Taking a big company to small claims court sounds like a big hassle but reader Bill has done it successfully three times. He says the time and effort spent on taking a company to small claims court is far less then how it long it takes to get companies to fix above-average in complexity problems.
Here’s his typical expenditure for a small claims suit: $24 and 45 minutes. The $24 is the cost to file a claim. The 45 minutes includes his total time of driving to and from court to file, as well as the time spent on the phone with the company when they call to settle.
See, in all cases, he hasn’t even had to go to court: the company calls him up the day before the court date and gives him a settlement. It seems they prefer to do that then pay to fly a company representative who isn’t fully versed on all the facts to court. Here’s his true story of how he got what he deserved from Tmobile and Washington Mutual, without breaking a sweat.
Bill writes:
Twice I have taken T-Mobile to Small Claims court. Each time I asked for payment of my many hours of time, to have early termination fees waived and to have money refunded to me for equipment that never worked. Each time they have called me and settled for what I was asking. Then I would tell them to apply the settlement to my account. Since I’m a heavy user of my cell phone and I know that changing companies is just another set of headaches, I opt to stay put. Mostly because I know how to fight this monster. In those two cases combined, I have got my $2912.00 back. Settling the case.Washington Mutual bank had taken overdraft fees of $58.00 even though the check was deposited and they didn’t clear it when they said it was immediately available. I took them to small claims and asked for $2,058.00. $2000 for the impact it caused and for punitive. They called 7 days before the court date and sent me a check, settling the case for exactly what I asked for. I have not had a problem with them since.
It important to note that corporations can’t use an attorney in small claims and they have to send (fly) a representative that is NOT fully versed on the facts. It’s easier to just pay from their point of view. In small claims, they are stripped of their lawyers and the odds are in favor of the consumer. [ed. Depends. In some states, companies can send their lawyers.]
The bigger point that I’m making here is that perhaps to the average consumer this is a lot of hassle. However, if a reasonable person was to take a look at this from a time management point of view, here was my total investment in money and time: $24 to file the small claims, 45 minutes total on each case, that includes driving to the court to file and talking with them on the phone once to get the settlement.
It’s understandable why consumers do not want to sue and to try to work it out. But in reality, that is a lot of aggravation, time for the least amount of gain. However, the satisfaction of wining and getting paid for it is unbeatable. Now, I do not get upset or angry, I just wait for them to play their games and I sue. No warning, no anger and no headaches.
Taking a big company to small claims court of course only applies when you have been legitimately and materially wronged by the company. We’re not talking about spurious claims and people trying to unfairly profit. I make this caveat because I know someone is going to freak out in the comments about hurting the poor company and frittering away tax dollars and how baseless lawsuits make services expensive for the rest of us.
Now that that’s out of the way, here’s some posts we did on how to take a company to small claims court:
How To Take Your Case To Small Claims Court
Here’s a state-by-state index of links to small claims court papers and brochures.
(Illustration: Leo Espinosa)
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Um, companies CAN bring an attorney in small claims court, so can you. Small claims court is just designed in order to avoid lawyers, it doesnt ban them as far as I know.
I sued a former employer in small claims in PA, they had an attorney defend them. Ive also been in court locally (MD) and seen people defending themselves against lawyers for collection agencies.
It varies from state to state – in Colorado, the person in court as the representative of the company has to be a full-time employee of the company. So, if they have full-time lawyers on their payroll, they could send a lawyer – otherwise, nope. So they could not just pay an in-state lawyer to take the case.
Even if they have a “full-time employee lawyer” if that person is not based in Colorado, they would have to fly them in.
In many states the case can be bumped to a higher court with lawyers at the request of either litigant. This is the case in Michigan.
I wish I had thought of doing something like this with National City bank.
I ate huge overdraft fees because the bank representative I opened my account with did not apply the overdraft protection they offered me to the account.
I had to spend some money in an emergency that my overdraft protection would have easily covered, but they then claimed my account never had it an forced me to pay all the fees.
The key to this method is the size of the company you’re going after. A Goliath like AT&T, Exxon/Mobil, Best Buy, find it’s more economical to settle than to send one of their $200.00 an hr. plus expense lawyers down. The small guy will fight back.
Some states, companies can have a lawyer, other states they can’t. Misleading information!
You may be represented by counsel in small claims court, at least in New York.
