SF 570 (LSB 2452SV (1) 91)

SENATE FILE 570

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO SSB 1203)

A BILL FOR

An Act creating a specialty business court, providing fees, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  602.6801  Definitions.
   As used in this part, unless the context otherwise requires:
   1.  “Controlling person” means a person who directly or indirectly controls a governing person, officer, or other organization.
   2.  “Governing documents” means the instruments, documents, or agreements adopted under an organization’s governing law to govern the organization’s formation and internal affairs. “Governing documents” includes any of the following:
   a.  A certificate of formation, articles of incorporation, or articles of the organization.
   b.  Bylaws of the organization.
   c.  A partnership agreement.
   d.  A company agreement or operating agreement.
   e.  A shareholder agreement.
   f.  A voting agreement or voting trust agreement.
   g.  An agreement among owners restricting the transfer of ownership interests.
   3.  “Governing law” means the law governing the formation and internal affairs of an organization.
   4.  “Governing person” means a person who is entitled, alone or as part of a group, to manage and direct an organization’s affairs under the organization’s governing documents and governing law. “Governing person” includes any of the following:
   a.  A member of the board of directors of a corporation or other organization.
   b.  A general partner of a general or limited partnership.
   c.  A manager of a limited liability company that is managed by its managers.
   d.  A member of a limited liability company that is managed by its members.
   e.  A trust manager of a real estate investment trust.
   f.  A trustee of a business trust.
   5.  “Governmental entity” means any of the following:
   a.  This state.
   b.  A political subdivision of this state, including a municipality, a county, or any kind of district.
   6.  “Internal affairs” means any of the following:
   a.  The rights, powers, and duties of an organization’s governing persons, officers, owners, and members.
   b.  Matters relating to the organization’s membership or ownership interests.
   7.  “Managerial official” means a governing person or officer.
   8.  “Officer” means a person elected, appointed, or designated as an officer of an organization by the organization’s governing persons or governing documents.
   9.  “Organization” means a foreign or domestic entity or association, regardless of whether the organization is for profit or nonprofit. “Organization” includes any of the following entities:
   a.  A corporation.
   b.  A limited partnership.
   c.  A general partnership.
   d.  A limited liability partnership.
   e.  A limited liability company.
   f.  A business trust.
   g.  A real estate investment trust.
   h.  A joint venture.
   i.  A joint stock company.
   j.  A cooperative.
   k.  A bank.
   l.  A credit union.
   m.  A savings and loan association.
   n.  An insurance company.
   o.  A series of a limited liability company or of another entity.
   10.  “Owner” means an owner of an organization. “Owner” includes any of the following:
   a.  A shareholder or stockholder of a corporation or other organization.
   b.  A general or limited partner of a partnership or an assignee of a partnership interest in a partnership.
   c.  A member of, or an assignee of a membership interest in, a limited liability company.
   d.  A member of a nonprofit organization.
   11.  “Ownership interest” means an owner’s interest in an organization, including an owner’s economic, voting, and management rights.
   12.  “Qualified transaction” means a transaction under which a party does one of the following:
   a.  Pays, receives, is obligated to pay, or is entitled to receive consideration with an aggregate value of at least one million dollars.
   b.  Lends, advances, borrows, receives, is obligated to lend or advance, or is entitled to borrow or receive, money or credit with an aggregate value of at least one million dollars.
    Sec. 2.  NEW SECTION.  602.6802  Business court judicial district.
   The business court judicial district is created and is composed of all counties in this state.
    Sec. 3.  NEW SECTION.  602.6803  Jurisdiction.
   1.  Subject to subsections 2 and 3, a judge of the business court created in section 602.6802 has the jurisdiction granted by section 602.6202, including but not limited to the power to do all of the following:
   a.  Issue writs of injunction, mandamus, sequestration, attachment, garnishment, and supersedeas.
   b.  Grant any relief that may be granted by a district court.
   2.  The business court has within its civil jurisdiction, concurrent with district courts, all of the following: 
   a.  A derivative action on behalf of an organization.
   b.  An action arising out of or relating to a qualified transaction in which the amount in controversy exceeds ten million dollars, excluding interest, statutory damages, exemplary damages, penalties, attorney fees, and costs.
   c.  An action regarding the governance or internal affairs of an organization.
   d.  An action in which a claim under a state or federal securities or trade regulation law is asserted against any of the following:
   (1)  An organization.
