First Department Holds Source Code to Be a Trade Secret and Defines Bounds of Judicial Proceedings Privilege
On November 12, 2019, in BEC Capital, LLC et al. v. Bistrovic et al., 177 A.D.3d 438 (1st Dep’t 2019), the Appellate Division, the First Department issued a decision reversing an order of the Commercial Division and holding that the Defendants’ source code is a trade secret, and therefore should have been ordered to be produced under an “attorneys and expert eyes only” form of review. The First Department also held that an email produced prior to the litigation was not subject to privilege from defamation and thus could support Defendants’ counter-claim for defamation.
Commercial Division Holds That Russian Law Restrictions on Document Discovery Do Not Absolve Russian Party From Responsibility to Produce Documents
The Commercial Division regularly hears suits involving foreign parties, in part because contract parties, anywhere in the world, can choose to have a dispute heard by the Commercial Division as long as the transaction at issue concerns $1 million or more. However, the Commercial Division’s rules sometimes provide for more extensive discovery than would be allowed in a foreign party’s home country. And in some instances, the Commercial Division’s rules may even provide for discovery that would be illegal in the foreign party’s home country. Justice Andrew Borrok’s recent decision in Starr Russia Investments III B.V. v. Deloitte Touche Tohmatsu Ltd. provides an illustration of how the Commercial Division may navigate this thorny issue.
On Wednesday June 5, 2019, all eight of the New York County Commercial Division justices participated on a panel for the New York State Bar Association’s Commercial and Federal Litigation Section on “Motion Practice Before the Commercial Division.” Motion practice is one of the most frequently used aspects of practice in the Commercial Division. The format was an informal question and answer session on motion practice, moderated by the Section’s Past Chair, Robert Holtzman.
Beginning in April 2019, the First Department has changed its practice to assign panels of four justices for oral argument, as opposed to five justices as has been the traditional practice of the court. This change is the result of three ongoing vacancies on the First Department that have remained unfilled by Governor Cuomo. The Presiding Justice of the First Department, Hon. Rolando Acosta, explained that the move to four justice panels is necessary because there are not enough judges to hear all the pending appeals. Aware that four justice panels could create a two-to-two split, Presiding Justice Acosta explained that a fifth judge can be brought in to issue a decision if needed. Parties can preserve their right to reargue or submit the case to a fifth justice by making a statement on the oral argument record. This change will likely remain in place until new judges are appointed to the court.
So ruled Justice Andrea Masley of the Commercial Division in a recent summary judgment motion in the case Frenk v. Solomon, Index No. 650298/2013, holding that a standardized form release signed by the plaintiff’s mother in 1973 to settle a case primarily involving one piece of artwork barred the plaintiff’s present suit to recover other pieces of art that were believed lost at the time of the 1973 settlement.
Patterson Belknap Hosts Conversation about Litigation Practice in New York Courts with Court of Appeals Judge Michael Garcia and New York Practice author Professor Patrick M. Connors
On Wednesday, June 20, 2018, Patterson Belknap Webb & Tyler LLP welcomed Associate Judge Michael Garcia of the New York Court of Appeals, and Professor Patrick M. Connors, author of the New York Practice treatise, for a continuing legal education program on litigation practice in New York courts. Patterson Belknap partners Stephen P. Younger and Muhammad U. Faridi, authors of the New York Commercial Division Practice Guide, also participated with Mr. Younger moderating a discussion of New York practice issues and Mr. Faridi serving as a panelist.
In Rebecca Broadway LP v. Thibodeau, Justice Andrea Masley of the Commercial Division denied plaintiff Rebecca Broadway Limited Partnership’s (“RBLP”) motion to set aside a damages verdict after it prevailed at trial against Defendant Marc Thibodeau (“Thibodeau”) on claims for breach of contract and tortious interference with business relationships. The case raised issues of whether a jury’s damages verdict is supported by a rational interpretation of the trial evidence and the circumstances under which a retrial solely on the issue of damages is appropriate.
The Westchester County Commercial Division has launched a new state-of-the-art courtroom at the White Plains Courthouse. The Integrated Courtroom Technology (ICT) part is outfitted with high-tech features designed to ease the handling of complex commercial cases and enhance the presentation of evidence.
The First and Second Departments Split on What is Considered "Documentary Evidence" on a Motion to Dismiss Under CPLR 3211(a)(1)
CPLR 3211(a)(1) allows a defendant to “move for judgment dismissing one or more causes of action asserted against him on the ground that . . . a defense is founded upon documentary evidence.”
Commercial Division Refuses to Disturb Judgment Based On “Newly Discovered” Evidence That Was Available in Russian Public Records Prior to Trial
What is the ability of a litigant in the Commercial Division to use evidence located in the public records outside of the United States to re-open a New York court judgment?
Talking Shop in the Courtroom: Courts Set a High Bar for Using Industry Custom to Interpret Contracts
Industry jargon becomes second nature to those in the industry. Wall Street knows “poison pills” and Silicon Valley knows “burn rates.” But what is second nature to industry insiders may be entirely foreign to others, and courts have set a high bar for allowing industry custom to color their interpretation of contracts. Two recent decisions of the New York Commercial Division underscore the danger of relying on custom and usage to supply meaning to contract terms. See Lehman Bros. Holdings Inc. v. IVC WH HG II, LLC, No. 652178/2012, 2016 N.Y. Misc. LEXIS 3215 (N.Y. Sup. Ct. Aug. 31, 2016) and IFC v. Carrera Holdings Inc., No. 601705/2007, 2016 N.Y. Misc. LEXIS 2640 (N.Y. Sup. Ct. June 29, 2016).
On August 23, 2016, Justice Eileen Bransten of the New York Commercial Division issued a decision granting a motion for spoliation sanctions in a six-year-old dispute involving Covista Communications, Inc. and Oorah, Inc., two telecommunications companies. Oorah, Inc. v Covista Communications, Inc., 2016 N.Y. Misc. LEXIS 3104 (N.Y. Sup. Ct. Aug. 23, 2016). Justice Bransten’s opinion serves as an important reminder that parties must institute a litigation hold and exercise care when erasing documents, even as part of an unrelated transaction, when they are in litigation or reasonably anticipate litigation.
Commercial Division Rejects Attempt to Dismiss Two Alleged Verbal Agreements Despite Written Agreement’s Requirement that Contract Cannot Be Changed Except Upon Written Agreement of Parties
On August 18, 2016, in Obsessive Compulsive Cosmetics, Inc. v. Sephora USA, Inc., No. 652074/2015, 2016 BL 307244 (N.Y. Sup. Ct. Aug. 18, 2016), Justice Ramos handed down an order that allowed a plaintiff to proceed with claims for breach of two verbal agreements that were purportedly made after the parties had executed a written agreement stating that the contract cannot be changed except by written agreement of both parties.