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Investor Fraud Allegations Lead to Legal Battle at Spartan Micro, Inc.
In September 2022, the United States District Court for the Central District of California reviewed a case involving...
A commercial or business litigation attorney represents businesses, corporations, and organizations in legal disputes. They work on various legal issues, including breach of contract disputes, shareholder disputes, intellectual property disputes, business torts such as unfair competition or misappropriation of trade secrets, and regulatory compliance issues. Commercial litigation lawyers play a critical role in protecting their client's interests and ensuring they are able to operate their businesses effectively. They may represent clients in court proceedings or alternative dispute resolution methods such as mediation and arbitration.
The commercial litigation team at Whitcomb Selinsky, PC has a deep understanding of business law and corporate litigation, and strong advocacy skills. They evaluate the merits of each case and devise an appropriate prosecution or defense strategy that aligns with your legal and business interests, including whether a jury or bench trial is best for your case. Our commercial litigators are experienced trial lawyers and recognize that all cases should be prepared for trial. However, they also understand the primary goal is to achieve the best possible outcome for you and your business in a cost-effective manner. Whether the matter involves high-stakes risk to the company or is a discrete issue, we can help you navigate the complexities of business law and protect your interests.
Antitrust Cases
Breach of Contract Actions
Breach of Fiduciary Duty Allegations
Business Disputes
Business RICO Claims
Business Torts
Class Action Lawsuits
Derivative Actions
Insurance Coverage Cases
Intellectual Property (IP) and Patent Infringement Cases
Misrepresentation Actions
Product Liability Claims
Securities Litigation
Shareholder Issues
Trade Secret Lawsuits
Unfair Competition Actions
During a jury trial, a group of 6 - 12 individuals is selected to hear evidence and determine the facts of a case. In a jury trial, the judge oversees the proceedings, instructs the jury on the law, and ultimately enters a judgment based on the jury's verdict. Although the 7th Amendment guarantees the right to a jury trial in most cases, Rule 38 requires that a party “demand” a jury trial. The written demand typically accompanies the complaint or answer. Either party may demand a jury trial.
It may be unknown whether a jury trial is to your advantage in complex commercial litigation matters, including class actions. In this case, you can demand a jury trial and then offer to stipulate to a bench trial later. This is far easier than waiving your right to a jury trial and filing a motion with the court in the future.
In a bench trial, the judge alone determines the outcome of a case. The judge hears the evidence, makes findings of fact, and applies the law to those facts to render a verdict. If the parties seek to convert a jury trial to a bench trial, the parties simply need to stipulate to a bench trial, and no motion is required. However, bench trials are not necessarily speedier and more efficient. In fact, jury trials may result in lower costs, faster verdicts, and a common-sense result.
Depending on the case's complexity, a judge may request hundreds of pretrial submissions and proposals costing you additional expenses. In jury trials, jurors tend to turn out verdicts faster as deliberations typically take a few hours or days. In addition, jurors in federal court cases often possess advanced degrees and technical know-how. This subject matter knowledge can be an advantage.
Summary judgment is a mechanism for deciding a case without the expense, effort, and time of going through a trial. But it is only appropriate when the material facts of the case are not disputed by the parties and the outcome is more-or-less obvious.
For example, a plaintiff might move for summary judgment when it claims the defendant failed to perform a contractual obligation owed to the plaintiff. Additionally, the parties do not dispute that there was a valid and enforceable contract, the defendant did not perform the duties, the plaintiff held up its end of the bargain and otherwise fulfilled all conditions precedent, and the plaintiff was harmed in some meaningful way. All that is left is for the judge to determine what legal obligation was owed.
In terms of breach of fiduciary duty or contract interpretation, this is the role of judges, not jurors. Therefore, summary judgment would likely be appropriate, and there is no need for trial.
A motion in limine is a motion brought by either party to exclude, limit, or include evidence before it is offered at trial. These motions ensure a judge may rule on certain issues before they come up in a trial to avoid unnecessary delays during the trial. A motion in limine is also used when a party anticipates that the evidence may be objected to for several reasons during the trial and want to ensure that the evidence will be allowed. Besides addressing evidentiary concerns, motions in limine are also used to set limits on damages or remedies sought by the parties.
Daubert motions are common pretrial motions used to limit or exclude expert witness testimony that fails to meet certain evidentiary requirements, is not reliable, or is not relevant. When these motions are used it is most often challenging the expert’s expertise (including qualifications), methodology, and conclusions. In jury trials, a judge typically decides on these issues prior to trial in an effort to narrow the issues addressed at trial.
