It has become an acknowledged priority to make New York State courts a more appealing choice for complex commercial litigation. Chief Judge Jonathan Lippman made this priority clear in his 2012 State of the Judiciary message, asserting that “We must make sure that New York remains at the cutting edge of how commercial disputes are resolved,” and that it is time that our court system focuses on how we “might better serve the needs of the business community and our state’s economy.” To this end, Lippman appointed a taskforce that included some of the most knowledgeable members of the commercial bar, academia and the business world, to make recommendations as to how New York’s state court system can accomplish these goals.

The Taskforce on Commercial Litigation in the 21st Century issued its report in June 2012,1 in which it emphasized that “the quality, reliability and visibility of the Commercial Division are essential to assuring the vitality of our State in the 21st century.” The report provides a useful framework for considering the specific areas of our courts’ handling of complex commercial litigation that require attention and adjustment. While it goes without saying that we must maintain a first-rate system in all of our courts, the speed with which new issues emerge in commercial litigation makes it an area that uniquely requires ongoing efforts in order to optimize the court system’s ability to handle that litigation expeditiously and competently. For New York to be, and remain, an attractive option for businesses, our handling of commercial litigation must excel. This applies, of course, not only to the New York County Supreme Court’s Commercial Division, but to all the division’s locations throughout the state, which now include Albany, Kings, Nassau, Onondaga, Queens, Suffolk, and Westchester counties, as well as the 7th and 8th Judicial District.

A Dec. 13 article in the New York Law Journal explicitly acknowledged that in the view of many practitioners and members of the business community, for New York to be a vital forum for commercial litigation, state courts must at least consider, and where appropriate, adopt Delaware law,2 a body of law often spoken of as more “business-friendly” than the law of other jurisdictions.3 The article discussed recent appellate decisions that “have grappled with the legacy of [our] more established rival, Delaware.” It also quoted practitioners on the subject of recent New York court rulings considering, and often adopting, the reasoning of Delaware cases on the same issues; some of these practitioners suggested that doing so may increase New York State courts’ popularity as a venue for commercial litigation in the future. As an example of this trend in court rulings, the article points to the Court of Appeals in Pappas v Tzolis,4 where the court adopted the same position as that previously taken by the Delaware Chancery Court, namely, that partners in LLCs can, by agreement, free themselves of a fiduciary duty toward each other.

As a justice of the Appellate Division, First Department, I am interested in exploring the ways we in this court can adapt our procedures to optimize the handling of complex Commercial Division matters when they come before us; I imagine that justices in the other departments may have these same concerns. The taskforce expressed the desire to “open a dialogue” with the Appellate Divisions, and offered a few thoughts, involving streamlining interlocutory appeals of discovery orders, permitting more oral argument time, establishing e-filing, and increasing CLE programs focused on commercial topics. I write to pick up where the taskforce left off, and to contribute to the necessary dialogue that may lead to the adoption of useful changes in complex commercial litigation at the appellate level, with an eye toward maximizing our competence and efficiency. Indeed, if we cannot handle complex commercial appeals as expeditiously and competently as they are handled at the trial court level, we may soon find that such litigation migrates to more capable court systems.

Dedicated Benches

I submit that we should consider forming a Commercial Division appellate bench at the Appellate Division. Although our state court system was structured to give the Appellate Division broad authority over virtually all the types of matters heard and determined by all the various trial courts, making us of necessity a court of generalists, a degree of specialization within our structure may be feasible, and useful. Just as the Commercial Division was created from within Supreme Court, Civil Division, without the need for the type of constitutional amendment that would have been necessary to create an entirely separate court, we could constitute a bench of interested justices with commercial law backgrounds, training, or interest, who would be capable of competently handling complex commercial appeals.

While all our justices are, of course, capable of handling such appeals, and currently do so, it seems to me that some appellate justices have more background and interest in this area. Presumably, at the trial court level, the selection of justices to the Commercial Division reflects not only the justices’ present abilities, but their interest in acquiring the necessary level of knowledge; it is not intended as an insult to the other justices. Similarly, the selection of Appellate Division justices for a complex commercial appellate bench need not cause disharmony, or create grounds for charges of elitism. Any such concerns could be assuaged by the rotation of the bench’s members over time, to ensure that all interested and prepared justices would have the opportunity for such an assignment.

In fact, perhaps we should consider convening special benches for other categories of appeals, such as complex criminal appeals. It would probably be a good idea to appoint a standing committee within the court to oversee and adjust the use and the functioning of such specialized benches. The creation of such a specialized bench would necessitate the concomitant use of some sort of intake clerk competent to review perfected appeals arising out of the Commercial Division, to determine which of those appeals actually involve complex commercial issues warranting the special treatment. My guess would be that the number of appeals requiring such treatment would fill one or perhaps two calendars per month exclusively dedicated to such cases. While the workload from these calendars would be unusually heavy in comparison to a typical day’s calendar, which tends to balance heavier and more complex cases with simpler and more straightforward ones, I believe a means could be found to ensure that over time, the workload was not unevenly divided.

