How To Sue A Business In Small Claims Court

If you’ve been mistreated by a large corporation you don’t have to sit there and just take it. After you’ve tried to work out your differences amicably, you can play hard ball if that’s the only way to wake them up. And the good news is you don’t need a big budget or fancy pants lawyer to stick it to “the man” either. If you have a justifiable grievance, you can use small claims court to demand satisfaction. It’s easy, fast and cheap.

Neal’s Notes – I was pretty shocked but I learned that you can also sue a credit bureau in small claims if they don’t clean up your credit history when they should.  That’s cool.

Small Claims Set Up

Small claims courts are designed to settle local disputes between individuals involving modest sums.  But many people use the same process to settle problems with very large corporations too.  Just be aware that the rules that govern the small claims system vary from county to county. So in most cases, if you want to sue someone in small claims, you do so in the country where they live or where the business has its main place of business.

But what happens if the business you want to sue is located out of state? Don’t panic. You can still get your hooks into them without too much trouble.

Suing an Out of State Business

If a business is incorporated or they created an LLC in your state, you can sue them in Small Claims Court locally. And even if they don’t meet these requirements, you can still get to a business through Small Claims as long as they:

• Carry out on-going business activities in your state. (That means if they regularly sell products or services in your state, you can go after them if they’ve crossed the line. And this definition is very liberal; even if they only distribute catalogs or ads in your state, they are fair game.
• Have a physical place of business in your state – even if it’s not the main headquarters.
• Didn’t live up to a contract they signed in your state or didn’t carry out the services they promised to perform in your state.

This last point is a little complicated so let’s look at an example. Let’s say you own a fabric business in California and a firm from New Jersey asks you to do some work from them. You agree and do the work but they people in Jersey don’t feel like paying you. You can sue the East Coast firm in Small Claims in California because that’s where you did the work. The only trick is that in order to sue a business, you have to be able to serve them in your state.

As I said at the start of this post, each country has its own rules when it comes to bringing suit in Small Claims. Contact your local government for the specifics of how much you can sue for (varies from state to state) and how and who to serve.

When you use Small Claims Court, you turn the tables on companies. They can’t use lawyers and it’s a huge inconvenience. For that reason, if you have a justifiable beef, they’ll probably settle with you long before it’s time to go to court and you won’t have to even worry about collecting on the judgement.

Have you ever sued a business in Small Claims? What was it like?