It’s no secret to anyone litigating in the Commercial Division over the past couple years during the COVID era that the judges of the Commercial Division have been particularly keen on lightening their dockets by encouraging, and even participating in, the settlement of cases that come before them. That trend is sure to continue in 2022 (and beyond) with a recent amendment to Commercial Division Rule 30 (“Settlement and Pretrial Conferences”), which provides for a mandatory settlement conference in every Commercial Division case that’s been certified ready for trial. The amendment became effective earlier this month on February 1, 2022.
Subpart “a” of Rule 30 still allows ComDiv judges the discretion to schedule a settlement conference in a case anytime after the discovery cut-off date. But new subpart “b” shifts from the permissive to the mandatory, requiring that “the parties in every case pending in the Commercial Division must participate in a court-ordered mandatory settlement conference (MSC) following the filing of a Note of Issue.”
The amended rule offers the parties four “tracks” on which they can put their case toward the prospect of settlement:
- They can have the judge already assigned to their case conduct the settlement conference, or they can request that another judge oversee the matter;
- they can have the court assign a Judicial Hearing Officer or Special Referee to conduct the settlement conference;
- they can have the court refer their case to the court’s ADR program for selection from the roster of neutrals; or
- they can hire a private neutral from JAMS, NAMS, AAA, etc.
As noted by the Commercial Division Advisory Council, which proposed the amendment back in September of 2020, “one of the principal goals of the Commercial Rules is to make the business litigation process in New York more cost-effective, predictable, and expeditious, and to thereby provide a more hospitable and attractive environment for business litigation in New York State.” According to the Council, “business clients will find attractive the improvement, enhancement, and institutionalization of the settlement process.”
To be sure, incentives and opportunities for settlement already are baked into the ComDiv Rules. For example, Rule 3 allows the court to direct the parties to mediation at any time during the case. Rule 8 requires the parties to “meet and confer” about the prospects of settlement and/or ADR prior to the Preliminary Conference. And Rule 10 requires counsel to submit a certification prior to every conference thereafter, certifying that they have discussed ADR with their respective clients.
But as the Advisory Council pointed out in its September 2020 proposal, parties may be reluctant to settle for any number of reasons. They may believe that initiating or even engaging in settlement negotiations is a sign of weakness — an admission that their case has holes or that they are without the financial wherewithal to go the distance. Others may believe that the process is a costly waste of time and distraction from having their case properly adjudicated. Still others may be wary — despite the broad confidentiality provisions expressly set forth in the amended rule — of having a judge assess the merits of their claims or defenses before trial, particularly if it’s the judge assigned to their case.
Whether justified or not, these excuses no longer are available to litigants post-Note of Issue. Hence, a new opportunity to settle your case quickly with your adversary on the way to court.