In Gordon v. Verizon Communications, Inc., No. 653084/13, 2017 WL 442871 (N.Y. App. Div. Feb. 2, 2017), the Appellate Division of the Supreme Court of the State of New York, First Judicial Department (the “First Department”), reversed an order denying plaintiffs’ motion for final approval of a proposed non-monetary settlement in a shareholder class action litigation related to Verizon Communication Inc.’s (“Verizon”) acquisition of Vodafone Group PLC’s (“Vodafone”) stake in Verizon Wireless (“VZW”). With its decision, the New York Appellate Division breathed new life into beleaguered disclosure-only class action settlements, and modernized what it believed had become an outdated analytical framework for approving class action settlement agreements. It also appeared to accord special weight to provisions in such agreements whereby corporations promise to obtain fairness opinions in connection with future transactions in determining the overall fairness of the agreements. Thus, while non-monetary class action settlements are increasingly disfavored in other courts — most notably, in the Delaware Court of Chancery — New York courts remain receptive to their utility.
The New York Commercial Division is poised to continue its rules revamp, with six new rules proposals announced since October. While these proposals would not alter practice before the Commercial Division in the same manner that the 2014 and 2015 updates did, they do raise important practice considerations for parties and counsel who are currently, or expect to be, engaged in practice before the Commercial Division.
The Office of Court Administration is currently accepting public comments on most of the proposed rules described below, which will likely go into effect later this year or early next year.
In Matter of CDR Créances S.A.S. v First Hotels & Resorts Invs., Inc., 2016 Slip Op. 04888 (1st Dep’t June 21, 2016), the Appellate Division reversed a December 11, 2014 Order by New York County Commercial Division Justice Lawrence K. Marks, which denied respondent First Hotels & Resorts Investments, Inc.’s (“First Hotels’”) motion to dismiss the action for lack of personal jurisdiction. The action related to an $82 million loan made in 1991 by a predecessor in interest of petitioner CDR Créances S.A.S. (“CDR”) to Euro-American Lodging Corp. (“Euro-American”). The loan was made to enable Euro-American to acquire Manhattan real estate and convert it into a hotel. After Euro-American defaulted on that loan, CDR obtained a foreign judgment against Euro-American that CDR domesticated in New York. CDR subsequently commenced an action and obtained a New York judgment against a handful of individuals affiliated with Euro-American based upon allegations that those individuals engaged in a conspiracy to convert the proceeds of the loan for their own benefit. One of those individual judgment debtors was Maurice Cohen, one of the principals of Euro-American.
The Commercial Division Advisory Council continued its revamp of the Commercial Division Rules on October 14, 2015, when it implemented amendments to 22 NYCRR § 202.70(b) and (c). As we discussed in this blog when the amendments were proposed in April, the amendment to 22 NYCRR § 202.70(b) subjects actions to compel or stay domestic arbitration hearings and actions to affirm or disaffirm domestic arbitration awards to the same eligibility criteria as other matters. Such actions must involve equitable and/or declaratory relief, or meet the monetary threshold of $500,000 in New York County, $200,000 in Nassau County, $150,000 in Kings County, $100,000 in Suffolk and Queens Counties and the Eighth Judicial District, and $50,000 in Onondaga and Albany Counties. Those actions must also involve one of the commercial issues set forth in 22 NYCRR § 202.70(b), meaning the subject matter of the case must involve principal claims for: breach of contract or fiduciary duty, fraud, misrepresentation, business tort, statutory and/or common law violation where the breach or violation is alleged to arise out of business dealings, transactions governed by the Uniform Commercial Code, transactions involving commercial real property, shareholder derivative actions, commercial class actions, business transactions involving commercial banks and other financial institutions, internal affairs of business organizations, accounting and legal malpractice arising from commercial representations, environmental insurance coverage, or dissolution of business entities. Continue Reading
In AP Services, LLP v. Lobell et. al, No. 651613/2012, 2015 NY Slip Op 31115(U) (N.Y. Sup. Ct. June 19, 2015) (argued Feb. 21, 2014), Justice Friedman, applying Delaware Law, denied a motion to dismiss plaintiff AP Services, LLP’s first cause of action alleging breach of fiduciary duty against the defendants, former directors of Paramount Acquisition Corp., while granting dismissal of the second cause of action against them for allegedly aiding and abetting the breach of fiduciary duty. Continue Reading
In Justinian Capital SPC v. WestLB AG, etc. et al., 2015 N.Y. Slip Op. 04381 (1st Dep’t May 21, 2015), the Appellate Division affirmed the February 25, 2014 decision of the New York County Supreme Court, Commercial Division (Kornreich, J.), 43 Misc. 3d 598, holding that actual payment for the transfer of rights to a legal claim is required in order to qualify for the champerty doctrine’s safe harbor provision. Continue Reading
The Commercial Division Rules are once again the subject of several proposed amendments, as detailed below. While these proposals are not as far-reaching as some of the rule changes enacted in 2014, they nonetheless raise important practice considerations for parties and their counsel engaged in practice before the Commercial Division. Expect to see these new rules take effect later this year. Continue Reading
On Tuesday, April 7, 2015, Justice Anil C. Singh of the New York Supreme Court was appointed to the New York County Commercial Division. Justice Singh succeeds Justice Melvin Schweitzer, who retired last year. According to his judicial biography, Justice Singh is a 1986 graduate of Antioch School of Law in Washington, D.C. Continue Reading
The past year has been a busy time for anyone keeping up with the Rules for the Commercial Division of the New York State Court System. The Commercial Division Advisory Council, led by Justice Eileen Bransten, has been pushing through various reformative measures, most of which were first recommended in the June 2012 Report and Recommendations to the Chief Judge of the State of New York of the Chief Judge’s Task Force on Commercial Litigation in the 21st Century. Below is a brief summary of the new rules, which are already in effect or take effect on April 1, 2015. Continue Reading
Effective September 2, 2014, the New York Supreme Court implemented a major change to the Commercial Division rules governing privilege logs submitted during the course of litigation. (See New York Supreme Court, Administrative Order of the Chief Administrative Judge of the Courts: Rule 11-b (July 8, 2014)). Previously litigants were required to produce a traditional “document-by-document” privilege log that included a separate entry for each document being withheld, pedigree information for that document, and the specific privileges insulating the document from production. Under Rule 11-b of the Rules of Practice for the Commercial Division, Litigants can instead produce “categorical” privilege logs. Categorical privilege logs designate privileged documents by category, rather than in an item-by-item list.