Have Commercial Dispute, Will Travel (to New York)
July 28, 2022
A few years back, in a post entitled What the Commercial Division Has Done for Us Lately, we commented on a 2019 report from the Commercial Division Advisory Council, which extolled “The Benefits of the Commercial Division to the State of New York” since its inception in 1995, including how it “has made the business litigation process in New York more cost effective, predictable and expeditious, and has thereby provided a more hospitable and attractive environment for business litigation in New York State.”
The business and legal communities in New York continue to carry the banner of the Commercial Division. And for good reason. As highlighted in a recent webinar sponsored by the Business Council of New York, the Commercial Division has become a preferred forum — if not the preferred forum — for resolution of complex business disputes and remains available to businesses of all sizes and all locations, including outside the State of New York. Indeed, according to Advisory Council chair Robert L. Haig, himself a webinar participant:
Any business, which has a choice, should seriously consider bringing its business litigation in New York and including choice-of-forum clause in its contracts, specifying the Commercial Division as the forum for resolving disputes arising under the contract.
Any business that is concerned about the predictability and the cost of litigation should consider moving its operations, its markets, and even its headquarters to New York State.
Seriously? New York? After all, as noted by moderator Heather Briccetti of the Business Council at the outset of the webinar, “New York is a very challenging environment to do business, both in terms of taxes and regulation.” So why choose to litigate in or even move your company to New York?
Well, according to the various webinar participants — among them representatives from the Association of Corporate Council, the American Bar Association and several current and retired judges, including former Manhattan ComDiv Justice O. Peter Sherwood and Queens County ComDiv Justice Marguerite A. Grays — it’s primarily because the Commercial Division is made up of sophisticated and responsive judges and court staff who possess the requisite commercial expertise to handle a strictly commercial docket, and who have developed a body of well-reasoned and consistently-applied precedent and rules on which businesses and their counsel can predictably rely in the efficient and effective resolution of their disputes. The fact that the Commercial Division remains on the cutting edge of courtroom technology and other procedural innovations doesn’t hurt either, especially in the COVID and post-COVID era.
Sarah J. Mugel, General Counsel for National Fuel Gas Company, a multi-billion dollar diversified energy company headquartered outside Buffalo, offered an interesting perspective in terms of what matters to corporations and in-house counsel when faced with litigation:
Like most corporations, National Fuel tries to avoid litigation because of its cost and risk, and because of the diversion it causes to those non-legal employees who are involved, taking them away from their regular duties. While there are many disadvantages to being involved in litigation, the process can be at least somewhat improved when the courts make efforts to do so. And the Commercial Division . . . has made substantial efforts to improve the litigation process, and companies generally regard these efforts as successful.
The Commercial Division helps businesses resolve our disputes quickly and cost-effectively so we can get on with our business and avoid getting bogged down in litigation quagmires — which is truly, even for the lawyers, what we look forward to.
Drawing on the aforementioned 2019 ComDiv Advisory Council report, Chief Administrative Judge Lawrence K. Marks also offered an interesting perspective from the point of view of economics — particularly, the economic benefits of the Commercial Division to New York, its courts, and its citizens:
The Commercial Division is unique . . . in its ability to help increase business activity within the State, which in turn generates tax revenue and provides employment. These unique characteristics benefit our entire court system and all New Yorkers.
For example, a division or subsidiary that generates $10 billion in annual revenue might incur employee compensation costs of as much as $6 billion, which would result in annual New York income tax revenue of as much as $500 million. The move to New York might also result in annual New York corporate income tax revenue of as much as $50 million. Thus, the move of a division or subsidiary of one company to New York could result in additional New York income tax revenue of as much as $550 million each year. The annual operating budget for the New York state court system is currently $2.4 billion. If the benefits of greater access to the Commercial Division help to persuade a company to move a $10 billion division to New York, one such move could pay for nearly a quarter of the entire annual operating costs of our court system.
So there you have it. Sound reasons — from the bench, as it were — for moving your business to rather than from New York, even in this era of mass exodus to more tax-friendly states. We’ve said it before; we’ll say it again: Get thee to the Commercial Division!