Filed: Mar. 28, 2014
Latest Update: Mar. 02, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-1889 DAWN FLORES; ALFRED E. FLORES, Plaintiffs – Appellants, v. ETHICON, INC.; JOHNSON & JOHNSON; STEVEN A. SCHEUER, M.D.; GREATER LONG BEACH GENITO-URINARY MEDICAL GROUP, INC.; ST. MARY MEDICAL CENTER; DIGNITY HEALTH; DOES 1-100, Inclusive, Defendants – Appellees. Appeal from the United States District Court for the Southern District of West Virginia, at Charleston. Joseph R. Goodwin, District Judge. (2:12-cv-01804) Argued
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-1889 DAWN FLORES; ALFRED E. FLORES, Plaintiffs – Appellants, v. ETHICON, INC.; JOHNSON & JOHNSON; STEVEN A. SCHEUER, M.D.; GREATER LONG BEACH GENITO-URINARY MEDICAL GROUP, INC.; ST. MARY MEDICAL CENTER; DIGNITY HEALTH; DOES 1-100, Inclusive, Defendants – Appellees. Appeal from the United States District Court for the Southern District of West Virginia, at Charleston. Joseph R. Goodwin, District Judge. (2:12-cv-01804) Argued:..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-1889
DAWN FLORES; ALFRED E. FLORES,
Plaintiffs – Appellants,
v.
ETHICON, INC.; JOHNSON & JOHNSON; STEVEN A. SCHEUER, M.D.;
GREATER LONG BEACH GENITO-URINARY MEDICAL GROUP, INC.; ST.
MARY MEDICAL CENTER; DIGNITY HEALTH; DOES 1-100, Inclusive,
Defendants – Appellees.
Appeal from the United States District Court for the Southern
District of West Virginia, at Charleston. Joseph R. Goodwin,
District Judge. (2:12-cv-01804)
Argued: January 29, 2014 Decided: March 28, 2014
Before DUNCAN, KEENAN, and WYNN, Circuit Judges.
Affirmed by unpublished opinion. Judge Duncan wrote the
opinion, in which Judge Keenan concurred. Judge Wynn wrote a
separate opinion dissenting in part.
ARGUED: Daniel Mitchell Graham, DANIEL M. GRAHAM, APC, Torrance,
California, for Appellants. Philip Combs, THOMAS COMBS & SPANN,
PLLC, Charleston, West Virginia, for Appellees. ON BRIEF:
Gerald P. Peters, LAW OFFICE OF GERALD PHILIP PETERS, Thousand
Oaks, California, for Appellants. David B. Thomas, Daniel R.
Higginbotham, THOMAS COMBS & SPANN, PLLC, Charleston, West
Virginia; Susanna M. Moldoveanu, BUTLER, SNOW, O'MARA, STEVENS &
CANNADA, PLLC, Memphis, Tennessee; Christy D. Jones, John C.
Henegan, BUTLER, SNOW, O'MARA, STEVENS & CANNADA, PLLC,
Ridgeland, Mississippi, for Appellees Ethicon, Incorporated and
Johnson & Johnson. David P. Pruett, CARROLL, KELLY, TROTTER,
FRANZEN & MCKENNA, Long Beach, California, for Appellee Dignity
Health.
Unpublished opinions are not binding precedent in this circuit.
2
DUNCAN, Circuit Judge:
Appellant Dawn Flores 1 appeals from the district court's
denial of her motion to remand to California state court,
dismissal of her action without prejudice, and denial of her
motion to reconsider the dismissal and reinstate the action.
Flores contends that the district court lacked subject matter
jurisdiction because her complaint alleged a viable cause of
action against non-diverse defendants and that it abused its
discretion by dismissing her case for failure to comply with a
scheduling order. For the reasons that follow we affirm.
I.
On December 29, 2003, Flores underwent surgery at St. Mary
Medical Center in Long Beach, California to implant in her
pelvic cavity a transvaginal mesh sling produced and distributed
by Ethicon, Inc. and Johnson & Johnson (“J&J”). The mesh device
was implanted by Dr. Steven A. Scheuer, a member of Greater Long
Beach Genito-Urinary Medical Group, Inc. (“GLBG”), to treat
Flores’s stress urinary incontinence. During the life of the
implant, which was removed on July 21, 2011, Flores developed
pelvic infections, hematuria, and necrosis which she alleges
1
Dawn Flores’s husband, Alfred Flores, is also an appellant
but because all of his claims are derivative of hers, for
convenience we refer to only Mrs. Flores throughout.
