On February 14, 2024, Chief Administrative Judge Joseph Zayas signed an Administrative Order amending Section 202.70(b)(1) of the Uniform Rules for the Supreme and County Courts (Rules of the Commercial Division of the Supreme Court), and adding a new Rule 9-b to Section 202.70(g). But rather than vest the Commercial Division with new powers, the amendments simply emphasize the capabilities it already has. Amended Section 202.70(b)(1) underscores the Commercial Division’s proficiency in adjudicating technology disputes, and new Rule 9-b reminds litigators of the CPLR’s existing framework for referees. Taken together, the amendments aim to embrace the rising prevalence of technology disputes in business courts, and prod litigators toward an underutilized method of dispute resolution.
Amended Rule 202.70(b)(1)
Rule 202.70(b)(1) lists the types of actions that qualify as “commercial” and may be litigated in the Commercial Division. Prior to the amendment, the rule encompassed actions in which the principal claims involved “breach of contract or fiduciary duty, fraud, misrepresentation, business tort (e.g., unfair competition), or statutory and /or common law violation where the breach or violation is alleged to arise out of business dealings.”
As amended, Rule 202.70(b)(1) now emphasizes that “commercial” cases include those resulting from “technology transactions and/or commercial disputes involving or arising out of technology . . ..” Significantly, the amendment appears within a clause that lists examples of commercial cases, such as “sales of assets or securities; corporate restructuring; partnership, shareholder, joint venture, and other business agreements . . ..” By including the amendment within this clause, the Rule signifies that it does not expand the Commercial Division’s jurisdiction to encompass a new category of cases. Instead, as the Commercial Division Advisory Council (“CDAC”) explains in its Memorandum, the amendment “amplif[ies] the Commercial Division’s capabilities” (Memorandum at 3).
Thus, the rule simply serves as a reminder that the Commercial Division, as “one of the world’s most sophisticated venues for the resolution of commercial disputes and located in the world’s leading financial center and serving as a technology hub,” is uniquely equipped to adjudicate disputes arising from technology (Memorandum at 2). The motivation for the amendment is to “communicate the Commercial Division’s receptivity to, and familiarity with, resolving technology disputes” in light of the “increasingly important role” technology plays in business operations (id.). Further, the amendment takes after the rules of other state business courts that have emphasized their jurisdiction over and experience with technology disputes—namely, Georgia, Iowa, Michigan, North Carolina, Tennessee, Utah, and West Virginia.
In short, the amendment invites attorneys litigating technology disputes to consider New York’s Commercial Division as a venue, and highlights the Commercial Division’s status as a leading business court.
New Rule 9-b
The Administrative Order also adds “Rule 9-b” to Section 202.70(g). The new rule, titled “Referees,” states: “Counsel should be aware that in accordance with CPLR 4301 and 4317(a), on consent of the parties, and with the agreement of the Court, any person may be appointed by the Court to act in place of the assigned Supreme Court Justice, to determine any or all issues or to perform any act, with all the powers of the Supreme Court.”
The Rule is meant to encourage use of referees. Like the amendment to Rule 202.70(b)(1), Rule 9-b does not add any new capabilities, but reiterates the options already available to litigators in the Commercial Division. As the CDAC explains in its Memorandum, this method of adjudication “operates completely within the existing judicial system. The CPLR expressly contemplates this procedure by authorizing, upon consent of the parties and the approval of the court, the appointment of a person to be substituted for the Supreme Court Justice to make all judicial determinations” (Memorandum at 1). Indeed, the text of the new rule points to CPLR 4301 and 4317(a), which provide for the appointment of a referee upon consent and approval.
Rule 9-b reflects the CDAC’s belief “that practitioners, as well as many judges, may not be aware of the availability of this alternative. The proposed rule would bring attention to its utility” (Memorandum at 3). The benefits of using a referee include streamlining the resolution of issues that otherwise would require a formal motion to be addressed through a lengthy and often arduous decision process. Beyond that, increased use of referees could alleviate the strain on Judges, allowing them to devote more attention to the cases on their dockets.
The new Rule is, of course, voluntary. But the goal is clear: to elevate referee usage so it is on par with mediation and arbitration, both of which have enhanced efficiency in the disposition of cases.
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