The New York Commercial Division has become a truly innovative court improving efficiency, lowering costs and shortening the duration of litigation. During the past year, numerous significant new Commercial Division rules have been generated—and more are coming. They will dramatically change the way cases are litigated.
As background, following the issuance of New York State Chief Judge Jonathan Lippman’s Task Force Report on Commercial Litigation in the 21st Century, the chief judge created the Commercial Division Advisory Council to make recommendations based on the report.  The intent was to change how cases are handled in the Commercial Division. The advisory council is headed by Robert Haig, a partner at Kelley Drye & Warren, and consists of Commercial Division judges, in-house counsel and attorneys who practice in the Commercial Division.
The council members, using their hands-on experience, proposed new rules for consideration by the Office of Court Administration. Following a public comment period and final changes, Chief Administrative Judge Gail Prudenti issued administrative orders implementing new rules. As of July 22, 2014, seven new Commercial Division rules are now in effect; six other new rules have been approved but have not yet taken effect; two more rules for which the comment period has ended stand ready for approval; and two proposed rules are currently pending and in the comment period.
The rule changes will have an important impact on litigants; attorneys should be thoroughly familiar with the new Commercial Division rules. They relate to essential aspects of litigation, including: threshold amounts for Commercial Division cases; the drafting of contract dispute resolution clauses; use of an expedited docket; consensual waivers on litigation requirements and interim appeals; hearings on international arbitration cases; mandatory mediation; settlement; conduct of pretrial proceedings; the process of conferring with opposing counsel; revised preliminary conference forms; appearances in court; the use, limitations, and exchanges of discovery; e-discovery treatment; disclosure by expert witnesses; and sanctions. Each new rule was considered carefully.
Following is a compilation of the approved and pending rules:
Approved and Taken Effect
Administrative Order Regarding International Arbitration Cases before the Commercial Division, New York County (effective Sept. 16, 2013) – Justice Charles E. Ramos was designated by the chief administrative judge to handle all international arbitration cases before the Commercial Division, New York County.
Commercial Division Rule 13. Adherence to Discovery Schedule, Expert Disclosure (effective Sept. 23, 2013) – Requirement and timing for parties to confer on disclosure and discovery schedule for expert witnesses including depositions and exchange of written reports.
Commercial Division Rule 8. Consultation prior to Preliminary and Compliance Conferences (effective Sept. 23, 2013) – Requirement for parties to consult prior to the preliminary and compliance conferences on expert disclosure under Rule 13(c) and prior to the preliminary conference on anticipated electronic discovery issues, including a list of issues regarding e-discovery.
Administrative Order Setting Monentary Threshold for New York County (effective Jan. 28, 2014) – The new threshold to bring a case in the Commercial Division in New York County is $500,000.
Commercial Division Rule 9. Accelerated Adjudication Actions (effective June 2, 2014) – Under new Rule 9, parties may give written consent to submit their disputes to the Commercial Division under new accelerated procedures. Rule 9 provides suggested specific language for contracts and sets forth accelerated procedures for litigation, including an expedited docket, reduction and limitation of discovery, and waiver of interim appeals.
Commercial Division Rule 11-a. Interrogatories (effective June 2, 2014) – Limitation on the number and scope of interrogatories. Interrogatories are limited to 25. The subject matter of interrogatories are limited to the enumerated topics in Rule 11-a. Contention interrogatories may be served at the end of fact discovery.
Administrative Order Setting Forth Revised Preliminary Conference Form (effective June 2, 2014) – A model preliminary conference form for optional use, with significant revisions to the old PC form, has been prescribed. A copy is attached to the order. The revised PC Form contains significant new matters.
Approved But Not Yet Taken Effect
Administrative Order Creating Pilot Program for Mandatory Mediation (effective July 28, 2014) – A pilot program was established for the automatic referral of one out of every five Commercial Division cases for mandatory mediation. The pilot program will last 18 months and the order contains rules and procedures for implementing the program.
Administrative Order Setting Time Frame for Seeking Assignment to the Commercial Division (effective Sept. 2, 2014) – Parties shall have 90 days following service of the complaint to seek assignment to the Commercial Division by filing a request for judicial intervention (RJI).
Rule 11-b. Privilege Logs (effective Sept. 2, 2014) – Parties are required to meet and confer at the outset and throughout the case to discuss the scope of privilege review. Use of categorical designations is the preferred method of designation. Parties who resist such approach without good cause may be subject to costs and attorneys’ fees.
Rule 8(a). Settlement-related Disclosure (effective Sept. 2, 2014) – Prior to a preliminary or compliance conference, the parties shall consult concerning any voluntary and informal exchange of information the parties agree would help aid early settlement of the case. This requirement adds subjects on which the parties must consult prior to the conferences.
Administrative Order Setting Monetary Thresholds for Counties Outside New York County (effective Sept. 2, 2014) – Revised monetary thresholds required for bringing cases in the Commercial Division for each of the counties outside New York County. The monetary threshold for New York County was previously increased as noted above.
Comment Period Has Ended
Proposed Adoption of a Pilot Program for Special Masters in the Commercial Division – One or more Commercial Division judges would participate in an 18-month pilot program involving referral of complex discovery issues to a pool of special masters. The special masters would be comprised of seasoned former practitioners no longer active in the practice of law and they would serve pro bono.
Proposed Adoption of Staggered Court Appearances – The Commercial Division judges would assign time slots for oral argument. The length of the time slots would be determined by the court.
Proposed Adoption of Guidelines for Discovery of Electronically Stored Information (ESI) From Non-Parties in Commercial Division Cases – Guidelines governing e-discovery from non-parties are proposed for parties and non-parties, with the purpose of improving the efficiency of e-discovery and reducing the potential costs and burdens imposed on non-litigants.
Comment Period Pending
Proposed Adoption of a Preamble to the Rules of the Commercial Division related to Sanctions – The preamble would acknowledge dilatory tactics and failure to comply with case management orders and discovery deadlines. The preamble would confirm that Commercial Division judges will impose sanctions when warranted.
Proposed Adoption of Limits on Depositions – The number of presumptive depositions would be limited to 10 depositions for each side. The duration of depositions would be limited to seven hours per witness. Parties could agree to extend or alter the limits. A party could seek court approval for different limits upon good cause shown.
Jay G. Safer is a partner in Locke Lord’s New York office and has experience handling complex litigation and arbitration in the United States and abroad.
1 Safer is a member of the Commercial Division Advisory Council.