3
resulted from the erosion of the mesh into adjacent pelvic
organs.
On March 14, 2012, Flores initiated this action in the
Superior Court of Los Angeles County, California against Ethicon
and J&J, New Jersey corporations, and Scheuer, GLBG, and Dignity
Health d/b/a St. Mary Medical Center, California residents and
entities. 2 Flores’s complaint raises claims of negligence,
strict products liability, breach of warranty, and loss of
consortium. On May 10, 2012, Ethicon and J&J removed the action
to the Central District of California contending that the
California defendants were fraudulently joined and that the
district court therefore possessed subject-matter jurisdiction
to hear the case. Flores filed a timely motion to remand on May
24, 2012.
On May 30, 2012, the Judicial Panel on Multi-District
Litigation transferred Flores’s action to the Southern District
of West Virginia and consolidated it with thousands of similar
cases against Ethicon (the “MDL”). Flores’s motion to remand
remained pending before the district court. On October 4, 2012,
the district court entered Pretrial Order 17, requiring all MDL
plaintiffs to submit an abbreviated Plaintiff Profile Form
2
Flores also names “Does 1-100” but the citizenship of
fictitious parties is not relevant for purposes of determining
diversity jurisdiction. 28 U.S.C. § 1441(b).
4
(“PPF”) containing preliminary interrogatory responses,
including medical information, by December 3, 2012. Order 17,
whose terms were agreed upon by lead counsel for the MDL
plaintiffs and defense counsel, provides that “[i]f a plaintiff
does not submit a PPF within the time specified in this Order,
defendants may move immediately to dismiss that plaintiff’s case
without first resorting to [this Order’s] deficiency cure
procedures.” J.A. 281.
Flores did not submit a timely PPF. On December 28, 2012,
Ethicon moved to dismiss Flores’s case with prejudice for
failure to comply with Order 17. Flores contended in opposition
that she was reasonably concerned that filing the PPF would
waive her right to remand. On April 10, 2013, the district
court denied Flores’ motion to remand, holding that the
California defendants were fraudulently joined because there was
no possibility that Flores could prevail against them in state
court on any cause of action raised in her complaint. On May
20, 2013, the district court granted Ethicon’s motion in part,
dismissing Flores’s case without prejudice for her ongoing
failure to submit a PPF. Flores filed a motion to reconsider
the dismissal and reinstate her action which the district court
5
denied on June 18, 2013. At the time of the parties’ oral
argument on appeal, Flores had never submitted a PPF. 3
II.
We review “questions of subject matter jurisdiction de
novo, ‘including those relating to the propriety of removal.’”
Md. Stadium Auth. v. Ellerbe Becket, Inc., 407 F.3d 255, 260
(4th Cir. 2005) (quoting Mayes v. Rapoport,
198 F.3d 457, 460
(4th Cir. 1999)). The party seeking removal bears the burden of
establishing jurisdiction and we construe removal jurisdiction
strictly.
Id. “If federal jurisdiction is doubtful, a remand
is necessary.” Mulcahey v. Columbia Organic Chems. Co.,
29 F.3d
148, 151 (4th Cir. 1994).
We review for abuse of discretion the imposition of
sanctions for violation of a scheduling or discovery order. See
3
Prior to filing her appeal in this action, Flores
initiated a second action raising the same claims against the
same defendants in California Superior Court. We raised the
question of whether this later action rendered the appeal before
us moot. The parties agree, and we now hold, that Flores’s
appeal is not mooted by her pending state court action because
she has a continuing cognizable interest in the outcome of the
appeal. Specifically, if we affirm the dismissal of Flores’s
first case, the statute of limitations may not be tolled in
relation to her later filed case, see Wood v. Elling Corp., 572
F.2d 755, 758 (Cal. 1977), and she would then be susceptible to
a statute of limitations defense. We are persuaded by the First
Circuit’s rule that a cognizable interest in the earlier filed
case persists in such circumstances. See Patriot Cinemas, Inc.
v. General Cinema Corp.,
834 F.2d 208, 215-16 (1st Cir. 1987).
6
Fed. R. Civ. P. 16(f); Rabb v. Amatex Corp., 769 F.2d 996, 999-
1000 (4th Cir. 1985). We review the denial of a Rule 59(e)
motion for abuse of discretion. Robinson v. Wix Filtration
Corp. LLC,
599 F.3d 403, 407 (4th Cir. 2010). “A district court
abuses its discretion when it acts arbitrarily or irrationally,
fails to consider judicially recognized factors constraining its
exercise of discretion, relies on erroneous factual or legal
premises, or commits an error of law.” United States v.
