NY Commercial Division Issues Rule Calling On Parties to Seek Earlier Resolutions
The court system has implemented a rule encouraging litigants to move for instant trials or evidentiary hearings in the early stages of a case when threshold matters arise.
July 25, 2018 at 06:17 PM
4 minute read
It's a common occurrence in New York state courts: a civil case drags on for a few years, through extensive discovery and up to trial and, alas, it's determined that the case could have been thrown out long ago because it was But the court system has passed an amendment to the rules for the New York Commercial Division that could save parties from this pitfall. It has implemented a rule encouraging litigants to move for instant trials or evidentiary hearings in the early stages of a case when threshold matters arise. “All too often litigants engage in costly, broad-based litigation when a dispute might be resolved, settled or significantly narrowed in scope by targeting key issues for early limited discovery and an immediate evidentiary hearing or trial,” the Commercial Division Advisory Council wrote in a memo to recommend the new rule. “Early disposition, where proper, will conserve judicial and litigant resources.” Tracee Davis, a partner at Zeichner Ellman & Krause who serves on the advisory council and was the principal author of the new rule, noted that the rule is not creating new tools to expedite cases; these are options already provided for under New York's Civil Practice Law and Rules but often go underused. The “prevailing sense” among judges and practitioners, Davis said, has been to get all the discovery out of the way before trying evidentiary matters. “Let's do all of the discovery and try the matter in one fell swoop,” she said. But under the new measure it doesn't have to be this way. If a defendant raises, say, a statute-of-limitation defense early in the case that is tied to an issue of fact, the parties could hold an early trial on limited discovery pertaining to the defense, potentially avoiding future litigation. The rules also allow courts to appoint special referees to handle these early matters, who could issue a report to a judge for final approval. “It helps to eliminate the time and expense that would otherwise be exhausted on those other issue that are not ultimately dispositive,” Davis said. The rule also suggests that parties could use yet another often-overlooked method of resolving civil disputes that's already on the books. The amendment is the latest change to the Commercial Division's rules intended to help streamline operations. Last week, the division implemented a rule to encourage the practitioners and the courts to more widely embrace technology-assisted document review to potentially speed cases up. Bradley Rank, the managing attorney at Sheppard, Mullin, Richter & Hampton, said the Commercial Division has worked to present itself as a business-friendly venue, and moving cases through the system quickly will make it more attractive to litigants. “I think this new rule shows that the Commercial Division is really focused on resolving disputes in a cost-effective and expeditious manner wherever possible,” Rank said. But John Lundin, a partner at Schlam Stone & Dolan, said that, while finding ways to resolve cases more quickly is generally seen as a good thing, early hearings and trials might be a better fit for Commercial Division courts outside of Manhattan, where the monetary threshold for bringing cases is $500,000 (thresholds in Queens and Brooklyn, for example, are $100,000 and $150,000, respectively). Litigation in the Manhattan Commercial Division tends to be of a high-stakes nature—often seven- or eight-figure disputes, Lundin said; thus, there may be more incentive for practitioners and litigant there to explore every possible avenue. “As a practical matter, it's a question of how often it would be used, particularly in a place like New York County,” Lundin said.
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