In a recent article building on the report of the Chief Judge’s Taskforce on Commercial Litigation, I proposed the creation of specialized commercial appellate panels in the Appellate Division, First Department (NYLJ, Jan. 23). Justice Leonard Austin of the Second Department provided a response (Feb. 15).
In dissenting from my suggestion for the creation of a specialized commercial appellate bench at the First Department, Justice Austin asserted that there is no need for it, and that our standard operating procedures work as well for complex commercial appeals as for all other areas of law. To avoid confusion, I should clarify that my suggestion was aimed specifically at the First Department, since it was premised only on my experience in this court. If Austin’s opinion applies only to his court, I take no issue, since I have no personal knowledge of the nature, quantity, or complexity of the commercial division cases that are handled by the Second Department.
But if his assessment was intended to apply equally to the First Department, I do take issue. In any event, however, I am sure that others, including some members of the First Department, would agree with Austin’s view. After all, hewing to the status quo is a natural response to proposed changes generally, and properly so: it is ill-advised to alter systems and procedures that function well, without first carefully ensuring that the proposed changes will bring substantial improvement.
Even then, we know that such changes may not succeed; a recent example is the experimental court merger in the Bronx, which failed to achieve the hoped-for benefits, and was eventually scrapped ("Merger to End as Officials Plan to Split Bronx Criminal Courts," NYLJ, April 9, 2012).
Yet, even ultimate failure does not mean that the effort was not worthwhile or that the attempt should not have been made. While caution is appropriate in adopting changes to longstanding systems, it is worth emphasizing that the taskforce suggested that we make, or at least contemplate, changes to the Appellate Division’s handling of commercial cases, as part of the overall effort to encourage the business community to litigate in New York State courts rather than federal or Delaware State courts.
Moreover, the chief judge explicitly encouraged the adoption of changes that will improve the experience of the business community in our court system as a whole. Keeping in mind this desire to improve our handling of commercial cases, and recognizing that our court system is now, and has for some time been comfortable with the concept of specialized case assignments, I suggested that at the First Department we should ask ourselves whether insisting that complex commercial cases be handled just like every other appeal is consistent with that system-wide effort, or whether, instead, adopting changes to our treatment of complex commercial cases could legitimately improve the overall value and effectiveness of our court system in the eyes of the business community.
The question is not whether we are currently handling our complex commercial cases adequately. It is whether we could implement a system under which they would be handled optimally. In my experience, many of the commercial appeals that come out of New York County’s five commercial division parts are highly complex and demanding.
In a substantial number of the complex commercial cases we see, before we can address the proper application of emerging case law, we must first grapple with transactions that are unlike any with which we are familiar, such as complicated investment vehicles, intricate real estate financing, and elaborate reinsurance arrangements, that are difficult to comprehend absent a substantial background in business and finance that many of us lack. It is not an area in which one can dabble lightly or quickly; it requires dedication and time.
It makes sense that we have so many complex commercial matters, in view of Manhattan’s position as, arguably, one of the commercial capitals of the world, and a natural venue for litigation arising from the business worlds of finance, banking and insurance. Of course, the First Department is also presented with complicated facts and issues in other specialized areas of law, including some areas now handled by specialized trial parts, such as medical malpractice and matrimonial law.
The reason this discussion is limited to complex commercial appeals is that my suggestions are responsive to the chief judge’s expressed concern that New York state courts "remain at the cutting edge of how commercial disputes are resolved." If a specialized appellate commercial bench were to be implemented and to prove valuable, it would then be reasonable to consider whether we should implement such specialized benches for other types of complex appeals, since the value of the specialized trial parts has already been established.
But for the moment, our topic is the statewide goal of optimizing our handling of commercial litigation, and whether we should make changes to the handling of appeals in that field. As to the anticipated "cries of elitism" which Austin asserts would follow the creation of a separate commercial appellate panel, I would point out that if any such "cries" emerged at the original creation of the commercial division itself, they have since been muted, probably because the commercial division has proved to be an outstanding success. If the perceived elitism lies in choosing among the justices for the panel, it could be laid to rest by rotating justices in and out of the specialized panel over time.
If it lies in potential concerns about differentiated handling of categories of appeal, nothing in my proposal would result in any change in how such appeals were decided, except as to the dates on which they would be scheduled for argument. If such cries were to arise simply from distinguishing commercial cases from other cases, I would only respond that the distinction was made by the taskforce, and that I believe a commercial appellate panel would prove a welcome addition to the commercial bar. Austin points out that the CLE necessary to properly address complex commercial appeals is available to all justices.
Beyond our appellate divisions’ yearly joint CLE programs, which of necessity focus on a wide variety of emerging legal topics, the specialized business-focused CLE necessary for competence in the area of complex commercial litigation may be obtained through programs sponsored by bar associations and nationwide associations such as the American College of Business Court Judges.
These are excellent and useful suggestions, and I agree that such specialized continuing education is necessary for competently deciding appeals in this area. Those of us who aspire to a more complete understanding when hearing commercial appeals would undoubtedly be well served by attending and participating in these programs and events. But, we should acknowledge that acquiring that specialized education demands extraordinary time and effort, well in excess of that already needed for the CLE we already participate in, covering the breadth of law in which we must be conversant.
Ultimately, we should acknowledge the difficulty involved in having judges acquire the necessary background in business, finance and insurance that would make a specialized bench for complex commercial appeals a valuable endeavor. Those justices assigned to that bench would commit to devoting the extra time and attention necessary for acquisition of the specialized education and training. We should recognize that requiring such extra effort from five justices at any one time, and leaving the disposition of such appeals to those justices, would optimize the handling of complex commercial appeals.
David B. Saxe is an associate justice of the Appellate Division, First Department.