Before resorting to litigation, you and your attorney need to evaluate numerous factors to determine whether you have a viable commercial lawsuit. The first step in any commercial dispute is to obtain experienced counsel and ensure through a retention agreement that the scope of the services the attorney has agreed to perform dovetails with your expectations. It is also important that your attorney and his or her law firm perform a conflict of interest check to ensure that they won’t be disqualified from representing you down the road.
Is the Controversy Still Live?
You must be a party to a live controversy, which is an actual dispute between you and one or more other parties relating to your legal rights that is still going on when it is presented to a judge. For example, if you are considering suing a customer for non-payment of a specific amount, and that customer pays you what is owed, there is no longer be a live controversy to sue on. As a plaintiff you must also have standing to sue. Standing requires the plaintiff to be a stakeholder in the dispute, a stakeholder who will suffer harm if the decision is not in the plaintiff’s favor.
Is Immediate Relief Necessary or Is It Already too Late?
As another preliminary matter, consider if the damage you are sustaining requires immediate relief (e.g. an injunction or restraining order). For example, if you have an agreement with a vendor who handles your data and that vendor breaches an obligation to keep that information confidential, you may not have the time to commence a lawsuit and get the remedy you need, which is to shut down the disclosure.
Does the Case Have Merit and Is It Supported by Evidence?
If you determine litigation is the preferred route, consult with your attorney on the merits of your case. Not only must you support your claim with evidence, there has to be an applicable legal principle to base your case on. Here are some preliminary questions to review with your attorney:
- Do you have documented evidence supporting your case? Keep in mind the location of the evidence, the burden of gathering and producing that evidence, and if any of those documents may be detrimental to your case.
- What does the choice of law provision say in the contract? Subsequently, what precedent in that jurisdiction may affect your claim?
- Is jurisdiction predetermined in the contract?
- Does the defendant have affirmative defenses to your claim? For example, is your claim filed after the requisite time period in the statute of limitations? That defense would excuse the defendant from liability.
- Are there any potential counterclaims you may face? If successful, these could reduce your recovery or even mean you have to pay the defendant damages.
- Will proving damages be difficult?
How worthwhile your case is depends on the extent of the evidence, which is the primary driver in the viability of your case. Yet, admissibility of that evidence is even more critical to sustaining your claim. What breadth of documents do you have? You should identify your witnesses and determine which ones can help or hurt your case. Are they credible? Do you need experts to prove a technical argument based on the evidence you have?
Do You Have the Ability to Fund the Case?
More often than not, sustainability of a case depends on a plaintiff’s ability to fund it. Litigation costs arise at every stage of the process, whether that be discovery, trial, or appeal. Each of these stages has costs: drafting and serving the complaint, defending pre-answer motions, document review and production, taking depositions, responding to other discovery requests, motions, experts, witness preparation, pre-trial motions, trial, and post-trial motions. Are you likely to recover more than the cost of the litigation? There are also other non-monetary costs to consider such as time spent by your employees and how litigation may affect your business reputation.
Who Are the Proper Parties and What Is the Best Forum?
Determining the proper forum and parties is also a major factor. For example, does the case qualify to be brought in state or federal court, or both? Is it advantageous to litigate in a particular court because of matters such as precedent or proximity? The plaintiff must be the person or entity whose rights are at issue. On the other hand, naming the proper defendant is equally critical to avoid dismissal by the judge.
The plaintiff must have legal capacity to sue (e.g. a competent adult or corporation in good standing) and the defendant must be subject to personal jurisdiction either by being served with the lawsuit in New Jersey or outside the state via N.J.R. 4:4-4(b)(1), which is known as a long arm statute. A defendant located outside the state must have minimum contacts with the state (e.g. be frequently engaged in business ventures in the state). You also may want to join or be ordered by the court to join certain other interested parties that may impact your relief.
If your contract is silent on venue, you should consult with your counsel on where it makes the most sense to file the lawsuit. This determination is largely dependent on the rules of the court and the subject matter of your dispute.
Is Alternative Dispute Resolution a Better Option than Litigation or Is It Your Only Option?
The viability of your case can greatly depend on your alternative dispute resolution options. Arbitration and mediation may present easier, less costly paths to resolution. If your contract contains provisions requiring that the parties resolve any disputes in arbitration, you may be precluded from filing a lawsuit. Evaluate with your attorney whether the provision applies to your claim.
Does the Defendant Have the Ability to Pay?
The ability to collect on a judgment must ultimately be the focus when considering litigation. What are the available methods to enforce the judgement? Does the defendant have sufficient assets to satisfy the judgment? Are the defendant’s assets easy to locate? Does the defendant have insurance that will cover the judgment? Is the defendant profitable to where garnishment is a possibility? These are all questions to ask investigate when deciding if litigation is going to be sensible.
If you would like an assessment of whether you have a viable commercial lawsuit, call Snellings Law LLC at 973.265.6100 to speak with an experienced commercial litigator.