DEFENDING A CIVIL SUIT
What To Do if Your Business Has Been Named in a Lawsuit |
The last thing you want to see is a summons and complaint delivered to your business informing you that your business has been named in a civil lawsuit. If you have never been through this before, you may be confused, angry, and completely unsure what to do next. But don't panic- we have got you covered. Below is some basic information you need to know about defending a lawsuit.
|
Understanding the Deadlines in Your Summons
The summons and complaint you received most likely says you have twenty days to serve an answer. Once you hire an attorney, chances are very good you can get this deadline extended by agreement of the plaintiff, but the sooner you contact a lawyer the better. If you do not hire a lawyer and answer the summons and complaint, the court could enter a default judgment against your business, which could take away your right to raise any defenses you have against the complaint.
Understanding the Terms in the Summons and Complaint
A civil complaint will often include terms that are either unfamiliar to you or mean different things to lawyers than they may mean to you. Here is a quick guide:
What is a Civil Lawsuit? If the complaint was brought by a person or a company (i.e., not by the Commonwealth of Massachusetts), it is a civil suit. The word "civil" means it is a lawsuit seeking either money damages or an order from the court telling you to do or stop doing something (this is called an injunction).
What is a Civil Summons? The summons is the document issued by the court after the complaint is filed directing you to answer the complaint. It is the plaintiff's obligation to serve the summons pursuant to the rules, and until you are served with that piece of paper you have no obligation to do anything. Service is usually made by a sheriff or constable. It can be alarming to have a sheriff walk into your business, but understand that all that means is they are formally delivering the summons and complaint. If someone tells you about the lawsuit, or even if the plaintiff emails you a copy of the summons and complaint, you have not yet been legally served (though you should not wait to contact an attorney).
What is a Plaintiff? The term "plaintiff" simply refers to the person or business that brought the complaint.
What is the Statement of Estimated Money Damages? In Massachusetts state court, the plaintiff is required to include this statement with the complaint. It is usually very much an estimate, and its main purpose is to help the court make sure that the case is in the appropriate forum (Superior Court generally handles cases where the claim is for $25,000 or more, and District Court generally handles cases for smaller amounts of money). This means little, if anything, about what your true potential exposure is.
What is a Civil Lawsuit? If the complaint was brought by a person or a company (i.e., not by the Commonwealth of Massachusetts), it is a civil suit. The word "civil" means it is a lawsuit seeking either money damages or an order from the court telling you to do or stop doing something (this is called an injunction).
What is a Civil Summons? The summons is the document issued by the court after the complaint is filed directing you to answer the complaint. It is the plaintiff's obligation to serve the summons pursuant to the rules, and until you are served with that piece of paper you have no obligation to do anything. Service is usually made by a sheriff or constable. It can be alarming to have a sheriff walk into your business, but understand that all that means is they are formally delivering the summons and complaint. If someone tells you about the lawsuit, or even if the plaintiff emails you a copy of the summons and complaint, you have not yet been legally served (though you should not wait to contact an attorney).
What is a Plaintiff? The term "plaintiff" simply refers to the person or business that brought the complaint.
What is the Statement of Estimated Money Damages? In Massachusetts state court, the plaintiff is required to include this statement with the complaint. It is usually very much an estimate, and its main purpose is to help the court make sure that the case is in the appropriate forum (Superior Court generally handles cases where the claim is for $25,000 or more, and District Court generally handles cases for smaller amounts of money). This means little, if anything, about what your true potential exposure is.
Review Your Insurance Policies
If you have insurance that may cover the claim that has been made against you, you should notify your insurer as quickly as possible. Not just because they can pay for an attorney to represent you, but also because the longer you wait, the greater the risk that your coverage could be compromised by not meeting whatever requirements you have in your insurance contract to provide notice of claims against your business.
Whether you are covered by insurance will depend on your policy and on the nature of the claims being asserted. In general, lawsuits based on negligence will be covered, while claims based on intentional conduct- a breach of contract, unfair competition claims, etc.- will not. If you are facing an employment lawsuit, you should check to see if you have the specific coverage, known as Employment Practices Liability Insurance ("EPLI") that provides coverage for employment discrimination and other employment law claims.
