“The expert discovery rules are promulgated so no party will be ‘sandbagged’ or surprised by another expert’s opinion” – Manhattan Commercial Division Justice Eileen Bransten

Several weeks ago, we reviewed some of the newer Commercial Division Rules and reported on a couple of recent decisions from Justice Shirley Werner Korneich of the Manhattan Commercial Division applying one of those Rules, Rule 11-c, concerning nonparty electronic discovery.  We follow up this week as promised with a look at another recent new-rule application from the same court.

Earlier this year, Justice Eileen Bransten, whose similarly-insightful decisions also are regular fodder for this blog, addressed issues concerning expert disclosure under Commercial Division Rule 13(c) in Singh v PGA Tour, Inc.Sandbagger

In Singh, the plaintiff, a professional golfer and member of the defendant PGA Tour, sued the Tour alleging that he had been humiliated by an arbitrary administration of the Tour’s anti-doping program and that the Tour wrongfully withheld his prize monies.  Singh had used a product called “deer antler spray” between seasons to address knee and back problems.  Sports Illustrated later posted an article about the spray on its website, referencing Singh’s use and suggesting that he had used it in violation of the Tour’s drug policy.  Singh responded by providing the Tour with a bottle of the spray for testing.  The initial results were negative for steroids but positive for a separate prohibited substance called “IGF-1.”  The Tour suspended Singh and held his 2013 prize money in escrow.  Singh challenged the Tour’s determination in arbitration.

The World Anti-Doping Agency, from which the Tour adopted its list of prohibited substances, subsequently determined that deer-antler spray was not a prohibited substance.  As a result, the Tour dropped its disciplinary action against Singh, and the arbitration was discontinued on the eve of the hearing.  Singh then sued the Tour in the Manhattan Commercial Division.

In the course of expert discovery in the Supreme Court action, Singh submitted a second, expert “reply report,” which the Tour challenged under Commercial Division Rule 13(c) as “impermissibly including new opinions which were not included in the first report.”  Specifically, Singh’s expert reply contained certain newly-obtained “consumer data” leading Singh to conclude that the “Tour suspension reduced the favorable criteria that marketing executives would use in their decision-making process in evaluating Singh’s viability as a spokesperson/endorser/advocate.”

Rule 13(c) mandates that an expert report contain, among other things, “a complete statement of all opinions the witness will express and the basis and the reasons for them,” as well as “the data or other information considered by the witness in forming the opinion(s).”  Quoting from The Chief Judge’s Task Force on Commercial Litigation in the 21st Century, Justice Bransten noted in her decision that “this rule was promulgated in an effort to harmonize the disclosure rules of our state and federal courts,” and that the Commercial Division looks to the Federal Rules of Civil Procedure “for guidance on expert disclosure issues.”  Federal Rule 26(a)(2)(B) mandates that an expert report contain the same statement, data, and information cited above, and Federal Rule 37(c)(1) provides that if a party fails to do so, “the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at trial.”

Justice Bransten granted the Tour’s motion to strike Singh’s expert reply, finding that “the new analysis, information, opinion and data contained within Plaintiff’s Reply Expert Report violates Commercial Division Rule 13(c) and FRCP 26.”  Noting the “egregiousness of the belated disclosure,” Justice Bransten cautioned Commercial Division practitioners that Rule 13(c) does not provide for “an opportunity for a party to ‘correct’ the deficiencies and omissions made in an initial expert report — including addition of new data and opinions, particularly when that data was available to the expert at the time the initial report was issued” or for an expert “to say what he neglected to say in his opening report.”

The rules of golf prohibit a player from “sandbagging” or deceiving others about their knowledge, intentions, and abilities.  As Justice Bransten’s recent decision in Singh v PGA Tour, Inc. makes clear, the same goes for the Commercial Division Rules regarding expert disclosure.

**Nota Bene** – Readers interested in hearing from Commercial Division Justices directly on lessons to be drawn from the implementation of some of these new rules and rule-changes should register for the upcoming Bench & Bar Forum sponsored by the NYSBA Commercial & Federal Litigation Section.  The program, entitled “True Innovation and Efficiency: New York County Commercial Division Justices Discuss the Success of the New Commercial Division Rules,” is scheduled for the evening of November 27th at Foley & Lardner LLP.

Two recent amendments to the Commercial Division Rules, designed to encourage alternative dispute resolution, will go into effect on January 1, 2018.