To my knowledge, you cannot seek ‘punitive’ damages in these forums; if you are using court papers claiming outlandish amounts of money simply to get a company’s attention, that is a waste of the court system’s resources and may be considered a frivolous lawsuit. (even if the case settles, there is work involved on the part of clerks, officers and the like behind the scenes on any case filed in court.) I would no doubt take a case to small claims court for a legitmate unresolved claim; I would not use it to generate a windfall for yourself. You had me, you lost me.
This is exactly what this article is talking about. He sued for provable actual damages, plus anything else that was provably reasonable. Each state is different but I can’t imagine Big American Bank sending an attorney to challenge your lawsuit in small claims lawsuit for $80 (plus maybe pennies in interest) in overdraft charges that should not have been posted as per their own rules and you can prove the company is stonewalling you in making a resolution.
And how is this approach impacted by all these binding arbitration clauses found in end user agreements? I’m surprised that T-Mobile doesn’t have them or chose not to enforce it in this case.
“It important to note that corporations can’t use an attorney in small claims… In small claims, they are stripped of their lawyers and the odds are in favor of the consumer.”
That’s not correct. As an individual, in many jurisdictions *you* can’t have a lawyer (though in some states you can), a corporation can. A corporation is a legal person, but since it can’t very well speak for itself since it only exists on paper, a lawyer fills in nicely.
And the company doesn’t have to fly anyone out, they can just hire a local attorney. But it’s often just cheaper to pay you off.
In Texas attorneys are allowed. Some good information and some entertaining antic dotes about a consumer getting his from The Man. I would avoid making sweeping generalizations about court and the availability of council moving forward.
[www.consumeraffairs.com]
“We’re not talking about spurious claims and people trying to unfairly profit.”
Works for RIAA
If you live in Washington, DC, and wish to sue a corporation, the following link contains a tool whereby you can look up the legal service agent for every corporation registered to do business in DC. This is the address that your civil complaint will be served to.
[mblr.dc.gov]
California prohibits parties in a small claims action from hiring attorneys for the sole purpose of representing them in that court. This does not prevent in-house counsel for a corporation from appearing on the corporation’s behalf, as long as he’s an officer of said corporation.
great article ben. like your comments at the end especially.
@mir777: To my knowledge, you cannot seek ‘punitive’ damages in these forums
I have sued a few times in small claims court when insurers didn’t follow through after minor car accidents. I only got money for actual damages and court costs. I had to get the car fixed first and incur the monetary loss; I couldn’t sue for an estimate of what it would cost to fix. The second time I sued, the insurance company tried to get the suit dropped after going behind my back to contact my insurance company (I didn’t want to get it involved to preserve my record.) I complained to the judge and he went kinda mideval on the other attorney. It was very satisfying.
I took Best Buy to small claims before when they screwed up my computer 8 years ago. This is in Indiana. I was going to just buy a new computer because it wasn’t great to begin with but my neighbor who was a judge recommend going to court.It never made it to court and I got a call from someone at Best Buy several days before and got a brand new PC that was 2-3 times faster.
@scoosdad: Just speculating here but for a lot of these claims, its easier for the company to settle a dispute than to fly out and file a motion for dismissal based on an arbitration clause.
@ShortBus: That’s important, making sure that it’s cheaper to pay you off than to spend resources on the claim.
I believe that if you win a claim against another party in small claims court and they fail to pay you afterwards, that you can send a copy of the judgment in your favor to the three major credit reporting agencies (letting them know of the failure to pay you), where it will be recorded and the other party’s credit will be damaged until they pay you.
The 3 major credit reporting agencies report on individuals, not businesses. Dun & Bradstreet reports on businesses, and they do pick up judgments. However, every business of any size gets sued from time to time, so this doesn’t carry much weight unless its a large amount.
It costs a lot more than that in Chicago [Cook County Circuit Court].
I think it’s closer to $75 to file in Pro Se court.
About $20 is for the certified mail notice to the defendant. If you want a deputy sheriff to hand deliver, it’s a lot more.
The plaintiff can’t have an attorney there, but the defendant can.
The judge is more informal here & assumes you don’t know a lot about the law, much like “The Peoples Court”.
The limit is definitely under $5000, maybe less, I’ve forgotten.
For larger amounts you use Small Claims Court.
I don’t know what the filing fee is there, but both sides get to have lawyers.
I sat there one morning watching, most of the cases were various loan companies getting judgments against a defaulting debtor. Mostly on cars, most for less than $2000.
