This is Part IV in a series of articles explaining the fundamentals of Commercial Division practice. The article addresses key differences in discovery procedure in the Commercial Division.

This is Part IV in a series of articles explaining the fundamentals of Commercial Division practice. The article addresses key differences in discovery procedure in the Commercial Division. Part I in the series, addressing the first steps taken when litigating in the Commercial Division, can be found here; Part II, addressing initial steps such as filing and pleading, can be found here; and Part III, addressing the timeline of litigation in the Commercial Division, can be found here.

Preliminary Conference

At the preliminary conference, which typically is scheduled soon after issue is joined, the court (often via the justice’s law secretary) sets the timing and scope of discovery. Parties may serve certain discovery devices prior to the preliminary conference, but often agree to hold off serving and/or responding to discovery until after the conference is held. Parties are required to meet and confer prior to the conference about resolution of the case and alternative dispute resolution, discovery (including e-discovery), expert discovery, and privilege issues (22 NYCRR Section 202.70[g], Rules of the Commercial Division [Comm’l Div.] Rule 8(a) (meet and confer requirements), Rule 11-b[a] (privilege), Rule 11-c[a]-[b] [e-discovery]; Appendix A). Note that the court will consider parties’ disclosures regarding document collection and review if a dispute arises (Comm’l Div. Rule 11-b(a)). Model stipulations concerning confidentiality are available in the Appendices and are usually agreed upon, with any (minor) additions submitted to the court for approval (see Comm’l Div. Rules, Appendix B [confidential information], Appendix F [same with attorneys’ eyes-only provision]). The court may also, and usually does, require the parties to submit a proposed scheduling order. See, e.g., Joel M. Cohen, “Part 3 – Practices and Procedures,” (requiring parties to submit a proposed Preliminary Conference Order using standard form).

At the conference, the parties must submit certain information about the case and a certification that counsel has discussed alternate dispute resolution with their clients (Comm’l Div. Rule 10; see also Rule 11[a] [court can require parties to summarize their causes of action and relevant elements]). The parties are often required to submit a stipulation on the protocol for discovery of electronically-stored information (ESI). Appendix A to the Commercial Division Rules (which is advisory rather than mandatory) contains additional guidelines regarding e-discovery (see Comm’l Div. Rule Appendix A; see also Comm’l Div. Rule 11-c[a] [Appendix A is advisory]).

Practice tip: Parties must defray costs of e-discovery for nonparties, and may be required to do so for fellow parties (Comm’l Div. Rule 11-c[e], Appendix A, pt. IV [“not reasonably accessible” data]). For the latter, courts determine if cost-shifting is equitable based on various factors (see, e.g., Allen v. Yertle Operations, 139 N.Y.S. 758, 764-69 [N.Y. Sup. Ct. 2020] [interpreting relevant New York federal and state decisions]).

Practice tip: At the preliminary conference, attorneys are expected to be sufficiently familiar with their clients’ IT systems to discuss e-discovery issues, or else bring a client representative or outside expert who is (Comm’l Div. Rule 1[b]).

The preliminary conference order will “contain a comprehensive disclosure schedule, including dates for the service of third-party pleadings, discovery, motion practice, a compliance conference, if needed, a date for filing the note of issue, a date for a pre-trial conference and a trial date” (Comm’l Div. Rule 11[e]), and may include any limitations on discovery or other scheduling modifications allowed by the court (Comm’l Div. Rule 11[d]-[f]). Note that—unlike in other forums—discovery is not automatically stayed pending determination of a dispositive motion (Comm’l Div. Rule 11[g]). However, the court may stay discovery in its discretion upon request (Comm’l Div. Rule 11[g]). Also, individual justices may take a different approach to the discovery stay issue, so it is always important to evaluate such rules as soon as a justice is assigned to your case.

Practice tip: Justices (together with or through their law secretaries) may conduct a preliminary conference telephonically or virtually, and nowadays often do. Where an in-person conference is scheduled, however, requests to appear telephonically must be filed 48 hours before the conference begins (Comm’l Div. Rule 34[d]). If a telephonic conference concerns a discovery issue, the court may order parties to submit a stipulation memorializing how the dispute was resolved within a business day of the conference (Comm’l Div. Rule 14-a[b]).

Discovery Devices

First things first: Individual justices may have rules on discovery that vary from the Commercial Division Rules. Similarly, they sometimes have unique form confidentiality and e-discovery orders for parties to use. Before serving discovery in the Commercial Division, parties should carefully review the assigned justice’s rules. Those rules also often contain justice-specific procedures for bringing discovery disputes to the court’s attention. Some justices may require telephonic conferences or submission of letters from counsel in an attempt to resolve discovery disputes without resort to formal motion practice.

