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Ignoring a complaint based on a technical defect can cost employers big money

May 15th, 2012  |  Lorene Park

Thanks to the inaction of in-house counsel, an employee who filed a discrimination complaint naming AIG Life Brokerage, an internal division of her employer, as the defendant, obtained a default judgment against her employer, American General Life Companies, in the amount of $373,443 (Conner-Cooley v AIG Life Brokerage, D. Wis., May 10, 2012, Adelman, L). Defense counsel, who had been involved in the prior EEOC proceedings filed by the employee, knew that the complaint had been filed and that the employee was seeking default judgment. However, counsel failed to appear in the case until after the default judgment was entered against AIG Life Brokerage, believing that the employer had not been properly served with process due to the misnomer of the defendant on the complaint and to the fact that the employer’s registered agent for service of process, Corporation Service Company (CSC), sent a form letter rejecting service based on its policy that the name on the complaint must match its files. Apparently second-guessing that determination, counsel filed a motion to set aside default.

In denying the motion, the court pointed out that American General did not point to any facts showing that the misnomer created any reasonable doubt or confusion about who it was that the employee intended to sue. To the contrary, the record indicated that CSC knew exactly who the employee was suing. In addition, when the EEOC issued its right-to-sue letter, which it forwarded to American General, it identified the defendant as AIG Life Brokerage so the employer had a head’s up that it was likely going to be sued and that it might be under the name AIG Life Brokerage. In the end, the court concluded that American General was served with sufficient process.

The court also pointed out that there is no provision of law allowing a defendant or its authorized agent to reject a properly served summons.  Thus, CSC’s “rejection” of that service had no legal effect. The court upheld the default judgment and ruled that it could be enforced against American General, which had “been the defendant all along.”

With this illustrative tale in mind, in-house counsel should not assume that a court will find that a technical misnomer in a complaint and summons is sufficient reason to ignore it when counsel knows very well who is the intended defendant. In this case, it was an expensive lesson.