The few cases filed without a lawyer were heard last, probably to punish them for not hiring some shyster.
@CurbRunner: Ive heard that you can have a sheriff seize property from the business that you win a judgement against if they dont pay up. The example i heard was some guy won against a bar owner for something or other and the owner wouldnt pay him the 500 or so. So the guy went in on a friday night with a sheriff and seized the owners liquor license. He got his money within minutes after that. Wonder if you could go into best buy and have a sheriff start seizing cash registers, that would be fun.
@JustRunTheDamnBallBillick.:
Not in California.
“It important to note that corporations can’t use an attorney in small claims and they have to send (fly) a representative that is NOT fully versed on the facts.”
Sounds like a con game to me.
Why didn’t I think of this! Sprint has made my life hell by lying to me and saying they were terminating my account (at the time my contract was up), then billing me anyway for an extra year PLUS early term fees. I’ve refused to pay this and it has harmed my credit.
Now I have the answer!!
@tylerk4:
Well said.
And since one of my major suppliers is OWNED by a lawyer, go ahead and sue the company…. the owner will show up.
NTC: Maybe you should learn to spell “counsel.”
Oregon is a state where attorneys are not allowed in Small Claims Court.
I like the concept of taking them to Small Claims. Even if they use an attorney to defend (if Allowed) the cost of an attorney getting prepared for a case, the time waiting to have the case called, is easily going to run 3-5k for any company. I can see where having a legit claim, computer company will not repair your laptop under warranty alleging it was damaged by you. Small Claims may be a better way to go then 4 months of BS with the company.. I could see where this would be a legit avenue.
I’m sorry, but what the OP is doing is basically extortion. He’s asking for far more than he knows he is owed, and doing so knowing that they will just pay it rather than try to fight. You can’t seek punitive damages in a contract case, unless fraud is involved. These basically amount to contract disputes. Basically, he knows he doesn’t have a good-faith claim for the amount in question but is choosing to pursue it anyway. These kind of lawsuits are frivolous, a waste of the legal systems resources, and generally bad for the consumer. That $3,000 T-Mobile sent you has to come from somewhere. Further, the idea that you are owed compensation for spending time trying to work out a billing issue is beyond me. What if every time YOU screwed up and T-Mobile had to fix it they billed you for their time? Next time you lose your phone, and someone from T-Mobile has to go in and fix your account, look for fraudulent calls, etc. they send you a bill for $100/hr. It’s absurd.
Finally, the issue of lawyers in small claims court varies heavily by jurisdiction. In Kansas, it even depends on the county. The filing fee’s also vary, and can exceed $100, depending on the jurisdiction. Finally, if you sue someone who is a resident of another state, and they have no property within the state in which the judgment is issued, you have to file a foreign judgment in the jurisdiction in which they reside before you can forcibly collect the funds. This can cost well over $100.
I’m not saying Small Claims court is a bad idea at all, I’m simply saying what the OP is doing is a blatant abuse of the system.
I’ve dealt with a large company that decided to just ignore a default judgment ( they didn’t show for small claims court, and then ignored my demand letter ).
I filed a writ of garnishment for information ( loser has to show up before the judge and answer my questions about their assets ), and delivered the notice by means of a Nordstroms gift box sent via certified mail.
They signed for it … and when they realized what they had signed for ( a writ that gave the company VP a choice between flying from Dallas TX to Hillsboro OR to talk to a judge, or a bench warrant for his arrest ), they sent a check for the judgement via express mail.
@CURBRUNNER:
File a writ of garnishment for information.
He has to show up to explain to the judge why he can’t pay … or be dragged in in chains on a bench warrant.
The reason for the companies settling has little, if anything to do with the company being “stripped of its lawyer.” Firstly, most companies have lawyers on staff and those people can represent the company in any jurisdiction, as a representative of the company. The reason that companies settle are (1) the cost of having a representative appear (who can be fully coached by an attorney, if necessary) (2) the cost of having legal counsel involved and, most importantly, (3) avoiding the possible repercussions of a negative decision. In other words, I find that most companies want to avoid a court, even the Town of East Bumble Justice Court, issuing a decision that the companies’ contract or business practices are improper or illegal. By settling out of court, there is no determination of liability. Of course, the later only comes into play if you have a real basis for the action.
That said, if a company is really wrongly giving you a hard time, small claims court can be a great opportunity. Just make sure that you determine what is involved in getting the summons served. The $30 filing fee isn’t much, but $60 to a process server across the country added on and you’re starting to get up there.