Voir Dire is the process of questioning prospective jurors about a variety of topics in order to ascertain if the juror is biased for or against a party or otherwise unable to decide the case in an impartial manner. In federal court, the magistrate or judge conducts voir dire with the use of questionnaires produced by the parties. The questionnaires’ purpose is to help counsel determine potential disqualifying bias but also to determine whether or not the potential juror is likely to favor their party.
In state courts, attorneys typically perform voir dire in person while the potential jurors are seated in the courtroom. Besides the information received from the juror’s answers, the attorneys in federal cases will often use online resources at trial to discover information about the jurors, such as social media postings. Counsel members sometimes ensure that any online research – particularly into social media – does not alert the potential juror.
The following details some of the key steps in the federal jury trial.
Before trial, the parties should exchange proposed jury instructions and verdict forms. These instructions and forms pertain to the substantive issues of the case such as what elements must be proven to find a party liable and how damages are measure damages. These instructions are usually based on model or pattern versions created by a committee for the jurisdiction.
Many judges issue standard preliminary jury instructions. Often, those instructions address fundamental matters like juror’s general conduct, note-taking in the courtroom, use of social media during the trial, banning independent investigation or research into the case via news or conversations with non-jurors, avoiding prejudice, how to communicate with the judge, and the meaning of common terms like “direct” or “circumstantial,” as well as how to view objections from counsel.
The parties will stipulate, or the court will order the final instructions or “jury charges.” These charges often include the necessary elements of liability and remedy, how to view evidence, evidence the jury cannot consider, and legal definitions. The jury must apply the law as described in the charges to the jurors’ factual findings.
In a bench trial, most judges will dispense with opening statements and proceed directly to the presentation of evidence as they are already familiar with the case. However, in a jury trial, the opening statement is crucial. The opening statement is the first opportunity for the jurors to hear the basis for the parties’ claims. The opening statement is a “roadmap” to guide the jury in evaluating the evidence that will be presented, describing the evidence and testimony that will be presented. Visuals can be extremely useful for guiding the jury in an opening statement but should be approved by the court ahead of time in order to avoid objections. Any visuals must be accurate.
The primary source of evidence in most jury trials is witness testimony. Accordingly, the parties should prepare lists of witnesses they intend to call ahead of trial. A witness list should include the witness's name, a description of the topics the witness will discuss, an approximate length of the testimony in hours, and the order in which the witnesses will be called.
Any facts that both parties agree on may be presented to the jury in the form of a stipulation. Stipulations save time and can help the jury understand the basic facts of the case.
Sometimes witnesses cannot be available for trial. In lieu of in-person testimony, previously recorded deposition testimony can be read or played before the jury. The parties must exchange designations of excerpts of transcripts or audio/video to be presented ahead of time so that parties have a chance to object. This gives the court time to rule on any objections outside the presence of the jury, which could lead to prejudice.
Exhibits should be accounted for ahead of the trial so that the parties can raise any objections. Again, this gives the court time to rule on such objections outside the presence of the jury. Often, courts will not permit exhibits not previously marked for admission. Impeachment exhibits not previously marked are permitted as they are used on cross-examination to contradict or call into question witness testimony.
Jury trials tend to move at a slower pace, with regular bathroom breaks, lunch breaks, and breaks for the parties to argue legal or evidentiary issues outside the presence of the jury. These trials are fairly regimented and limited to a set time. Bench trials can be more flexible. Additionally, a bench trial permits the parties to argue evidentiary issues in the middle of questioning witnesses without fear of prejudicing jurors.
The closing argument should attempt to persuade the jury to piece together the relevant facts and reach a decision. A closing argument revives concrete facts and testimony offered during the trial. It also appeals to the jury’s sense of right and wrong.
Judgment as a Matter of Law (JMOL) is a motion from either party challenging the sufficiency of the evidence presented to the jury. If the court decides there is insufficient evidence to reasonably support the party’s case, then the case is over under what is sometimes called a directed verdict. A party can move for JMOL before or after the jury reaches a verdict.
Although rare, a party can also move for a new trial if certain conditions are present. Courts have ordered new trials when there was improper striking of jurors, improper compromise verdicts, outside influence, inconsistent verdicts, or a verdict that is contrary to the weight of the evidence.
After the trial, the prevailing party can request the court order costs and fees. Costs are generally available to the prevailing party, but fees are only permitted by statute or if the parties previously agreed to the trial lawyer’s fees arrangement.