Whether you are covered by insurance will depend on your policy and on the nature of the claims being asserted. In general, lawsuits based on negligence will be covered, while claims based on intentional conduct- a breach of contract, unfair competition claims, etc.- will not. If you are facing an employment lawsuit, you should check to see if you have the specific coverage, known as Employment Practices Liability Insurance ("EPLI") that provides coverage for employment discrimination and other employment law claims.
Collect and Preserve Relevant Documents
There are many, many reasons to do this- the first being that you could be sanctioned by the court (including potentially losing the case outright) if you allow relevant documents to be lost or destroyed once you know there is a civil lawsuit. The second is that you, and your attorney, need to be able to fully understand what happened in order to present your defense and, if applicable, raise any claims you may have against the person who brought the lawsuit. Relevant documents include correspondence with or about the plaintiff or the subject matter of the lawsuit, agreements and drafts of agreements with any of the parties, employment records in an employment lawsuit.
Frequently Asked Questions
|
For most of our clients, being sued is a new experience, and they often don't know what questions to even ask at the beginning. Below are answers to some questions we have heard a lot from business owners in this situation.
Are my personal assets at risk? If you incorporated your business, you probably did so for exactly this reason- to protect your personal assets from your business' liabilities. In most circumstances, as long as you have followed the basic formalities of your corporate entity, the person suing your business cannot reach your personal assets. There are some exceptions to this, however, including certain employment law claims that can reach the owner individually, which you should address with your attorney early on as part of the overall assessment of defenses and risk. Does the answer date on the summons mean I have to appear in court? No- unless the plaintiff has filed something called a Motion for Preliminary Injunction, the answer date is simply the date that your attorney must file an answer. An answer is simply a legal document that admits or denies the factual assertions in the complaint, and lists the legal defenses you are claiming. If you have counterclaims (legal claims you have against the person or business bringing the suit), they will be included in this document. Also, if you have grounds to move to dismiss the complaint (see below), this is the date on which your attorneys will have to file that motion. Can I ask the court to dismiss these claims? There are basically three points in a lawsuit where the court can dispose of the claims against you: a motion to dismiss at the beginning of a case, a motion for summary judgment after the parties have completed discovery, and after all of the evidence at trial. To dismiss a case at the very beginning (on a motion to dismiss), you have to have a legal defense that would defeat the plaintiff's claims even if all of the facts they allege were true. Examples include claims that are outside of the statute of limitations, claims that are otherwise barred by law, or claims that require the plaintiff to exhaust an administrative remedy that they have not exhausted (for example, filing a discrimination claim first with the Massachusetts Commission Against Discrimination or the federal Equal Employment Opportunity Commission). Another example is a complaint that fails to even allege all of the facts necessary to establish the claim being asserted. More often than not, because the standard for stating a claim in a complaint is pretty forgiving, you will have to wait until discovery is completed then move for summary judgment, at which point you can make the argument that plaintiff actually does not have evidence to prove the elements of his or her claim. Can I sue the plaintiff? There are always at least two sides to the story, and very often when a plaintiff files a lawsuit, the person or business being sued also has a dispute or potential claim against the plaintiff. If your claim is related to the one in the lawsuit (for example, if you are being sued for breaching a contract you may also believe the plaintiff breached the same contract), then you must bring it is a counterclaim in the same action. This means that when your attorney files an answer to the plaintiff's complaint he or she will also lay out your counterclaim in the same document, which the plaintiff will have to answer in the time allowed under the rules. If your complaint is not related to the events raised in the original complaint, you may still want to assert the counterclaim in the same action, either for a strategic purpose or simply to put all of the issues on the table in the same proceeding. Our initial assessment of your defenses to the claim always includes an assessment of claims you may have against the plaintiff so that you can make an informed decision about whether to include them in the lawsuit. How much will this cost me? Perhaps as upsetting as being sued in the first place is realizing that you have a new and unexpected expense in the form of legal fees. We can't make that go away, but will do everything we can to make it manageable for you. This includes offering the initial analysis and assessment at a flat rate, so that you know what to expect, and can make an informed decision about whether to fight the claim or try to resolve it, before you have spent a lot of money. If you choose to fight the claim, we can provide estimates for each stage of the work, and for each stage we give you the choice of being billed by the hour or paying a flat fee. This does not make the process free, but at least gives you some predictability. We may also be able to offer you a payment