I had a problem with Netbank around 2001. Basically they stole a few hundred dollars out of my account from my account. I don’t remember where I got my info, but I was told that if I wanted to sue them in small claims court I would have to do so in Alpharetta, Georgia as that is wher the bank is (ie, where the problem occured). Does anyone know if I was misinformed?
it doesn’t say anywhere in the article that the company isn’t allowed a lawyer, it is just saying that, 9 times out of 10, huge companies aren’t going to bother sending one.
also, whoever was saying they were suing a former employer who sent a lawyer…your employer was probably in the same state you were suing them in right? obviously they were going to send out a lawyer. that and suing your employer is vastly different that suing a giant company.
“It important to note that corporations can’t use an attorney in small claims and they have to send (fly) a representative that is NOT fully versed on the facts.”
Some states permit lawyers, some states forbid them. And, as someone else noted, you can sometimes be bumped into a different court.
Also in my jurisdiction it costs $298 to file a small claims case. (If it cost $24 I’d probably be there every three days contributing to the litigiousness of American society!)
I’ll also give this warning horror-story: I had a client who sued basically under the rationale state above — there was no way on God’s green earth a multi-billion-dollar corporation was going to spend large amounts of money to litigate a $7000 (and very clear-cut) claim, in the middle of nowhere, where they’ll have to hire local counsel or send regional counsel out and pay to put them up.
Ha ha ha, we were ever wrong. By the time I handed the case off to another attorney (they bumped us from small claims to FEDERAL COURT! we were of course arguing that we’d been improperly moved, they were counter-arguing, and while I’m admitted in federal court, that’s mostly just for pretty, so I handed it off to an attorney with actual federal court experience), they were well over $40,000 in the hole in lawyers’ fees litigating a $7,000 claim AND WE WERE STILL PLAYING PRELIMINARY JURISDICTION GAMES. Last I heard they’re 24 months in and something well over $100,000 in lawyers’ fees, and they still haven’t gotten to trying the facts — the corporation is still playing legal games.
So I learned two important things here: 1) Don’t file on the assumption that the corporation won’t respond. (And don’t TAKE THOSE CASES!) Assume they will, and call it Christmas if they don’t bother. 2) Don’t invest in that company, because they’re way irresponsible in money management and customer care.
This guy sounds like a nut–very sue happy. I wonder how many small claim cases he’s filed against small businesses and individual people.
My record of success in small claims court:
Apple computer (4 logic board failures)
Comp USA (Tap Warranty)
Sprint (3 years of overcharges/dropped calls)
Allstate Ins. (denial of claim)
Travelers Ins. (wouldn’t pay holdback of claim)
New York Central Mutual Ins. (denial of claim)
Carpet Smart (wrong size ordered/installed)
New York Reciprocal (denial of claim)
Kwik Fill (medical expenses)
And so on and so on.
So the Cat’s out of the bag on the best kept secret of consumer empowerment.
Of the cases I cite, about half settled and half chose to litigate. In EVERY case, I prevailed.
To those who may criticize for being litigious, I offer you this;
My time is valuable. In every case I’ve taken to court, I’ve offered fair warning prior to initiating legal action.
I absolutely refuse to jump through the ridiculous hoops, hold times, ignorant CSR’s. Every minute spent on hold and arguing/begging for MY money is one STOLEN from my children.
My advise: DO NOT file unless you are 100% committed, ready, willing and able to fulfill your obligation to the Court. Prove your case.
@pylon83: I agree–he should be made whole–not make a profit–it sounds like extortion. Almost like a scam.
@boberto: Wow–why did so many insurance companies deny your claim? I’ve never had an insurance company deny a claim of mine.
@gingerCE:
A scam is exactly what it is. Even the way it’s written, he’s proud that he’s stealing money from the corporation, and it’s clear he knows he doesn’t deserve it. He’s basically a two-bit con man.
Oh yeah… in some states they will bump you to a higher court to intimidate you so you will hopefully go away.
I sued my health insurance company to get them to pay a claim and they moved the case to Federal Court under the ERISA statutes. They continued the case NINE times before the Federal Judge had enough of it and asked us to move to mediation. This was fine with me, I just wanted my claim paid.
