Punching Bag or Counterpuncher: Responses to a Frivolous Lawsuit

Congratulations. You’ve been sued in court in New Jersey. To make matters worse, the complaint is full of lies. Not distorted versions of the truth or someone’s interpretation of events that actually occurred, but outright false statements of fact. The kind that make you look bad in your personal and business communities. The kind that hurt your reputation and cause people to think twice about doing business with you or your company.

You are understandably upset and want to go on the offensive, but your lawyer tells you the playbook is empty. She explains that there is an “absolute litigation privilege” and that the New Jersey Supreme Court said in a case called Hawkins v Harris, 141 N.J. 207 (1995), that you can’t sue someone for defamation for any communication: “(1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.”

It is time for a new playbook—and maybe a new lawyer. Although it is true that you cannot sue someone for defamation based on false statements contained in a pleading (and frankly, we think that Hawkins should be revisited) you still have options.

First, both the state and federal courts impose penalties for filing frivolous pleadings. N.J.S.A. 2A:15-59.1 governs sanctions against a party, and New Jersey Rule 1:4-8 governs sanctions against an attorney. The courts recognize that these rules were put in place to deter baseless litigation without discouraging honest, creative advocacy. Ellison v. Evergreen Cemetery, 266 N.J. Super. 74, 85 (App. Div. 1993). Federal Courts have a similar provision, Rule 11 of the Federal Rules of Civil Procedure, which requires that attorneys investigate the factual basis of their pleadings and refrain from making pleadings intended to harass their litigation opponents.

Second, attorneys have an ethical obligation not to file frivolous or false pleadings. New Jersey Rule of Professional Conduct 3.3 imposes a duty of candor, and requires attorneys to correct any misstatements of fact in their pleadings. Therefore, if the statements contained in the complaint are demonstrably false, an aggrieved litigant should strongly consider bringing ethical charges against the lawyer who brought them in the first place. Attorneys are required to act as vigorous advocates, but they have a responsibility to occasionally act as a check on their client’s worst impulses. Wronged litigants should take advantage of New Jersey’s robust system to discipline attorneys who shirk their ethical obligations.

Third, New Jersey recognizes a common law counter-action for “malicious use of process” arising from an underlying civil proceeding. In LoBiondo v. Schwartz, 199 N.J. 62 (N.J. 2009), the New Jersey Supreme Court held that a plaintiff who files a frivolous suit can be held to account if the defendant can prove, after the favorable termination of the case, that the plaintiff acted with malice and had no probable cause to bring the lawsuit. Unfortunately, this claim cannot be perfected until the underlying litigation is successfully terminated, but the threat may be enough to force a settlement.

Finally, some state and federal statutes include a fee shifting provision that, if pursued aggressively, can deter a frivolous plaintiff from instituting or continuing a baseless lawsuit. The Lanham Act, for example, provides that in “exceptional cases” the court can award reasonable fees to the prevailing party, 15 USC § 1117(a), and courts have interpreted “exceptional cases” to include frivolous pleadings or conduct of the litigation. See Securacomm Consulting, Inc. v. Securacom Inc., 224 F.3d 273, 280 (3d Cir. 2000) (“culpable conduct on the part of the losing party” is required but it can “come in a variety of forms and may vary depending on the circumstances of a particular case.”).

It is never comfortable to be the target of a lawsuit, and facing frivolous and false allegations is even more frustrating. Although courts are rightly concerned with stifling access to justice, there is no reason that dishonest litigants—and the attorneys who enable them—should avoid the consequences of their bad actions, and defendants have options.