Opinion
IP IP00-1080-C-B/S
August 27, 2001
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS
Plaintiff Theodore Tremper filed suit against Defendants Air-Shields, Inc., Hill-Rom Co., Inc., Hillenbrand Industries, Inc. (collectively referred to as "Corporate Defendants"), Sudhir Pahwa, Walt Rosebrough, and Does 1 through 100, inclusive, alleging several causes of action arising from his employment relationship with Defendants. Tremper initially brought suit in California state court, and on May 15, 2000, Corporate Defendants removed this case to federal district court for the Central District of California. On June 21, 2000, the case was transferred to this Court as the proper venue.
The case comes before the Court on Defendants Pahwa's and Rosebrough's Motion to Dismiss, pursuant to Federal Rule of Civil Procedure 4(m), based on untimely service of process. Defendants argue that the Plaintiff's delay in serving process also constitutes a failure to prosecute, warranting dismissal with prejudice under Rule 41(b). Finally, Defendants request that the Court sanction Plaintiff for the extended delay in service. For the reasons set forth below, we GRANT IN PART and DENY IN PART Defendants' Motion to Dismiss, and we DENY Defendants' request for sanctions.
Factual Background
On March 21, 2000, Plaintiff Theodore Tremper filed an eight-count suit against Defendants in California state court. (Complaint at 1.) Only four of the listed causes of action were brought against Pahwa and Rosebrough: fraud — intentional misrepresentation; intentional infliction of emotional distress; negligent infliction of emotional distress; and defamation — slander per se. (Id. at 13, 15, 16.) Tremper timely served copies of the Complaint on Corporate Defendants, but not on Defendants Pahwa and Rosebrough. Upon removal, the federal district court for the Central District of California noted that, as of May 15, 2000, Defendants Pahwa and Rosebrough had not been properly served in the action. (Removal Order at 1 n. 2.) Based on the original filing date of March 21, 2000, the 120-day window for timely service closed on July 19, 2000. Plaintiff did not serve Pahwa and Rosebrough with copies of the Complaint until late February, 2001, nearly a year after filing the original Complaint in state court.
Standards of Review
1. Untimely service
Pahwa and Rosebrough contend that Tremper's suit should be dismissed based on Tremper's failure to serve process on them within the 120 days specified in Rule 4(m). Tremper responds that the delay in service was attributable both to Corporate Defendants' dilatory tactics and to Plaintiff's counsel's neglect and busy travel schedule. Tremper asserts that dismissal without prejudice under Rule 4(m) would amount to dismissal with prejudice, because the applicable statute of limitations has run. Ultimately, Tremper argues that his suit should not fail for his attorney's mistakes.
Rule 4(m) provides for dismissal of an action based on untimely service of process. The rule states, in relevant part:
If service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, the court, upon motion or on its own initiative after notice to the plaintiff, shall dismiss the action without prejudice as to that defendant or direct that service be effected within a specified time.
Fed.R.Civ.P. 4(m). If a plaintiff misses the 120-day deadline for service, there are two potential routes around dismissal. First, the rule provides that upon a showing of good cause, the court shall extend the time for service "for an appropriate period." Id.; Panaras v. Liquid Carbonic Indus. Corp., 94 F.3d 338, 340 (7th Cir. 1996). To establish good cause, a plaintiff "must at least show 'reasonable diligence' in attempting service." Hernandez v. Lara, 2001 WL 629309 (N.D.Ill. May 25, 2001), quoting Bachenski v. Malnati, 11 F.3d 1371, 1377 (7th Cir. 1993). Poor time management and attorney neglect-even excusable neglect-do not give rise to good cause for untimely service, however. Oliver v. Cassidy Restaurant, Inc., 2000 WL 1568650, at *2 (S.D.Ind. Oct. 5, 2000). ("Employee turnover and a busy schedule are not the making of good cause.") The Seventh Circuit has characterized such excuses as the "opposite of good cause." Powell v. Starwalt, 866 F.2d 964, 965 (7th Cir. 1989).
