Home > Uncategorized > Rules and Procedures to Effectively Litigate Small Dollar California Business Disputes Part I

Rules and Procedures to Effectively Litigate Small Dollar California Business Disputes Part I

Rules and Procedures to Effectively Litigate Small Dollar California Business Disputes Part I

Dave Tate, Esq. (San Francisco)
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This post is the first in what will be a series of three or four posts outlining a set of possible rules and procedures and a timeline to which parties can stipulate to effectively litigate small dollar business disputes.  Of course, the parties can also make changes to these rules and procedures, or can make or use different rules such as by the American Arbitration Association.  This post covers the Initial Actions and the Pleading/Claims phases.  I would define small dollar disputes as business to business and business/customer disputes generally involving less than $200,000 in dispute and often involving substantially less than $100,000.  Later posts will cover discovery, trial and other issues including attorneys’ fees.

The bottom line is that it is difficult to effectively litigate small disputes if the parties do not stipulate to special rules and procedures.  Even if the parties agree to arbitration, such as using the American Arbitration Association rules, or agree to the new California Expedited Jury Trials rules, without additional specific rules to speed and simplify the process the cases can take too long to litigate to resolution, and they costs too much in time, disruption and attorneys’ fees.  But it is also important that the parties have a fair opportunity to conduct discovery and to present their claims.  Simply cutting discovery and/or the length of time allowed to present evidence at trial or arbitration is not satisfying.  The below rules and procedures also can be used in conjunction with other rules such as the California Expedited Jury Trials Act rules, rules of the American Arbitration Association, or other established rules.

As indicated above, later posts will cover discovery, trial and other issues including attorneys’ fees.  The following is a set of possible rules and procedures and a timeline for the Initial Actions and Pleading/Claims phases of the litigation.  Of course, the parties can also mediate or reach settlement at any point in the dispute.

I.  Initial Actions

The parties must stipulate to the rules and procedures that the parties will be using.  Note that all necessary parties to the dispute will need to stipulate likewise.  These procedures probably will not work if all necessary parties to the dispute do not stipulate as in that circumstance multiple difference litigation proceedings might be impractical or reach contradictory results, and an adjudication probably would not be binding on a party or parties that do not stipulate and participate.

At the time of stipulation or soon thereafter as agreed upon the parties also select an arbitrator or panel of arbitrators if the dispute will be adjudicated by arbitration.  If the dispute will be adjudicated in the court system there is no need to select an arbitrator or panel of arbitrators.

At the time of the stipulation or soon thereafter as agreed upon the parties also select a referee, whether the dispute is to be adjudicated by arbitration or in the court system.  If the dispute is to be adjudicated by arbitration, the referee can be the arbitrator or panel of arbitrators, or it can be a different person.

II.  Pleadings/Claims Phase

Plaintiff serves the complaint or claims on defendant(s) by mail, and by fax or email, and files with the court or arbitrator.

Optional, within 5 business days Defendant(s) can request a more definite statement of claims, by mail.  If a more definite statement is requested, Plaintiff provides the statement within 5 business days.

Within 20 business days of the original service of the complaint Defendant(s) serves the answer including affirmative defenses to the complaint or claims on Plaintiff, and the cross-complaint or claims, if any, by mail and by fax or email, and files with the court or arbitrator.

Optional, within 5 business days of the service of the answer and cross-complaint or claims, if any, Plaintiff/Cross-Complainant(s) can request a more definite statement of the answer and cross-complaint or claims, by mail and by fax or email.  If a more definite statement is requested, Defendant(s)/Cross-Complainant(s) provide the statement within 5 business days.

Within 20 business days of the service of the answer and cross-complaint or claims, if any, Plaintiff/Cross-Complainant(s) serves the answer including affirmative defenses to the cross-complaint or claims, and any additional cross-complainant or claims, by mail and by fax or email, and files with the court or arbitrator.

Additional answers, cross-complaints or claims and optional requests for more definite statements continue on the same timeline until completed.

The goal is that this process, the Pleading/Claims process, should take two months or less.  Of course, in unusual circumstances the process could take longer depending on the number of new parties that are brought into the action by cross-complaint or claim.

There are no demurrers, or motions to strike or dismiss.  These issues or processes, and motions for summary or directed judgment can be brought at trial, and will be briefly discussed in later posts.

At any point in this Pleadings/Claims process any party can request the assistance of the referee to resolve a problem that arises, such as a claim that the complaint, a cross-complaint, or an answer remains indefinite despite a request and a more definite statement.  The parties are required to meet and confer in good faith prior to submitting an issue to the referee for adjudication.  The referee shall promptly adjudicate a request for assistance.  The request for assistance is made in writing and served by mail, and by email or fax, limited to no more than five pages double spaced. Within 5 business days the opposing party(s) serves (by mail, and by email or fax) the opposition or response limited to no more than five pages double spaced.  Thereafter within 3 business days the moving party has the option of serving a reply limited to no more than 3 pages double spaced, to be served by mail, and by email or fax.  The hearing on the matter is held by phone conference call unless the parties agree otherwise.  The referee shall render a written order, and shall re-adjust the subsequent pleading schedule if necessary.

The referee has the option of awarding sanctions against any party on any issue, or on multiple different issues that the referee is asked to adjudicate for the parties.  Sanctions should be awarded against any party that presents an argument that is not reasonably supportable, and against any party that fails to meet and confer in good faith prior to submitting an issue in dispute to the referee.  As guidance, sanctions in an amount between $1,000 and $3,000 are deemed not inappropriate in each instance where sanctions are warranted against a party; and appropriate circumstances multiple instances might be appropriate.  However, the referee has sole discretion to award sanctions or not, and, if sanctions are awarded, the amount and number of times of sanction award(s).

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