In 1995, due to a growing caseload of complex commercial litigation matters being filed in New York State Supreme Court (New York’s trial-level court of “supreme” jurisdiction), the Office of Court Administration (OCA) created the Commercial Division of the Supreme Court. Initially established in New York and Monroe Counties within the first year, the Commercial Division had 6,500 cases filed in New York County alone, prompting its expansion. Today, it boasts 29 Commercial Division Justices in almost all of the counties in New York with major metropolitan areas and the entirety of two judicial districts.
The success of the Commercial Division is attributable to a number of factors. The use of judges who specialize in hearing commercial cases has resulted in increased quality and consistency in the field and has fueled the development of a comprehensive and consistent body of case law. Additionally, the Rules established for the Commercial Division promote the speedy and efficient resolutions to discovery disputes and cases in general.
Ironically, the popularity of the Commercial Division has proved to be its greatest challenge. With caseloads increasing 11 percent statewide between 2008 and 2014, and the number of motions filed increasing 85 percent over the same period, the Commercial Division is suffering under the same strains that sparked its creation. This trend led New York’s Chief Judge to establish a permanent Commercial Division Advisory Council to advise on all matters pertaining to the Commercial Division. Since its inception, the Advisory Council has put forth a series of reforms to further streamline litigation, improve efficiency, enhance judicial expertise and limit costs.
Rule Changes under the Advisory Council
To this end, the Advisory Council recently proposed a number of changes to the Rules of the Commercial Division, which have been adopted by OCA and implemented. The following is a brief summary of the new Rules:
- To ensure that the resources of the Commercial Division are allocated to the complex litigation it was designed for, the monetary threshold to bring a claim has been raised from $150,000 to $500,000 in New York County and $300,000 in most other areas.
- The revised rules now afford parties the option to enter into a contract requiring them to complete pretrial proceedings within nine months provided they waive rights to a jury trial, punitive damages, interlocutory appeals and certain procedural defenses.
- To help manage the caseload and save costs, the Commercial Division has implemented staggered motion hearings, reducing time attorneys spend waiting for long calendar calls.
- To streamline discovery, depositions are now limited in number to 10 per party and length to seven hours per deponent.
- Interrogatories have been limited in number to 25 per party and scope to names of witnesses having material necessary information, computation of damages, and description and location of material and necessary documents and evidence.
- The rules on privilege now express a preference for categorical designations, saving time and expense associated with privilege logs; they now require a party to state the grounds for any objection to production with specificity. When discovery disputes arise, the rules steer parties to resolve them through letters and court conferences, rather than motion practice, providing additional cost controls.
- Expert disclosure is more robust and timely, increasing the opportunity for earlier settlements.
- Parties are required to meet and discuss the voluntary or informal exchange of information that the parties feel might promote an early settlement.
In addition, the new Rules place an increased emphasis on alternative dispute resolution by instituting a pilot program allowing justices to refer complex discovery issues to a Special Master, with the parties’ consent, who can help to narrow disputed issues and assist the court in narrowing the remaining issues. Further, a single justice is designated to hear all applications for relief in commercial international arbitration cases in New York County. This change ensures that the judge presiding over an international arbitration matter will have the expertise required to render a decision quickly and knowledgably.
While not every business dispute qualifies for the Commercial Division, those that are the appropriate type of complex commercial case can obtain considerable advantages, particularly where time and costs are of the essence.