Business Court Hearing, March 26, 1997
Testimony of Charles P. Pizzi, President
Greater Philadelphia Chamber of Commerce
Before the Pennsylvania Senate Judiciary Committee

Senator Stewart Greenleaf, Chairman
Senate Bill 570
Pennsylvania Commerce Court
Wednesday, March 26, 1997
Wanamaker Building, Suite 1010
Philadelphia, PA

My name is Charlie Pizzi. I am President of the Greater Philadelphia Chamber of Commerce. I am pleased to offer testimony today to members of the Senate Judiciary Committee. On behalf of the Greater Philadelphia Chamber of Commerce, Pennsylvania's largest business association, I would like to welcome you all to Philadelphia. Thank you Senator Greenleaf for including us in today's hearing.

On behalf of 6,000 businesses operating in Greater Philadelphia, the Chamber supports positive reform of Pennsylvania's judicial system in an effort to strengthen our state's economy. We believe that enactment of legislation like Senate Bill 570 creates a climate that will help to maintain existing businesses and attract new corporations to Pennsylvania.

Near the end of the 1996 Legislative Session, this Committee approved a bill to establish a statewide Commerce Court to handle business-related cases. This new court would have provided needed judicial expertise with respect to corporate litigation. We are pleased to see that the measure has been reintroduced this year as Senate Bill 570.

This new draft would establish the Pennsylvania Commerce Court consisting of ten judges with trial and appellate jurisdiction over twelve categories of civil actions involving property, contract, mergers, acquisitions and other financial issues. Senate Bill 570 specifies that the appellate division of the Commerce Court will consist of the president judge and the four senior other judges in regular active service. The appellate division of the Commerce Court will have exclusive appellate jurisdiction over all appeals from final orders of the Commerce Court. Under the measure, judges of the Commerce Court will be elected for a regular term of office and must face retention when their terms expire. Candidates will be evaluated by the Commerce Court Qualifications Commission, a group appointed by the Legislature. Evaluations will appear beside the candidates' names on the ballot. The Court will be funded by surcharges on fees charged by the Corporation Bureau, Department of Banking, Insurance Department and PA Securities Commission.

As Pennsylvania's largest business association, we believe that development of a commerce court is vital to our ability to retain and attract business. With the recent enactment of corporate tax relief, workers' comp reform and other regulatory reform, state government has shown its commitment to creating a more inviting business climate. Yet, to fully compliment those efforts, there still exists a need for reform in our judicial system.

We know that a stable judicial environment is an important factor when businesses consider their locations for incorporation. To be successful, businesses must plan for the future -- knowing all the facts and all the rules. The more confident business leaders are of their estimates, their forecasts and potential outcomes, the more comfortable they are in making investments to grow their business. Like a sound and predictable tax structure, we believe that a stable judicial environment can improve Pennsylvania's business climate and encourage businesses to make investments in Pennsylvania. Just as important, it will help us keep the businesses we already have.

Business and political leaders in our neighboring state of Delaware are very quick to point out how enticing their 200-year-old business-friendly court system is to prospective and existing corporations. The Delaware Court of Chancery is highly regarded as an expert court for corporate issues and has received consistent accolades among practitioners, litigants and academics. In the past four years, Delaware's pro-business policies, including its Chancery Court, have produced 35,000 new jobs. Between 1990 and 1995, Delaware attracted 73 new businesses and took more than 4,000 jobs from Pennsylvania. During that same time, Delaware ranked fifth nationally in new business, while the Commonwealth lagged far behind in 48th place. Investment bankers, venture capitalists and others who provide financing for new companies now insist on having a Delaware corporation. Pennsylvania needs a level playing field to compete with states like Delaware for new employers and jobs.

In addition to Delaware, business courts have also been introduced in New York and Illinois--all with measurable success. According to a report by the American Bar Association, the disposition of trial ready commercial cases increased 35% in 1993, the first year specialized commercial judges heard cases in New York. New York's Business Court has also helped cut the volume of pending cases by nearly one third, and increased the number of cases settled by 85%.

Our business and legal communities have expressed growing concern regarding the efficiency, predictability, experience and knowledge of our courts that handle complex corporate and commercial disputes. Experts note that while the legal profession has become more and more specialized, our judiciary has lagged far behind. During these times of scarce government resources, the inefficiencies that result from a failure to specialize have become less and less tolerable. As judges consistently hear particular types of cases, they develop expertise, experience and knowledge enabling them to perform their functions more proficiently than they could without that expertise. In general, the judiciary would become more efficient and its decisions more accurate and predictable.

The current caseload in our court system is producing unconscionable delays, particularly as criminal cases take precedence over corporate matters. A separate system for business matters would work to reduce crowded dockets in Common Pleas courts, enabling faster disposition of all pending cases. One of the goals of this legislation is to settle business disputes more quickly, lowering the costs of litigation. Businesses can then utilize time and resources to grow and expand, not on lengthy, expensive legal proceedings.

Furthermore, the caseload responsibility is widespread among a number of judges, many of whom lack special expertise in corporate law. A Commerce Court would not only reduce the caseload of the existing system and allow for timely decision making on business matters, but would also provide a specialized bench with expertise in corporate law. Through the Business Associations Act 1988, Pennsylvania's corporate laws were completely rewritten, and relatively few judges have any experience with new statute.

Increased expertise on the bench not only challenges litigators, but offers more predictability to corporate decision-makers. Specialized judges who are more experienced in corporate law and the business context of disputes ought to render more accurate and predictable decisions. They should also be more consistent from case to case and deliver outcomes that are compatible with decisions involving related legal doctrines.

A properly structured Commerce Court is a logical step toward meaningful judicial reform. To remain competitive, Pennsylvania must establish a judicial system whereby corporate law disputes can be promptly, efficiently and equitably resolved.

Again, we urge your prompt and favorable consideration of Senate Bill 570 and offer our assistance as this bill moves through the legislative process.

Thank you.