Served with a Summons & Complaint In State Court? Initial Steps for Corporate Defendants to Take

Initial steps that corporate defendants take within the first month after being served with a summons and complaint can profoundly affect the outcome of the litigation. 

Though no outcome is certain, doing your part as a defendant can help make impactful strides that move the litigation needle in a favorable direction. In this blog we will review three key steps to set the stage for a desirable case outcome.

YOUR LEGAL OBLIGATION AS A DEFENDANT

In both state and federal court, a defendant has a legal obligation to retain all physical and electronic records relating to the subject matter of the litigation. 

When a party fails to preserve evidence, “spoilation” occurs and the offending party may be subject to severe sanctions. Upon being served with a summons and complaint, corporate defendants should immediately gather all files that are potentially relevant to the lawsuit and send copies to outside counsel.  The defendant should also place “litigation holds” on the files of employees if the complaint identifies specific individuals as being central to the lawsuit. 

Not only do parties have a legal obligation to preserve all potentially relevant documentation – early identification of helpful and harmful documents will naturally affect the defense strategy. For example, identification of key case materials will determine whether to attempt an early settlement with the plaintiff or, whether to bring a motion for dismissal due to evidence that highlights the frivolous nature of the case.

THE 30-DAY COUNTDOWN

If served with a state court summons and complaint, the defendant has thirty (30) calendar days to file a substantive response in the Superior Court or to remove the action to federal court.  

A matter is removable if the complaint contains a federal claim or if there is complete diversity of citizenship between the parties. It generally is preferable for defendants to remove a case to federal court, assuming there are legitimate grounds for removal. Federal judges are usually more willing to grant dispositive motions that put an end to the case. Federal courts within the Ninth Circuit are also permitted to take “judicial notice” of a broader array of evidence during the early stages of a case, whereas state courts in California must give greater deference to the plaintiff’s allegations. Furthermore, if the case goes before a jury, there must be unanimous agreement among federal jurors to enter a judgment against a civil defendant. 

However, the 30-day removal deadline is harsh in nature. Most litigation deadlines can be continued through a stipulation by the parties, yet the parties cannot stipulate to push the removal deadline. Retaining outside counsel must be a top priority to ensure that the removal deadline is not blown. 

SECURING AN EXTENSION

Aside from the 30-day deadline to remove a case to federal court, the parties can stipulate to push other deadlines, including the date on which the defendant must substantively respond to the complaint by filing a demurrer, motion to dismiss, motion to strike, or an answer. 

Again, it is critical to retain outside counsel in swift fashion, and to send them all potentially relevant documents. Defense counsel will need these materials to assess what motions to prepare and whether it is desirable to seek an extension from the plaintiff. Typically, an opposing counsel will stipulate to an extension as a matter of professional courtesy. 

Securing an extension serves two purposes. First, a stipulated extension of time will prevent the plaintiff from seeking a “default judgment” against a defendant that fails to meet a response deadline.  Second, the quality of the initial papers filed by a defendant is critical.  While it may cost more to prepare an in-depth motion that attacks the legal sufficiency of a plaintiff’s claims, such a motion could result in an early dismissal of the case. By contrast, a defendant might opt to file a short “answer” that contains a “general denial” concerning the plaintiff’s allegations. Filing an answer will cost less in the short term, yet it may result in significantly higher overall defense fees, including but not limited to written discovery and depositions that could have potentially been avoided.

CONCLUSION  

When served with a state court summons and complaint, take the necessary steps to retain all physical and electronic records, file removal papers within 30 days if the matter is removable to federal court, and secure an extension if necessary to substantively respond to the complaint. These actions during the first month of litigation should significantly increase the likelihood of a favorable case resolution. 

The litigation team at Lagerlof, LLP averages more than 20 years of experience per attorney.  This experience enables Lagerlof attorneys to aggressively defend against lawsuits, securing the desired result for clients without incurring unnecessary legal fees

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