The amendment to Rule 10 requires counsel to certify that they have discussed with their clients the availability of alternative dispute resolution options in their case. Specifically, counsel will be required to submit a statement at the preliminary conference, and at each subsequent compliance or status conference, certifying that counsel has discussed the availability of ADR with the client and stating whether the client is “presently willing to pursue mediation at some point in the litigation.”

If the parties indicate their willingness to mediate, the Rule 11 amendment will require counsel to jointly propose in the preliminary conference order a date by which the mediator shall be selected.

The new amendments ensure that the option to pursue mediation is communicated to parties at a relatively early stage in the case, before substantial legal fees are incurred in discovery and motion practice, and before parties become too steadfast in their respective positions. Moreover, by requiring counsel to discuss with their clients the possibility of ADR, the amendments provide a mechanism by which counsel can candidly discuss with their clients the “pros and cons” of ADR in a way that does not signal weakness or lack of confidence in their position.

The amendments to Rules 10 and 11 are in line with federal court local rules which similarly require counsel to discuss the possibility of ADR with their clients and adversaries (see e.g. S.D.N.Y. Local Rule 83.9(d) [“In all cases . . . each party shall consider the use mediation . . . and shall report” to court]; W.D.N.Y. Local Rule 16(b)(3)(B).

The new amendments do not in any way alter Rule 3 of the Commercial Division Rules, which permits the court to direct, or counsel to seek, the appointment of a mediator at any stage of the action.

As we have come to expect, the Commercial Division Advisory Council periodically makes recommendations to amend and/or supplement the Rules of the Commercial Division, many of which are eventually adopted following a solicitation process for public comment by the Office of Court Administration.

In 2015, as a host of new Commercial Division rules and amendments were being rolled out, the NYSBA Commercial and Federal Litigation Section sponsored several panels throughout the metro-area to discuss the impact of the new rules on the various county bar associations.  At the time, Commercial Division practitioners and judges alike were still figuring out how and under what circumstances the new rules – concerning, among other things, interrogatory limitations, categorical privilege logs, nonparty electronic discovery, and expert disclosure – would be applied in their cases.  It’s been a couple years, so let’s take a look at some recent decisions to see how some of these rules are being applied.

Manhattan Commercial Division Justice Shirley Werner Kornreich, whose thoughtful decisions are no strangers to this blog, has at least twice this year addressed Commercial Division Rule 11-c concerning nonparty electronic discovery.  Under Rule 11-c and the corresponding guidelines found in Appendix A to the Rules of the Commercial Division, “[t]he requesting party shall defray the nonparty’s reasonable production expenses” – including, for example, “fees charged by outside counsel and e-discovery consultants” and “costs incurred in connection with the identification, preservation, collection, processing, hosting, use of advanced analytical software applications and other technologies, review for relevance and privilege, preparation of a privilege log . . . , and production.”

Recently, in Gottwald v Sebert, Justice Kornreich addressed Rule 11-c in the context of a motion to compel production of documents by a nonparty public-relations firm hired by pop star, “Kesha” Sebert, in connection with her allegations of sexual assault, battery, and harassment against her former manager and producer, “Dr. Luke” Gottwald.  Justice Kornreich granted Dr. Luke’s motion, assessing any burden on the PR firm as “minimal,” given that “hit count caps can be used to keep costs reasonable”; that hit counts for the limited time period in which the firm was involved “should be minimal or nonexistent”; and that Dr. Luke “must reimburse [the firm] for the reasonable costs of . . . review[ing] documents for responsiveness to the subpoena, and log[ging] those that are purportedly privileged.”

Earlier this year, in Bank of NY v WMC Mtge., LLC, Justice Kornreich addressed Rule 11-c in the context of motions to quash nonparty subpoenas in a RMBS put-back case.  In denying the motions, Justice Kornreich similarly assessed the burden on the nonparties as “relatively minimal,” given that the defendant serving the subpoenas “will have to defray the [nonparties’] reasonable document collection, review, and production costs, including certain legal fees.”

Justice Kornreich also addressed Rule 11-b (b) concerning the “categorical” versus “document-by-document” approach to logging of privileged materials in Bank of N.Y. Mellon.  Under Rule 11-b (b) (1), specifically, the Commercial Division had expressed a “preference . . . for the parties to use categorical designations, where appropriate, to reduce the time and costs associated with preparing privilege logs.”  Referencing the parties’ prior meet-and-confer on the subject, Justice Kornreich ruled that “a categorical privilege log, in the first instance, will be employed for the sake of cost efficiency,” and that once the defendant serving the subpoenas “is made aware of the hit count totals associated with the [nonparties’] privilege designations,” it may then “elect . . . to pursue such purportedly privileged documents in light of the legal fees necessary to do so.”

