New U.S. Supreme Court Justice Sonia Sotomayor recently authored an opinion that has implications for businesses of all sizes. In June, the Court issued an opinion in Krupski v. Costa Crociere S. p. A., addressing a negligence lawsuit brought by cruise ship passenger, Wanda Krupski, who sought compensation for injuries sustained when she tripped and fell on the ship. She named the defendant as Costa Cruise Lines, the North American sales and marketing agent for Costa Corciere, but failed to name the Italian cruise ship carrier itself. At issue in the decision was whether the Italian carrier could obtain a dismissal on statute-of-limitations grounds because the plaintiff mistakenly sued its affiliated entity and failed to amend the complaint to name the proper corporate defendant until after the statute of limitations had expired.

Reversing the decisions of the U.S. District Court for the Southern District of Florida and the 11th Circuit Court of Appeals, the U.S. Supreme Court held that Costa Corciere could not prevail on its theory because it had notice of the lawsuit before the expiration of the statute of limitations and knew it was the proper defendant from the beginning. The battleground in Krupski was the significance of the long period between when Krupski obtained information regarding the proper defendant's identity and when the statute expired. The U.S. Supreme Court held that Krupski's knowledge regarding the identity of the proper defendant was irrelevant to the relation back issue. What matters under the Federal Civil Rules is only the proper defendant's knowledge that, but for the plaintiff's mistake, it would have been sued.

In light of Krupski, a business with knowledge that, absent a plaintiff's mistake, it would have been named as a defendant in a lawsuit, cannot afford to pin its hopes on the strategy of sitting on its hands until the statute of limitations expires. A business that knows it should have been sued should work with its counsel to proactively take steps to protect itself in the litigation, because sooner or later, the plaintiff is likely to realize its mistake and name the proper defendant.