Claims and Bad Faith Law Blog

Judge Holds Federal Process Server's Oath Good For Damages, Contempt.

     The current Federal Securities and Exchange Commission awarded a contract to a Process Server corporation to serve an administrative subpoena for a Witness' deposition.  A State Judge in Massachusetts found that the Process Server's Return of Service was false.  A Return of Service is an Affidavit under oath or affirmation that the Process Server served the Witness.

     Officials of the SEC believed the Return of Service to be in Good Faith and valid at the time.  The Witness, of course, did not appear for the SEC deposition.  A body that has the power to issue subpoenas seemingly has the power to pursue contempt proceedings against a Witness that does not appear.  In this case, "SEC officials" instead reportedly "criticized" the Witness to a newspaper reporter for his failure to appear.

     The Witness filed suit against the Process Server for damage to reputation.  The lawyer who defended the Process Server admitted that the Witness "offered to resolve the matter" if only the Process Server would admit to the SEC that it never served the SEC subpoena.  The Process Server did not agree to do that, for whatever reason, which is not entirely clear from a newspaper report about the matter, below.

     The Witness then proved to the Massachusetts State Court Judge hearing his case that the Process Server had not in fact served the SEC subpoena.  The Witness also proved damages to his reputation as a result of these events.  He was awarded $3,300,000.00 for his damages, with interest, and attorney's fees.

     Further, the Process Server's "principal owner and business manager" reportedly failed to appear at the hearing.  The Judge found them in contempt.

     Affirmations and oaths "in Good Faith" are serious business.  When they are found to be made NOT in Good Faith, woe unto them that the finding is about--plus in this case it appears, $3.3 Million and contempt of court charges too.  See Jonathan Saltzman, "Judge:  Firm Lied About Subpoena Delivery" (The Boston Globe Online, Saturday, June 28, 2008).

     No word on whether the current SEC asked for the Taxpayer money back from the Process Server that the SEC paid for the one unserved subpoena that is now known, nor whether it is examining other matters in which it awarded contracts to this same Process Server, nor on whether the same SEC officials "criticized" the Process Server in any way.

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If You Reap Rewards, Then You Bear Responsibilities, Too ... Right?

    Under their current payment system, it appears that corporate executives receive large payments regardless of their companies' financial performance.  The idea that achieving balance in the payments received by corporate executives is a desirable goal, is shared by increasing numbers of people, among them, the president of a New York investment firm quoted in Gretchen Morgenson, "Fair Game/Approve This Deal, or Else" p. 1, col. 3 "SundayBusiness" Section (New York Times Nat'l Ed., Sunday, June 15, 2008), available online at www.nytimes.com.  The idea is that corporate executives need to share in the risk, as well as in the reward.  Since they have the opportunity to receive large payments, so the idea goes, they should receive large payments if their corporations perform well financially, but they should pay back some or all of the payments they have received, if their companies do not perform well.

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