“Pocket service” and pre-judgment garnishment

I threw the term “pocket service” out there the other day, and then Ben Popken IM’ed me to ask more about it. Pocket service is lawyer slang for the procedural rule in Minnesota that a lawsuit begins with service of the summons and complaint. This is different than the rule in most states and the federal courts, where a lawsuit begins with filing of the summons and complaint.

When coupled with Minnesota’s rules on pre-judgment garnishment, this can cause serious problems. A defendant who was never properly served, for example, can end up getting money taken from their bank account without any notice or any chance to respond to the lawsuit.

The moral: if you discover or are even suspicious you may be named in a lawsuit, look into it. And call a lawyer.

Advantages and disadvantages

Pocket service saves money, since the plaintiff (the person starting the lawsuit) doesn’t have to pay a filing fee, which is usually about $250-330, depending on whether a jury is desired, etc. This is great for consumers, at first glance. However, it really saves money for debt collectors, who are filing hundreds of lawsuits at a time. Sure, it may save one consumer $250, but it saves debt collectors thousands of dollars a day.

Do I like pocket service? Yes, because I can make sure everyone involved is served before filing a lawsuit, and I may be able to settle the case to my client’s advantage without ever involving the court. But if you are a consumer, your chances are often better in court than out of it. In effect, pocket service is a far more powerful tool for debt collectors than for consumers. On balance, I wouldn’t be a bit sad to see pocket service disappear in Minnesota.

While conciliation court is cheap, quick, and easy enough, it still requires debt collectors to take their win in conciliation court to district court before they can collect. With pocket service, it is actually cheaper to go straight to district court.

The internet would have you believe that if you are served with a summons and complaint, but the court has no record of the lawsuit, you don’t have to respond. Not true in Minnesota, and possibly in other states with pocket service laws. If you don’t respond, the plaintiff will be able to get a default judgment.

And, in Minnesota, the plaintiff will be able to garnish your wages and bank accounts without even getting a judgment. They can just show up in court, get an order for pre-judgment garnishment, and then start taking your money. Or, if they claim “extraordinary circumstances,” they don’t even have to go to court before garnishing. Scary stuff.

Then, if the debtor wants to challenge the garnishment, the fact that the summons was served by hiding it in a bush down the street, or the fact that their bank account is full of exempt funds, they have to pay to file the case in district court.

So if you find out your are named in a lawsuit, however you find out, make sure you get involved, if only to argue that you were never properly served. If you don’t, you might end up losing money without ever having a chance to defend yourself.