Delfino,
510 F.3d 468, 470 (4th Cir. 2007).
III.
The district court denied remand on the ground that the
California defendants, Scheuer, GLBG, and St. Mary Medical
Center, were fraudulently joined because there was no
possibility that Flores could prevail on any of her claims
against them in state court. On appeal Flores contends only
that she alleged a cognizable claim against the California
defendants for negligent failure to warn.
Under the fraudulent joinder doctrine, a district court may
“disregard, for jurisdictional purposes, the citizenship of
certain nondiverse defendants, assume jurisdiction over a case,
dismiss the nondiverse defendants, and thereby retain
jurisdiction.” Mayes, 198 F.3d at 461. To establish that a
defendant has been fraudulently joined, “the removing party must
7
establish either: [t]hat there is no possibility that the
plaintiff would be able to establish a cause of action against
the in-state defendant in state court; or [t]hat there has been
outright fraud in the plaintiff's pleading of jurisdictional
facts.” Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th
Cir. 1993) (internal quotation marks omitted).
The burden of showing no possibility of relief is heavy.
The removing party “must show that the plaintiff cannot
establish a claim against the nondiverse defendant even after
resolving all issues of fact and law in the plaintiff's favor.”
Id. at 232-33. The standard is “even more favorable to the
plaintiff than the standard for ruling on a motion to dismiss
under Fed. R. Civ. P. 12(b)(6).” Hartley v. CSX Transport,
Inc.,
187 F.3d 422, 424 (4th Cir. 1999). In fact, “‘there need
be only a slight possibility of a right to relief’ to defeat a
claim of fraudulent joinder.”
Mayes, 198 F.3d at 464 (quoting
Hartley, 187 F.3d at 426).
Contrary to Flores’s contention, we are only permitted, not
required, to look beyond the complaint to determine the
propriety of removal. Hartley, 187 F.3d at 426 (“[T]he court is
not bound by the allegations of the pleadings, but may instead
consider the entire record, and determine the basis of joinder
by any means available.” (emphasis added)). While the vast
majority of decisions in this Circuit review the entire record,
8
and as a consequence, fraudulent joinder is typically only found
in cases of legal impossibility, that analysis produces the
exact result that the doctrine intends to prevent in a case such
as this. Where a complaint is so inadequate and the record so
entirely lacking in factual support that we can only reasonably
conclude that the non-diverse defendants were added to defeat
jurisdiction, analysis of the entire record works an injustice
on the removing party.
The extent of Flores’s allegations against the California
defendants is an assertion that all of the defendants, diverse
and non-diverse, “were negligent in failing to use reasonable
care in designing, manufacturing, marketing, labeling,
packaging, supplying and selling the Product.” J.A. 32. The
complaint contains no allegations of specific actions by the
California defendants that fell below a standard of reasonable
care. The only theory of liability that Flores maintains on
appeal, negligent failure to warn, is not alleged in the
complaint and was never argued before the district court.
Flores’ only reason for raising it now is the district court’s
creation and rejection of that argument in its order denying
remand. It is unsurprising then that the complaint fails to
allege two necessary elements of that theory, that the
California defendants knew or should have known of the dangers
of the mesh implant and that consequently their failure to warn
9
Flores was unreasonable, in even a conclusory manner. See
Carlin v. Superior Court, 920 P.2d 1347, 1351-52 (Cal. 1996).
Moreover, there are no factual allegations in the complaint
which would allow a court to reasonably infer such knowledge and
no factual basis in the record for Flores to make such
allegations, a fact which she admits repeatedly. Appellants’
Br. 25 4, 28 5.
Contrary to Flores’s assertion, California is a fact
pleading state. A complaint must “state[] facts sufficient to
constitute a cause of action” when it is given “a reasonable
interpretation, reading it as a whole and its parts in their
context.” City of Dinuba v. County of Tulare, 161 P.3d 1168,
1171 (Cal. 2007). Unlike in a notice pleading state, when
assessing the sufficiency of the complaint, California courts
assume the truth of “all material facts properly pleaded, but do
not assume the truth of contentions, deductions or conclusions
of law.”
Id. As articulated above, Flores has not alleged any
4
“Were the California defendants among the health care
providers who reported the risks associated with the implanted
mesh? Were they aware of other health care providers who
reported the risks? We simply do not know at this point in the
litigation.”
5
“At this point, since there has been no discovery, it is
not known what the California residents knew at the time of
implantation.”; “Similarly, it is not now known whether the
California resident defendants, at some point after
implantation, learned of the risks associated with implanted
transvaginal mesh.”.