Be sure to check back in a few weeks when we take a look at a couple more recent decisions applying some of these newer Commercial Division rules.  In the meantime, Commercial Division practitioners, particularly those on the receiving end of a nonparty subpoena seeking ESI, should be mindful that the rules defraying the costs of e-discovery appear to have minimized the effect of the commonly-asserted “unduly burdensome” objection.

Visitors to this blog may recall our recent posts (here and here) concerning the individual practice rules of Manhattan Commercial Division Justice Bransten and Queens County Commercial Division Justices Gray and Livote.  “Check the rules!”, was the cautionary theme of those posts.

But just how much of a stickler for compliance can one expect a judge to be with respect to the part’s individual rules?  And is there any precedent for enforcement – perhaps even some case law that can be cited by a party affected by a non-compliance?

More and more, counsel are being reminded of the importance of following the rules in the Commercial Division.  In at least two decisions this year, Manhattan Commercial Division Justice Shirley Werner Kornreich gave such reminders to the bar when she admonished the parties for violating her part rules in the context of summary judgment motions.

With respect to motion papers filed in her court, particularly motions for summary judgment, Justice Kornreich’s “Practices in Part 54” clearly require, among other things, that:

·       “all e-filed documents must be OCR Text Searchable PDFs”;

·       all memoranda of law must include “cover pages, tables of contents, and tables of authorities, all three of which are mandatory”;

·       “the parties shall . . . prepare and file one joint Rule 19-a statement of material facts at least three weeks before the summary judgment motion is filed” and that “[i]f the parties cannot agree on a joint statement, no Rule 19-a statement of facts may be filed”; and that

·       “[i]f summary judgment briefs cite to deposition testimony, a complete copy of that deposition transcript must be filed.”

Simple enough, right?  Maybe not.

In Lau v Lazar, which involved cross-motions for summary judgment concerning the ownership and operation of an outpatient surgical center, Justice Kornreich reprimanded the parties for “substantially delay[ing] the court in resolving the instant motions” due to their filing of lengthy briefs that “lack[ed] tables of contents and authorities, that [we]re not text-searchable, and that contain[ed] almost no case law in violation of this part’s rules.”  Justice Kornreich also scolded the parties for “submit[ting] fact statements without citations to the record, forcing the court to piece together the factual background from the parties’ exhibits, which . . . did not include complete deposition transcripts.”

In Arizona Premium Fin. Co., Inc. v American Tr. Ins. Co., which involved cross-motions for summary judgment concerning the return of unearned insurance premiums, Justice Kornreich threw out altogether the defendant’s “proposed statement of material facts, which was submitted in violation of this part’s rules,” because the parties otherwise “were unable to agree on a joint statement of undisputed facts.”

You are remembered for the rules you break“, remarked Gen. Douglas MacArthur.  In the Commercial Division, however, you don’t want to be remembered as the one who broke the rules.  Justice Kornreich’s recent Lau and Arizona Premium decisions serve as another, best-practices reminder for the Commercial Division practitioner to first “check the rules”, then follow them!

 

 

 

 

 

If you have ever looked at a contract’s New York choice-of-law provision or a status conference stipulation and thought to yourself, “Who wrote this darned thing?” then now is your chance to weigh in. The Commercial Division Advisory Council has recommended two new forms—a model choice-of-law provision and a model status conference stipulation and order form—and the Office of Court Administration is soliciting public comments. Comments should be emailed to rulecomments@nycourts.gov by August 25, 2017.

Standard New York Choice-of-Law Provision

The proposed sample choice-of-law provision, which would be appended to the Rules of the Commercial Division, is as follows:

THIS AGREEMENT AND ITS ENFORCEMENT, AND ANY CONTROVERSY ARISING OUT OF OR RELATING TO THE MAKING OR PERFORMANCE OF THIS AGREEMENT, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO NEW YORK’S PRINCIPLES OF CONFLICTS OF LAW.

