Noncompete lawProposed legislation would revise Michigan’s business courts. It would provide several revisions, including a change that will be important concerning non-compete disputes.

Michigan experimented with creating a “business court” docket in 2011 in Macomb County Circuit Court. The experiment expanded into Kent County in March 2012 and Oakland County in July 2012. Then in 2013, Michigan launched its business court program statewide in circuit courts.

The proposed legislation is Senate Bill 333. It focuses on expanding cases eligible for the business court docket and removing others not suited for the program.

Specifically, the legislation would amend the Revised Judicature Act to “specify that a business court would have jurisdiction over business and commercial disputes in which equitable or declaratory relief was sought or in which the matter otherwise met circuit court jurisdictional requirements, instead of business and commercial disputes in which the amount in controversy exceeds $25,000.” See the bill analysis by the Senate Fiscal Agency.

In our experience, the business court program has been very successful in streamlining and bringing consistency to cases meeting the definition of a “business dispute.” However, the proposed legislation would improve the resolution of noncompete disputes. This is because litigants will frequently seek declaratory relief as to the enforceability of noncompete restrictions. Often, this strategy is pursued before any damages have occurred. But without such damages, the noncompmete dispute may not be eligible to be heard by the business court. But if this proposed change becomes law, business courts can decide equitable or declaratory relief without reference to the monetary dispute.

Michigan Lawyer’s Weekly (by Lee Dryden), reports that the proposed bill has wide support from legislators and judges. Specifically, the Senate Judiciary Committee approved the bill May 2. Further, business court judges James M. Alexander of Oakland County and Christopher P. Yates of Kent County spoke in favor of it, along with Michigan Supreme Court Justice Bridget M. McCormack. The legislation also has support from the Michigan Judges Association and State Court Administrative Office.

We will continue to monitor this legislation.