6 Ways Coronavirus May Impact Business Litigation

By Stephen Zralek and Maria Campbell
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Law360 (April 13, 2020, 5:34 PM EDT) --
Stephen Zralek
Maria Campbell
The COVID-19 pandemic has forced almost every court in the country to cancel in-person hearings and postpone trials. But the courts are still open, and lawyers are still advocating for their business clients.

Just as 9/11 forever altered travel, the coronavirus has at least temporarily altered business litigation in the United States, and some of these changes may be long-lasting. Here are a few observations and predictions.

1. Businesses will need to hire lawyers who are strong writers.

Some courts will allow lawyers to argue via video or telephone during the pandemic, but many judges have explained they will be deciding issues solely on written submissions. Businesses that submit evidence through affidavits rather than testifying in court could reduce both legal fees and time away from work.

Even though the technology for remote video depositions has been around for many years, lawyers and clients alike were less inclined to use these added features due to lack of familiarity with new technology. Now lawyers and clients have been forced to think creatively about moving cases forward even while states have issued mandates to stay home.

2. Location of company headquarters and witnesses will matter less.

When deciding whether to grant motions to transfer based on arguments of inconvenient forum, judges will undoubtedly remember how technology has allowed humans to stay connected during the pandemic. For example, on Apr. 2, after Tennesseans were ordered to stay home, U.S. District Judge Aleta Trauger denied Spotify USA Inc.'s request to transfer Eminem's copyright infringement case to New York, rejecting the argument that defending in Nashville would be inconvenient and more expensive.[1]

Similar arguments in other cases will likely fall on deaf ears, as judges know that most businesses are now operating from home and using video conference technology like Zoom every day, minimizing any burden involved in litigating from afar.

3. Video testimony will become more acceptable in courtrooms.

Juries will be comprised of people who utilized video conferencing during the pandemic, and they will thus be less critical of testimony via video from remote locations. Although many lawyers and business clients will still prefer to present evidence in person, we predict most lawyers and judges will be more willing to allow witnesses to testify live via video if they cannot be present in court.

Just as courts consider proportionality in discovery disputes, they should begin to weigh proportionality of travel costs when witnesses could testify via video. Doing so would promote the aims of most state courts and Rule 1 of the Federal Rules of Civil Procedure "to secure the just, speedy, and inexpensive determination of every action and proceeding."

For the first time in history, the Tennessee Supreme Court heard oral argument by video conference on Apr. 1. In its press release, the court explained it was looking for "innovative and creative ways to continue to conduct essential court business ... [and] to keep courts open during the COVID-19 pandemic, while balancing that priority with concerns for the health and well-being of all litigants, attorneys, judges, and employees of the court system."

At the trial court level, while other chancellors have begun holding nonevidentiary hearings via video since the pandemic, Chancellor Ellen Hobbs Lyle has even scheduled a bench trial via Zoom for late April. (In Tennessee, the chancery court hears most business disputes).

In Liquid Metal LLC v. Business Aircraft Leasing Inc.,[2] each side is expected to present one witness via live video testimony. There will be no experts testifying, and the parties have agreed to limit the evidence to a small set of documents. The final pretrial conference is scheduled for Apr. 20, at which time the court will enter an order outlining the logistics.

Businesses, courts and lawyers around the state will be watching this case closely as an example for future trials by video conference.

4. More state courts will likely switch to electronic filing.

While federal courts have used and required electronic filing for years, many state courts have lagged behind. Even in Nashville, where the chancery court allowed electronic filing, it had previously refused to accept summons by electronic filing. In the days following the national response to COVID-19, however, one of the first changes the chancery courts made was to accept summons by electronic filing.

As more state courts look for ways to adjust to this COVID reality, the court system may look for other ways to improve efficiency now that they already have the technological infrastructure in place.

5. Businesses and their lawyers will need to think more carefully about seeking emergency relief.

Having read the notorious "unicorn order," where one judge lambasted a plaintiff for seeking a temporary restraining order to restrain counterfeit unicorn drawings in the middle of the pandemic,[3] many businesses might be reluctant to seek court intervention for anything unrelated to the coronavirus.

Is a judge likely to view infringement of your copyright as an emergency in light of our current reality? What about departing employees who steal company trade secrets or violate a noncompete agreement? Judges are human, and all of us are reassessing our definition of "emergency."

Our view is that even though businesses should be cautious in how they ask for extraordinary relief during the pandemic, they should not ignore their own needs. Experienced lawyers can help businesses diplomatically and sincerely acknowledge the current reality while still seeking extraordinary relief.

6. Arbitration will become more attractive for time-sensitive disputes.

This pandemic is overwhelming the entire judiciary. Many judges have little experience working remotely and federal judges are required to prioritize criminal cases over civil cases. Many businesses have had jury trials postponed because of the pandemic, and most will likely stay postponed until stay-at-home orders are lifted since most courts are not yet conducting evidentiary hearings by video.

With arbitration, parties pay a neutral third party who has experience resolving disputes. Arbitrators can customize the schedule to the parties' liking and they can conduct the entire hearing by video. Arbitration is a great solution for clients wishing to resolve disputes from the comfort of their own home.

Even after this pandemic is over and we return to normal life, our common experience of working from home will forever change the way clients, courts and lawyers resolve disputes. Businesses and lawyers who are nimble will find a way to turn what today may appear to be obstacles into opportunities.

Stephen Zralek and Maria Q. Campbell are members at Bone McAllester Norton PLLC

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Memorandum Opinion Denying Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue or, in the Alternative, to Transfer Venue, Eight Mile Style, LLC et al. v. Spotify USA Inc., No 3:19-cv-0736 (M.D. Tenn. Apr. 2, 2020).

[2] Case No. 18-726-III (Chancery Court of Tennessee, 20th Judicial District, Sitting in Nashville).

[3] Art Ask Agency v. Individuals, et al., Case No. 20-cv-1666 (N.D. Ill. Mar. 18, 2020).

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