The gentle reader must forgive the ALL-CAPS format of the original proposed text (presumably this provision was intended to be read loudly in a New York accent). This proposed uniform provision is intended to (1) assist drafters who wish to choose New York law to govern disputes; (2) reduce litigation over choice-of-law issues; and (3) showcase New York’s “predictable and sensible commercial law” and thereby increase commercial litigation in New York courts. Whether increased commercial litigation in New York’s courts is a desirable goal may be open to debate, but few would object that litigation over sloppily-drafted choice-of-law provisions should be eradicated to the extent possible.

Model Status Conference Stipulation and Order

The Advisory Council has also recommended the adoption of a revised model status conference stipulation and order for use in the Commercial Division. This revised form, which can be viewed here, was designed to incorporate changes in Commercial Division rules and practice since the form was last revised in October 2015. The proposed form has a new section on expert discovery, contains reminders on the finality of discovery deadlines and the availability of alternative dispute resolution, and allows for greater specificity regarding discovery topics. As a model form it is not mandatory, but insofar as it is used as a guide by judges it provides a comprehensive overview of the discovery topics that a court would need to address.

Several weeks ago, we reported on some recent updates to Manhattan Commercial Division Justice Bransten’s individual practice rules. New York commercial litigators should take note of some recent changes in the Queens County Commercial Division as well.

According to an official announcement from the Queens County Commercial Division, as of April 3, 2017, all Commercial Division motions made before Justices Marguerite A. Grays or Leonard Livote must be made returnable directly before either judge in their respective Commercial Division Parts and on their respective motion days (as opposed to the Queens County’s Centralized Motion Part or “CMP”), with the corresponding Notices of Motion or Proposed Orders to Show Cause bearing the words “COMMERCIAL DIVISION” in boldfaced type.

Justice Grays’s individual practice rules and Justice Livote’s individual practice rules, particularly with respect to Commercial Division motions made before them (again, as opposed to the CMP), are virtually identical. Some specifics worth noting:

• Both judges designate Tuesdays as their motion day, first call at 10:00 a.m.;

• Both judges emphasize the above-referenced “COMMERCIAL DIVISION” marking requirement, cautioning that non-compliance “may result in the motion being calendared in the CMP”;

• Both judges require that all moving papers be filed in hard copy in the Motion Support Office “at least five business days prior to the scheduled return date.” All answering papers, cross-motions, and replies, on the other hand, “will be accepted only on the return date in the Part”;

• Both judges require in-person appearances by counsel or pro se litigants on the return date of all disclosure motions and Orders to Show Cause, cautioning that such “papers will not be accepted from a calendar service”; and

• Both judges require that all applications for adjournment be made in person on the return date. Again, “calendar service or non-attorneys will not be permitted to make applications for adjournments.”

These are welcome distinctions for litigants interested in prosecuting and/or defending their commercial cases expeditiously. Before April 3, 2017, a commercial litigator wishing to make a motion in the Queens County Commercial Division was left to navigate the many and specific procedures of the CMP where motions are seemingly ever subject to the prospect of being “administratively rescheduled,” “marked off,” outright “discarded,” or otherwise delayed because of some other emboldened, highlighted, and/or underscored procedural particularity.

New Rules Shutterstock_317335106One aspect of the Commercial Division that makes it a highly desirable forum for litigators and litigants alike is its focus on the efficient administration of justice. The Commercial Division Advisory Council (the “Advisory Council”), established by New York’s Chief Judge to make recommendations to improve and enhance the Commercial Division, recently proposed three amendments to the Rules of the Commercial Division that would each further this objective.

Standard Alternative Forum Selection Clauses

In light of concerns that were raised after the Chief Administrative Judge issued an Administrative Order, dated March 6, 2017, adopting the Advisory Committee’s September 2016 proposal to add a sample forum selection clause designating the Commercial Division as the chosen forum, the Advisory Committee recently issued a revised proposal. The concerns centered on the potential for the original sample forum selection clause to limit commercial litigants’ access to the New York federal courts. The new proposal addresses this by including two sample forum selection clauses: one designates the Commercial Division exclusively as the chosen forum, while the other provides that the parties agree to submit to the exclusive jurisdiction of either the Commercial Division or the New York federal courts.

 Further Support For Commercial Division Justices to Impose Sanctions

Referencing the finding of the Chief Judge’s Task Force on Commercial Litigation in the 21st Century that sanctions are often underutilized in Commercial Division Cases, the Advisory Council proposed an amendment to the Commercial Division Rules intended to provide additional support for Commercial Division judges to impose sanctions. The proposed amendment, which identifies “the need to conserve client resources, to promote efficient resolution of matters, and to increase respect for the integrity of the judicial process” expressly authorizes Commercial Division judges to “impose sanctions . . . against parties (or counsel) who fail to comply with case management deadlines and other discovery orders.”

