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.
In Webmediabrands, Inc. v. Latinvision, Inc., No. 601048/2010, the Supreme Court (J. Friedman) pierced the corporate veil at the summary judgment stage.
Under New York law, the factors used to determine whether a court should allow plaintiffs to pierce the corporate veil include “a failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, use of corporate funds for personal use,” an “overlap in ownership and directorship,” and “common use of office space and equipment.” For this reason, corporate veil piercing or alter ego claims of liability are fact-laden and, typically, are not considered well suited for resolution at the summary judgment stage.
In Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Bros. Co., 2014 N.Y. Slip Op. 02381, the New York Court of Appeals ruled that a court may sua sponte decide the issue of forum non conveniens so long as it allows the parties to brief and argue the matter. The Court of Appeals further found that the mere transfer of money through a New York-based bank account was not sufficiently compelling to keep an otherwise foreign case in a New York court.
The New York Supreme Court, Commercial Division, has announced that two of its judges, Justices Oing and Scarpulla, will participate in a new program strongly encouraging use of hyperlinks in submissions to the Court. The hyperlinks are to be utilized in all affidavits, affirmations, exhibits within those affidavits and affirmations, and memoranda of law that are filed electronically through the New York State Courts Electronic Filing System (“NYSCEF”) for cases that are assigned to Justices Oing and Scarpulla.
Several recent decisions by Commercial Division Justices, two of them affirmed by the First Department, have clarified the limitations and standards applied in actions brought pursuant to Article 75 of the CPLR. Article 75 permits participants in binding arbitration, irrespective of what arbitral forum they are in, to seek assistance from New York State Supreme Court judges under certain circumstances.
New York court officials have approved an amendment to Section 202.70(a) of the Commercial Division Rules, which will increase in the minimum monetary threshold of $150,000 to $500,000 for the commencement of lawsuits to be adjudicated in Manhattan’s Commercial Division. The Commercial Division handles complicated commercial cases as part of the Supreme Court of New York State. The new rule is effective February 17, 2014.
Effective Monday, February 3rd, Justice Saliann Scarpulla of the New York Supreme Court was appointed to the New York County Commercial Division. Justice Scarpulla succeeds Justice Barbara Kapnick, who was appointed to the Appellate Division, First Department, by Governor Andrew Cuomo on January 17, 2014. According to her judicial biography, Justice Scarpulla is a 1986 graduate of Brooklyn Law School. After law school, Justice Scarpulla was a Court Attorney for Justice Alvin F. Klein (1986-1987), a Litigation Associate at Proskauer Rose LLP (1988-1993), Counsel/Senior Litigator at the FDIC New York Legal Services Office (1993‑1997), and Senior Vice President and Bank Counsel at Hudson Bank (1997-1999). From 1999 to 2001, Justice Scarpulla was a Court Attorney for her now colleague in the New York County Commercial Division, Justice Eileen Bransten.
The Commercial Division Advisory Council has proposed that the court adopt a pilot program for New York County’s Commercial Division that would send every fifth newly assigned case to mediation unless the parties stipulate otherwise or one party makes a good cause showing that mediation would be ineffective or unjust. A copy of the proposal is available here.
In Khalife v. Audi Saradar Private Bank SAL, 2013 NY Slip Op 05971 (1st Dep’t Sept. 24, 2013), the First Department declined to broaden CPLR § 303, holding that the statute does not authorize personal jurisdiction over a foreign person or entity when the non-domiciliary seeks some form of affirmative relief in a New York court, as opposed to commencing an action. CPLR § 303 provides that “[t]he commencement of an action in the state by a person not subject to personal jurisdiction” designates the non-domiciliary’s attorney as agent for service of process. Khalife makes it clear that an application for affirmative relief is not enough to subject a non-domiciliary to jurisdiction in New York under CPLR § 303. Only the commencement of an action, through the filing of a complaint, will suffice.