It is extremely rare for an appeals court to disturb a jury’s findings.
Breach of Contract Cases: These involve allegations that a business failed to meet its contractual obligations, resulting in quantifiable monetary harm.
Product Liability Cases: These occur when a company is held responsible for injuries or damages caused by a defective product it manufactured or sold.
Intellectual Property Disputes: These cover conflicts related to patents, trademarks, copyrights, and trade secrets. Businesses may litigate over ownership rights or infringement claims.
Antitrust Litigation: This type of case deals with allegations of anti-competitive behavior, such as price-fixing, monopolies, or unfair business practices.
Consumer Litigation: Consumer disputes can involve issues like false advertising, defective products, or unfair business practices that harm consumers.
Privacy and Data Security Cases: As data breaches become more common, businesses may face litigation related to data breaches, privacy violations, or cybersecurity incidents.
When facing intricate legal issues, such as multi-jurisdictional disputes, regulatory compliance challenges, or novel legal questions, outside counsel with specialized expertise can provide valuable insights and guidance.
One such situation is when the company's in-house IP and general counsel need advice or assistance, or when preparing for litigation and/or negotiations. Often, the necessity for outside counsel emerges from the complexity or importance of issues ill-suited for in-house resolution, or from organizational policies mandating that tasks like litigation are entrusted to external legal professionals.
Another situation is when the company needs to handle their IP work. Outside counsel often handle patent and trademark applications, corporate intellectual property plans, patent infringement risks, trademark clearance opinions, licensing, acquisitions, and intellectual property litigation.
Additionally, companies may engage outside counsel when they have a small IP workload or when the amount of work varies. The actual cost of IP work can be better monitored and controlled when only outside counsel are used.
For more serious allegations, which seem likely to draw scrutiny from government regulators and others, result in civil litigation, or have significant reputational risk, it is typically best practice for the company to retain outside counsel.
When a business owner is involved in a commercial litigation case, they have several key responsibilities to ensure the best possible outcome. Here are some important tasks and considerations:
Consulting with Legal Professionals: Engage an experienced commercial litigation attorney. They will guide you through the legal process, provide advice, and represent your interests. Collaborate closely with your attorney to develop a strategy for handling the case effectively.
Gathering Evidence: Collect relevant documents, contracts, communications, and any other evidence related to the dispute. This evidence will be crucial during negotiations or in court. Ensure that all relevant information is organized and accessible for your legal team.
Assessing Damages and Losses: Understand the financial impact of the dispute on your business. Calculate any monetary losses, potential damages, or harm caused.
Work with your attorney to evaluate the financial implications and determine the appropriate legal remedies.
Participating in Settlement Negotiations: Be open to settlement discussions. Many commercial litigation cases are resolved through negotiation before reaching trial.
Understand your goals and priorities during negotiations. Balancing financial considerations, reputation, and long-term business interests is essential.
Complying with Legal Procedures: Follow court procedures, deadlines, and requirements. Attend hearings, depositions, and other legal proceedings as necessary. Our experienced legal team will help you stay on top of this.
Maintaining Confidentiality and Reputation: Commercial disputes can become public knowledge. Protect your business’s reputation by maintaining discretion.
Avoid discussing the case with unauthorized parties or making public statements that could harm your position.
Remember that each case is unique, and the specific responsibilities may vary based on the details of the dispute. Seeking professional legal advice is crucial to navigate commercial litigation successfully.
Companies gearing up for commercial litigation need to weigh several crucial considerations. A primary factor is evaluating the financial stability of the opposing party to ascertain their capability to fulfill a judgment. Implementing a protocol for conducting a thorough analysis of litigation risks and rewards for substantial and intricate disputes is advisable, as outlined in § 4.01 Pre-Litigation Analysis of Disputes. Additional factors to consider include the potential impact of commercial principles or legal issues on the company's broader operations, the legal jurisdiction of the case, the competence of the plaintiff's legal representation, and the presence of any additional parties that may share liability. It's also vital to compare the monetary value of the claim against the expenses associated with its defense, as mentioned in § 4.01 Development of a Litigation Plan.
