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How to proceed when your restaurant faces a lawsuit

How to proceed when your restaurant faces a lawsuit

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The growth of the restaurant industry nationwide has accelerated the volume of lawsuits filed against food establishments. Regardless of the type of lawsuit, restaurant owners should know what to expect during litigation, a process often inaccurately reflected in TV shows and other popular forms of entertainment. Here’s what operators will be looking at when someone sues their restaurant.

Suits typically fall into two categories: employment related or breach of contract. In the former, employees claim they were wrongfully fired, demoted or passed over for promotion by their employer, or subjected to discrimination or harassment in the workplace. With the latter, typically is a vendor sues when there is a dispute over terms of an agreement. 

When faced with a lawsuit, good recordkeeping practices are crucial. Once served with a lawsuit, you legally must maintain all documents, files and communications, including print and electronic. Deleting or getting rid of information later determined to be necessary can cause you further legal trouble down the road.

After a lawsuit is filed, the parties engage in a process called discovery, which includes written discovery and depositions. In the discovery phase, attorneys on both sides of the case engage in written discovery, including sending out requests for information in the form of interrogatories, requests for admissions and demands for documents to the other party to gather information. Your attorney will review these with you and assist you in preparing responses. In response to demands for documents, you give the requested records to your attorney, who reviews the records to determine responsiveness and whether there may be a reason to not disclose the document. Records may be held back for one of two reasons:

1. The documents do not contain information responsive to questions posed by opposing counsel.

2. They are privileged or confidential (e.g., exchanges between you and your attorney).

Typically, written discovery precedes depositions. During depositions, your attorney asks questions of witnesses, including the opposing party, in person and under oath. Depositions are a valuable opportunity to question persons regarding answers previously provided in written discovery, as well as other key topics related to the case.  

Once served with a lawsuit, there is a deadline to respond. Providing your attorney with prompt notice of a lawsuit will give them, and you, the time needed to evaluate the claims, obtain initial information and, if applicable, challenge the complaint in court. At worst, a full failure to respond to a lawsuit can lead to a default judgment being entered against you. A default judgment is easily avoided by timely response to a lawsuit.

In the courtroom

Surprisingly, most lawsuits do not end up at trial. Some are settled or dismissed as a result of a dispositive motion, such as a motion for summary judgment. The time between when a lawsuit is served and when it goes to court tends to be two or more years. 

During this time, you will discuss with your attorney whether to go to trial or settle out of court. Your attorney will provide you with an overview of the claims, your potential liability (if any) and other information relevant to your decision on how to proceed with a lawsuit. For example, a case involving many disputes over procedural matters, documents or depositions may require so much of your attorney’s time—costing you significant attorney’s fees—that settling may be the most cost-effective answer. A detailed estimated budget of the cost to litigate a restaurant-related lawsuit, plus regular updates to that budget, is how attorneys assist you in evaluating the cost to take your case to trial. 

Before a trial, a lawsuit goes through a series of hearings. Some involve minor details such as dates, while others relate to more complicated matters. You have the option to accompany your attorney to any hearing. Your hearing likely will be one of many on the judge’s calendar for the day, with cases called in the order set by the judge. If you go, you should expect to wait. When your case is called, generally the attorney handles communicating with the court. 

Your presence at other pretrial meetings may be required, and your lawyer will inform you when that is the case. You are also required to attend the trial. 

A lawsuit can be a scary and overwhelming experience, but ignoring the problem will not make it go away and will likely worsen it. By knowing what to expect, keeping proper records and reacting quickly, you can decide on the best, lowest-cost resolution.

Amber Morton is an attorney with Carico Johnson Toomey LLP, a law firm that counsels restaurants in transactions and employment disputes. Reach her at [email protected] or 310-545-0010.

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