Plaintiff contends that Plaintiff's counsel purposefully delayed service on Pahwa and Rosebrough because he gleaned from Defendants' counsel at the First Status Conference in November 2000 that "matters would get resolve (sic) must (sic) easier" if Plaintiff excluded Pahwa and Rosebrough from the dispute. (Pl's Resp. to Mot. to Dis. ¶ 6.) This argument holds no merit, though. The Conference at which Plaintiff's counsel supposedly formed this impression took place more than three months after the 120-day service period expired. While counsel's strategic decision may explain the delay from November to February, it does little to excuse the delay from July to November.
Plaintiff then argues (somewhat inconsistently) that, owing to a busy travel schedule and "extensive written discovery" requested by Corporate Defendants (not Pahwa and Rosebrough), Plaintiff's counsel "failed to properly calender (sic) for the service of the individual defendants." (Pl's Resp. to Mot. to Dis. ¶ 8.) Apparently, Plaintiff's counsel would have the Court believe that the delay in service was simultaneously purposeful and inadvertent. Such contradictory explanations offer scant evidence of "reasonable diligence." Accordingly, Plaintiff has not made out the showing of good cause necessary to trigger the mandatory 4(m) extension of time. We must therefore analyze whether a discretionary extension is warranted in this case.
Absent good cause, Rule 4(m) authorizes the court to grant a discretionary extension of time for service. Panaras, 94 F.3d at 340; Roberson v. Arrow Trucking Co., 2001 WL 484468 (S.D.Ind. Mar. 9, 2001). In deciding whether to exercise its discretion, the court examines several factors, including possible repercussions of attorney neglect to the plaintiff, participation in or benefit from the neglect by the plaintiff, and prejudice or harm to the defendant. Oliver, 2000 WL 1568650, at *2. Extension of time under Rule 4(m) may also be appropriate "if the applicable statute of limitations would bar a later filed action." Cardenas v. Benter Farms, 2000 WL 1693807, at *2 (S.D.Ind. Nov. 7, 2000). The running of the applicable statute of limitations merits close examination, but does not mandate an extension of time. Panaras, 94 F.3d at 341.
The factors analyzed in two cases decided in the Southern District of Indiana help to guide our exercise of discretion in this case, although they lead us to a different outcome. In Oliver v. Casssidy Restaurant, Inc., 2000 WL 1568650 (S.D.Ind. Oct. 5, 2000), the plaintiff did not achieve service on the defendant until 21 days after the 120-day deadline. Plaintiff's counsel cited personnel changes, an increased workload, and basic negligence as reasons for the delayed service. The court found that these excuses did not amount to good cause sufficient to justify 4(m)'s mandatory extension. Id. at *2. Instead, based on the brevity of the delay and the lack of benefit to Plaintiff, the court exercised its discretion to extend the service period 21 days to include the date on which the plaintiff actually accomplished service. Id. Oliver is distinguishable from the present case, though, in that Oliver centered on a delay of merely 21 days, whereas Tremper waited to serve Pahwa and Rosebrough until nearly an entire year from the filing date-almost seven months after the original service deadline.
More recently, in Roberson v. Arrow Trucking Company, 2001 WL 484468 (S.D.Ind. Mar. 9, 2001), one of two defendants moved under Rule 12(b)(5) to dismiss a claim against him, arguing that service had not been effective. Id. at *1. Based on "limited and confusing evidence before the Court," it was impossible to determine whether service was effective. Id. at *3. In the time since the filing of the complaint, however, the statute of limitations had lapsed. Therefore, a dismissal of the plaintiff's suit without prejudice would effectively have been with prejudice, because the statute would bar refiling. Because of the consequence of this bar, the court extended the service period an additional 45 days from the date of entry-nearly seven months from the initial filing date-to remedy the defective service. Roberson is distinguishable from the present case, however, as it involved an actual attempt at service whose effectiveness was later challenged. Here, Plaintiff made no attempt to serve Defendants for nearly a year from filing the complaint.
The present case bears strong resemblance to Troxell v. Fedders of North America, Inc., 160 F.3d 381 (7th Cir. 1998). There, the plaintiff attempted service on the defendant more than 240 days after filing her complaint. Id. at 382. The defendant filed a motion to dismiss under Rule 4(m) for untimely service, and the plaintiff responded by requesting an extension of the service period for "good cause." Id. The district court found no good cause to justify the plaintiff's lengthy delay of service. Id. In addition, the district court declined to grant a discretionary extension, despite the running of the applicable statute of limitations and allegations of attorney neglect. Id. at 383. The Seventh Circuit found that the district court did not abuse its discretion in refusing the plaintiff's request for more time.