   (2)  A governing or controlling person or officer of an organization for an act or omission by the organization or by the person in the person’s capacity as a governing person.
   (3)  An underwriter of securities issued by the organization or the auditor of an organization.
   e.  An action by an organization, or an owner or a member of an organization, if all of the following apply:
   (1)  The action is brought against an owner, managerial official, or controlling person of the organization.
   (2)  The action alleges an act or omission by the person in the person’s capacity as an owner, managerial official, or controlling person of the organization.
   f.  An action alleging that an owner, managerial official, or controlling person breached a duty by reason of the person’s status as an owner, managerial official, or controlling person, including the duty of care, loyalty, or good faith.
   g.  An action seeking to hold an owner, member, or governing person of an organization liable for an obligation of the organization, other than on account of a written contract signed by the person to be held liable in a capacity other than as an owner, member, or governing person.
   h.  An action in which the amount in controversy exceeds ten million dollars, excluding interest, statutory damages, exemplary damages, penalties, attorney fees, and costs, that does either of the following:
   (1)  Arises against, between, or among organizations, governing authorities, governing persons, members, or owners, relating to a contract transaction for business, commercial, investment, agricultural, or similar purposes.
   (2)  Involves violations of Title XII or Title XIII.
   i.  An action seeking a declaratory judgment or injunctive relief brought under the Iowa rules of civil procedure involving any of the following:
   (1)  Chapter 490.
   (2)  An organization’s governing documents.
   (3)  A dispute based on claims that fall within the provisions of this subsection.
   j.  An action arising out of provisions in Title XII.
   3.  The business court does not have jurisdiction over any of the following:
   a.  A civil action brought by or against a governmental entity, unless the governmental entity invokes or consents to the jurisdiction of the business court.
   b.  Any claim in which a party seeks recovery of monetary damages for personal injury or death or any claim arising under section 714.16, chapter 633, or chapter 633A, unless all parties and a judge of the business court agree that the claim may proceed in the business court.
    Sec. 4.  NEW SECTION.  602.6804  Judicial authority.
   A judge of the business court has all powers, duties, immunities, and privileges of a district judge.
    Sec. 5.  NEW SECTION.  602.6805  Initial filing —— removal and remand —— transfer and dismissal.
   1.  An action described in section 602.6803 may be filed in the business court. If the business court does not have subject matter jurisdiction of the action, or part of the action, the court shall, at the option of the party filing the action, do one of the following:
   a.  Transfer the action or part of the action to an appropriate district court.
   b.  Dismiss the action or part of the action without prejudice to the party’s rights.
   2.  If an action or part of an action is to be transferred under subsection 1, paragraph “a”, and the action or part of the action could have been filed in more than one county, the party filing the action may select the county to which the action or part of the action is transferred.
   3.  A party to an action filed in a district court that is within the subject matter jurisdiction of the business court may remove the action to the business court. If the business court does not have jurisdiction of the action or part of the action, the business court shall remand the action, or part of the action, over which the business court does not have jurisdiction to the district court from which the action was removed.
   4.  Removal of a case to the business court is not subject to rule of civil procedure 1.441.
   5.  Removal of a case does not waive a defect in venue or constitute an appearance to determine personal jurisdiction.
    Sec. 6.  NEW SECTION.  602.6806  Appeals.
   The procedure governing an appeal or original proceeding from the business court is the same as the procedure for an appeal or original proceeding from a district court.
    Sec. 7.  NEW SECTION.  602.6807  Qualifications of judge.
   A judge of the business court must be all of the following:
   1.  At least thirty-five years of age.
   2.  A United States citizen.
   3.  A resident of Iowa for at least two years before appointment.
   4.  A licensed attorney admitted to practice law in this state with ten or more years of experience in any, or a combination of any, of the following:
   a.  Complex civil business litigation.
   b.  Business transactions law.
   c.  Teaching courses in complex civil business litigation or complex business transactions law at an accredited law school in Iowa.
   d.  Serving as a judge of a court in this state with civil jurisdiction.
    Sec. 8.  NEW SECTION.  602.6808  Composition of court.
   1.  The governor shall appoint three judges meeting the qualifications of section 602.6807, subject to confirmation by the senate, to serve on the business court for a two-year term.
   2.  A judge of the business court may be reappointed to additional two-year terms.
   3.  The governor shall not appoint judges who reside in the same county.
   4.  A judge of the business court is not a district judge or district court judge for purposes of Article V, sections 16 and 17, of the Constitution of the State of Iowa.
