Kevin Schlosser Authors, "Commercial Division Judges Help Shape Procedure and Law" for NYLJ

Publication Source: New York Law Journal

This column will review important current topics in the Long Island litigation landscape, with emphasis on the trial-level courts. In this issue, we hear personally from the justices holding down the fort in an important forum for commercial litigators, Long Island's commercial divisions, and review the inner workings of those parts.

In recognition of its role as 'one of the major centers in the world for business, finance, the professions, publishing, and many other enterprises,'1 New York in November 1995 launched a Commercial Division of the Supreme Court in the counties of New York and Monroe. After accolades from the business and commercial litigation community, commercial divisions were added in Erie, Nassau and Westchester counties in 1999 and in Albany, Kings and Suffolk counties in 2002.

In Nassau County, two experienced judges preside over the Commercial Division. Justice Leonard B. Austin has been at the helm of the Commercial Division since October 2000. In his 20 years of private practice before his election to the Supreme Court in 1998, Justice Austin focused primarily on complex commercial litigation, matrimonial and family law, personal injury and real estate matters.2 Justice Ira B. Warshawsky assumed the duties of the other Nassau County Commercial Part on Oct. 7, 2002. He has had over 30 years experience in the courts, including as an assistant district attorney, a judicial law secretary, a district court judge and, since 1997, a Supreme Court justice.3

Suffolk County's entree into the Commercial Division was inaugurated on Oct. 2, 2002, with the designation of Justice Elizabeth Hazlitt Emerson. Before being elected to the Supreme Court, Justice Emerson was a partner at Sherman & Sterling, where she represented domestic and foreign commercial banks, investment banks and corporations in acquisition financings, leveraged buyouts, restructurings, project finance and public offerings.4

Adopting Procedures

Consistent with the mission of the Commercial Division to facilitate the timely and efficient resolution of complex business disputes, each of the justices of Long Island's commercial parts takes an early, active role in case management. Long Island's commercial divisions have adopted similar Part Rules governing pretrial and trial procedures, which closely resemble the rules a practitioner would expect to see from a federal district court judge, where personal judicial involvement in all phases of a case is the norm.6

In adopting procedures for Suffolk, Justice Emerson believes it is important to maintain consistency with Nassau's Commercial Division. Although she currently maintains a full non-commercial civil caseload as well as all of the Commercial Division assignments, Justice Emerson notes that she is making a concerted effort to conference cases early on to address and resolve issues from the outset. Justice Emerson reports favorable results in the early returns, observing that thorough conferencing of complex business disputes can and have led to innovative solutions, where the typical monetary recovery does not quite fit the bill, such as settlements achieved through business apologies, gift certificates and the like.

Provisional Remedies

One fertile area of litigation that the Commercial Division has dramatically reformed is the manner in which provisional remedies, such as temporary restraining orders and preliminary injunctions, are addressed. Prior to the existence of the commercial divisions, out-of-state practitioners had been heard to lament how easily a temporary restraining order could be obtained in New York, without any notice to the adversary. However, the rules in both of Long Island's commercial divisions specifically provide: 'Absent extraordinary circumstances, the court will not issue a temporary restraining order unless the applicant has given notice to the opposing parties sufficient to permit them an opportunity, if so inclined, to appear and contest the application.'7

While every case will be assessed on its own facts and circumstances, Justices Warshawsky and Austin note that 'extraordinary circumstances' justifying an ex-parte TRO are principally limited to those situations where the harm sought to be avoided by the TRO is more likely to occur if notice is given prior to the issuance of the order, such as where assets of a closely held business are about to be secreted or converted.

All three justices of Long Island's commercial divisions have observed that requiring the parties to appear in court to address whether a temporary restraining order will be issued often leads to resolving all or some of the issues or to a stipulated form of interim relief.

Of course, not all motions are resolved by consent, even in the commercial parts, where the justices give personal attention to the issues. A review of the recent on-line decisions emanating out of Long Island's commercial divisions indicate a fairly heavy caseload of formal decisions on motions for preliminary injunctions and other provisional remedies.8 The decisions generally reflect a careful review of the competing interests, and, in almost all instances, an analysis of the well-established requirements for a preliminary injunction: 'likelihood of success on the merits, that irreparable harm or injury will occur if the relief is not granted and that the balancing of the equities favors the party seeking the preliminary injunction.'9

In a variety of contexts, including traditional restrictive covenants, trade secret enforcement, corporate and partnership disputes as well as non-traditional cases, the commercial divisions have not hesitated to grant provisional relief, at least in part, and to weed out those cases where the necessary elements have not been established.10 Representative of the analysis of these competing interests are several rulings, including Justice Austin's decision in Sri Shirdi Sai Baba Samsthan of America, Inc. v. Dattatreyudu Nori, Subhadra Nori, and Nori Foundation, Inc., in which he preliminarily enjoined defendants from: (i) removing from the state or transferring or damaging certain religious articles alleged to be owned by plaintiff; (ii) transferring, selling or mortgaging certain real property; and (iii) using a business name similar to plaintiff's.

Another decision was by Justice Warshawsky in Del Global Technologies, Inc., Dynarad Corporation v. Vasilios Milonas, Source-Ray, Inc. Raymond Manez, in which he granted only a limited aspect of plaintiffs' motion, preliminarily enjoining former employees of plaintiffs from using plaintiffs' confidential information, while allowing those defendants otherwise to continue to operate their competing business. Also representative was Justice Emerson's decision in Mark Davis, DVM, d/b/a South Fork Animal Hospital v. Barry C. Browning, in which she preliminarily enjoined defendant veterinarian from operating a clinic in violation of a restrictive covenant that prohibited defendant from competing with plaintiff on the South Fork of Long Island for a three-year period after his employment.