The factors relied upon by the Oliver, Roberson, and Troxell courts counsel against discretionary extension of time in this case. First, while Plaintiff has not personally engaged in any dilatory or nefarious conduct, Plaintiff's counsel attests that his own busy travel schedule and neglect led to the delay. The Supreme Court made clear in Link v. Wabash Railroad Company that an attorney's negligence is attributable to the client. 370 U.S. 626, 634, 82 S.Ct. 1386, 1390, 8 L.Ed. 734 (1962). "[K]eeping [a] suit alive merely because plaintiff should not be penalized for the omissions of his own attorney would be visiting the sins of the plaintiff's lawyer upon the defendant." Id. at 634 n. 10.
Second, the seriousness of Plaintiff's counsel's omission has exacerbated whatever harm Defendants might suffer by such a delay. Nearly a year passed between the filing of the complaint and service on two named defendants. Even accepting Plaintiff's own contradictory arguments, the case before us bears little resemblance to the minuscule 21-day delay faced in Oliver or the technical defect later uncovered in Roberson.
Finally, the effect of the relevant statutes of limitations bears on our decision not to extend the service period. The events giving rise to the present suit, namely the alleged breach of Plaintiff's employment contract, took place on March 23, 1999. The Plaintiff filed suit in California state court on March 21, 2000. Three of the four claims brought against Defendants Pahwa and Rosebrough are subject to two-year statutes of limitations. Ind. Code § 34-11-2-4. Because Plaintiff waited until the "latest possible date to avoid any statute of limitations problems," (Pl's Resp. to Mot. to Dismiss, ¶ 1) a dismissal without prejudice now would prohibit subsequent filing of these claims. As the Seventh Circuit has recognized, a dismissal "'without prejudice' does not mean without consequence. If the case is dismissed and filed anew, the fresh suit must satisfy the statute of limitations." Powell, 866 F.2d at 966. Plaintiff's choices (and those of Plaintiff's counsel) may have made this impossible, but without more compelling justification, this is no reason to revive a suit that otherwise warrants dismissal under Rule 4(m). Therefore, we GRANT without prejudice Defendants Pahwa's and Rosebrough's Motion to Dismiss under Rule 4(m).
The Executive Employment Agreement underlying the dispute states that Indiana law governs "any disputes arising out of the employment relationship of the parties." (Executive Employment Agreement, ¶ 13.) Indiana's two-year statute of limitations will preclude refiling of the defamation and emotional distress claims. The remaining count, fraud-intentional misrepresentation, is subject to a six-year statute of limitations. Ind. Code § 34-11-2-7. Therefore, Plaintiff's arguments regarding the need for discretionary extension of the service period to allow for later refiling do not apply to the fraud claim.
2. Failure to prosecute
Based on the delayed service of process, Defendants Pahwa and Rosebrough contend that Tremper's suit should be dismissed for failure to prosecute. Plaintiff fails to address these related grounds for dismissal in the Response to the Motion, presumably relying on a favorable resolution of the Rule 4(m) issue to moot the failure to prosecute issue. The dismissal under Rule 4(m) effectively disposes of three of Plaintiff's four claims against Pahwa and Rosebrough, based on the running of the applicable statutes of limitations. The fraud claim, however, is subject to a six-year statute of limitations, and so it may potentially survive the 4(m) dismissal. Ind. Code § 34-11-2-7. Therefore, we must consider whether Rule 41(b) requires dismissal of the remaining count with prejudice.
Rule 41(b) provides for dismissal with prejudice based on a plaintiff's acts or omissions:
For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against the defendant. Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision . . . operates as an adjudication on the merits.