10
facts, or for that matter any sufficient conclusions of law,
that would allow a court to reasonably infer negligence of any
kind on the part of the California defendants. 6 Therefore on the
complaint as pled, even when all facts and reasonable inferences
are viewed in the light most favorable to Flores, there is no
possibility that she could prevail in state court against the
California defendants on her claim of negligent failure to warn.
Because negligent failure to warn is the only cause of action
before us on appeal, the district court’s denial of Flores’s
motion to remand is affirmed.
IV.
Flores also appeals the district court’s dismissal of her
case without prejudice in accordance with Case Management Order
17. 7 Flores does not contend that the district court’s decision
was inconsistent with Order 17 or that she ever complied with
6
Flores also argues that she should have been allowed to
amend her complaint to allege the necessary facts. Flores has
admitted that she does not possess such facts, and in any case
she has waived this argument by raising it for the first time on
appeal. See United States v. Evans, 404 F.3d 227, 236 n.5 (4th
Cir. 2005).
7
To the extent that there is a question regarding our
jurisdiction to consider this dismissal on appeal, the general
rule in this Circuit is that dismissal of an action without
prejudice is final and appealable while dismissal of a complaint
without prejudice is not because a saving amendment is usually
possible. See, e.g., Domino Sugar Corp. v. Sugar Workers Local
Union, 392, 10 F.3d 1064, 1066-67 (4th Cir. 1993). The district
court’s order explicitly dismissed Flores’s case as a whole.
11
the Order by filing a PPF. She argues that she was
substantially justified in not complying with Order 17. 8 This
argument is meritless.
Flores contends that she did not comply with the Order
because she was reasonably concerned that doing so would
constitute an affirmative act that would deprive her of her
right to remand. Her argument appears to conflate the doctrines
of subject-matter and personal jurisdiction. Flores did not
challenge the district court’s exercise of personal
jurisdiction. Her motion for remand rested entirely on an
assertion that the non-diverse defendants were properly joined
and that the district court therefore lacked subject-matter
jurisdiction. It is a central premise of American jurisprudence
that federal courts are courts of limited jurisdiction and that
8
Flores also argues on appeal that the district court’s
dismissal was an abuse of discretion because 1) Order 17
violates due process and the Federal Rules of Civil Procedure,
2) dismissal violates Federal Rule of Civil Procedure 11 and
Multi-District Litigation Manual Rule 10.15, 3) the court
impermissibly failed to warn Flores or impose lesser sanctions
prior to dismissal, and 4) Ethicon did not demonstrate
substantial prejudice as a result of Flores’s failure to comply
with Order 17. Flores had the opportunity to raise these
arguments in both her response to Ethicon’s motion to dismiss
and in her motion for reconsideration but she failed to do so
and they are therefore waived. Evans, 404 F.3d at 236 n.5.
Flores arguably raised the lack of substantial prejudice to
Ethicon in her Rule 59(e) reply, but arguments raised for the
first time in Rule 59 motions are also generally considered
waived. Holland v. Big River Minerals Corp.,
181 F.3d 597, 605
(4th Cir. 1999).
12
“‘[n]o action of the parties can confer subject-matter
jurisdiction upon a federal court.’” Orquera v. Ashcroft, 357
F.3d 413, 416 (4th Cir. 2003) (quoting Ins. Corp. of Ireland,
Ltd. v. Compagnie des Bauxites de Guinee,
456 U.S. 694, 702
(1982)). Because any reasonable diligence on Flores’s part
would have revealed that her concern was unfounded, her refusal
to comply with Order 17 was willful and unreasonable. Moreover,
the district court did not rule on Ethicon’s motion to dismiss
until 40 days after it denied Flores’s motion to remand.
Therefore, even if her jurisdictional concern had originally had
merit she was given ample time to come into compliance with the
district court’s Order after that concern was removed.
The district court did not abuse its discretion by
dismissing Flores’s case in accordance with the procedures of
Order 17 as a result of her unjustified refusal to comply, 9 and
its dismissal without prejudice is therefore affirmed.
9
Flores argued in her Rule 59(e) motion that although she
failed to submit a PPF, her submission of a different
noncompliant document after the entry of the dismissal without
prejudice satisfied the underlying informational needs of the
defendants. Her claim that the dismissal was therefore an abuse
of discretion is unavailing. The requirements of, and penalties
associated with, Order 17 are plain, and Flores had numerous
opportunities to file a PPF to cure the defect. The district
court was under no obligation to accept any submission in place
of a timely-filed PPF, and its decision to enforce Order 17 in
light of Flores’s willful refusal to comply was well within its
discretion.