The taskforce mentioned that Appellate Division justices, like Commercial Division justices, could use more CLE programs to give us “additional exposure to academic thinking on commercial issues.” It also recommended “greater engagement with the Bar and Academy.” Adoption of both these measures is critical. Appellate justices often approach our continuing education as the generalists we are, and the CLE programs we typically attend provide standard, general overviews of recent case law. We need much more than this. I am reminded of a conversation I had a number of years ago with two of my colleagues during a break at CLE program, in which I recalled noticing an unusual silence from the bench during oral argument of certain commercial appeals—perhaps a reflection that many of us might have felt a bit out of our depth in the areas addressed by these appeals. I suggested that we should arrange for a member of the business community to come to the court and educate us on the subject area, namely, derivatives, currency swaps and other newly-emerging types of transactions. Just at that moment, then-Chief Judge Judith Kaye joined our small group and asked what we were talking about. When we told her, she enthusiastically seconded the idea, transforming it instantaneously from a vague suggestion into a concrete plan. Not long after that, we arranged for a professor affiliated with NYU’s graduate school of business to give the First Department justices our first crash course.

The courses we need in the commercial arena should focus on providing an understanding the complexities of the business practices and transactions involved in the legal disputes we hear; more “continuing business education” than “continuing legal education.” Moreover, in the past, we waited until we were presented with a critical mass of appeals in which a particular new issue was repeatedly raised, before recognizing the need to educate ourselves regarding the nature of the commercial transactions we were required to analyze. We must adopt a procedure, perhaps in conjunction with Commercial Division justices, through which we keep up with newly-emerging types of transactions, having them explained by practitioners and experts, so we can better handle the necessary analysis of the legal issues.

Even in areas where the law is generally well-established, such as the law of fraud, refresher courses may be useful to our analysis in the context of complex commercial litigation. For instance, when considering claims of justifiable reliance, it is imperative that our legal analysis differentiates appropriately between unsophisticated individuals and arms-length business transactions between highly sophisticated business entities having the means to conduct investigations and verify financial documents, who can properly be held to strict business standards.

While the Commercial Division has made, and continues to make, adjustments in its handling of discovery disputes, the Appellate Division employs identical procedures for all appeals. The taskforce suggested ways to streamline the process for appeals from discovery rulings. I agree that the adoption of new processes, specific to discovery disputes, would be valuable to expediting these appeals, and offer these additional suggestions to fast-track their resolution. At the trial court level, the taskforce recommended that Commercial Division judges preside personally over discovery conferences; it also recommended creating a panel of Special Masters, using retired commercial litigators.

I suggest that related procedures could be adopted at the appellate level, to quickly ascertain whether a resolution of discovery disputes can be reached before the formal appeal is perfected. Appellate challenges to discovery rulings could be initially handled using a modification of our “Special Master” program, which is normally used for selected appeals to try to achieve a negotiated resolution of the dispute. A special master with commercial law expertise could conduct an initial review of the issues, and we could assign one judge from our newly-constituted Complex Commercial bench, to be available to consult with the special master and review her or his recommended resolution.

Indeed, it might be worthwhile to consider experimenting with assigning a specific justice, or special master/justice combination, to a specific Commercial Division part, in order to best expedite the informal preliminary review process. If a formal appeal and ruling on the discovery appeal is required, we cannot, of course, unilaterally impinge on the appellant’s statutory rights to employ all the normal interlocutory appeal procedures. We could, however, consider modifying the procedures for such appeals, since they are in any event non-enumerated and therefore generally not argued.

The taskforce recommended both the use of letter-briefs and smaller benches for these appeals; we could form special four-justice rather than the usual five-justice benches to hear these appeals,5 if doing so would allow for greater expedition. Perhaps allowing the litigants to employ a less formal letter-brief format would serve to reduce the expense. Slightly shorter deadlines for perfecting such appeals might be a workable option as well, since the legal issues to be addressed should be relatively circumscribed. There may be even more ways that the Appellate Division could contribute toward making New York State’s court system a stellar option for business litigation. The open dialogue must consider every suggestion and the court must move quickly to adopt those changes that could have a significant positive impact on improving New York’s place in the universe of commercial litigation.

David B. Saxe is an associate justice on the Appellate Division, First Department.


1. See

2. Brendan Pierson, “With Nod to Delaware, N.Y. Courts Define Commercial Law,” NYLJ Dec. 13, 2012 at 1, col. 5)

3 See e.g., Dominic Bencivenga, Corporate Update, “Lawmakers’ Stepchild? Few Business Bills Embraced by State Legislature, NYLJ, July 309, 1998 at 25, col. 6

4. —NY3d—, 2012 NY Slop Op 8053 [p11/27/12] revg. 87 AD3d 889, 2011 NY Slip Op 6455 [1st Dept. 2011].

5. NY Const. Art §4