Trial court Judgments
A trial courts judgment is only binding on the parties and is not binding upon any other court, although in rare areas of jurisprudence where a court of appeals simply has not spoken it could be cited with perhaps greater persuasive weight then a law review article.
This case is far from any final judgment. New York is being ordered to respond, and the burden of a response is the most preliminary component of a case against any defendant.
I wish Holtz well, but this case is just getting started.
With regard to if the state does not appear, it is unlikely, and such a case would have the least persuasive value of any trial court case.
With regard to the legal impact, I have tried a case in federal court where the defendant simply failed to appear until default judgment was filed. The defendant is simply increasing the cost on the plaintiff in hope that he will go away sooner rather than later. The judgment upon motion for default was simply an order to respond. That may be where we are in this case. I can tell you that nothing is easy legally, and this case has a long way to go.