Defining Complex Commercial Litigation

 

Commercial litigation generally involves two or more businesses in a dispute over money or other property.  Classic examples include suits for

 

o      Misuse of Intellectual Property:  Patents, copyrights, trademarks, trade dress, service marks, and trade secrets. 

o      Antitrust Violations:  Monopolization of a line of business, group boycotts, price discrimination, tying arrangements, and conspiracies to fix prices, allocate customers, divide territories, or otherwise prevent competition.

 

o      Fraud and Deceptive Trade Practices:  Misrepresentations and fraud in business transactions.

 

o      Securities Law Violations:  Deceptive or manipulative conduct in connection with buying and selling stocks, bonds, mutual funds, and other securities, whether privately or on an open market like the New York Stock Exchange or Nasdaq.

 

o      Abuses of Trust:  Breaches of fiduciary duties by persons in positions of trust, including corporate officers and directors, agents, trustees, partners, or majority shareholders.

 

o      Employer/Employee Disputes:  Overtime, disabilities, health and pension benefits, and discrimination (age, race, and gender).

 

o      Collection of Debt:  Promissory notes, guaranty agreements, and mortgages/deeds of trust.

 

o      Breach of Contract:  Mergers and acquisitions, purchases and sales of securities, transactions in real estate and other business assets, and agreements to provide goods or services.

 

o      Tortious Interference with Contract:  A third party’s hindering or preventing performance of an agreement.

 

o      Agreements Limiting Competition:  Non-competition, non-solicitation, and non-disclosure agreements by former business owners and employees.  These suits often include requests for emergency relief such as a restraining order or pre-trial injunction.

 

That was the easy part.  According to the 2004 version of the Manual for Complex Litigation, “complex litigation” is not “susceptible to any bright-line definition.”[1]  But some characteristics do stand out.  These include

 

o      Great Resources.  Litigants who don’t have resources can’t afford to make lawsuits complex.  A wealthy litigant can bear the cost of complexity and ─ especially when the other side is poorer ─ may have an incentive to create and exploit complexity.[2]  The opposite is also true.  Complexity rarely develops between poor parties.

 

o      High Stakes.  The more each side has to gain or lose, the greater the impulse to over-discover, to over-litigate, and to over-analyze the case.

 

o      Multiple Parties.  Having a greater number of parties doesn’t necessarily cause wasteful complexity.  In fact, a multiplicity of parties usually results from the parties’ ability and willingness to afford the expense of complexity.  But multiplying parties can promote inefficiency and sow confusion if the parties fall into disparate groups that have conflicting interests ─ thus making settlement harder to broker and the outcome of a trial more unpredictable.

 

o      Hourly Fees.  Clients that pay lawyers for effort instead of results encourage greater effort regardless of results.  True, results do require effort, but why not promote efficient effort by basing compensation on measurable results?


[1][1] Manual for Complex Litigation, 4th, at 1 (2004).  The third edition of the Manual at least attempted a definition, saying that the “need for…judicial management with the participation of counsel” distinguishes complex from non-complex litigation.  Manual for Complex Litigation, 3rd, at 3 (1995).

[2][2] In class actions, class counsel’s resources (rather than the class representatives’) determines the affordability of complexity.