How COVID-19 Will Affect Litigation In NY And Beyond

By Stephen Younger, Muhammad Faridi and Timothy Smith
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Law360 (March 25, 2020, 2:56 PM EDT) --
Stephen Younger
Stephen Younger
Muhammad Faridi
Muhammad Faridi
Timothy Smith
Timothy Smith
The ongoing COVID-19 pandemic is among the most devastating and disruptive forces in recent history, with, as of the writing of this article, hundreds of thousands of cases confirmed worldwide.

In an effort to curb the outbreak, state and federal governments have introduced various emergency measures, including travel restrictions, curfews, bans on public gatherings and mandatory quarantines. In addition, many businesses have cancelled events, are requiring employees to work from home and are taking other steps to limit the spread of the virus.

It is unclear how long the pandemic will last or how long the measures currently being undertaken will remain in effect. It is certain, however, that the global response to COVID-19 will have substantial effects on pending litigation.

The Pandemic's Impact on Pending Litigation

The pandemic will likely affect ongoing court proceedings in at least three ways.

First, as concerns about COVID-19 have escalated, courts have implemented various restrictions, ranging from visitor screenings to complete court closings. These measures will surely slow the pace of litigation.

New York state courts, for instance, have implemented particularly drastic restrictions. Effective March 16, trials already pending in New York Supreme Court, which includes the Commercial Division, will continue to conclusion, but no other trials shall commence until further notice.[1]

In addition, all nonessential court functions have been postponed indefinitely.[2] Essential functions in the Supreme Court outside the Commercial Division include civil commitments, guardianships and any other essential applications as the court may allow.[3] In the Commercial Division, they would likely include matters such as temporary restraining orders and other emergency forms of relief. Some Commercial Division judges have also issued individual practice rules to address the fallout from the pandemic.

Justice Andrea Masley, for instance, has ordered that there will be no in-person appearances until further notice and that all oral arguments (currently scheduled between March 17 and April 17) and court conferences (currently scheduled between March 20 and April 17) will either be cancelled or conducted via teleconference.[4]

The Appellate Divisions for the First and Second Departments, meanwhile, have suspended certain filing and perfection deadlines indefinitely and until further notice.[5] These appellate courts also will not be entertaining any motions aside from emergency applications, and will be recalendaring arguments scheduled beyond a certain date (the second week of April in the First Department and April 2 in the Second Department).[6]

Similarly, the U.S. District Courts for the Southern and Eastern Districts of New York have postponed trials scheduled to begin before April 27, while trials already pending will continue to conclusion.[7]

The Eastern District, however, is conducting case-related business as usual, subject to various visitor restrictions, and it will allow individual judges to decide whether to hold hearings, conferences and bench trials.[8] Similarly, civil case operations in the Southern District will proceed at the discretion of individual judges, with in-court appearances limited strictly to emergency matters.[9] Nonetheless, adjournments of scheduled appearances can be expected.

The U.S. Court of Appeals for the Second Circuit, by contrast, is currently hearing its appeals and motions calendars as scheduled.[10] The Second Circuit has, however, extended certain deadlines by 21 days to minimize the disruption caused by the pandemic.[11] Whether these extensions will produce additional litigation logjams down the line remains to be seen.

Going forward, litigants should be cognizant that these restrictions have been — and likely will remain — subject to rapid changes as responses to this pandemic evolve. Even in the U.S. Supreme Court, where proceedings do not require appearances from any jurors or witnesses, extraordinary measures have resulted from concerns about the pandemic. Not only has the court banned public visitors, it postponed its next round of oral arguments — the first time it has done so since 1918, when the Spanish flu epidemic hit Washington, D.C.[12]

Second, even if a proceeding has not been postponed, that proceeding might be conducted differently, such as via remote means, to limit the spread of the virus. Again, using New York state courts as an example, trial court judges have been directed to conduct any essential functions in a manner designed to minimize court appearances, meaning that most motions will be heard on submission.[13]

