California Cannabis Litigation: Who Should Be Sued?
Our litigation team has experience representing both plaintiffs and defendants in the cannabis industry, and one issue we commonly see is whether an individual is rightfully sued along with his/her business. For example, in a breach of contract action, do you sue the company AND its owners, managers, members? What do you do if you’re the owner/manager/member and you’re sued individually?
As a very general rule of thumb, most business entities provide protection for their principals as a matter of law. Therefore, individuals should not be personally named in lawsuits unless there are specific facts to support their individual liability. A potential plaintiff may desire naming anyone and everyone involved with a company to exert additional pressure, but this strategy is very likely to result in early motion practice that can cost tens of thousands of dollars in the first two months of litigation. If there truly is a basis for claiming an individual is personally liable, that plaintiff should be ready for a battle on whether the Court should allow “piercing of the corporate veil.” An individual defendant who is wrongfully personally named in a lawsuit should be ready for the same.
According to the Legal Information Institute, “‘Piercing