How can I get rid of a baseless lawsuit without going all the way to trial?
To state the obvious, litigation is time-consuming and expensive. Litigating a business dispute all the way to trial is likely to take years and may cost thousands or even millions of dollars. If you have been sued, are you doomed to go down that path? Not necessarily.
What is a Motion to Dismiss?
The most common way to weed out improper claims is the motion to dismiss, which is often made as a first response to the complaint. The idea is that, instead of taking the trouble to admit or deny the factual allegations of the complaint, the defendant argues that plaintiff’s claims, even taken at face value, fail as a matter of law. Such failure may be based on a variety of grounds, some procedural and others substantive.
Motions Based on Jurisdiction
If you are not a New York resident, and the dispute does not arise from your contacts with this state, you can argue that the New York court lacks personal jurisdiction over you. One subset of this category is a motion based on improper service of process, because the court cannot acquire jurisdiction over a defendant unless that defendant has been validly served with a summons and complaint. Moreover, even if jurisdiction exists, a defendant can move to dismiss based on the doctrine of forum non conveniens (“inconvenient forum”) – that is, that the dispute properly belongs in the courts of a different jurisdiction.
Such motions can be very effective in defeating the lawsuit right at the outset. One problem, however, is that a claim dismissed on jurisdictional grounds may come back to bite you. Lack of proper service may be corrected by another attempt to serve, and an action dismissed for lack of New York connections may be re-filed in another state or country. Indeed, a forum non conveniens dismissal is often conditioned on the defendant’s consent to jurisdiction in an alternative forum. So the question to consider before bringing a jurisdictional motion is: would you rather litigate in New York or elsewhere?
Motions Based on Prior Litigation
If the same or similar dispute has already been litigated (whether in the same court or elsewhere), further litigation may be precluded. Where plaintiff attempts to restate (albeit in a different form) a claim that has already been resolved on the merits, the new action will likely be barred by the doctrine of res judicata, or “claim preclusion.” In another scenario, the claims are not entirely the same, but a specific issue (perhaps central to the dispute) has been decided in a prior action between the same parties, binding them to the result; such “issue preclusion” is often called collateral estoppel. If a prior action was settled, a release received in the settlement may serve as a conclusive defense to a new claim.
Motions Based on the Passage of Time
The so-called statutes of limitations prescribe the period of time in which a claim must be asserted. Although that period is vastly different for different kinds of claims, the bottom line is that almost any claim has an expiration date (see our post on statutes of limitations here). If the applicable statute of limitations had run before the action was filed, that is a clear ground for dismissal. In addition, a more nebulous concept of “laches” (plaintiff’s inexcusable delay) may occasionally defeat a claim regardless of the formal time period prescribed by statute, especially where the defendant can show prejudice caused by the delay (e.g., the documents or witnesses needed for the defense became unavailable).
Motions Going to Standing and Capacity
Generally, a claim may only be asserted by a person who was directly harmed by the misconduct alleged. Sometimes, an individual shareholder may try to sue for the harm caused to the corporation, or a company may try to sue under a contract of its affiliate, or an entity may try to collect on a claim that has been assigned to another entity. In such situations, the plaintiff may not have standing to sue – which is another ground for dismissal. Standing and capacity to sue are governed by specific rules that can get quite technical.
Motions Going to Pleading Requirements
The law requires the complaint to be sufficiently particular to give the parties and the court proper notice of the facts and events alleged. In addition, many kinds of claims are subject to heightened particularity requirements. For instance, a fraud claim requires specific details of the alleged fraud; a claim for sale of goods must list the items sold, their quantity and value; and a defamation claim must specify what was allegedly said or written, when, where and to whom. Failure to comply with the pleading requirements may be a ground for dismissal – but the plaintiff may be given another chance to restate the same claim. Indeed, it is common for a plaintiff to amend the complaint in order to remedy any pleading defects without waiting for the motion to dismiss to be decided.
Motions Going to the Merits
Sometimes, a claim suffers from a fatal legal defect so that, even if all the alleged facts were true, the plaintiff is not entitled to the relief the complaint seeks. This situation is commonly referred to as a “failure to state a cause of action.” For instance, the kind of claim the plaintiff is trying to assert might be prohibited by statute. Or the contract plaintiff is relying on could be invalid, or have been superseded by another contract. Or the facts alleged are simply insufficient because an indispensable element of the claim (such as damages or causation) is absent. Potential examples are endless. The key, however, is that the claim must fail “as a matter of law” – that is, even assuming the truth of the facts as plaintiff described them.
That being said, the plaintiff’s allegations do have to meet some minimal plausibility standards. A complaint that says the Earth is flat may well be dismissed, because the court can take judicial notice of generally known facts. Likewise, any factual allegations that clearly contradict documentary evidence do not have to be taken at face value. Suppose that the plaintiff alleges an oral agreement for sale of oranges at a price of $500 per ton – but you present a written contract describing the same deal and expressly setting the price at $250 per ton. If there is no question as to the authenticity and validity of the contract, a New York court may dismiss plaintiff’s claim based on “documentary evidence.”
One advantage of a merits-based motion is that, if successful, it typically results in dismissal with prejudice – which means that the plaintiff cannot simply restate and re-file the same claim, whether in the same court or elsewhere. But usually the defendant can only make one motion to dismiss combining all possible grounds, procedural and substantive. This means that which grounds to include and which ones to omit becomes an important strategic decision. Let’s say you have a simple and strong argument for lack of personal jurisdiction, as well as a more nuanced and complicated argument for dismissal on the merits. If you move on both grounds, the court is likely to take an easy way out and dismiss for lack of jurisdiction – which means that the plaintiff may re-file in another court. But if you move only on the merits and lose, you have waived your jurisdictional argument.
A motion to dismiss is a powerful litigation tool that should be used with care and precision. If you are facing a baseless lawsuit, be sure to consult with competent counsel regarding whether the complaint can be the subject of a motion to dismiss. In the complex commercial litigations that make up most of our work, motions to dismiss are common. We have an excellent track record both of successfully asserting and successfully defending motions to dismiss on behalf of our clients.