s pleading and describes what the defendant did (or failed to do) that caused harm to the plaintiff. The complaint also states the plaintiff’s legal basis for holding the defendant responsible for that harm.
Answer: Once a defendant has been served with the complaint, an answer must be filed. The defendant is given a specific amount of time to file an answer to the complaint. The answer is defendant’s pleading and sets forth the defendant’s side of the dispute. The defendant may also file counter-claims against the plaintiff, in a case where the defendant believes that the plaintiff has harmed him and should be held liable for that harm. Sometimes, the plaintiff responds to the defendant’s answer or counter-claims by filing a reply.
In some instances, instead of filing an answer or reply, a party may request that the other party clarify or correct deficiencies in its pleading or may ask the court to dismiss part or all of the suit. This may lead to amended complaints or amended answers. Once the parties have completed the pleading process, the issues for resolution by the court have been defined.
Discovery is the method by which parties gather relevant information from each other or from third parties regarding their claims and/or defenses, and thorough preparation is critical to this process. Research of the law, document review and organization, and witness interviews help clients and their lawyers assess the merits of claims and defenses. Discovery may take several forms, discussed in greater detail below. The extent to which these and other steps are needed is determined by the issues of the case.
Discovery is usually the longest part of the case. It begins soon after a lawsuit is filed and often continues until shortly before trial. During discovery, the parties ask each other and for information about the facts and issues of the case. Sometimes, discovery will be sought from persons or entities who are not parties to the case (third-party discovery). Information is gathered in a variety of ways. A party may serve written questions (known as “interrogatories”), which must be answered under oath as if you were in Court. In other instances, a party may request documents from the other party, or, serve requests for admission (which ask a party to admit or deny statements of fact). Another key method of obtaining information is to conduct depositions. In a deposition, a witness is questioned under oath by the parties’ attorneys and the witnesses’ answers are recorded by a court reporter (and, sometimes, by videotape as well).
Depositions are used to learn more about the facts of a case and about what the different witnesses contend happened. Depositions also may be used at trial to show inconsistencies in a witness’ story or to question the witness’ credibility. The recorded testimony from a deposition sometimes may also be used at trial in place of a witness who is not able to attend the trial in person.
In certain disputes a claim or defense requires support from expert witnesses to explain technical information or validate an argument. An expert may be qualified by education, training and/or relevant experience. One or more experts might be needed to explain the connection between the defendant’s conduct and the loss suffered by the plaintiff, or the existence and amount of the plaintiff’s damages. Expert witnesses work closely with a party’s representatives and attorneys to prepare the case.
A motion is a formal request made to the Court, asking the Court to rule on one or more issues in the case. Although some motions may be made orally, they are most often made in writing. Before trial, the parties may use motions to ask the Court to rule or act. Motions usually pertain to law or facts in the case but, sometimes, they seek clarification or resolution of procedural disputes between the parties. For example, if one party has refused to provide information in discovery, the aggrieved party may make a motion to compel the other party to respond. Other motions, such as a motion for summary judgment, ask the court to dismiss part or all of a plaintiff’s case or a defendant’s defense, avoiding the need to have a trial on those issues. Other motions might ask the court to order a party to exclude evidence from trial.
The trial is the point in time when the parties come before the court and present evidence in support of their claims or defenses. In some instances, the case is tried to a jury but, in others, there is no jury and the case will be heard only by the judge (known as a “bench trial”).In many instances, right before the trial, each party will provide the judge a document, called a “brief,” that outlines the arguments and evidence to be used at trial. In a jury trial, there is an additional step where the attorneys will question potential jurors during a selection process known as “voir dire.” Once the trial begins, each party presents its outline of the case in an opening statement. After opening statements are made, the parties will present their evidence. Each party may call witnesses or introduce documents and exhibits in support of its arguments. After each witness is called and questioned, the opposing party will be given an opportunity to cross-examine the witness. The plaintiff presents its evidence first, then the defendant presents its evidence. Sometimes, the plaintiff is allowed to present additional evidence, called rebuttal evidence, after the defendant has finished presenting its case. Once all the evidence has been presented, the parties will give their closing arguments (although closing arguments are not always permitted in a bench trial). After closing arguments, the court will instruct the jury on the law to be applied to the evidence. The jury will then deliberate until it has reached a decision or verdict.
