In May 2003, a panel of the justices assigned to the New York State Supreme Court Commercial Division met and compared all of the different individual rules of eligibility and practice in each of the Commercial Parts throughout the state. A consensus quickly developed that practicing in the Commercial Parts should be more uniform and consistent. Justice Leonard B. Austin of Nassau County’s Commercial Division was enlisted to spearhead the effort to draft a set of rules and guidelines that would apply to the Commercial Parts for all of the Counties of the State.
In formulating a draft of the uniform rules, Justice Austin used three guiding principles: (1) tapping his own experience as a practicing lawyer, he borrowed the best rules of the judges before whom he appeared; (2) he avoided judicial rules that appeared to be unfair when he was faced with them in private practice; and (3) he identified the rules that would make life easier as a judge having to preside over a complex and voluminous case load.1 After input and commentary from other justices of the Commercial Parts and the Commercial Bar, more than fifteen drafts, and two and half years in the making, the Chief Administrative Judge of the Courts of New York implemented the new rules that now govern all of the Commercial Parts throughout the entire state as of January 17, 2006. The rules are promulgated under a new section of Part 202 of the Uniform Civil Rules of the Supreme and County Courts, published in 22 NYCRR Section 202.70. Certain of these new rules actually supersede provisions that apply to non-Commercial Division cases concerning preliminary conferences and motion procedures.2
Although the rules are intended to apply to each of the justices of the Commercial Divisions throughout the state, certain provisions of the rules are discretionary and, of course, individual judges may apply the rules in practice in varying manners.
Eligibility and Assignment
While under the previous rules each County had slightly different variations for the type of cases eligible for Commercial Division assignment, the only variation now is the monetary threshold necessary to qualify for the Commercial Courts. The monetary thresholds range from a low of $25,000 in Counties such as Suffolk, Albany and Erie, to a high of $100,000 in New York and Westchester Counties.3 Nassau County’s monetary threshold remains at $75,000.4
Under the old practice, it was difficult and unclear how to address situations where a case was eligible for Commercial Division assignment but, for one reason or another, was assigned to a non-Commercial Part. The new rules specifically address assignments and re-assignments.5 A party seeking to assign a case to a Commercial Division must indicate on the Request for Judicial Intervention that the case is “commercial.”6 Such party must also submit with the RJI “a brief signed statement justifying the Commercial Division designation, together with a copy of the proceedings.”7 If a case has not been assigned to a Commercial Part where it is otherwise eligible, any other party may apply by letter application to the Administrative Judge to request that the case be transferred into the Commercial Division, but, significantly, this must be done within ten days after receiving a copy of the RJI.8 Although the rules state that a request for reassignment may be made only if the party filing the RJI did not designate the case as “commercial,” one would hope that the Administrative Judge would also properly reassign a case if there were an omission or error in designating a case where the RJI actually did identify it as a commercial case.
The rules also provide a procedure for a Commercial Part justice’s rejecting a case if he or she believes it does not fall within the jurisdiction of the Commercial Division.9 Any designations or re-designations under these provisions also may be brought to the Administrative Judge within ten days of receipt of the designation. (Counsel should consider the wisdom, however, of challenging a Commercial Division judge’s decision to reject a given case as not qualifying for such assignment, which would require the Administrative Judge to impose that assignment on that judge.) All determinations of the Administrative Judge are final and subject to no further review or appeal.10
Preliminary Conference Preparation
Commercial Division practitioners should be particularly mindful of the new rule on preliminary conferences, which closely tracks well-established federal practice.11 Rule 7 now requires a preliminary conference to be held within 45 days of assignment of the case to a Commercial Division Justice “or as soon thereafter as is practicable.” Rule 8 further requires counsel for all the parties to consult prior to a preliminary or compliance conference about several topics, including resolution of the case, in whole or in part, discovery, and alternate dispute resolution to resolve some or all of the issues.12 Counsel are also required to make a “good faith effort to reach agreement on these matters in advance of the conference.” 13
Significantly, the new rules require counsel to give detailed and careful consideration to electronic discovery issues before the preliminary conference and to confer with each other and address these issues at the conference. The electronic discovery issues that must be addressed include but are not limited to (i) implementation of a data preservation plan; (ii) identification of relevant data; (iii) the scope, extent and form of production; (iv) anticipated cost of data recovery and proposed initial allocation of such cost; (v) disclosure of the programs and manner in which the data is maintained; (vi) identification of computer system(s) utilized; (vii) identification of the individual(s) responsible for data preservation; (viii) confidentiality and privilege issues; and (ix) designation of experts. 14
Yet another rule requires counsel to be prepared to supply the court with certain materials at the preliminary conference, such as the caption of the case with the index number, the names, addresses, telephone numbers and email addresses of all counsel, the dates when the case was instituted and issue joined, a description of any anticipated motions and a copy of any decisions rendered in the case. 15
Thus, counsel would be well advised to give their case careful consideration and attention and be prepared prior to as well as at the preliminary conference.
The rules allow counsel to agree among themselves without court permission to reschedule the dates and deadlines set in a PC order for particular items of discovery, so long as all discovery is completed by the cutoff date of the PC order.16 In addressing discovery disputes, the rules continue the practice applicable to all other cases requiring counsel to consult with each other in a good faith effort to resolve the dispute.17 While the rules require counsel for the aggrieved party to contact the court to arrange a conference to resolve the discovery dispute and, in fact, recommend that counsel request a conference by telephone “if that would be more convenient and efficient than an appearance in court,” how individual justices apply this rule in practice remains to be seen.
Orders to Show Cause and TROs
The rules also continue the general Commercial Division practice of prohibiting motions to be brought by order to show cause unless there is a “genuine urgency,” a stay is required or a statute mandates otherwise.18 Further, the rules warn that “a temporary restraining order will not be issued” unless the moving party “can demonstrate that there will be significant prejudice by reason of giving notice” to the opposing side.19 Thus, a party moving for a temporary restraining order “must give notice to the opposing parties sufficient to permit them an opportunity to appear and contest the application.”20 Significantly, reply papers are prohibited when a party is moving by order to show cause unless the court gives advance permission.21
Another rule which has applied in federal court for quite some time has been left up to the discretion of the individual Commercial Division Justices. This rule would require a party moving for summary judgment to submit a statement of material facts that are not in dispute. If the opposing party does not submit a counterstatement or otherwise contest those facts, they are deemed admitted.22 Insofar as Justices in New York County and Nassau County had previously adopted such a rule, it is expected that this requirement will continue there.
The rules continue to require counsel to notify the court in advance of making certain motions.23 A list of the motions to which this rule does not apply are set forth in Rule 24. In commenting upon the requirement that counsel must give the court advance notice before making a motion for summary judgment when discovery is not yet complete, Justice Austin noted that he hoped to avoid the disruption of discovery by premature dispositive motions and the corresponding routine request for further discovery pursuant to CPLR 3212(f).
Finally, the rules continue the general practice in the Commercial Parts of requiring counsel to prepare, serve and submit detailed pre-trial papers in advance of trial.24 The rules warn that failure to follow these pre-trial requirements could result in an order of preclusion.25
In all, the rules are a welcome addition to the sophisticated Commercial Parts that are now fully integrated into state court practice in New York. As Justice Austin has commented, the rules should now provide Commercial practitioners with uniformity and consistency throughout the state.