Giuliano v. Everything Yogurt, Inc.
Giuliano v. Everything Yogurt, Inc.
Opinion of the Court
MEMORANDUM AND ORDER
Defendants Everything Yogurt, Inc. (“EYI”) and Richard Nicotra move this court for an order dismissing plaintiffs’ action for failure to prosecute pursuant to Federal Rule of Civil Procedure 41(b). For the following reasons, the motion is denied.
FACTS
The genesis of this action is detailed in Giuliano v. Everything Yogurt, Inc., 819 F.Supp. 240 (E.D.N.Y. 1993), familiarity with which is assumed. Briefly, EYI, a New Jersey corporation, operates a chain of yogurt stores and food stores nationwide under the trade names of “Everything Yogurt” (“EY”), “Bananas” and “South Philly Steaks and Fries.” In addition, EYI franchises stores under those trade names to interested individuals. Defendant Richard Nicotra is a director and shareholder of EYI. On or about October 16, 1989, plaintiffs Thomas and Michele Giuliano entered into a franchise agreement with defendants to operate an EY store in the South Street Seaport area. The franchise was unsuccessful and plaintiffs were forced to close the store in December of 1991. Thereafter, they commenced this civil action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”).
In a Memorandum and Order dated April 28, 1993 and published at 819 F.Supp. 240, this court denied in part and granted in part defendants’ motion to dismiss plaintiffs’ Second Amended Complaint which was served on or about October 3, 1992.
Approximately two months following this court’s April 28, 1993 Memorandum and Order, on or about June 11, 1993, defendants served their answer to the Second Amended Complaint, a request for production of documents, and two notices of depositions. Affirmation of Gary Trachten, November 4, 1993 (“Trachten Affm”), ¶ 5, Ex. C. The parties entered into a stipulation extending until August 17, 1993, plaintiffs’ time to respond to the document request. Affirmation of Ar
Defendants contend that the lack of activity by plaintiffs regarding discovery warrants a dismissal of the action pursuant to Federal Rule of Civil Procedure 41(b).
DISCUSSION
Rule 41(b) of the Federal Rules of Civil Procedure provides in relevant part:
For failure of the plaintiff to prosecute ... a defendant may move for dismissal of an action or of any claim against the defendant. Unless the court in its order of dismissal otherwise specifies, a dismissal under this subdivision ... operates as an adjudication upon the merits.
Fed.R.Civ.P. 41(b). In dismissing an action for failure to prosecute, the court must analyze such factors as: (1) the duration of plaintiffs failures; (2) whether the plaintiff had received notice that further delays would result in dismissal; (3) whether the defendant is likely to be prejudiced by further delay; (4) whether the district judge has taken care to strike the balance between alleviating court calendar congestion and protecting a party’s right to due process; and (5) whether the judge has adequately assessed the efficacy of lesser sanctions. Harding v. Federal Reserve Bank of New York, 707 F.2d 46, 50 (2d Cir. 1983); see also Merker v. Rice, 649 F.2d 171, 173-74 (2d Cir. 1981). Dismissal for lack of prosecution is left to the discretion of the court. Theilmann v. Rutland Hospital, Inc., 455 F.2d 853, 855 (2d Cir. 1972) (per curiam) (a dismissal under Rule 41(b) is reversible only if an abuse of discretion has been shown).
