The New York Commercial Division Adds New Rules

The Commercial Division of New York’s Supreme Court turned 20 in 2015, an occasion marked by a conference and accompanying booklet on its accomplishments (link here: https://www.nycourts.gov/courts/comdiv/NY/PDFs/CDbrochure.pdf), and, in the last few weeks, by a 12-minute video birthday card of sorts (you can watch it at https://vimeo.com/151074229, using the password Justice).

But lest you think it was all birthday cake and speeches, the Commercial Division also put in place a bundle of new rules in 2015, and already has others at the proposal stage in 2016 — as one of the segments of the video put it, “Continuously Reinventing Itself.”  Broadly speaking, the new rules continue the trend of moving features of the Court’s practice closer to federal-style proceedings.  The Division is able to do this in part because it has a panel of active practitioners, in-house counsel and judges, the Commercial Division Advisory Council, that has contCDbrochure_Page_01_Image_0001inued to look for ways to improve its operations.

Here a word is in order about how rules for New York courts get made.  When New York’s Civil Practice Law and Rules took effect over 50 years ago, the Rule portions could be amended by the court system.  Later, the Legislature took away that power, so any CPLR change must get the approval of the Legislature and the Governor.  The Unified Court System’s administrative rules for the state’s ten different types of trial courts which it can alter on its own, provided they don’t conflict with the CPLR.  The Commercial Division Rules, found at 22 NYCRR §202.70, have been creative in avoiding such conflicts – for example, by making expediting procedures available provided all parties consent.

New Commercial Division rules adopted in 2015 included the following:

  • Entity Depositions Resembling FRCP 30(b)(6) Much as under F.R.C.P. 30(b)(6), permitting a party seeking the deposition of an entity to identify with “reasonable particularity” matters about which it wishes to inquire, not less than 10 days before the noticed date.  That obliges the entity to provide a witness with knowledge in the specified areas.  Alternatively, the inquiring party can name an individual and areas of inquiry, in which event the entity may substitute someone else with knowledge in the areas.  The overall length of depositions for an entity is subject to the general presumptive seven-hour deposition limit (see below) unless the Court otherwise approves (Rules 11-d, 11-f);
  • Cutbacks on bringing domestic arbitration disputes, residential home improvement contracts into Commercial Division Changes to the eligibility rules for assignment to the Commercial Division for domestic arbitration matters (under CPLR Art. 75 to compel or stay arbitration or to confirm or overturn awards) so that, if monetary relief is sought, the otherwise applicable dollar thresholds must be met.  Notably, the change does not apply to international arbitrations if the specified arbitral forum is outside the United States, a move seen as encouraging use of the Division’s Part 53 that handles international commercial arbitration matters.  Also excluded from Division jurisdiction were home improvement contracts where a residential building with four or fewer units, or an individual residential unit, is involved (22 N.Y.C.R.R. §202.70(b)(12) and (c)(4));
  • Proportionality in discovery Formal acknowledgement that the Division’s justices will apply the proportionality principle in deciding disclosure (a/k/a discovery in the federal courts) issues (Rules Preamble);
  • The institution of summary jury trials if all parties consent (Rule 11-f);
  • A requirement for “bookmarks” for the contents of electronically submitted papers (but rejecting a proposal to require hyperlinking to cited authority) (Rule 6); and
  • Adopting additional model forms, so that ones for the preliminary conference, compliance conferences and status conferences now exist.

In addition, 2014 rule proposals took effect so that:

  • Presumptive discovery limits Subject to variation by leave of court, depositions will be limited to ten per party, seven hours per deposition, and interrogatories limited to 25, with subject matter restrictions (Rules 11-d, 11-a);
  • More Specificity in Discovery Objections If a party asserts an objection to a request in a notice for inspection and copying, requiring it to state whether it nevertheless will be producing materials and, if not, it has to state its objection with specificity; it also must state if production is complete or if it has no responsive documents (Rule 11-e); and
  • A default procedure for disclosure disputes (Rule 14).

Finally, two new rules already have been proposed in 2016 and are open for public comment until March.  One deals with in-person conferences to resolve disclosure disputes before non-judicial Court personnel.  At any party’s request, the parties would be required to submit a writing setting out what was resolved and submit it for signature by the justice assigned to the matter, or to dictate the result into the record to be submitted to the Court to be so ordered or otherwise incorporated into an order.  This is intended to avoid disputes over how disclosure disputes were resolved.

Settlement Judges  Another proposal would let counsel in a case jointly request that another Division justice act as a settlement judge, in the manner that magistrate judges often do in the federal district courts.  Not only the parties, but also the judge to whom the case is assigned, must go along with the request.  The idea is to avoid a party’s signaling what may be perceived as weakness to the judge hearing the case, and also avoid the possibility the assigned judge might in turn communicate that weakness to an adverse party.  Interestingly – and, unlike the Civil Appeals Management Plan in the Second Circuit, for example — the proposed rule does not explicitly impose a confidentiality obligation on the settlement judge.

David Jacoby is a seasoned commercial litigator in Culhane Meadows’ New York City office and has just finished teaching New York Practice for the ninth year as an adjunct professor at Fordham Law School.  He has helped clients navigate disputes in a wide range of industries including haute couture, motion picture, franchising, finance and software involving trademarks, anti-counterfeiting, copyrights, trade secrets, Internet issues and contract rights. He has tried or argued cases in numerous state and federal trial and appellate courts, in private arbitrations, and at the Iran-U.S. Claims Tribunal at The Hague.

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