What to do When You Are Sued

Despite your best efforts, there may come a time when an employee sues you.  The actions you take when you first learn of a suit can be the difference between a quick, inexpensive resolution and a prolonged expensive one.

 As reported in the HR Daily Advisor, here are the ten most important things to do, as outlined by the Employer Resource Institute®, once you learn you have been sued:

 1.  Watch Your Dates – Once you are served with a complaint, you are required to file a written response or answer within a specific period of time.  In state court, it is 30 days.  Before a judgment can be entered against you in state court, the Plaintiff must send you a ten-day notice.  Typically, this will come around 21 days after the complaint has been served.  In an action filed in federal court, the summons that accompanies the complaint will state the time by which you must respond.  There is no ten-day notice in federal court.  In each court, your failure to timely respond can result in a judgment being entered against you.  All papers received from administrative agencies such as the EEOC or PHRC will also list the date by which you must respond.

 2.  Hire the Right Attorney – Be sure the attorney you hire has experience with the type of case that has been brought against you.  While the total fees cannot be guaranteed, you can ask for an estimate.  Be aware there are many variables that can affect litigation making it difficult to accurately estimate.  You can discuss a budget with your attorney and request that you be advised before major expenses are incurred.  It may be necessary to revise the budget during the course of the litigation, again, based on the variables.

 3.  Notify Your Insurer – You may have coverage under an Employment Practices Liability Insurance.  If so, your carrier probably requires immediate notification when a suit is files against you.  The carried may also have the right to handle the case and settle it.  General liability policies do not typically cover claims such as sexual harassment and discrimination.  It is still worth the cost to have your attorney speak with the carrier to determine if they will pay the defense costs with the option to deny liability later, depending on what happens in the lawsuit.

 4.  Assign Responsibility to One Person – If you are a small business, you may be the only person; however, even if you have three managers, it is best to assign responsibility for the matter to just one person in order to avoid delays and confusion.  This person will be the liaison with the attorney, insurers and anyone else who may be involved in the case.  The designated person monitors the claim to be sure it is handled in a timely fashion.

5.  Caution Employees – Remind employees who have information about the case not to discuss it with anyone but the attorney.

 6.  Organize Information – Prepare a list of people who may have information about the case.  Gather and organize all pertinent documents so the attorney will be able to make a quick review of the case.

 7.  Don’t Create or Destroy Evidence – At the first notice of a possible suit, put a hold on any paper document destruction or the electronic deletion of documents.  If you destroy materials that could have been evidence, the court may assume the destroyed evidence could have supported the case against you.  Do not backdate or doctor any records.  Once this comes out at trial, your credibility is shot.  Make it a practice to initial and date all memos or reports on the day you create them.  If the suit has been filed and you write a memo regarding discussions or incidents that occurred before the suit was filed, sign and date for the date it was created.  

 8.  Prepare a Chronology of Events Managers and employees with information about the facts of a claim should prepare a chronology of the events leading up to the lawsuit.  This will save attorney time and money.  Any memos prepared and given to your attorney should be specifically marked “Confidential – Attorney-Client Communication”.  This will prevent the need to turn the documents over to the other party during discovery.

9.  Don’t Apologize – Don’t contact the employee who is suing you to say you are sorry or to offer to make amends.  This can end up hurting your case, since what you say can be used against you as an admission of wrongdoing.  Let your attorney handle all settlement discussions.

 10.  Consider Alternative Dispute Resolution – Explore Alternative Dispute Resolution (ADR) options with your attorney. ADR may allow you to avoid a court proceeding which in turn can lower your legal costs and eliminate the risk of a large jury verdict.   The employee may have signed an agreement to arbitrate disputes as part of the hiring intake process.  You cannot force someone to use ADR unless there is a signed agreement.

 Contact Roger Foley for further information at rwf@mbm-law.net or 412.242.4400.