3 Legal Tips for Dealing With Frivolous Lawsuits Against Your Small Business
There are some lawsuits that businesses just cannot avoid. Unfortunately, the most unavoidable lawsuits are the frivolous ones.
IntroductionThere are some lawsuits that businesses just cannot avoid. Unfortunately, the most unavoidable lawsuits are the frivolous ones. Fortunately, the law and the courts provide a means to detect and dismiss frivolous claims early on, before a defendant is forced to spend significant money on defending a meritless claim.
What Is a Frivolous Lawsuit?A frivolous lawsuit is one where the filer has no legal or factual basis for their claim, but the claim is filed and pursued regardless. Generally, frivolous filers are not going to listen to logic, or act rationally, or act according to the law. They may make demands for fictitiously large sounding dollar amounts, and make claims that relate to clearly delusional or completely fictional or fraudulent claims.
Here are the three best ways to deal with frivolous lawsuits:
A. File a Motion to Dismiss ASAPWhile you will want your attorney to reach out to the plaintiff or their attorney to try to negotiate a dismissal, once that is unsuccessful, the next step should be filing a motion to dismiss. Failing to file a responsive pleading with the court can subject you to a costly default. Typically, anyone can file any claim with the court. Once a claim is filed, the other side can challenge that claim. If there is no legal basis, or factual merit to a claim, it can often be dismissed before an answer to the complaint is filed.
B. File CounterclaimsIf you are successful with getting a frivolous lawsuit dismissed, you may be able to file a claim for abuse of process, fraud, or another civil claim relating to frivolous lawsuit.
Filing counterclaims may not always be a good idea. Sometimes it is just throwing good money after bad, as the saying goes, because even if you win, anything you win may be uncollectable.
C. Pursue Vexatious LitigantsIn the state of California, if a business has been sued by the same individual or entity repeatedly for meritless or frivolous claims, and has repeatedly won against the frequent filer, the state legislature has provided a way to get somewhat permanent relief. Under California law, a person or entity can be declared as a vexatious litigant, which would require them to get the approval of a judge before they could file any lawsuits in the future. The state courts maintain a publicly available list of all individuals declared vexatious.