How Can a Corporation Bring a Suit?

By Marilyn Lindblad

A corporation is an organization formed under state law to carry on a business. A corporation is, in essence, a legally created pseudo-person that operates a business. The corporation's bylaws grant authority to its officers, directors and shareholders to control its activities. Different corporations may have different procedures for authorizing the corporation to file a lawsuit.

Bylaws

The bylaws of a corporation are its written rules of conduct. The bylaws establish who the corporate officers are and what authority each officer has to act on behalf of the corporation. For instance, the bylaws may establish a chief legal officer for the corporation who has authority to file a lawsuit on behalf of the corporation. Alternatively, the bylaws could require that the board of directors vote on and approve a resolution to file suit in the corporation's name. The bylaws could also delegate authority to bring a lawsuit to the corporation's general counsel or another lawyer in the corporate legal department.

Representation

Because a corporation is not a person, it cannot represent itself in state or federal court. Therefore, an attorney representing the corporation must bring a suit on its behalf. Every corporation may have its own process for choosing an attorney to bring a lawsuit. The bylaws may specify a process for choosing an attorney or delegate that authority to a lawyer who works for the corporation.

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Disclosure

A corporation that brings a lawsuit as a plaintiff or gets sued as a defendant must identify its owners. This disclosure enables judges, jurors and attorneys representing other parties to determine whether they have conflicts of interest in the case. For instance, if a judge owns stock in a corporation that owns a subsidiary corporation that brings a lawsuit, the corporate disclosure makes the judge aware of the potential conflict so she can disqualify herself from overseeing the case or disclose her interest to the litigants.

Discovery

During litigation, either party may take the deposition of its opponent. Procedural rules permit a defendant to take the deposition of a corporation, even though the corporation is an artificial person. If the defendant does not know the name of individuals within the corporation that he wishes to depose, he can make the corporation designate a witness to testify in place of the corporation. This witness must testify about information that the corporation knows and information that is available to the corporation.

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References

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