13
V.
Finally, Flores appeals the district court’s denial of her
motion for reconsideration of its dismissal. 10 Flores makes only
unsupported, conclusory assertions that she satisfied the
requirements of Federal Rule of Civil Procedure 59(e) by
presenting new evidence after dismissal and by alleging that
dismissal would result in manifest injustice. 11 The district
court’s denial of her motion is therefore affirmed.
VI.
For the foregoing reasons, the district court’s denial of
Flores’s motion to remand, dismissal of her case without
prejudice, and denial of her motion for reconsideration and
reinstatement are
AFFIRMED.
10
Flores contends on appeal that she satisfied the
requirements for relief under both Rule 29 and Rule 59.
However, Flores did not move the district court for relief under
Rule 29 so that argument is waived. Evans, 404 F.3d at 236 n.5.
11
A Rule 59(e) motion “may only be granted in three
situations: ‘(1) to accommodate an intervening change in
controlling law; (2) to account for new evidence not available
at trial; or (3) to correct a clear error of law or prevent
manifest injustice.’” Mayfield v. NASCAR, 674 F.3d 369, 378
(4th Cir. 2012) (quoting Zinkland v. Brown,
478 F.3d 634, 637
(4th Cir. 2007)).
14
WYNN, Circuit Judge, dissenting in part:
I agree that the district court correctly denied the motion
to remand and acted within its discretion in dismissing the case
without prejudice as a sanction for Plaintiffs’ refusal to
comply with the district court’s pretrial discovery procedures.
Nonetheless, I cannot agree that the district court properly
denied Plaintiffs’ Rule 59(e) motion to reconsider the dismissal
and reinstate the case. By the date of their motion, Plaintiffs
had remedied the discovery defect, which was the sole basis for
dismissal. In denying Plaintiffs’ motion to reinstate the case,
the district court observed that the applicable statute of
limitations likely barred refiling of Plaintiffs’ action. Thus,
the district court recognized that denial of the motion to
reinstate the case effectually dismissed Plaintiffs’ action with
prejudice.
“Mindful of the strong policy that cases be decided on the
merits, and that dismissal without deciding the merits is the
most extreme sanction,” imposed only “with restraint,” United
States v. Shaffer Equip. Co., 11 F.3d 450, 462 (4th Cir. 1993),
I would reverse the district court’s denial of Plaintiffs’
motion to reinstate the action. Because I believe that
dismissal is an unduly harsh sanction for a case in which there
is no evidence of bad faith by Plaintiffs or prejudice to the
15
opposing party, I respectfully dissent from Section V of the
majority opinion.
I.
As the majority notes, Plaintiffs Dawn and Alfred Flores
initiated this action in California after Mrs. Flores developed
pelvic infections, hematuria, and necrosis following surgical
implantation of a synthetic mesh device manufactured by Ethicon,
Inc. [J.A. 27] Plaintiffs alleged that, like numerous women
throughout the country, Mrs. Flores sustained “severe and
debilitating injuries” caused by the synthetic mesh device. 1
J.A. 37. Plaintiffs’ case is one of thousands of similar
actions pending against Ethicon in multi-district litigation
assigned to the Southern District of West Virginia (the “multi-
district litigation”).
Following removal to federal court and transfer of
Plaintiffs’ action to the multi-district litigation, and while
1
Plaintiffs further alleged that the United States Food and
Drug Administration has received “thousands of reports from
numerous manufacturers . . . regarding the severe health
complications related to the use of transvaginal placement of
surgical mesh.” J.A. 31. According to Plaintiffs, health
problems associated with the use of synthetic transvaginal mesh
include infections, urinary problems, recurrence of pelvic organ
prolapse, incontinence, and erosion of the mesh following
surgery. Complications include bleeding, infection, discharge,
pain, backaches, bowel movement difficulties, bladder outlet
obstruction, and vaginal scarring and shortening. [J.A. 31]
16
Plaintiffs’ motion to remand to state court remained pending,
Ethicon moved to dismiss the case with prejudice under Federal
Rule 37 of Civil Procedure for Plaintiffs’ failure to comply
with the court’s pretrial order (“Order 17”) requiring all
multi-district litigation plaintiffs to submit a five-page
“Plaintiff Profile Form” by December 3, 2012. [J.A. 286-94]
Ethicon argued that “[t]he information contained in a completed
[Plaintiff Profile Form], as well as the medical records that a
plaintiff must submit with the completed [Plaintiff Profile
Form]” were “essential to the defense of this action” and that
Plaintiffs’ failure to submit a Plaintiff Profile Form warranted
immediate dismissal of the case. J.A. 292. In response,
Plaintiffs asserted that they had no objections to filing a
Plaintiff Profile Form, but feared that engaging in discovery
would be viewed by the court as an affirmative act waiving their
right to remand. [J.A. 296]
Upon consideration of the motions, the district court
denied Plaintiffs’ motion to remand [J.A. 356], but also found
that “Ethicon has not provided sufficient support to dismiss
this action with prejudice.” J.A. 371. The court therefore
granted the motion to dismiss “to the extent Ethicon seeks
dismissal of plaintiffs’ case” but denied the motion “insofar as
Ethicon seeks such dismissal with prejudice.” J.A. 371. The
17
court entered its order dismissing the case without prejudice on
May 20, 2013.
