Dinsmore Earns Temporary Case Closure for Client Facing COVID-19 Financial BurdenMay 6, 2020 – Legal Alerts
Many clients who are engaged in litigation may also now be facing the added burden of decreased cash flow due to the economic crisis created by the COVID-19 pandemic. While courts around the country may view the situation differently, Dinsmore attorneys were recently able to help a corporate client obtain an early, administrative closure of their case due to the economic crisis they are experiencing at this time.
The order was issued by the Federal District Court for the Northern District of Georgia, in a case where the client was facing class action allegations. Both the plaintiff and the defendant agreed that, due to the current decrease in operating revenue facing the defendant and the economic burdens of discovery, the case should be stayed for several months. The defendant submitted an affidavit to the court demonstrating its substantially reduced staff, sales, and cash flow. The defendant further explained that it was difficult to meet the financial burden associated with completing discovery and class certification.
Addressing these current business realities and noting the "continuing uncertainty about when the significant and ongoing economic and other dislocations from COVID-19 may abate and permit the parties to resume discovery," the court issued an order directing the clerk to "administratively" close this civil action. The court further required the plaintiff to submit a motion to reopen and related motion to adjust discovery deadlines if and when it elects to reopen the case. The court provided the parties one year to make such an election. Even though the case could be reopened in several months, the current closure/stay will hopefully ease the economic burden to the defendant until the business can recover sufficiently to resume the litigation.
If you are facing litigation while also facing an economic crisis within your business, it may be worth requesting similar relief from plaintiff’s counsel and/or the court. Even if the opposing parties do not work together as they did in the case noted here, it should still be possible to petition the court for relief. As this case shows, at least some courts may be sympathetic, preferring cases to be properly addressed on the merits rather than rushed through the system at a time when business survival is at stake for a multitude of economic reasons.
If you have any questions, please contact the authors or your Dinsmore attorney.