The decision to file lawsuit against a former client is never easy. Credit managers consider many factors, including the account balance and likelihood of recovery, the prospects of a future business relationship, the impact to the creditor’s reputation in the marketplace, and not least of all, the costs associated with legal actions. Too often, a major contributor to inflated legal costs are the archaic regulations dictating how and when to serve a complaint and summons. A new Texas Supreme Court Order is poised to modernize this process and significantly reduce the time and expense of service and, thus, securing a judgment.
On August 21, 2020, the Texas Supreme Court announced an amendment to the state’s Rules of Civil Procedure that authorizes civil courts to allow service of complaints, citations, and subpoenas via electronic means, including Twitter, Facebook, and/or email. The move is in response to a general mandate from Texas legislature to fully incorporate technological advances into the state’s bureaucratic and judicial processes.
Although a handful of federal courts occasionally permitted service of process via social media as far back as 2016, such cases are far from the norm. Most jurisdictions dictate that a defendant is properly served when a complaint is personally handed to a the individual or, in the case of corporate entities, to a registered agent. In some cases, local rules also require that service of process occur at the specific registered agent address noted on a company’s most recent state franchise filing. In instances where registered agents purposefully dodge service or a company’s annual franchise filings are not up to date, creditors are left with few options. In theory, most jurisdictions have provision for alternative service, including service by publication. To serve by publication, a creditor must publish an official notification of a lawsuit in a daily print newspaper that circulates in the county where the debtor resides or where the debtor business operates. Jurisdictions require Plaintiffs to publish the legal notice for several weeks, and this can easily cost hundreds of dollars. Nevertheless, as print newspapers become little more than relics of a bygone era, courts heavily disfavor service by publication and often happily overturn Judgments if debtors resurface later.
While the Texas Supreme Court has not set forth specific guidelines, it has made clear that electronic service will be a form of “alternative service” and not an expedient replacement for personal service. A creditor will still be required to show that they exhausted all other reasonable efforts and service via social media and/or email are the only remaining options. Further, the court will likely require reasonable proof that the social media account or email address used for service of process actually belongs to the debtor and the debtor uses said account with regularity.
Nonetheless, service via social media leaves room for several practical quagmires, including how one can prove that service documents were received by the debtor and the interconnectedness between the debtor’s legal entity and a social media account that omits their legal entity name. The Texas Supreme Court has not specifically addressed those issues and lower court judges will likely assess each case individually.
The Texas procedural amendment is open for public comment until December 1, 2020 and is scheduled to go into effect on December 31, 2020. New York and Minnesota Courts are also considering similar changes to their respective civil procedure rules, though they have not yet put forth draft amendments.
As more state courts opt to make greater use of available technology, it is more important than ever that credit managers engage with a trusted third-party collection partner. Established and independently certified commercial collection agencies employ seasoned litigation specialists and partner with bonded local attorneys across the country. This ensures that your legal matters receive professional service in accordance with the most up-to-date procedural standards, minimizing time and expense and maximizing recoveries.