Within hours of the court’s dismissal, Plaintiffs served
Ethicon with a “Plaintiff Fact Sheet.” [J.A. 412] A Plaintiff
Fact Sheet is a twenty-six-page discovery form setting forth and
expanding upon the information and medical authorizations
requested in the Plaintiff Profile Form. [J.A. 308-355 (sample
Plaintiff Fact Sheet)] Both forms were established under Order
17. In short, a Plaintiff Fact Sheet is simply a more detailed
version of the Plaintiff Profile Form. 2 Under Order 17, only
those plaintiffs selected to participate in the multi-district
litigation discovery pool must file the more detailed Plaintiff
Fact Sheet. [J.A. 281] Although they were not so selected,
Plaintiffs explained that they served the Plaintiff Fact Sheet
2
Notably, the majority opinion omits Plaintiffs’ filing of
the Plaintiff Fact Sheet from its recitation of the facts, and
only later identifies the Plaintiff Fact Sheet in a footnote as
“a different noncompliant document[.]” Ante at 13, n.9.
However, the district court never found that filing the
Plaintiff Fact Sheet did not fulfill Plaintiffs’ discovery
obligations under Order 17, or that the Plaintiff Fact Sheet was
deficient or otherwise “noncompliant.” To the contrary, both
Ethicon and the district court acknowledged that the Plaintiff
Fact Sheet is a more in-depth discovery document than a
Plaintiff Profile Form. [J.A. 413, 432 n.2] Simple comparison
of the two documents indisputably shows that the Plaintiff Fact
Sheet contains all of the information required by a Plaintiff
Profile Form. It would, therefore, be inaccurate to suggest
that Plaintiffs failed to submit the information that Order 17
required.
18
instead of the Plaintiff Profile Form to minimize any potential
prejudice to Ethicon. [J.A. 373 n.1]
Having submitted the Plaintiff Fact Sheet, Plaintiffs
moved, pursuant to Federal Rule 59(e) of Civil Procedure, for
reconsideration of dismissal and reinstatement of the case.
[J.A. 372] In their motion, filed May 29, 2013, Plaintiffs
advised the district court that the applicable statute of
limitations likely barred refiling and that unless the case was
reinstated, “the [d]ismissal [o]rder may turn out to be exactly
what the [c]ourt did not intend”—a dismissal with prejudice.
J.A. 379. Plaintiffs argued that such a sanction was
unwarranted and would result in manifest injustice, given the
substantial injuries sustained by Mrs. Flores, the absence of
any pattern of dilatory conduct by Plaintiffs, and the lack of
prejudice to Ethicon. 3 In opposing Plaintiffs’ Rule 59(e)
motion, Ethicon confirmed that on the afternoon of May 20, 2013,
it had received Plaintiffs’ Plaintiff Fact Sheet, which, it
acknowledged, was “a more extensive disclosure than the
[Plaintiff Profile Form.]” Nonetheless, Ethicon asserted that
3
The majority opinion states that Plaintiffs failed to
raise the issue of substantial prejudice to Ethicon in their
motion for reconsideration. Ante at 12, n.8. But Plaintiffs
explicitly argued that dismissal of the case would result in
manifest injustice because, among other reasons, “there has been
absolutely no showing of prejudice incurred by [Ethicon].” J.A.
380.
19
Plaintiffs’ failure to submit the information by December 3,
2012, had “deprived the defendants any opportunity to consider
[Plaintiffs’] case for the discovery pool.” J.A. 413. Ethicon
articulated no other grounds for prejudice.