    Sec. 9.  NEW SECTION.  602.6809  Vacancy.
   If a vacancy occurs on the business court, the governor shall appoint in the same manner as provided in sections 602.6807 and 608.6808 another person to serve for the remainder of the unexpired term.
    Sec. 10.  NEW SECTION.  602.6810  Salary.
   A judge of the business court shall receive the annual salary set for a district judge under section 602.1501.
    Sec. 11.  NEW SECTION.  602.6811  Removal —— disqualification and recusal.
   1.  A judge of the business court may be removed from office in the same manner and for the same reasons as a district judge.
   2.  A judge of the business court is disqualified and subject to mandatory recusal for the same reasons a district judge is subject to disqualification or recusal in a pending case. Disqualification or recusal of a judge of the business court shall be governed by the same procedure as disqualification or recusal of a district judge.
    Sec. 12.  NEW SECTION.  602.6812  Private practice of law.
   A judge of the business court shall diligently discharge the duties of the office on a full-time basis and shall not engage in the private practice of law.
    Sec. 13.  NEW SECTION.  602.6813  Visiting judge.
   1.  A retired or former judge or justice may be assigned as a visiting judge of the business court by the chief justice of the supreme court. A visiting judge of the business court is subject to objection, disqualification, or recusal in the same manner as a retired or former judge or justice is subject to objection, disqualification, or recusal if appointed as a senior judge.
   2.  Before accepting an assignment as a visiting judge of the business court, a retired or former judge or justice shall take the constitutional oath of office required of appointed officers of this state and file the oath with the supreme court.
    Sec. 14.  NEW SECTION.  602.6814  Jury practice and procedure.
   1.  A jury trial of the business court shall be held in a county in which venue would be found under the Iowa rules of civil procedure.
   2.  Subject to subsection 1, a jury trial in a case removed to the business court shall be held in the county in which the action was originally filed.
   3.  Subject to subsection 1, a jury trial in a case filed initially in the business court shall be held in any county in which it could have been filed under the Iowa rules of civil procedure, as chosen by the plaintiff.
   4.  The parties and the judge of the business court may agree to hold the jury trial in any other county. A party shall not be required to agree to hold the jury trial in a different county.
   5.  The drawing of jury panels, selection of jurors, and other jury practice and procedure in the business court shall follow the standards for juries provided in chapter 607A.
   6.  Practice, procedure, rules of evidence, issuance of process and writs, and all other matters pertaining to the conduct of trials, hearings, and other business in the business court are governed by the laws and rules prescribed for district courts, unless otherwise provided under this part.
    Sec. 15.  NEW SECTION.  602.6815  Written opinions.
   To facilitate the establishment of a coherent body of law, a judge of the business court shall issue a written opinion when deciding issues of law by order or judgment, unless any of the following apply:
   1.  The court has a well-developed body of law on the issue.
   2.  The court is applying the precedent on the issue.
   3.  Another opinion on the issue will not significantly contribute to the development of the law.
    Sec. 16.  NEW SECTION.  602.6816  Business court staff.
   1.  The business court shall have a clerk, whose office shall be located in a judicial branch building, or located in a central location designated by the chief justice of the supreme court. The clerk shall do all of the following:
   a.  Receive all filings in the business court.
   b.  Fulfill the legal and administrative functions of a district clerk.
   2.  Each judge of the business court shall maintain chambers in the judicial district of the judge’s county of residence in facilities as provided by law.
   3.  Subject to section 602.6814, the business court, or any judge of the business court, may hold court at any location in this state, as the court determines is necessary or convenient for a particular civil action.
   4.  The business court shall use the most advanced technology feasible when necessary and appropriate to facilitate expeditious proceedings in matters brought before the court. As determined by the business court, counsel and parties may appear before the business court by means of internet-based or other technological devices rather than in person.
   5.  In a county in which the business court sits, the sheriff shall in person or by deputy attend the business court as required by the court. The sheriff or deputy is entitled to be reimbursed by the state for the cost of attending court.
   6.  The business court may appoint personnel necessary for the operation of the court, including any of the following:
   a.  The clerk of the court.
   b.  Staff attorneys for the court.
   c.  Staff attorneys for each judge of the business court.
   d.  Court coordinators.
   e.  Administrative assistants.
