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August 4, 2023 | BusinessLitigation

What to Do If Your Business Is Sued in New York

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Danielle Yurkew

Associate Attorney

Joseph Ford

Client and Marketing Coordinator

In the world of business, lawsuits pose an ever-present threat.  There is a good chance that your company will encounter some type of legal dispute.  With that in mind, gaining a comprehensive understanding of the legal process is imperative, as it enhances the likelihood of achieving a favorable outcome in the event of litigation.

When Does a Lawsuit Begin?

A lawsuit is typically initiated when the plaintiff files a complaint and delivers a copy of it, along with a summons, to the defendant.  The complaint specifies the plaintiff’s claims against the defendant and the relief sought, which may include financial compensation or equitable remedies (e.g., specific performance).  Once served, the defendant must file an answer responding to each allegation and asserting any available defenses.  The timeframe for filing an answer is short, and failure to file a timely answer may result in a default judgment.

If the parties are unable to reach a settlement, the lawsuit proceeds according to the deadlines set by the court, unless these deadlines are later modified.

What Happens if my Business is Sued?

If your business is sued, the first step is to consult an attorney to review the summons and complaint. Experienced counsel can assess the strength and weaknesses of the case, as well as any counterclaims you may have.  It’s also essential to notify your insurance company, as your general liability policy may cover the claims your business is facing.  Understanding the claims and liability your business faces will help you respond appropriately, either by admitting or denying the allegations, making counterclaims, asserting defenses or attempting to settle.

It is crucial to be diligent and prompt in any action you take.  Failing to file a timely answer may result in a default judgment in favor of the opposing party.  Finding a lawyer who specializes in the subject area of your dispute is also recommended, as different attorneys and law firms have experience in different areas of the law.

Can a Dispute be Resolved Out of Court?

Before going to court, it is important to know that there are other ways to resolve a dispute.  Alternative dispute resolution (“ADR”) refers to the processes used to settle a dispute outside of the courtroom.  Common types of ADR for civil cases include mediation and arbitration.

When people are in a disagreement, they usually prefer to reach an agreement outside of court.  This is because going to court can be expensive and time-consuming, sometimes taking months or even years. However, if the disputing parties are unable to find common ground, they may have no choice but to take the case to court.

Lawsuits In New York City State Courts

In New York, lawsuits are filed in state or federal courts, depending on certain factors such as the amount in dispute and the alleged violation of law.  Civil cases with a claim not exceeding $5,000 can be filed in Small Claims Court.  In Small Claims Court, the relief sought must be for money only (as opposed to forcing someone to act or refrain from acting, or for pain and suffering).

Cases with a value of $25,000 or less are filed in the Supreme Court.  The Commercial Division of the Supreme Court hears complex business disputes with a value of $500,000 or more for Manhattan and much lower for Kings, Queens and Westchester counties.  The Commercial Division has the authority to adjudicate additional corporate disputes that do not meet the aforementioned thresholds.  This includes cases that involve the dissolution of a corporation, partnership, or limited liability company; commercial class actions and shareholder disputes.

Lawsuits In New York Federal Courts

If certain criteria are met, a case can also be initiated in a federal court.  In New York City, there are two federal district courts available: the U.S. District Court for the Southern District of New York and the U.S. District Court for the Eastern District of New York.  Cases brought before a federal court typically involve an alleged violation of federal laws, such as the Copyright Act, the Fair Labor Standards Act (FLSA) or the Americans with Disabilities Act (ADA).  Additionally, disputes that exceed $75,000 and involve plaintiffs and defendants from different states can also be heard in federal court, even if that case does not arise under a federal law.  It is important to note that there may be other circumstances under which a federal court can adjudicate a dispute, and an attorney can offer guidance on such matters.


Lawsuits can be troublesome and being sued can be extremely unsettling.  However, it’s important to maintain a mindset of openness and approach the process with careful attention and perseverance. Allowing anger, resentment or panic to guide your actions will not benefit your business.  Since legal cases often stretch over a significant period, it is vital to prioritize what is best for your business.

Ensure that you collaborate with an experienced attorney whom you can rely on to advocate for your interests and the well-being of your business.  Contact the team at Romano Law today.


Photo by Jack Finnigan on Unsplash
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