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Corporations Don’t Have the Right to Make Fools of Themselves Through Self-Representation

 

He who represents himself has a fool for a client.

— Abraham Lincoln

This is one of the most famous legal quotes of all time. But did you know that a corporation cannot represent itself without counsel? An individual can represent himself in court. Unlike an individual, however, a corporation can only be represented by an attorney. It cannot represent itself through an officer, director, or employee of the corporation who is not an attorney. The legal system has basically decided that good ole Honest Abe’s quote isn’t going to apply to corporate entities.

At least in federal court, there are local rules preventing a corporate entity from representing itself. For example, let’s take a look at the local rules in California district courts:

Northern District of California Local Rule 3-9(b):

A corporation, unincorporated association, partnership or other such entity may appear only through a member of the bar of this Court.

 Eastern District of California Local Rule 183(a):

A corporation or other entity may appear only by an attorney.

Central District of California Local Rule 83-2.2.2:

Only individuals may represent themselves pro se. No organization or entity of any other kind (including corporations, limited liability corporations, partnerships, limited liability partnerships, unincorporated associations, trusts) may appear in any action or proceeding unless represented by an attorney permitted to practice before this Court under L.R. 83-2.1.

 Southern District of California Local Rule 83.3j:

Only natural persons representing their individual interests in propria persona may appear in court without representation by an attorney permitted to practice pursuant to Civil Local Rule 83.3. All other parties, including corporations, partnerships and other legal entities, may appear in court only through an attorney permitted to practice pursuant to Civil Local Rule 83.3.

Likewise, the same goes for federal appellate courts. Although the Ninth Circuit does not appear to have a local rule prohibiting a corporation from representing itself, it has made it clear that is the case in its holdings. See, e.g., Reading Int’l, Inc. v. Malulani Grp., Ltd., 814 F.3d 1046, 1053 (9th Cir. 2016) (“A corporation must be represented by counsel.”)

And to be clear, the rule applies to all non-natural persons regardless of whether the entity is for profit or a non-profit. Kermanj Foundation v. Broward County, 2010 U.S. Dist. LEXIS 35024 (S.D. Fla. 2010). The federal statute allowing parties to plead their own cases has never been extended to non-natural parties. Id.; 28 U.S.C. § . 1654.

No Circumventing the Rule

Another interesting aspect to the rule is that federal courts do not permit an entity to circumvent the rule through an assignment—even if the assignment would otherwise be valid! In other words, a corporation or other entity cannot simply assign its claims to an individual (and presumingly its liability on claims) to an individual to avoid the requirement of obtaining counsel to litigate the claims. See, e.g., Global Ebusiness Servs. v. Interactive Broker LLC, 2017 U.S. Dist. LEXIS 22916 (N.D. Cal. 2017) (an individual plaintiff affiliated with a corporation may not circumvent this rule through a purported assignment of interest from the corporation to the individual); Bischoff v. Waldorf, 660 F. Supp. 2d 815 (E.D. Mich. 2009) (despite assignment of trademark claims to individual plaintiff from corporation, attorney required to litigate claims). However, this rule seems to be limited to situations in which the individual has an affiliation with the entity.

Sue Tangential But Liable Entities

Strategically, if you’re the plaintiff and the contemplated defendant is an individual, you may want to evaluate whether there are entities that are affiliated with the individual defendant that you can add to the complaint. For example, in a trademark case, an individual owner of a trademark may have also licensed one or more of his companies to use the infringing mark. Suing those licensee entities would force the defendant to retain counsel for those entities. And if the individual defendant would otherwise have proceeded pro se defending himself, requiring him to expend resources to obtain counsel for his entities could provide the leverage for an expedited resolution. Or it’ll set the stage for obtaining a default judgment against the entity. See, e.g., London v. Gums, 2014 U.S. Dist. LEXIS 16149 (S.D. Tex. 2014) (refusing to set aside default for corporation that failed to obtain counsel); Mendelsohn v. Titan Atlas Mfg., 2013 U.S. Dist. LEXIS 62777 (E.D. Pa. 2013) (“Default judgment is an appropriate sanction for corporate defendants that fail to retain counsel pursuant to a court order.”).

Good Luck Withdrawing

If you are representing an entity, you may want to ensure that the chances of you having to move to withdraw are small—whether for non-payment or some other non-mandatory basis for withdrawal.

I know from personal experience that, during initial consults, I’ve had potential clients disclose that they are contemplating representing themselves. Although this is almost always a red flag indicating that the potential client can’t afford litigation, there have been times when the potential client (or one of them) is an entity, which led to me informing the potential client that self-representation was not an option for the entity. This, in turn, may have led to succesfully landing the client because they realized they needed an attorney regarldess, but on the other hand, created problems when I eventually (and predictably) sought to withdraw later. (Bonus tip: 99% of potential clients contemplating self-representation should be avoided.) So keep this in mind from the very start.

Many judges will allow an attorney to withdraw and simply set a date by which the entity has to retain counsel. See, e.g., Partridge v. American Hosp. Mgmt. Co., LLC, 289 F. Supp. 3d 1 (D.C. 2017) (requiring defendant entities to find counsel within 30 days); Max Ten Mktg., LLC v. Marketech, Inc., 2013 U.S. Dist. LEXIS 200057 (D.N.J. 2013).

However, other judges will not permit an attorney or firm to withdraw from representing an entity before replacement counsel is found because they do not want an entity unrepresented before the court. See, e.g., SEC v. Pentagon Capital Mgmt. PLC, 2012 U.S. Dist. LEXIS 105885 (S.D.N.Y. 2012) (“motion to withdraw as counsel for PCM is denied unless substantive counsel is provided”); Austin v. Taylor, 2016 U.S. Dist. LEXIS 33430 (N.D. Cal. 2016) (“Because there were two additional corporate plaintiffs at the time, and a corporation cannot represent itself, the Court denied Mr. Braden’s motion to withdraw as counsel.”); Green Stripe, Inc. v. Berny’s Internacionale, S.A. de C.V., 2003 U.S. Dist. LEXIS 6633 (E.D. Pa. 2003) (“the administration of justice will be significantly affected if counsel withdraw. Defendant Berny’s International, S.A. de C.V. is a corporation and as such it cannot represent itself.).

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Bruno Tarabichi