Although the parties may believe that the case is over after the jury has reached a verdict, that is not always the case. A party may seek to challenge a jury’s verdict. Frequent challenges may allege that the trial court made errors of law or that the jury disregarded the law or evidence. Another remedy may be to seek motion for judgment notwithstanding the verdict (“JNOV”) A JNOV asks the court to disregard the jury’s verdict and enter a different decision. A motion for a new trial asks the court to set aside the jury’s verdict and order a new trial of the case.
Costs and Fees
The party who prevails at trial will usually file a motion asking the court to order the losing party to pay the prevailing party’s costs to prosecute or defend the case. Recoverable costs are defined by rule, statute, or private agreement and generally do not include attorneys’ fees. Recoverable costs rarely cover all out-of-pocket costs a party incurs during the course of a lawsuit. Some statutes and contracts also allow the prevailing party to seek reimbursement of its attorneys’ fees from the losing party, however, that is the exception, rather than the rule The general rule is that parties to a lawsuit should be prepared to pay their own costs and fees.
If a party is dissatisfied with the result reached at trial, the party may file an appeal. An appeal asks a higher court to review the trial court proceeding to determine if there were errors that require reversal. Once an appeal is filed, the parties present their arguments in briefs, which are submitted to the appellate court along with the record of evidence from the trial court. The appellate court usually reviews a case for legal error only, however, in certain unusual circumstances, the appellate court may be called upon review factual evidence or override a jury’s findings of fact. The appellate court announces its decision in a document called an opinion. The appellate court will affirm the verdict if it finds that there was no error in the trial court proceeding. If there was an error, however, the appellate court can reverse the verdict or order a new trial. An appeal can extend the litigation process by a year or more.
Alternatives to Litigation
Alternatives to litigation are heralded as saving time and expense, but they may not result in a final resolution of the dispute. The desirability of these alternatives should be evaluated early on, as there are both benefits and detriments.
It is generally wise at the outset of any court proceeding to review the potential for an out-of-court settlement. Indeed, a surprising number of matters settle before reaching the trial stage. Settlement can be discussed by any party at any time during litigation and is often a cost-effective alternative to trial. With certain exceptions, the court does not require the parties to discuss or attempt settlement, however, if the parties are amenable to discussing settlement most courts today have procedures by which a party can request the court’s assistance in a settlement.
Alternative Dispute Resolution
There are two common options for resolving a dispute if a party does not wish to go to court. They are mediation and arbitration.
Mediation is a non-binding process through which parties to a dispute may wish to see if the dispute can be resolved. While the parties may be able to negotiate a settlement without outside help, it is far more common to involve a neutral third party, known as a “mediator.” The mediator’s job is to assist the parties’ settlement efforts. The parties will jointly select the mediator, who meets privately with each party to discuss the strengths and weaknesses of each side’s case. The mediator’s role is, in part, to help the parties identify the risks of the case and encourage them to consider how those risks can affect their goals. The mediator does not have the power to force the parties to agree on a settlement, but may be persuasive in helping them reach a compromise.
Unlike mediation, if the parties elect to go to arbitration, the decision will be binding. Arbitration is an adversarial proceeding which more closely resembles a court proceeding. In an arbitration, the parties select a neutral third party, called an “arbitrator,” to resolve their dispute. In arbitration, as in a court proceeding, the parties present evidence and argue the case to the arbitrator, who then decides which party wins. The process is not as lengthy and is less formal than a court proceeding. Arbitration often arises from a private agreement, but many courts also require the parties to smaller disputes to explore arbitration as an alternative. Parties who agree to settle their dispute using binding arbitration often cannot appeal the arbitrator’s ruling to a court.
How Commercial Litigation Differs from Traditional Litigation
Commercial litigation generally progresses the same way that other civil litigation matters do. The commonalities include: retaining an attorney, conducting factual investigations, researching applicable law, sending demand letters, engaging in settlement negotiations, filing suit, conducting discovery, participating in motion practice, trying the case before a judge or jury, filing post-trial motions, and so on.
Commercial litigation is different from most other civil lawsuits by virtue of the involvement of businesses rather than individuals. Because the issues involved can be specialized and typically more complex, both factually and legally, the processes may be different. If jurisdictional thresholds are met, many times, commercial litigation plaintiffs may prefer to file their cases in federal court, rather than state court. Sometimes, these cases may involve class action claims or multi-district litigation. Additionally, commercial litigation can take many twists and turns and may persist far longer as compared to other types of civil litigation. Commercial litigation also can be more expensive due to the costs of discovery, particularly e-discovery, and the costs of forensic experts.