Limited Liability Companies May Face Lawsuits Across State Lines

When a limited liability company (LLC) conducts business across state lines, it must generally meet the individual qualifications to do business in each state. Each state may use similar laws, or they may vary significantly, depending on the nature of the business being conducted and the applicable laws. One of the most significant effects of these rules is that companies who qualify to do business in a given state may also suffer lawsuits within that state.

If a company does receive a lawsuit, then they may have to defend themselves in the suit within that state. Not only does that place extra strain on the company to address litigation out of its home state, it also practically requires that the company seek out legal guidance from within that state, beyond any existing representation.

If a court does choose to make a ruling on the qualification of an LLC to do business in a state, they will probably make this ruling on the basis of the amount of business that the LLC conducts, any presence the business maintains in the state or advertising the business does there.

Even if a court does not qualify the company, some party may still successfully sue a company if the party makes a compelling case that the lawsuit is valid under that specific state's “long-arm statute” that allows such lawsuits.

If you are part operator of an LLC that does any business outside of your home state, it is very wise to make sure that you cross your t's and dot your i's, legally. There are simply far too many risks that any company doing substantial business across state lines faces to take these legal dangers lightly. Be sure to use all the tools you have available to ensure that you have the guidance and protections you need to keep your business properly within the law.