Since 1995, when then-Chief Judge Judith S. Kaye inaugurated the Commercial Division our court system’s handling of complex commercial cases has become increasingly successful. The ongoing efforts made by Chief Judge Jonathan Lippman to further improve the court have made it an attractive option for businesses and litigators, capable of competing with the Delaware Chancery Court and the Southern District Federal Court.
In creating the Task Force on Commercial Litigation in the 21st Century, Lippman recognized that in the face of tightening budgets and increasing caseloads, it was particularly important to ensure that commercial litigators and the businesses they represent would continue to be confident that our courts would efficiently adjudicate their disputes (“Task Force Seeks to Keep Court at “Top Tier,” NYLJ, April 17, 2012).
The 32-member task force’s June 2012 report proposed the adoption of many improvements and procedural reforms, including the addition of new Court of Claims judges to serve in the Commercial Division, the re-hiring of judicial hearing officers and the hiring of additional law clerks for Commercial Division justices, raising the monetary threshold for cases to be assigned to the Commercial Division in Manhattan, a pilot program for mandatory mediation, and a new rule on expert discovery.
In March 2013, Lippman appointed a permanent Commercial Division Advisory Council to implement the task force’s recommendations. That implementation is well underway: the monetary threshold in Manhattan’s Commercial Division has successfully been raised to $500,000 and proposals have been released by the advisory council for a pilot mandatory mediation program in New York County, and for an enhanced preliminary conference form.
An important proposal currently under consideration is the proposed draft of a new Commercial Division rule (proposed 22 NYCRR § 202.70[g] [Rule 9]) providing for accelerated procedures to be used in Commercial Division cases where consented to by the parties. The procedures include limitations on discovery and waivers of various forms of challenges such as objections based on personal jurisdiction or forum non conveniens. In addition to the proposed rule itself, in order to provide means by which parties would be most likely to agree to accelerated litigation procedures, the advisory council subcommittee formulated a proposed contract clause that could be easily inserted during a contract negotiation, like a standard arbitration clause, by which the parties would agree to submit to the exclusive jurisdiction of the Commercial Division and its accelerated procedures in any litigation arising out of the agreement.
While these forward-looking proposals are commendable, they do not make any provision for the continuation of accelerated adjudication procedures once the litigation has reached the appellate forum. Thus, matters handled with expedition through resolution in the trial court will potentially bog down when exposed to the Appellate Division’s deliberate pace once a notice of appeal is filed.
First, there is the standard nine month period allowed for the perfection of an appeal (see 22 NYCRR § 600.11[a]), then there are enlargements of time that are routinely granted for tardy perfection; appellate courts are generally “extremely tolerant in accepting excuses for delay [in perfection]” (1 Buzzard and Newman, New York Appellate Practice § 5.04, at 5-32), as long as the party seeking an enlargement of time to perfect an appeal “make[s] a prima facie showing that the appeal presents at least arguable questions of substance” (see Tonkonogy v Jaffin, 21 AD2d 264, 265 [1st Dept 1964]). Even once the briefing is complete and the matter calendared, it is highly likely that complex commercial appeals may require extra time to be decided.
This potential log-jam in matters that were expedited up to this point seems wrong. Rather than slowing things down, the Appellate Division should be partnering with the Commercial Division and the court system’s administration to promote the prompt adjudication of accelerated commercial litigation all the way to the end of the process.
The recently-proposed amendment calls for the adoption of parallel procedures at the appellate level. First, the standard contractual consent language proposed in Rule 9 paragraph (a) could be phrased to include consent to the use of accelerated procedures at the Appellate Division as well, for appeals in accelerated Commercial Division cases. Then, the Appellate Division’s own rules could be adapted, corresponding to the proposed Rule 9, to allow for the accelerated handling of complex commercial appeals.
The new rules could include a reduced time period in which to perfect an appeal, say, three months rather than nine months, with applications for extensions of time based on a demonstration of good cause as well as a meritorious claim.
The Appellate Division could also implement its own fast track, by which it would expedite calendaring appeals of accelerated commercial cases, as well as motions for reargument, renewal or leave to appeal, and would also commit to deciding such appeals and motions on an expedited basis. Another possibility to consider, in the interest of expediting appellate decisions of accelerated commercial cases, is the adoption of a suggestion I made previously: using specialized commercial benches, which could help minimize delay that can be caused by justices’ need to become familiar with this fast-changing and complex area of law (“Improving Appellate Review of Commercial Litigation,” NYLJ, Jan. 23, 2013).
It has been reported that the advisory council is not actively undertaking any implementation of the task force’s proposals regarding appellate litigation (“Commercial Division Advisory Council Makes Headway,” NYLJ Dec. 27, 2013). I suggest that the task force’s expressed desire to “open a dialogue” with the Appellate Divisions is more likely to occur if the appellate court itself reaches out to explore possibilities such as these for improving appellate handling of commercial cases.
David B. Saxe
The author is an associate
justice on the Appellate Division,