Eventually they paid. But I still wonder how much money they spent defending a $5,000 claim in Federal Court.
in Los Angeles county, you never even need to go to court. everything can be done online + by mail. the maximum you can ask for, per calendar year, is $7500:
*you can file your claim online. choose your court date, pay the fee + print out your paperwork.
*serve the other party. if you’re suing a company or corporation, you can serve by certified mail, which will save you the process server fee.
*you need to file proof of service by the court date. however, the judge will accept proof of service on the day of your scheduled hearing. if the company settles, you won’t even need to file proof of service.
[www.lasuperiorcourt.org]
@pylon83: and those corporations are made up of saints and would never dare do anything that would be illegal in the name of profit. fight fire with fire. maybe it takes a two-bit con man to fight a company of them. way to ‘bite back’ op.
@gingerCE: Many different reasons. For awhile during the early 90′s it was Allstates (and many others) blanket policy to just simply deny claims. Also, I am particularly adept at pursuing claims that most people would otherwise just let go of. A construction truck throwing stones. A flatbed once had rail fly off. Another time a bucket of stones fell off of a work truck. All caused damage. All were documented with my camera phone in real time.
I drive somewhat of a nice vehicle, and many many miles for my job. It is always worth it to pursue payment for even the most minute damage, because over time my car will look like it was entered in a demolition derby.
Once confronted with the very real possibility of losing in court, most smart Lawyers will come to their senses.
Other times, large corporations have legal counsel on retainer and figure, “hey, we’re paying a lawyer anyway, what have we got to lose”. This is when I have a very serious “come to Jesus” with opposing counsel. I lay out the implications that losing in small claims will have. Both personally and professionally. Not pretty.
I also enjoy great strategies in the court room that yield success. If you are to treat the Judge with great respect, then you are to treat your opposition with even greater respect. Answer all questions directly and succinctly. Common sense? Maybe, but try sitting in a small claims court for a session. Emotions run rampant, people can never give straight answers. It really drags on.
In Illinois, a corporation MUST have an attorney represent them. I was credit manager for a corporation where I live, and found out the hard way. We (my bosses and myself) thought just being an employee was enough – I was informed by the judge this is practicing law without a license and my case would be dismissed if I didn’t have an attorney. I walked outside the courtroom and hired an attorney on the spot.
The fee information is misleading, too. Court filing fees vary from jurisdiction to jurisdiction. In some jurisdictions, they actually are on a sliding scale, based on the amount in controversy.
Really, Consumerist, the info is valuable, but some fact checking should be in order when you run these types of articles.
@Dave!: yeah why should i be responsible to do my own fact checking. i mean i read it on the internet, so, it must be fact right?
In the T-Mobile case, at least, it sounded as though the fellow had paid in at least $3000, so there, it is not apparent that there was any attempt at “punitive damages.” If he bought two “smartphones” that never did work, I’m not sure the amount is at all out of line.
In the banking scenario, it’s not well documented what the side effects of the overdraft were. $2000 may be punitive, but we don’t know for sure.
@pylon83: You sound like one of the corporate shills that lurk around the Consumerist.
So a bank cheats you, you stick it to them in court, you’re the con man? If your state allows you to seek punitive damages, you should. Maybe the businesses to whom we pay good money in exchange for their products would be less cavalier about “accidentally” screwing up your bill if they thought you might stick them for $2000 in damages. It’s not like you can send a large bank to jail for 30 days to teach them a lesson.
One of the less-visible problems with our crazy litigious society is that not only is everyone filing whackass lawsuits, but when someone who actually has a legitimate claim actually uses the system in good faith, people assume the opposite by default.
@cbbrowne:
The guy is asking T-Mobile to pay him for dealing with them. That’s simply unreasonable. A company should not have to worry about compensating a customer for “their time” beyond a small service credit. There are jerks out there who think they should be paid $50/hr to talk to someone on the phone about a billing issue. That’s absolutely absurd. I’m sorry, you are owed nothing for having to hash out service problems. I come back to my question of what happnes when you call in, you are wrong, and the company then decides they are going to charge you for their time? If T-Mobile did it that way, I’d perhaps agree that the customer should also be compensated. Otherwise, it’s a stupid demand.
@Troy F.:
I simply don’t understand why people can’t be happy with just being made whole again. Why are punitive damages necessary? Most people who seek them aren’t doing so in a “teach the corporation a less” fashion anyway. They are seeking them to make a buck. That’s why guys like the OP are con men. He’s proud that he’s been successful in extorting a profit out of the big bad corporation.