Practice tip: If parties wish to modify form orders supplied by the court, they should file a redlined form order and explanation for the changes (see, e.g., Comm’l Div. Rule 11-g[][b] [requiring parties to submit form confidentiality order in Appendix B]; Rule 11-g[][a] [if parties want to deviate from Appendix B, they should file a redline and written explanation]).

Practice tip: Discovery demands and responses are usually not filed on NYSCEF, the electronic docket, although formal discovery motions would be. Instead, counsel typically agree to serve discovery by email (see CPLR Section 2103[b][7]). If there is no agreement to serve by email, parties typically serve discovery by mail, including a certificate of service, and email a copy as a professional courtesy. Note that serving by mail enlarges the response time: Mail served from New York adds five days, and mail served from any other state adds six days (CPLR Section 2103[b][2]). Also, note that certain justices may have rules about discovery deadlines (see, e.g., Judge Schechter’s Rules, Paragraph 31 [requiring discovery deadlines be met by 5 pm New York time]).

Discovery in the Commercial Division is somewhat more limited than allowed under the CPLR. For example, only 25 interrogatories (including subparts) may be served (Comm’l Div. Rule 11-a[a]). Similar to initial disclosures required by Federal Rule of Civil Procedure 26, the Commercial Division Rules limit the scope of interrogatories to (1) names of witnesses with relevant information, (2) computation of damages, and (3) the existence, custodianship, and location of relevant evidence (Comm’l Div. Rule 11-a[b]). Interrogatories on other topics can be served only by mutual consent or if ordered by the court for good cause (Comm’l Div. Rule 11-a[c]). “At the conclusion of other discovery and at least 30 days prior the discovery cut-off date,” parties may serve contention interrogatories (Comm’l Div. Rule 11-a[d]). Requests for admission are unlimited and can be served up to 20 days before trial; responses are due within 20 days (CPLR Section 3123[a]).

Practice tip: If the case is proceeding on the accelerated track, discovery is even more limited: Just seven interrogatories and five requests for admission can be served, with document requests narrowly limited in scope, and only seven depositions can be taken. Parties can agree to narrow or enlarge this discovery as needed (Comm’l Div. Rule 9[c][5]).

Practice tip: Parties should respond to discovery thoughtfully and in good faith; the Commercial Division has little patience for pro forma denials and may treat them as if no response were made (see, e.g., Arpino v. F.J.F. & Sons Electric, 959 N.Y.S.2d 74, 79-83 [N.Y. App. Div. 2012]). Additionally, if a denial to a request for admission is unreasonable, parties can recover the costs of proving the facts denied, including attorneys’ fees (CPLR Section 3123[c]).

Note that the Commercial Division Rules convey a strong preference for categorical, rather than item-by-item, privilege logs (Comm’l Div. Rule 11-b[b]; see also Comm’l Div. Rule 11-b[b][3] [additional requirements for item-by-item privilege logs]; Rule 11-b[b][(2] (cost-shifting if one party insists on item-by-item log)). For each category, the producing party must provide a certification explaining why the category of documents is privileged and how privilege review was conducted (Comm’l Div. Rule 11-b[b][1] [requiring certification]; 22 NYCRR Section 103-1.1a [required certification]). In complex cases where privileged documents may have to be produced, parties are encouraged to jointly hire a special master to help with privilege logs (Comm’l Div. Rule 11-b[c]).

Each party may take up to 10 depositions, each seven hours long. (Comm’l Div. Rule 11-d[a]). Parties may demand that documents be produced in advance of a deposition and, if the documents are not produced, ask the court to preclude the other party from introducing those documents at trial (Comm’l Div. Rule 13[b]). For entity depositions, 10 days before the deposition, the entity must designate its representatives, which do not have to be those identified in the notice of deposition (Comm’l Div. Rule 11-f[c]-[d]). 

Practice tip: The parties can move to expand or reduce the scope of discovery. Parties can also request additional depositions or to expand the length of a deposition if good cause exists (Comm’l Div. Rule 11-d[e]-[f]). Deposing an entity through more than one representative still counts as a single deposition (see CPLR Section 3106[d], Comm’l Div. Rule 11-d[c]), including with respect to the seven hour time limit, although the deposition’s duration may be enlarged by agreement or upon “application for leave of court, which shall be freely granted” (Comm’l Div. Rule 11-d[e]). Deposing the same entity representative in an individual capacity as a “fact witness” constitutes a separate deposition for purposes of the total number of allowed depositions (Comm’l Div. Rule 11-d[d]). In sum, read the Rules carefully as you prepare for entity and fact witness depositions.

Experts

Expert discovery takes place after completion of fact discovery. (Comm’l Div. Rule 13). Deserving of more extensive treatment than can be accommodated in this space, we will delve into the topic in greater detail in our next installment.

Up Next

Part V of our series will address expert discovery in the Commercial Division.

---

Reprinted with permission from the September 25, 2024 issue of New York Law Journal. © 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.