“The operative condition of the Rule is lack of due diligence on the part of the plaintiff— not a showing by the defendant that it will be prejudiced by denial of its motion.” Messenger v. United States 231 F.2d 328, 331 (2d Cir. 1956) (citation omitted). Accord Lyell Theatre Corp. v. Loews Corp., 682 F.2d 37, 43 (2d Cir. 1982) (“The primary rationale underlying a dismissal under 41(b) is the failure of plaintiff in his duty to process his case diligently.”); West v. City of New York, 130 F.R.D. 522, 524 (S.D.N.Y. 1990) (“Dismissal is warranted where there is a lack of due diligence in the prosecution of the lawsuit by plaintiff.”). The Second Circuit has repeatedly warned that dismissal for lack of prosecution is a drastic measure and only to be used in extreme circumstances. Minnette v. Time Warner, 997 F.2d 1023, 1027 (2d Cir. 1993) (“We have repeatedly emphasized that ‘dismissal is a “harsh remedy to be utilized only in extreme situations!)]” ’ ”) (quoting Gibbs v. Hawaiian Eugenia Corp., 966 F.2d 101, 109 (2d Cir. 1992)); Merker v. Rice, 649 F.2d 171, 173-74 (2d Cir. 1981) (dis
A review of the relevant case law indicates that the “extreme situations” and “rare occasions” referenced above are those situations wherein the conduct of the dilatory plaintiff is drastic and evidences a clear intent not to take a case to trial in an efficient and orderly fashion. For example, in Peart v. City of New York, 992 F.2d 458 (2d Cir. 1993), the Second Circuit held that dismissal with prejudice pursuant to Federal Rule of Civil Procedure 41(b) was warranted when, after three years of discovery, plaintiffs counsel failed to timely file a pre-trial memorandum as ordered by the court; refused to return phone calls from her adversary regarding a proposed joint pre-trial memorandum; made several claims of non-receipt of court notices; and refused to proceed to trial after receiving a court order to appear. Citing plaintiffs counsel’s “particularly contemptuous and disrespectful behavior,” the court concluded that the district court did not abuse its discretion “in finding that dismissal was necessary both to reform [plaintiffs counsel’s] conduct and to re-establish the court’s authority to manage its calendar,” id. at 463.
In Chira v. Lockheed Aircraft Corp., 634 F.2d 664 (2d Cir. 1980), the court affirmed a dismissal after plaintiff had been given six months to complete discovery, did not do so, and during those six months “[plaintiff and his attorney] did absolutely nothing at all to move their case to trial.” Chira, 634 F.2d at 666. “Completely aside from his failure to comply with the order, a dismissal is justified for [plaintiffs] failure to prosecute at all.” Id. at 667. See also Lyell Theatre Corp. v. Loews Corp., 682 F.2d 37, 43 (2d Cir. 1982) (dismissal for lack of prosecution affirmed “considering the commitments not honored, delinquent inactivity, adjournments and delay over the seven year span during which this conduct persisted----”). Dismissal, therefore, is only appropriate when plaintiff has made no moves whatsoever to move his or her case to trial. West v. City of New York, 130 F.R.D. 522 (S.D.N.Y. 1990) (dismissal appropriate where plaintiff has failed to take any specific and concrete action over a period of 19 months); M & H Cosmetics, Inc. v. Alfin Fragrances, Inc., 102 F.R.D. 265, 267 (E.D.N.Y. 1984) (dismissal appropriate because “plaintiff has made no move to press this action over the course of seventeen months, has not moved to make discovery and has substantially failed to respond to discovery requests, and from every appearance has not prepared its case. Manifestly there is no intent to proceed to litigation.”).
Applying these considerations to this case, it would be an abuse of discretion to dismiss plaintiffs action for lack of prosecution. Eight months have elapsed since this court’s April 28, 1993 Memorandum and Order and in that time plaintiff has not initiated any discovery.
Defendants argue that they will be prejudiced by further delay because the “stigmatizing effect of a RICO case is felt particularly painfully by a franchisor[.]” Defs.’ Mem. at 12. “While Messenger permits the court to consider whether, on a Rule 41(b) motion, the defendant has been prejudiced by the delay, this consideration comes into play where there has been only ‘moderate or excusable neglect.’ ” Charles Labs, Inc. v. Banner, 79 F.R.D. 55, 57 (S.D.N.Y. 1978). See also Lyell Theatre Corp. v. Loews Corp., 682 F.2d 37, 43 (2d Cir. 1982) (“Prejudice to defendants resulting from unreasonable delay may be presumed, but in cases where delay is more moderate or excusable, the need to show actual prejudice is proportionally greater.”) (citation omitted). Because the court was considering a motion to dismiss, it was reasonable for plaintiffs not to commence discovery prior to this court’s Memorandum and Order of April 28, 1993; therefore, the delay in commencing discovery in this case is approximately six months which is moderate and hence this court can examine the likelihood of actual prejudice to defendants. _ Defendants, however, have failed to establish actual prejudice caused by plaintiffs’ delays. Actual prejudice refers not to the stigma of being a defendant in a civil action; rather, it refers to those situations wherein a plaintiffs delay hinders the defendant’s opportunity to adequately defend the claim. See, e.g., Pearson v. Dennison, 353 F.2d 24, 28 (9th Cir. 1965) (prejudice from delay may result because of the destruction of important records, the fact that parties have moved to other occupations, or memories may have faded). In this case, defendants argue that to remain defendants in this case prejudices them because they must disclose the litigation to potential franchisees; however, there is no indication that plaintiffs’ delay in commencing discovery has in any way prejudiced the defendants in the defense of this action.