Attorney Certifications Regarding ADR

Finally, the Advisory Council has also proposed a new rule aimed at increasing ADR utilization in the Commercial Division. The proposed rule would require attorneys to certify at the preliminary conference, and at each compliance or status conference, that they have discussed ADR options with their client(s) and to state whether their client(s) is willing pursue mediation during the litigation.  If the parties are both willing to mediate their dispute, they would be required to jointly propose a date by which they will select a mediator, but does not require that they set a deadline for the mediation to begin.

You’re a commercial litigator in New York. You’ve just been brought in on a case pending in the Commercial Division before a particular Commercial Division judge.  Or maybe you’ve just received an administrative bounce to a Commercial Division RJI Addendum, assigning your case to a particular Commercial Division judge sitting in the county where you recently filed motion papers or requested a preliminary conference. What’s the first thing you do?  You check the rules, of course.

Obviously, that begins with familiarizing (or re-familiarizing as the case may be) yourself with the Commercial Division Rules – particularly Rules 7 through 24, which supersede the Uniform Civil Rules with respect to conferencing your case and engaging in motion practice.

Know the Rules

But you also should look to see whether the particular Commercial Division judge assigned to your case has individual practice rules – which rules, in turn, often supersede or otherwise modify the Commercial Division Rules. Those Commercial Division judges that have individual practice rules update their rules with some regularity, so you also should make a point of checking them periodically.

As a recent example, Manhattan Commercial Division Justice Eileen Bransten, whose practice rules begin with the general principle of application noted above – namely, that “the Commercial [Division] Rules govern all cases before Justice Bransten unless modified or changed below” – updated her rules in March of this year. Some of the more notable updates to Justice Bransten’s “Practices in Part 3” are as follows:

  • Correspondence with the Court:       All letters to Justice Bransten, including pre-motion conference letters under Commercial Division Rule 24, in addition to being e-filed on the NYSCEF system, must be “hand delivered” to her Part Clerk and must conform to the font requirements of “Times New Roman, Size 12.”
  • Court conferences: Justice Bransten’s updated practice rules link to forms for the New Revised Preliminary Conference Stipulation and Order, as well as the New Compliance Conference Stipulation and Order, both of which are required for conferences held in Part 3.
  • Filing under seal: Justice Bransten’s updated practice rules provide for extensive direction concerning the filing of documents under seal:
    • Applications to file under seal must be made by Order to Show Cause;
    • Parties must meet and confer regarding the documents proposed for sealing before making a motion to file under seal;
    • Motions to file under seal will be considered in light of the limitations imposed on sealing as dictated by recent case law; moving parties must propose document redactions “as opposed to the wholesaling sealing of documents”;
    • Any document proposed for sealing must be filed in its original, un-redacted form as an exhibit to the motion, with the proposed redacted version of the document filed “as a subset of that exhibit”;
    • All motions to file under seal must be accompanied by a jointly-created index of the documents proposed for sealing, to include the basis for the proposed sealing and any objection thereto.
  • Motion practice in general:
    • Justice Bransten requires a courtesy (hard) copy of all e-filed motion papers;
    • If a party wishes to submit a deposition/hearing transcript or an arbitration award as an exhibit to a motion, the document must be submitted in its entirety as opposed to excerpts;
    • When submitting a Statement of Material Facts under Commercial Division Rule 19-a in support of a motion for summary judgment, a party must provide specific “references to appropriate documentation” establishing that the facts are undisputed; the party opposing the motion must “first repeat the movant’s claimed undisputed facts followed by its response,” which also must provide “reference to appropriate documentation.”
    • Consistent with her prior rulings on the topic (see e.g. ZV NY, Inc. v Moskowitz 44 Misc 3d 1225[A] [Sup Ct, NY County 2014), attorney affirmations in which counsel present arguments of law – sometimes referred to as “memo-affs” or “brief-adavits” or “brief-irmations” – “will not be considered by the Court.”
  • Trial practice:
    • Justice Bransten will not give parties a trial date unless and until they have attempted some form of ADR, whether privately or through the Commercial Division’s ADR Program.
    • All pre-trial submissions (briefs, witness and exhibit lists, and motions in limine, etc.) must be “both e-filed and hand delivered to the Part in hard copy.”