Similarly, judges in the Eastern District have been encouraged to conduct court proceedings by telephone or video conferencing where practicable, while judges in the Southern District, where in-court appearances are limited to emergency matters, have been directed to conduct proceedings remotely even in emergency matters if possible.[14] At least one judge in the Southern District allowed — over objections from the government — a juror to participate in deliberations in a criminal case via video conference.[15]

At the appellate level, the Appellate Divisions for the First and Second Departments will be processing the remainder of calendared arguments without in-person oral argument, and they will not be conducting any in-person oral argument until further notice.[16] The Second Circuit has likewise suspended in-person oral argument and will be hearing all oral arguments using a teleconference platform.[17]

Outside of the courtroom, practitioners may find themselves turning to videoconferencing for discovery procedures such as depositions, as well as for notarizations where permitted under state law.[18] Many client meetings and witness interviews may also occur remotely, whether out of a need to comply with governmental orders, or out of a commitment to social distancing — i.e., the practice of creating physical space between individuals to reduce the spread of the virus, which has been strongly encouraged by health organizations.

Third, the unavailability of witnesses, inaccessibility of documents and indisposition of attorneys due to COVID-19 will likely result in adjournments of trial dates, discovery periods and briefing schedules, among other deadlines. Many documents are only accessible abroad and thus may lie outside the reach of attorneys subject to travel restrictions. Witnesses likewise may be unable to travel. And courts have regularly found good cause to extend deadlines due to the unexpected illnesses of witnesses and attorneys.[19]

Many courts may even take prophylactic measures to excuse likely delays.

For example, the New York State Unified Court System Chief Administrative Judge Lawrence K. Marks issued an administrative order on March 19 providing that (1) civil litigants "shall use best efforts to postpone proceedings by agreement and stipulation for a period not to exceed 90 days" whenever a party, attorney, or other person is unable to meet discovery or other litigation deadlines "for reasons related to the coronavirus health emergency"; (2) "[a]bsent such agreement, the proceedings shall be deferred until such later date when the court can review the matter and issue appropriate directives"; and (3) "[i]n no event will participants in civil litigation be penalized if discovery compliance is delayed for reasons relating to the coronavirus public health emergency."[20]

In addition, New York Gov. Andrew Cuomo issued an executive order that tolled numerous statutes of limitations, among other statutory deadlines.[21]

Any adjournments, in turn, will likely delay the adjudication and resolution of many commercial cases. Similarly, efforts to settle cases — whether by court involvement or by nonbinding mediation or other consensual means — are likely to see a slowdown.

Conclusion

The foregoing are just a few of the effects the pandemic may have on commercial litigation.

It is also likely that the pandemic will lead to numerous new civil disputes, particularly in the context of commercial contracts. As a result of the emergency measures imposed by various governments, it has or will become impracticable or impossible for many parties to perform their contractual obligations — or at least some will claim as such.[22]

A common question in the wake of the pandemic will thus be whether a party should be excused for its nonperformance. Businesses experiencing operational disruptions, moreover, may find themselves embroiled in insurance disputes. Similarly, there may be disputes over whether the pandemic constitutes a material adverse change or material adverse effect (collectively, MAC) under an existing transaction. Many acquisition and financing agreements contain MAC provisions, under which the nonexistence of a MAC is a condition to closing.

In sum, a host of legal issues are likely to arise in the wake of the Coronavirus pandemic.



Stephen Younger is a partner at Patterson Belknap Webb & Tyler LLP and former president of the New York State Bar Association.

Muhammad Faridi is a partner at Patterson Belknap.

Timothy Smith is an associate at Patterson Belknap.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


[1] http://www.nycourts.gov/whatsnew/pdf/MEMO-3.13.20.pdf (last visited March 18, 2020).

[2] http://www.nycourts.gov/whatsnew/pdf/Updated-Protocol-AttachmentA3.pdf (last visited March 18, 2020).