Regarding the preparation of documents, it's crucial to understand that materials gathered from third parties for litigation purposes don't automatically receive work product privilege if they're created as part of normal business operations before litigation begins, as per the USCS Federal Rules of Civil Procedure Rule 26, which outlines the Duty to Disclose and the General Provisions Governing Discovery. Documents produced during the regular course of business lack the protective shield against disclosure, as evidenced in cases like Progressive Casualty Insurance Co. vs. FDIC (302 F.R.D. 497), Electronic Data Systems Corp. vs. Steingraber (2003 U.S. Dist. LEXIS 11818), and Reedhycalog UK Ltd. vs. Baker Hughes Oilfield Operations, Inc. (242 F.R.D. 357). Nonetheless, it's important to note that documents don't have to be created with the sole intention of litigation to be considered under the umbrella of work-product privilege, a principle highlighted in the case of Strougo vs. BEA Associates (199 F.R.D. 515).
Furthermore, effective litigation management hinges on the strategic coordination of external legal teams and internal corporate efforts. Understanding the comprehensive ramifications—whether it's a victory, a settlement, or a defeat—is paramount and should be meticulously evaluated to the fullest extent feasible, as highlighted in § 7.08 Other Considerations in Managing Litigation.
Commercial disputes are disagreements arising between businesses during commercial activities. These disagreements often stem from:
Contract Misunderstandings or Mismanagement: Issues interpreting or fulfilling contractual terms.
Breaches of Agreements: Failure to deliver on promises or adhere to regulations outlined in a business deal.
There are several methods for resolving commercial disputes:
Negotiation: Parties directly discuss and attempt to reach a mutually agreeable solution.
Mediation: A neutral third party facilitates communication and guides the parties toward a settlement.
Arbitration: A neutral third party (arbitrator) hears arguments and issues a binding decision.
Litigation: Formal court proceedings where a judge makes a final ruling.
Companies might opt for mediation or arbitration over litigation when:
Expertise and Guidance: Commercial litigation lawyers specialize in handling disputes related to business transactions. Our team understands the intricacies of contract law, partnership disputes, and other business-related legal matters, ensuring that you receive accurate advice and guidance throughout the process.
Protection of Rights and Interests: In the midst of a business disagreement, securing a lawyer guarantees the safeguarding of your rights and interests. From contract breaches to intellectual property disputes and beyond, an attorney will champion your cause, ensuring your best interests are at the forefront.
Efficient Resolution: Our legal team is dedicated to resolving disputes with efficiency and precision. We'll engage in negotiations on your behalf, prepare all required legal documents, and stand up for you in court when necessary. Our aim is to secure a just outcome while minimizing the duration and expense of litigation.
Avoid Costly Mistakes: Legal proceedings can be complex, and mistakes can have significant consequences. Having an attorney ensures that you navigate the process correctly, avoiding costly errors.
A strong commercial litigation case is built on foundational elements. Tortious interference often emerges as a key cause of action, requiring the plaintiff to prove the existence of a valid contractual relationship or business expectation, the defendant's knowledge of this expectation, intentional interference resulting in the breach or end of this relationship or expectation, and subsequent damages. Additionally, some regions may require the plaintiff to demonstrate that the defendant's interference was unjustified.
Fraud is another common cause of action in commercial litigation, typically stemming from a misrepresentation or omission intended to influence a party's decision to engage in or avoid a specific transaction. To establish a valid claim for fraud, the plaintiff must demonstrate that there was a misrepresentation or omission of a crucial fact, that the defendant knew this misrepresentation or omission was untrue, that there was an intention for the other party to rely on it, that the other party reasonably relied on it, and that this reliance resulted in damages.
In patent cases, inequitable conduct, which encompasses deliberate misrepresentations and omissions of material information, constitutes a significant cause of action. Essential components include demonstrating that the misrepresentation or omission was both material and made with the intent to deceive the Patent and Trademark Office.
The decision to appeal should be made promptly and thoughtfully after the entry of final judgment. If a case is driven by economic considerations, a cost-benefit analysis should be done as well as an analysis of grounds for appeal.
A cost-benefit analysis entails assessing the costs of an appeal relative to the likelihood of achieving a favorable outcome. For example, when considering an appeal of a monetary judgment against a client, one should account for the expenses of a supersedeas bond and the accumulating interest.
Another important consideration is the potential for the appeal to make "bad law" for the client. When the issue at stake in an appeal is crucial to the specific industry, business, or profession of the client, one must consider whether it is wiser to accept an unfavorable lower court ruling rather than risk a potentially adverse and precedent-setting decision from an appellate court.
The potential for a case to set a precedent is a major consideration in product liability lawsuits, as a single case can influence ongoing or future litigation involving hundreds, thousands, or even millions of other product users. Consequently, attorneys must carefully consider whether to appeal an unfavorable trial court decision or seek a settlement.