Despite its previous ruling dismissing the case without
prejudice, the district court denied Plaintiffs’ motion for
reconsideration and reinstatement on the grounds that Plaintiffs
failed to show clear error of law or newly discovered evidence
justifying reconsideration under Rule 59(e). [J.A. 431] As to
manifest injustice, the district court stated that although it
was “cognizant of the fact that the plaintiffs’ case might be
barred by the applicable statute of limitations[,]” such was
“the result of strategic decisions made by the plaintiffs’
counsel” in failing to submit a Plaintiff Profile Form before
the case was dismissed. J.A. 438. The district court made no
findings regarding bad faith by Plaintiffs or prejudice to
Ethicon. Plaintiffs timely appealed.
II.
Rule 37 of the Federal Rules of Civil Procedure permits the
district court to impose a variety of sanctions upon parties who
fail to comply with a discovery order, including “dismissing the
action or proceeding in whole or in part[.]” Fed. R. Civ. P.
37(b)(2)(A)(v). However, the power to dismiss a case “is
20
appropriately exercised only with restraint.” Dove v. CODESCO,
569 F.2d 807, 810 (4th Cir. 1978). “‘Against the power to
prevent delays must be weighed the sound public policy of
deciding cases on their merits.’”
Id. at 810 (quoting Reizakis
v. Loy,
490 F.2d 1132, 1135 (4th Cir. 1974)). Thus, while a
district court has discretion in fashioning a discovery sanction
under Rule 37, this discretion is tempered when the sanction
terminates the action without a decision on the merits.
Reizakis, 490 F.2d at 1135; Wilson v. Volkswagen of Am., Inc.,
561 F.2d 494, 503 (4th Cir. 1977) (stating that “[t]he power to
impose sanctions under Rule 37(b) for failure, after court order
in discovery proceedings to produce documents, is discretionary
with the Trial Court. It is not, however, a discretion without
bounds or limits but one to be exercised discreetly and never
when it has been established that failure to comply has been due
to inability, and not to willfulness, bad faith, or any fault of
[the non-complying party].”) (quotation marks and footnotes
omitted). This is because the court’s interest in judicial
administration and enforcement of its orders conflicts with “the
party’s rights to a trial by jury and a fair day in court.”
Mutual Fed. Sav. & Loan Ass’n v. Richards & Assoc.,
872 F.2d 88,
92 (4th Cir. 1989) (reviewing sanction of default judgment
imposed under Rule 37).
21
To balance these competing interests and determine whether
dismissal under Rule 37 is an appropriate sanction, “a court
must consider” the following four factors:
(1) whether the noncomplying party acted in bad faith;
(2) the amount of prejudice the noncompliance caused
the adversary; (3) the need for deterring the
particular sort of noncompliance; and (4) the
effectiveness of less drastic sanctions.
Hillig v. Comm’r of Internal Revenue, 916 F.2d 171, 174 (4th
Cir. 1990); cf. Davis v. Williams,
588 F.2d 69, 70 (4th Cir.
1978) (applying substantially similar four-part test to sanction
of dismissal with prejudice under Federal Rule 41(b) of Civil
Procedure). We utilize the same four-part balancing test to
assess whether a sanction of default judgment under Rule 37 is
appropriate. Mutual Fed. Sav. & Loan
Ass’n, 872 F.2d at 92.
This balancing test “[i]nsure[s] that only the most flagrant
case, where the party’s noncompliance represents bad faith and
callous disregard for the authority of the district court and
the Rules, will result in the extreme sanction of dismissal or
judgment by default.” Id.; accord
Hillig, 916 F.2d at 174-75
(stating that the “harsh sanction” of dismissal under Rule 37
“is reserved for only the most flagrant case, where the party’s
noncompliance represents bad faith and callous disregard for the
authority of the district court and the Rules”) (quotation marks
omitted); cf. Projects Mgmt. Co. v. Dyncorp Int’l LLC,
734 F.3d
366, 373 (4th Cir. 2013) (cautioning that, although courts
22
possess the inherent power to dismiss a case, orders of
dismissal “must be entered with the greatest caution” and are
“appropriate when a party deceives a court or abuses the process
at a level that is utterly inconsistent with the orderly
administration of justice or otherwise undermines the integrity
of the process”) (quotation marks omitted).
A party seeking relief from dismissal may move the court to
alter or amend its judgment under Federal Rule 59(e) of Civil
Procedure. Rule 59(e) “permits a district court to correct its
own errors, sparing the parties and the appellate courts the
burden of unnecessary appellate proceedings.” Pac. Ins. Co. v.