   7.  The court officials shall perform the duties and responsibilities of their offices and are entitled to the compensation, fees, and allowances prescribed by law for the offices.
    Sec. 17.  NEW SECTION.  602.6817  Fees.
   The business court shall provide rates for fees associated with filings and actions in the business court. The fees shall be set at a sufficient amount to cover the costs of administering the provisions of this part, taking into account fee waivers in the interest of justice.
    Sec. 18.  NEW SECTION.  602.6818  Seal.
   The seal of the business court is the same as that provided by law for a district court except that the seal must contain the phrase “The Business Court of Iowa”.
    Sec. 19.  NEW SECTION.  602.6819  Rules.
   1.  The supreme court shall promulgate rules of civil procedure for the business court as the supreme court determines necessary, including rules providing for any of the following:
   a.  The timely and efficient removal and remand of cases to and from the business court.
   b.  The assignment of cases to judges of the business court.
   2.  The business court may prescribe rules of practice and procedure, but these rules must be consistent with this part, and are subject to approval of the supreme court.
    Sec. 20.  NEW SECTION.  602.6820  Transition provision.
   1.  This part applies to civil actions described under section 602.6803 filed on or after the effective date of this Act.
   2.  If a civil action described under section 602.6803 was pending in a district court before the effective date of this Act, the parties may agree to have the civil action transferred or removed to the business court in accordance with this part.
   3.  Except as otherwise provided in this part, the business court for the business court judicial district shall begin conducting its business on January 1, 2027.
    Sec. 21.  APPOINTMENT OF BUSINESS COURT JUDGES.  As soon as practicable after the effective date of this Act, the governor shall appoint judges, subject to confirmation by the senate, to the business court for the business court judicial district, as required by section 602.6808, as enacted by this Act.
    Sec. 22.  CONTINGENT ON APPROPRIATION.  The business court for the business court judicial district is not created unless the general assembly makes a specific appropriation of moneys for that purpose. For purposes of this section, a specific appropriation is an appropriation identifying the business court or this Act.
    Sec. 23.  EFFECTIVE DATE.  This Act takes effect September 1, 2025.
    Sec. 24.  APPLICABILITY.  This Act applies on and after January 1, 2027, for civil actions involving a business matter specified in section 602.6803, subsection 2, as enacted by this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates the business court of Iowa.
   The bill provides that the business court has jurisdiction in all counties in the state and the business court has the same powers granted to a district court. The bill provides that the business court has jurisdiction as specified in the bill, including but not limited to controversies over certain commercial transactions of $10 million or more, and controversies involving the leadership or operation of a business entity.
   The bill provides that business court judges are granted the same powers, duties, immunities, and privileges of a district court judge.
   The bill provides that a person appointed to serve as a business court judge must be (1) at least 35 years of age, (2) a United States citizen, (3) an Iowa resident for a least two years prior to appointment, and (4) a licensed attorney in Iowa that has 10 or more years of experience in practicing civil business litigation, practicing business transactions law, teaching classes in civil business litigation or business transaction law at an accredited Iowa law school, serving as an Iowa judge with civil jurisdiction, or any combination thereof.
    The bill requires the governor to appoint three judges to the business court to serve two-year terms. The business court judges are required to be confirmed by the senate. Judges appointed are able to be reappointed for additional two-year terms. The bill prohibits the governor from appointing multiple judges that reside in the same county. The bill provides that if vacancy in the business court occurs, the governor may appoint a new judge for the remainder of the term following the procedure of the original appointment. The bill also provides procedures for the removal, disqualification, and recusal of a business court judge. A person appointed as a business court judge is prohibited from participating in the private practice of law. The bill authorizes a retired or former judge or justice of the Iowa courts to be assigned as a visiting judge of the business court.
   The bill requires each business court judge to maintain chambers in the judicial district of residence. The bill further requires the business court to utilize the most advanced technology accessible for matters brought before the court and instructs the sheriff, in person or by deputy, to attend business court as required. The bill authorizes the court to appoint personnel necessary for operation of the court. The bill requires the business court to determine fees and rates for filings and actions in the business court.
   The bill directs the supreme court to establish court rules as necessary for the operation of the business court and requires the governor to appoint judges to the business court as soon as practicable after the effective date of the bill. The bill provides that the business court is not created unless the general assembly appropriates moneys for that purpose.
   The bill takes effect September 1, 2025, and applies to certain business actions described under the bill on or after January 1, 2027.