Defendants other arguments in support of dismissal are without merit. Defendants concede that “neither the Court nor the defendants have warned the plaintiffs explicitly that their lack of diligence risked dismissal for lack of prosecution.” Defs.’ Mem. at 14. As stated above, a court must analyze whether the plaintiff received notice that further delays would result in dismissal. Harding v. Federal Reserve Bank of New York, 707 F.2d 46, 50 (2d Cir. 1983). In this case, defendants point to a letter dated October 1, 1993, to plaintiffs’ counsel wherein defendants’ counsel states that,
The plaintiffs have no right to unilaterally extend indefinitely the time for providing responses to discovery. I ask that you call me to confer regarding resolution of the issues raised by the plaintiffs’ blatant disregard of their responsibilities as litigants.
Trachten Aff'm, Ex. E. Defendants argue that this language “implicitly warns that the whole manner in which the plaintiffs were failing to act as responsible litigants had become an issue of concern.” Defs.’ Mem. at 15. However, it is unreasonable to interpret this letter as a warning that further delays in responding to document requests or initiating discovery will result in a Rule 41(b) dismissal.
Defendants also argue that the court should give little weight to the policy cited above regarding a plaintiffs right to due process because, defendants urge, there is little likelihood of success for plaintiffs. Defs.’ Mem. at 16-18. In this regard, defendants have submitted documentary evidence that plaintiffs’ allegations of fraudulent mis
In sum, the facts surrounding plaintiffs’ delay in initiating discovery and responding to defendants’ first request for production of documents, and the duration of that delay, are not so egregious as to warrant the harsh remedy of a Rule 41(b) dismissal. See, e.g., Minnette v. Time Warner, 997 F.2d 1023, 1027 (2d Cir. 1993) (trial court abused its discretion in dismissing action for want of prosecution where, among other factors, there were only three months of inaction by plaintiff). Therefore, the better course of action is to refer this matter to the magistrate who will establish a discovery schedule with a firm cut-off date after the completion of which defendants may move for summary judgment or the violation of which may be the basis for a Rule 41(b) motion.
CONCLUSION
For the foregoing reasons, defendants’ motion is denied and this matter is referred to Magistrate Judge John L. Caden for further proceedings consistent with this opinion.
SO ORDERED.
. The Second Amended Complaint is the fourth complaint drafted by plaintiffs' counsel in this action. See Giuliano, 819 F.Supp. at 243 n. 2.
. Defendants stress that approximately 19 months had elapsed since plaintiffs originally commenced this action, Defs.’ Mem. at 8, but during that time plaintiffs were responding to defendants’ motions to dismiss and hence it cannot be concluded that plaintiffs were inactive and evidencing an intent not to take the case to trial. Furthermore, as plaintiffs note, "[ajlthough the plaintiffs’ counsel also expected to win the motions, if he had commenced any discovery before the motions were decided, he would have been engaging in an exercise in futility if either motions had been granted with prejudice.” Pls.’s Mem. at 9.
. In their Reply Memorandum of Law, defendants suggest that if the Rule 41(b) motion is not granted, this court should (i) disallow discovery as a sanction; and (ii) order plaintiffs to pay the reasonable attorneys' fees in connection with this motion. Defs.’ Reply Mem. at 4. However, as discussed above, plaintiffs’ inactivity is not egregious and therefore these sanctions are not warranted.
Reference
- Full Case Name
- Thomas A. GIULIANO and Michele N. Giuliano v. EVERYTHING YOGURT, INC. and Richard Nicotra
- Status
- Published