The enforceability of non-compete agreements remains an active issue in New York courts, and a recent Queens County Commercial Division case, Cabrita v. Vitabyte, Inc., offers a good example of how judges can be willing to rein in aggressive enforcement tactics while still leaving restrictive covenants intact.
Background
The Commercial Division Advisory Council (“CDAC”) has recommended a new rule that would introduce the use of Virtual Evidence Courtrooms in the Commercial Division. The proposed Rule 25-a is now under review by the Administrative Board of the Courts (the “Board”). If adopted, the rule would mark another step towards the Commercial Division’s ongoing efforts
In a recent decision from the Manhattan County Commercial Division, Justice Margaret A. Chan addressed a confluence of corporate-governance, fiduciary-duty, and bankruptcy-stay issues in Ragab v. SHR Capital Partners LLC. The ruling offers instructive guidance on two legal themes; the limits of the automatic bankruptcy stay in litigation, and the viability of fiduciary-duty claims against individual directors.
Background
Hassan Ragab, founder and former CEO of SHR Capital Partners (“SHR”) filed suit against SHR and its board members, alleging that after his termination, they manipulated the valuation process to prevent his equity from vesting, among other things. According to the Plaintiff, this was not just a matter of contract but also a clear fiduciary-duty claim based on bad faith. SHR filed for bankruptcy during litigation, which complicated matters, but Hassan wished to proceed with claims against the individual board members.
Justice Margaret Chan’s March 2025 ruling allowed the litigation to proceed against the individual directors. This offers an important message for commercial litigators: bankruptcy won’t save your directors, and equity-based disputes may survive as fiduciary-duty claims when driven by alleged bad faith.
Key Takeaways for Practitioners – No Shield for Individual Board Members
Justice Chan disagreed with SHR’s claim that the bankruptcy stay protected the individual defendants, stating that the stay “applies only to SHR and does not extend to the individual defendants, who are not debtors in the bankruptcy proceeding. Because plaintiffs’ claims against the individual defendants do not involve SHR’s property or seek to impose liability on the debtor, the stay does not bar the proposed amendments.” Continue Reading Bankruptcy, Board Conduct, and Fiduciary Duty: Key Takeaways from Ragab v. SHR Capital Partners LLC
On April 29, 2025, the Justice Robert R. Reed of the Commercial Division of the Supreme Court of New York County issued a significant ruling in ACM MCC VI LLC v. Able Liquidation Three, Thomas Rossi, et al., granting a default judgment on liability against defendant Thomas Rossi in a commercial dispute after two
In a recent decision, the New York County Commercial Division reaffirmed the high bar that parties must meet when attempting to seal court documents in business disputes. In Linkable Networks, Inc. v. Mastercard Inc., the court ruled that Mastercard, despite having the consent of the plaintiff, was not entitled to an order sealing documents referenced in prior motion practice and produced in discovery. This ruling is another reminder of the high bar courts have set to seal documents, as discussed by my colleague Serene Carino in her blog post “Signed, Seal, Delivered.” It also highlights the balance courts strike between protecting sensitive business information and upholding the public’s right to access judicial records.
Under Section 216.1(a) of the Uniform Rules for Trial Courts, a court may seal or redact court records only upon a written finding of “good cause.” The rule stipulates that such an order must specify the grounds for sealing and take into account both the interests of the parties involved and the public’s right to transparency. In the business context, courts are more willing to seal records when trade secrets or competitive advantages are at risk.Continue Reading Commercial Division Clarifies Standards for Sealing Court Records in Business Disputes
Under CPLR 3213, a plaintiff can move for summary judgment in lieu of complaint which, under the right circumstances, serves as a useful tool to avoid extensive litigation and obtain speedy relief. Recently, in JADR Consulting Group Pty Ltd. v Ault Alliance, Inc., some loan sharks attempted to take advantage of the device’s efficiency.
One of the ongoing goals of the New York State Office of Court Administration (“OCA”) is to periodically update and refine the jurisdictional criteria for the Commercial Division to ensure that it exclusively handles complex commercial matters. As part of this effort, OCA has proposed an important change aimed at establishing a monetary threshold for
The Executive Committee of the Commercial and Federal Litigation Section of the New York State Bar Association hosted a very special guest speaker at its final meeting of 2024: The Honorable Timothy S. Driscoll from the Commercial Division of Nassau County. Justice Driscoll opened the meeting with some general points about how he runs his
Piggybacking off of the success of its 2022 and 2023 lecture series, the Commercial Division Advisory Council held its third annual lunchtime Zoom lecture series during June for summer interns working with Commercial Division Justices, summer associates at law firms, and this year expanding it to lawyers and bar associations worldwide. The stated goal of the series was to educate the future lawyers and others about the Commercial Division and commercial practice, the wide variety of cases that come before the Commercial Division, and the value of clerking, interning, and litigating in the Commercial Division.
At these lunch-and-learns, those who zoomed in were fortunate enough to learn about essential litigation topics from the following distinguished speakers:
| Date | Topic | Speakers |
| June 6, 2024 | Motion Practice | Hon. Joel M. Cohen Robert J. Giuffra Jr. |
| June 12, 2024 | Written and Electronic Discovery | Hon. Margaret A. Chan Hon. Richard Platkin Lynn K. Neuner Linton Mann III George S. Wang |
| June 18, 2024 | Depositions | Hon. Timothy S. Driscoll Hon. Andrea Masley Roberta A. Kaplan Timothy S. Martin John C. Quinn |
| June 26, 2024 | Trials | Hon. Robert R. Reed Loretta E. Lynch Daniel J. Toal |
By now, you are likely fully aware that we litigators at Farrell Fritz are huge proponents of the Commercial Division, and so we jumped at the opportunity to introduce our summer interns to its virtues through this lecture series.Continue Reading Commercial Division Offers Zoom Lunches That Pack Punches