Legal Question in Business Law in California

The suspension doesn't expose the corporation's owners, though they might already be exposed for other reasons. But, with minor exceptions, being suspended does prevent a corporation from litigating, whether as a plaintiff or a defendant.

First, I'd be very careful to double-check the suspended status ......... maybe the corporation has reincorporated elsewhere, or under a somewhat different name. Most large corporations wouldn't allow such a thing to happen. If indeed the defendant corporation is suspended, its only permissible corporate action is applying for tax-exempt status or changing its name. All other corporate powers are suspended, and anyone attempting to exercise any other corporate power is subject to criminal punishment (fine and/or imprisonment). A suspended corporation may not prosecute or defend an action in a California court, and its attorney is under a duty to notify the court of the suspension. The corporation may also lack capacity to sue or defend in federal courts. The corporation may, however, obtain reinstatement by applying for reinstatement to the Franchise Tax Board, and accompanying said application with all necessary returns and payment in full of taxes due plus penalties, fees and interest. Another caution is that a large corporation that has allowed itself to become suspended may be broke, with the result that it may be unable to pay damages even if you win the lawsuit due to the corporation's disability to defend in court or otherwise, e.g. on the merits of your case.