Fed.R.Civ.P. 41(b). Dismissal under 41(b) is "an extraordinarily harsh sanction that should be used 'only in extreme situations, where there is a clear record of delay or contumacious conduct, or when other less drastic sanctions have proven unavailing.'" Dunphy v. McKee, 134 F.3d 1297, 1299 (7th Cir. 1998), quoting In Re Bluestein Co., 68 F.3d 1022, 1025 (7th Cir. 1995). "In certain circumstances, a plaintiff's dereliction in not obtaining service may lead beyond Rule 4 and head off into territory covered by Rule 41(b)." O'Rourke Bros. Inc. v. Nesbitt Burns, Inc., 201 F.3d 948, 953 (7th Cir. 2000). Not all allegations under 4(m) rise to a level warranting 41(b) dismissal.
The Seventh Circuit has enumerated several factors that should bear on courts' decisions to dismiss suits for failure to prosecute. "These factors include the frequency and magnitude of the plaintiff's failure to comply with court deadlines, the effect of these failures on the court's time and schedules, the prejudice to other litigants, and the possible merits of the plaintiff's suit." Williams v. Chicago Bd. of Educ., 155 F.3d 853, 857 (7th Cir. 1998); Ball v. City of Chicago, 2 F.3d 752, 759-60 (7th Cir. 1993). Before ordering dismissal for failure to prosecute, courts must ensure that plaintiffs receive "due warning" of the threat of dismissal. Williams, 155 F.3d 853, 857-59.
Although Plaintiff was seriously delayed in serving process on Defendants, Plaintiff's singular failure to meet the 4(m) service deadline does not establish a pattern of dilatory or negligent behavior sufficient to warrant dismissal for failure to prosecute. Moreover, the court has not yet had occasion to warn Plaintiff of the possibility of dismissal under Rule 41(b); today's ruling should remedy that. Any further instances of purposeful delay or missed deadlines may result in dismissal of Plaintiff's claims for failure to prosecute. Having provided Plaintiff with the necessary warning, we DENY Defendants' Motion to Dismiss with prejudice under Rule 41(b).
3. Sanctions
Defendants also request that the Court sanction Plaintiff for the excessive delay in service. (Mot. to Dismiss, ¶ 7.) Without clarification from Defendants, we presume that they refer to sanctions available under Rule 11. The rule requires that any pleading, written motion or other document presented to the Court not be "presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation." Fed.R.Civ.P. 11(b)(1). The court retains authority to award sanctions against attorneys, firms, or parties responsible for violations of the rule. In determining whether Rule 11 has been violated, the parties' conduct is evaluated for its "reasonableness under the circumstances." Indianapolis Colts v. Mayor and City Council of Baltimore, 775 F.2d 177, 181 (7th Cir. 1985).
The sanctions Defendants request are presumably in addition to the dismissal of three of Plaintiff's claims, which is, in itself, a substantial sanction.
Defendants rely on Ordower v. Feldman, 826 F.2d 1569 (7th Cir. 1987) to support their request for sanctions against Plaintiff for delayed service. In Ordower, the Seventh Circuit found that the district court did not abuse its discretion in awarding sanctions against the plaintiff, because the plaintiff had served several defendants well beyond the 120-day deadline, even after receiving multiple motions to dismiss for untimely service. Id. at 1575.
Although Plaintiff's conduct is hardly commendable, it does not appear sufficiently repetitive or designed to further the type of improper purpose that would merit the assessment of sanctions. The harm to Defendants was not egregious, and, in any event, the dismissal of claims against Defendants Pahwa and Rosebrough should adequately address any consequences of the delayed service. Accordingly, the Court DENIES Defendants' request for sanctions.
Conclusion
Defendants Pahwa and Rosebrough moved for dismissal based on untimely service of process, under Rule 4(m), and failure to prosecute pursuant to Rule 41(b). Defendants also moved for sanctions based on Plaintiff's failure to prosecute. As set forth in our discussion above, we find that 1) Plaintiff failed to show good cause sufficient to justify mandatory extension of the service period, and that Plaintiff's counsel's explanation for the tardy service is insufficient to warrant a discretionary extension; but 2) Plaintiff's delay in service does not warrant dismissal with prejudice under Rule 41(b) or sanctions under Rule 11. Accordingly, we GRANT IN PART and DENY IN PART Defendants' Motion to Dismiss, and we DENY Defendants' request for sanctions.