plan for legal fees, depending on the circumstances. What if I don't want to fight this? This is a 100% fair question, given the real costs of defending yourself in court. In most cases, if that is your decision you can usually reach an early settlement with the person bring the suit by paying some amount of money. Unfortunately, settlement also depends on the other side being reasonable, which neither you nor your lawyers can control, but if an early settlement is your priority we will make that a priority in developing our strategy for you. Do I have to hire a lawyer? If you are sued individually (meaning it is you as a person named in the lawsuit and not your business) you have the right to represent yourself (this is called proceeding pro se). There are significant risks to this, because even a simple misunderstanding of the procedural rules can seriously disadvantage you, and without knowledge of the substantive law you may miss important defenses. If your business is named in the suit, it must be represented by a licensed attorney in order to present any defenses or counterclaims in the lawsuit, and your business can be defaulted (meaning the court enters a judgment against it) if nobody appears on its behalf. This claim is frivolous- can I make them pay my attorneys' fees? If you have a contract with the other side with a provision that says the winning party in a lawsuit is entitled to attorneys' fees, then yes. Otherwise, unfortunately, the "American Rule" in civil litigation is that each party is responsible for their own fees no matter who wins. If the lawsuit arises under certain employment laws (i.e., wage and hour or anti discrimination or retaliation laws), you may actually be liable for the plaintiff's attorneys' fees if they win. But part of our review of your defenses includes a review of claims you may have against the plaintiff (called "counterclaims") which can serve as an offset to anything they are claiming against you. |
|
How to Find the Right Attorney
If you have insurance coverage, your insurer will most likely choose a lawyer for you. If you do not, here are some pointers.
Subject Matter Expertise: Just like you wouldn't want your dermatologist performing heart surgery, you want a lawyer who understands the area of law that is involved. If you are sued for breach of contract, you should be looking for an attorney with business litigation experience. If you are sued by an employee or former employee, you should be looking for an attorney with employment law experience.
Litigation Experience: Inside of each substantive area of the law (i.e., contracts, employment, trade secrets, unfair competition), there are lawyers who specialize in doing work outside of litigation, like drafting agreements and employment policies or negotiating with vendors, and lawyers who specialize in litigation. These are different skill sets, and the attorney you need should have substantial experience in litigation.
Cost and Value Considerations: There is no getting around the fact that, unless you are covered by insurance, defending a civil lawsuit will cost you money, One of the first things your lawyer should do with you is to help you understand how much you might be liable for if you lost the lawsuit, estimate the costs of various stages of the litigation, and discuss the pros and cons of trying to settle the case in the early stages. No attorney has a crystal ball, and at the beginning there are a lot of unknowns, but you should look for a lawyer who seems willing to have these conversations from the very beginning.
Subject Matter Expertise: Just like you wouldn't want your dermatologist performing heart surgery, you want a lawyer who understands the area of law that is involved. If you are sued for breach of contract, you should be looking for an attorney with business litigation experience. If you are sued by an employee or former employee, you should be looking for an attorney with employment law experience.
Litigation Experience: Inside of each substantive area of the law (i.e., contracts, employment, trade secrets, unfair competition), there are lawyers who specialize in doing work outside of litigation, like drafting agreements and employment policies or negotiating with vendors, and lawyers who specialize in litigation. These are different skill sets, and the attorney you need should have substantial experience in litigation.
Cost and Value Considerations: There is no getting around the fact that, unless you are covered by insurance, defending a civil lawsuit will cost you money, One of the first things your lawyer should do with you is to help you understand how much you might be liable for if you lost the lawsuit, estimate the costs of various stages of the litigation, and discuss the pros and cons of trying to settle the case in the early stages. No attorney has a crystal ball, and at the beginning there are a lot of unknowns, but you should look for a lawyer who seems willing to have these conversations from the very beginning.
How slnlaw Can Help
We have years of experience representing individuals and small businesses in litigation involving business and employment disputes in Massachusetts state and federal courts. If the subject matter of your lawsuit is within our areas of expertise, we can work with you to assess your risk, evaluate your defenses and any counterclaims you may have, and create and implement the strategy that is right for you. If the lawsuit is about something we do not have experience with, we can provide you a referral to someone with the correct expertise.
You can use the button below to schedule a call back from a member of our team, give us a call at 413-667-2322, or fill out our web form to let us know a little more about your situation.
You can use the button below to schedule a call back from a member of our team, give us a call at 413-667-2322, or fill out our web form to let us know a little more about your situation.
