Litigation: Budget woes slow Calif. courts, but they remain a favored forum for corporate plaintiffs

For many plaintiffs, California state courts remain a favored forum and one corporations should consider

Over the last 5 years, general counsel of corporations have dealt with shrinking budgets. They have responded by pressing outside counsel to reduce expenses, shifting work in-house, using non-law firm vendors to provide some services and requiring the implementation of legal project management procedures. The efforts to respond to shrinking budgets have not stopped with asking how to reduce expenses. Many companies have considered the question: Can we bring affirmative claims to bring in money or provide the company with other benefits? Many companies have concluded that pressing affirmative claims makes sense. Companies now opt out of class actions and press their own claims, bringing actions against vendors that fail to perform or customers that fail to pay. They file lawsuits to protect intellectual property and bring actions against competitors under a variety of business torts.

For far longer than the last five years, general counsel have dealt with lawsuits brought against the companies they work for in California. It is not uncommon for general counsel to lament about being sued in California state courts and subjected in some cases to the broad reach of California statutes or procedures that make it difficult to bring a case to a quick conclusion. So the obvious question: Are California state courts a good forum for a corporation to bring an action?

The issue of where to file an action involves the consideration of many factors. The facts might limit where the lawsuit can be brought as a matter of law. For example, contracts might specify a venue. The substantive law likely to be applied in different states might also be a factor. While there are many exceptions, the substantive law of California often provides stronger rights for those bringing an action than other states. In short, the very statutes and case law that has had general counsel complaining about California might provide greater support for corporate plaintiffs. A good example is the breadth of possible claims under Business and Professions Code Section 17200.

California also has procedural rules that can be helpful to plaintiffs including corporate plaintiffs. California has a restrictive summary judgment statue that does not allow summary adjudication of narrow issues but requires that summary adjudication deal with entire causes of action or defenses. California does not require a unanimous jury verdict in civil matters. A plaintiff (or defendant) can prevail on a 9-3 vote. Another factor to consider is whether the possible judges or jurors might be more supportive of the claims in one location over another. California is a large and diverse state. Each county state court in California has its own characteristics.  What might be true in Los Angeles County about the characteristics of judges and juries, is likely not true in Santa Clara County.

Oftentimes a critical factor as to where to file a lawsuit is how quickly the matter can get to trial. Corporations filing lawsuits rarely are out to leverage the discovery burden placed on the defendant. More often the leverage is the ultimate resolution of the dispute. In such situations, the best friend of a plaintiff is a trial date. The certainty of a trial date places great pressure on plaintiffs and defendants to work out a deal. If there is no deal, there is a trial and the matter is resolved that way.

With the Trial Delay Reduction Act of 1990, California set out to provide all plaintiffs with speedy civil trials. With the implementation of case management procedures, required alternative dispute resolution (ADR), appointment of additional judges and other reforms many California courts approached the goal of providing a civil trial within 12 months of filing a complaint for most cases and within 24 months for all cases. The budget cuts applied to California trial courts that followed the Great Recession created new challenges in pushing cases to trial.

Today, California enjoys budget surpluses, but California state trial courts remain budget challenged. However, cases are still pushed forward with case management procedures, ADR is required, and cases can get tried faster than in other state court jurisdictions. For many plaintiffs, California state courts remain a favored forum and one corporations should consider.

Contributing Author

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Gregory D. Call

Gregory D. Call is a partner in Crowell & Moring's San Francisco office and serves as head of that office. He is co-chair of...

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