In late 2016, the Commercial Division Advisory Council proffered a proposed rule, Proposed Rule 11-h, which would amend Rule 216.1(a) of the Uniform Rules for Trial Courts in New York to define the “good cause” under which court records could be sealed. “Good cause” to seal court records, as defined by the proposed rule, “may include the protection of proprietary or commercially sensitive information, including without limitation, (i) trade secrets, (ii) current or future business strategies, or (iii) other information that, if disclosed, is likely to cause economic injury or would otherwise be detrimental to the business of a party or third-party.” The Advisory Council has explained that the revised rule is designed to “clarify and highlight” that “the protection of proprietary sensitive business information in commercial disputes is an appropriate goal of, and ‘good cause’ for, sealing of selected documents or portions of documents filed in the course of litigation.” This is in keeping with a principal goal of the Advisory Council: to further enhance the reputation of the Commercial Division as a business friendly court.
However, despite the widespread and shared desire among attorneys in New York to promote the Commercial Division as a favored forum for the resolution of commercial disputes, Proposed Rule 11-h has run into resistance from the organized bar. Specifically, the Committee on Media Law of the New York State Bar Association has argued that Proposed Rule 11-h risks impeding “the public’s constitutional, common law and statutory rights of access to records relevant to the judicial process in New York State, and thereby impede the public’s corresponding right to be fully and fairly informed about matters of legitimate public interest.” Additionally, several committees of the New York City Bar jointly submitted a comment in opposition to Proposed Rule 11-h.The City Bar letter said that the sealing of court records invokes rights “of a constitutional dimension” and questioned the appropriateness of relaxing the existing “good cause” standard for sealing through a rule designed simply to “clarify and highlight.” The City Bar further argued that perhaps the bulk of documents filed in cases in the Commercial Division arguably involve “commercially sensitive information” and could potentially be subject to sealing under the proposed rule.
Ultimately, the decision of whether to enact the controversial new rule rests with the Office of Court Administration. Keep an eye on this space for further updates and commentary.