How will latest changes to Volcker Rule affect non-US banks?
Kathleen A. Scott discusses the final Volcker Rule, focusing on some of the issues raised by non-US banks in their comments.
July 2018 was a busy month for the New York Commercial Division courts, which specialize in handling significant commercial disputes, with the adoption of two new rules, both effective October 1, 2018, designed to reduce the cost of litigation. One such rule encourages the use of technology-assisted review of electronically stored information, and the second encourages early mini-trials or evidentiary hearings on key disputed issues that can dispose of or significantly narrow a case. Together, these rules are part of the Commercial Division's ongoing effort to improve the efficiency and cost-effectiveness of cases litigated before it.
Commercial Division Rule 11-e provides in relevant part:
"The parties are encouraged to use the most efficient means to review documents, including electronically stored information ('ESI'), that is consistent with the parties' disclosure obligations under Article 31 of the CPLR and proportional to the needs of the case. Such means may include technology assisted review, including predictive coding, in appropriate cases. . . ."
The use of technology-assisted review can greatly reduce the cost of reviewing ESI. The memorandum of the Commercial Division Advisory Committee submitted in support of this Rule cites a 2012 study estimating that document review consumes an average 73% of the document production cost in cases involving ESI. It notes that there currently are many types of technology-assisted document review available, "ranging from widely used software tools like keyword searching to more sophisticated algorithmic technologies such as predictive coding." Predictive coding purports to obviate the need for the human review of documents for responsiveness, as the computers are trained through a training set of sample documents to recognize the characteristics of responsive documents.
This Rule does not prescribe whether or when a particular form of technology-assisted review should be used. Rather, it encourages cooperation among the parties with input from the court, and will "make clear that the Commercial Division is sensitive to the cost of document review in complex commercial cases."
It is not unusual for a dispositive motion to be denied on the basis of a single material disputed issue of fact requiring a trial, for example, where the determination of a motion to dismiss on statute of limitations grounds turns on when the plaintiff learned of the existence of the claim. In the past, the determination of that factual issue frequently needed to await the trial on the merits of all issues following full-blown discovery.
New Commercial Division Rule 9-a encourages parties in those situations to bring the issue to the court's attention, and to request a prompt mini-trial or evidentiary hearing to resolve that issue, following focused expedited discovery, if needed. It provides in relevant part:
"Subject to meeting the requirements of CPLR 2218, 3211(c) or 3212(c), parties are encouraged to demonstrate on a motion to the court when a pre-trial evidentiary hearing or immediate trial may be effective in resolving a factual issue sufficient to effect the disposition of a material part of the case. . . ."
The Rule goes on to give examples of situations in which such an immediate trial may be particularly useful to resolve discrete factual issues, including in connection with dispositive, jurisdictional, statute of limitations and class certification motions. The Rule provides that parties may request limited expedited discovery on the factual issue to be tried. In its supporting memorandum for this Rule, the Commercial Division Advisory Committee observed that this Rule allows for the narrowing of the scope of a case early on by targeting key factual issues for early discrete discovery and resolution at a factual hearing or trial. The memo went on to note that the early disposition of cases encouraged by this Rule "will conserve judicial and litigant resources."
Since its inception, the New York Commercial Division has pursued the policy of making the litigation of commercial cases before it more user-friendly, expeditious and cost-effective.
These new rules further that cause, and put the Commercial Division at the forefront of this drive.
OFAC published a final rule that modifies the Cuban Assets Control Regulations to revoke the so-called "U-turn" authorization.