[3] Id.

[4] https://www.nycourts.gov/LegacyPDFS/courts/comdiv/NY/PDFs/Part48-Temporary-Rules.pdf (last visited March 18, 2020).

[5] http://www.courts.state.ny.us/courts/ad1/PDFs/Temporary%20Suspension%20Order.pdf (last visited March 18, 2020); http://www.courts.state.ny.us/courts/ad2/pdf/ADM%202020-0317.2%20-%20Emergency%20extensions.pdf (last visited March 18, 2020).

[6] http://www.courts.state.ny.us/courts/ad1/PDFs/COVID-19%20EmergencyProcedures%20Mar2020.pdf (last visited March 18, 2020); http://www.courts.state.ny.us/courts/ad2/NOTICE_REGARDING_LIMITATION_OF_COURT_OPERATIONS.pdf (last visited March 18, 2020).

[7] https://nysd.uscourts.gov/sites/default/files/2020-03/20%20MISC%20154a%20(002)%20-%20In%20Re%20Coronavirus-COVID-19%20Pandemic.pdf (last visited March 18, 2020); https://img.nyed.uscourts.gov/files/general-ordes/2020-06_In_Re_CoronavirusCovid19Pandemic.pdf (last visited March 18, 2020).

[8] https://img.nyed.uscourts.gov/files/general-ordes/2020-06_In_Re_CoronavirusCovid19Pandemic.pdf (last visited March 20, 2020).

[9] https://www.nysd.uscourts.gov/sites/default/files/2020-03/COVID%20Memorandum%20-%20FINAL.pdf (last visited March 20, 2020).

[10] http://www.ca2.uscourts.gov/ (last visited March 18, 2020).

[11] Id.

[12] https://www.washingtonpost.com/politics/courts_law/supreme-court-coronavirus/2020/03/16/4dcbe6a8-679f-11ea-9923-57073adce27c_story.html (last visited March 18, 2020).

[13] http://www.nycourts.gov/whatsnew/pdf/Updated-Protocol-AttachmentA3.pdf (last visited March 18, 2020).

[14] https://www.nysd.uscourts.gov/sites/default/files/2020-03/COVID%20Memorandum%20-%20FINAL.pdf (last visited March 20, 2020); https://img.nyed.uscourts.gov/files/general-ordes/2020-06_In_Re_CoronavirusCovid19Pandemic.pdf (last visited March 20, 2020).

[15] Stewart Bishop, SDNY Judge Lets Sick Juror Deliberate Via Videoconference, Law360, Mar. 16, 2020.

[16] http://www.courts.state.ny.us/courts/ad1/PDFs/COVID-19%20EmergencyProcedures%20Mar2020.pdf (last visited March 18, 2020); http://www.courts.state.ny.us/courts/ad2/covid-19.shtml (last visited March 18, 2020).

[17] http://www.ca2.uscourts.gov/ (last visited March 19, 2020).

[18] The Governor of New York, Andrew Cuomo, issued an executive order authorizing notary services to be provided remotely. https://www.governor.ny.gov/news/no-2027-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency (last visited March 20, 2020).

[19] See, e.g., Martinez v. City of Avondale , 2013 WL 673507, at *4 (D. Ariz. Feb. 25, 2013).

[20] https://bit.ly/2WxY1Yv (last visited March 20, 2020).

[21] https://www.governor.ny.gov/executiveorders (last visited March 21, 2020).

[22] For example, in New York City, Mayor Bill DeBlasio has issued an Executive Order requiring all bars and restaurants to close effective on the evening of March 16, 2020. See https://www1.nyc.gov/assets/home/downloads/pdf/executive-orders/2020/eeo-100.pdf (last visited March 17, 2020). This, in turn, will force the cancellation of any events that were to be held at these establishments. In addition, the President has restricted travel from Europe which will render unfeasible various business conferences and meetings.

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