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Melville New York Law Firm
July 2013

7 Ways To Keep Your Case Moving In NY Commercial Court

By Pete Brush

Law360, New York (July 12, 2013, 7:09 PM ET) -- The New York Supreme Court's Commercial Division, set up nearly two decades ago to handle corporate contract, fraud and similar disputes, is creaking under the weight of a growing caseload as Empire State businesses increasingly view it as the place to hash out their money squabbles.

The state's current and former ranking judges are concerned the burden is growing too unwieldy. Officials have worked to add judges and otherwise streamline the system, but those efforts have been offset by judicial budget cuts, meaning the backlog doesn't appear to be going away any time soon.

Nevertheless, there are steps attorneys can take to keep their case moving quickly and in the right direction when it comes time to navigate New York's premier business court.

Don't Waste the Judge's Time

This is perhaps true of any court, said Sullivan & Cromwell LLP litigation partner Robert J. Giuffra Jr., but in the Commercial Division — where 27 justices across the state are said to be handling hundreds of complex cases at once and arebeing prodded to resolve them quickly — time is a particularly acute concern.

"The judges in the Commercial Division have a large caseload. And they are experienced. They see a lot of cases and they often repeat many of the same issues. You don't have to assume they don't have experience in these concepts,” Giuffra said. "You should avoid long, nuanced digression."

The court's rules lay out strict schedules for everything from conferencing deadlines to disclosure schedules, Wollmuth Maher & Deutsch LLP complex litigation partner Vincent Chang said. They even make a point of warning counsel to "be on time for all scheduled appearances" and not to show up cold.

"Other state courts tend to be less rigorous than the Commercial Division," Chang said. "There are some judges who are kind of harsh when it comes to these kinds of things."

Bring a Bulletproof Statement of Material Facts

Unlike other New York courts, the Commercial Division asks counsel to provide a statement of material facts at the summary judgment stage. Not all of the court's 27 Commercial Division judges admit to relying heavily on that statement, lawyers in the know say, but it nevertheless is mandatory.

Quibbling over basic facts is a surefire way to draw unwanted attention, according to Gusrae Kaplan Nusbaum PLLC commercial litigator Brian D. Graifman.

"A good practitioner will make these statements so that they cannot really be contested," Graifman said. "When we do them we try to make them uncontested. We see other practitioners advocating in them and gumming up the works. The statements are supposed to be black and white."

Know the Role of the Law Secretary

Commercial division judges are leaning more heavily then ever on their law secretaries — experienced lawyers in their own right — to manage discovery disputes, said Davis Polk & Wardwell LLP litigation partner Benjamin S. Kaminetzky.

"Given the crushing dockets that they face, the Commercial Division judges often give them more ability and leeway to resolve these issues," he said.

More often than not, the discovery-related agreements hashed out in such meetings will become the basis for the court's order, Kaminetzky said.

"These aren't law clerks right out of law school," he said. "The judges feel more and more comfortable with having these people hear discovery disputes."

Have Your E-Discovery Ducks in a Row

Once a business reasonably anticipates litigation, it has the obligation to ensure the preservation of relevant documents, said commercial litigator Leo K. Barnes Jr. of Barnes & Barnes PC, adding that the Commercial Division mandates that lawyers walking into a conference come in having already mastered the ins and outs of their client's system.

"Accordingly, it is imperative that counsel immediately consult with a client’s information technology personnel in an effort to identify, preserve and secure all sources of electronically stored information," Barnes said. "The working knowledge of a party's technology system coupled with the preservation of relevant [information] are absolute prerequisites to successful representation in the Commercial Division."

Kaminetzky echoed that sentiment, saying lawyers "should be prepared to discuss electronic discovery issues in more detail.”

Referees Don't Enter the Game for Free

Federal courts, while also feeling the money pinch, nevertheless have magistrate judges waiting in the wings to guide warring lawyers through all kinds of disputes. Not so in New York's Commercial Division, Chang noted.

"That's a really big difference between the federal courts and the Commercial Division. In federal court you've got the magistrate judges — and they're free," he said.

In the Commercial Division, busy judges are not going to spend long periods of time refereeing protracted fights over evidence, which puts a premium on knowing whether, in a contentious case, the litigants might be willing to fund the hiring of a special master, lawyers say.

"If you can agree with your adversary on someone that you both like, that's probably a worthwhile expenditure," Chang said. "If you have a special master imposed on you — that may be less effective."

Use Interlocutory Appeals Wisely

Lawyers should be cognizant of the cost to clients both in terms of time and money of appeals, which can easily be taken in New York prior to final disposition of a case, in what amounts to another major difference between Empire State and federal court.

Without limits on how appeals can be brought, more well-funded litigants often are tempted to use them more liberally, a tactic that can put pressure on adversaries with less money to settle as an alternative to "ping-ponging" between the trial and appellate courts.

New York's mid-level appellate courts tend to rule fairly quickly and many lawyers believe the reversal rate is high compared to federal court. Even so, some lawyers caution, the appellate process can be abused in Commercial Division cases.

"I wouldn't do it unless you have a good issue," Giuffra said. "You've got to have a good dispositive legal issue."

If the issue is right, however, an appellate-level detour can yield long-term expediency for a client, Chang said.

"An appeal can increase the cost to your client," Chang said. "On the other hand, it can provide necessary guidance and potentially reduce those costs in the long run."

Don't Try to Game the Money Threshold

Not including punitive damages, interest and other costs, the money at stake in New York City must exceed $150,000 in order for the Commercial Division to take a case. That number drops to $100,000 in Westchester and Nassau counties and drops further in other areas.

But, with a proposal afoot to jack up the threshold to $500,000 in New York County — and with the aforementioned heavy caseloads — lawyers say Commercial Division judges are becoming more cognizant of the dollars before they agree to take a case.

Many commercial litigators deal exclusively with far greater sums, but experts say practitioners trying to get before wizened Commercial Division judges should be careful about trying to game the dollar threshold to bring in a case that might not belong.

"Commercial division judges are becoming more careful," Chang said. "They're questioning whether or not there's enough money to meet the Commercial Division limit. This is anecdotal but it appears they are doing that to a greater extent than they used to."

--Editing by John Quinn and Katherine Rautenberg.
All Content © 2003-2013, Portfolio Media, Inc.


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