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New York Commercial Division: Notable Rule Changes for 2017

On Behalf of | Feb 1, 2017 | Firm News

In the Fall of 2016, the Commercial Division of the New York Supreme Court announced a series of proposed revisions to the Rules of the Commercial Division (22 NYCRR 202.70[g]), which govern civil commercial practice in the state’s county-level trial courts.

While four of the six new rules proposed are largely technical and procedural, two of the rule changes may prove meaningful to parties litigating or considering litigating in the forum.

Sealing of Court Records: Confidential/Proprietary Business Data

In October 2016, the New York Office of Court Administration proposed new Commercial Division Rule 11-h, which clarifies what types of confidential or otherwise sensitive business data may be sealed from the public eye when included in docket filings.  While there is already a rule on the books that authorizes sealing for “good cause,” proposed Rule 11-h adds some precision to the term by specifically defining “good cause” to include the “protection of proprietary or commercially sensitive information,” including trade secrets, business strategies, or anything else that, if disclosed, would “otherwise be detrimental to the business of a party or third-party.”

Inasmuch as summary judgment and other dispositive motions under the Commercial Division Rules carry significant burdens of proof, this change, if enacted (the public comment period on the proposed Rule changes recently closed), may have a real impact on business litigation strategies in the Commercial Division courts.

New Temporary Restraining Order Requirements

There is also a proposal on the table to amend Commercial Division Rule 20, which governs the issuance of temporary restraining orders (TROs), to require the party seeking the TRO to serve the opposing/adverse party with advance copies of the motion and other supporting papers.  While many practitioners already serve TRO motions on adverse parties as a matter of courtesy or convention, the current Rule does not per se mandate it; it only requires that the movant give “notice” of the motion.  This proposed change is coupled with a proposal to make ex parte TRO applications harder to come by: they will not be granted unless the moving party shows that notice to the opposing party would cause “significant prejudice.”

TROs are a vital weapon in the business litigator’s strategic arsenal—they can dramatically impact the outcome of otherwise protracted litigation with remarkable speed and efficiency.  And an ex parte TRO can certainly turn a dispute on its head, as it carries an element of surprise not seen in other phases of civil litigation.  Thus, this amendment is certainly something Commercial Division litigants and their attorneys will need to be sensitive to when it is enacted.

*Stuart A. Laven, Jr., a Shareholder in the firm’s Business Law and Capital and Finance Groups, is licensed in both New York and Ohio and regularly practices in the New York Commercial Division.

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