Finally, attorneys typically strive to refine the appeal issues, as the pivotal trial issues may not align with the strongest appeal points. Once a party involved in litigation files a notice of appeal, the other parties may want to consider the option of appealing on either all or only specific issues.
Commercial litigation attorneys shoulder a wide range of duties, from deeply engaging with their clients to unearth the true facts of a case, rather than merely taking the client’s account at face value, as underscored in Fleming Sales Co. v. Bailey, 611 F. Supp. 507. Their role extends to exhaustive legal research, fact-finding missions, and offering sage advice to clients on the viability of claims under the scrutiny of law, a responsibility highlighted in the same case and further detailed in USCS Fed Rules Civ Proc R 11, concerning the signing of legal documents and upholding standards in representations to the court. Bound by rigorous professional and ethical benchmarks, their obligations don't end there. Commercial litigation lawyers also navigate the complexities of the business world, from establishing and managing a legal practice to ensuring smooth operational flow, akin to the responsibilities of any business owner, as demonstrated in Vogelsang v. Allstate Ins. Co., 46 F. Supp. 2d 1319. Their duties encapsulate drafting and submitting legal documents, managing logistics, adhering to regulatory standards, engaging in negotiations, and maintaining open lines of communication with their clients’ teams, as seen in Fannie Mae v. CSL Bridle Brook, LLC, 2021 U.S. Dist. LEXIS 247046.
Commercial arbitration involves the following key characteristics:
Binding Decision: The arbitrator's decision is generally final and enforceable by courts.
Neutral Arbitrator: A neutral third party, often with expertise in the relevant commercial field, is chosen by the parties.
Streamlined Process: Arbitration proceedings are typically less formal and quick than litigation.
Confidentiality: The details of the dispute can be kept confidential, unlike public court cases.
In mediation, a neutral mediator facilitates communication between the disputing parties. The mediator doesn't impose a solution but helps guide them toward a mutually agreeable settlement. Here's how mediation works:
Joint Sessions: The mediator meets with both parties together to understand the issues.
Caucus Meetings: The mediator may meet with each party individually to explore options confidentially.
Settlement Facilitation: The mediator guides the parties toward crafting a solution that addresses their concerns.
One significant disadvantage of commercial arbitration is the limited opportunity for appeal. Unlike court rulings, which can be appealed to higher courts, arbitration decisions are generally final and binding.
Although a common perception is that bench (non-jury) trials are speedier and more efficient, this is not always the case. In fact, jury trials may result in lower costs, faster verdicts, and a common-sense result.
Both bench trials and jury trials have the potential to be incredibly expensive, especially if you are litigating against an especially litigious party. That said, jury trials may be the most cost-effective option because they typically do not require as many pretrial submissions or proposed conclusions and findings of fact. Depending on the complexity of the case, a judge in a bench-trial case may request hundreds of pretrial submissions and proposals.
Conventional wisdom would posit that a single decision-maker will work faster than many, but in practice, jurors tend to turn out verdicts much faster than judges. After a bench trial, the parties will gather the evidence and arguments presented, package them as post-trial submissions, and present them to the judge. The judge, in turn, reviews the submissions and writes findings of fact and conclusions of law, often taking weeks. Whereas, a jury trial will often result in much swifter conclusions because the jury rarely deliberates longer than a few hours or days before producing a verdict.
It is a common misbelief that jurors, unlike professional judges, lack the specialized knowledge and expertise to comprehend complex cases and technical subject matter. However, Federal jurors often possess advanced degrees, varied life experience, and technical know-how that can be a real advantage to a party presenting difficult claims. The layperson's perspective can result in commonsense solutions that attorneys and judges neglect.
Joe Whitcomb is the founder and president of Whitcomb Selinsky, PC. In addition, he manages the firm and heads up the Government Contracting and International Business Transactions practice areas.
Tim Turner is a member of Whitcomb Selinsky, PC’s Labor and Employment group. He centers his practice in the Health and Safety sector, defending clients against MSHA and OSHA regulatory enforcement actions.
Nathan is an attorney at Whitcomb Selinsky, PC specializing in civil litigation and government contracting. He brings his diverse experience in and outside the legal field into every personal and professional interaction with clients and peers.
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Aug 19, 2024 by Joe Whitcomb
In September 2022, the United States District Court for the Central District of California reviewed a case involving...