Am. Nat’l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998)
(quotation marks omitted). The district court may grant a Rule
59(e) motion to prevent manifest injustice. See EEOC v.
Lockheed Martin Corp.,
116 F.3d 110, 112 (1997); Hutchinson v.
Staton,
994 F.2d 1076, 1081 (4th Cir. 1993). We review the
district court’s denial of a Rule 59(e) motion for abuse of
discretion. See Matrix Capital Mgmt. Fund, L.P. v.
BearingPoint, Inc.,
576 F.3d 172, 192-96 (4th Cir. 2009)
(holding that the district court abused its discretion in
denying the plaintiffs’ Rule 59(e) motion seeking to alter the
judgment of dismissal with prejudice and allow an amended
complaint). Generally speaking, failure by the district court
to actually exercise its discretion by considering and balancing
23
relevant factors amounts to an abuse of discretion. See James
v. Jacobson, 6 F.3d 233, 239 (4th Cir. 1993).
III.
In this case, the district court’s denial of Plaintiffs’
motion for reconsideration and reinstatement is flawed on
several fronts. First, the district court failed to undertake
the multi-factor balancing test before effectually dismissing
Plaintiffs’ action with prejudice. In denying reinstatement of
the case, the court recognized that the applicable statute of
limitations likely barred refiling the action. See Dove, 569
F.2d at 810 n.3 (assuming the prejudicial effect of a dismissal
without prejudice handed down after the statute of limitations
had run). Thus, the district court acknowledged that denial of
reinstatement would likely end the case and thus ultimately
preclude Plaintiffs from exercising their “rights to a trial by
jury and a fair day in court.” Mutual Fed. Sav. & Loan
Ass’n,
872 F.2d at 92. Denial of reinstatement effectively transformed
the district court’s earlier order of dismissal without
prejudice into a dismissal with prejudice. See
Dove, 569 F.2d
at 809-10 (construing dismissal without prejudice as dismissal
with prejudice where the plaintiff could not refile the action
due to statute of limitations). And, of course, had the
district court dismissed the case with prejudice in the first
24
instance, it would have been required to perform the four-part
balancing test at that time. Hillig, 916 F.2d at 174 (stating
that “[a] court must consider . . . four factors before
dismissing a case” under Rule 37).
Despite recognizing the finality of its order denying
reconsideration of dismissal, the court made no attempt to
justify the severity of the sanction imposed. The district
court made no findings indicating bad faith by Plaintiffs,
prejudice to Ethicon, the need for deterrence, or the
ineffectiveness of less drastic sanctions. See Wilson, 561 F.2d
at 516 (faulting district court for failing to make appropriate
findings on “critical issues which the District Court was
required to address in determining whether to grant default
judgment” as a Rule 37 sanction). In short, the district court
failed to support its decision with any findings demonstrating
“flagrant” and “callous disregard” for the authority of the
court necessitating the “harsh” sanction of dismissal.
Hillig,
916 F.2d at 174-75.
Nor does the record reflect such “callous disregard.”
Although Plaintiffs’ concern that engaging in discovery would
jeopardize their motion to remand may have been misguided, their
behavior does not demonstrate a “pattern of indifference and
disrespect to the authority of the court,” Mutual Fed. Sav. &
Loan Ass’n, 872 F.2d at 93, rising to the level of bad faith.
25
See Hillig, 916 F.2d at 174-175 (vacating order of dismissal
where there was no evidence of bad faith and the circumstances
of the case did “not merit the harsh sanction of dismissal for
failure to comply with a discovery order”);
Dove, 569 F.2d at
810 (reversing order of dismissal as abuse of discretion where
the record “disclose[d] a number of minor defaults” but “nothing
which [could] be construed as evidence of deliberate delay on
the part of Dove or his attorneys”); cf.
Wilson, 561 F.2d at
503-12 (holding that the evidence was insufficient to establish
a pattern of misconduct to justify sanction of default, although
the district court had issued two orders compelling discovery
and extended the discovery deadline, and notwithstanding that
the plaintiffs had only received incomplete responses to their
interrogatories and requests for documents).
Moreover, any prejudice arising from Plaintiffs’ initial
failure to serve the Plaintiff Profile Form is minimal. Ethicon
suggested in its motion to dismiss that prejudice arose because
it had been “deprived . . . any opportunity to consider
[Plaintiffs’] case for the discovery pool.” J.A. 413. This
argument is inapposite, however, because Plaintiffs submitted
the Plaintiff Fact Sheet, which is the very document that would
have been required had they been selected to participate in the
discovery pool. In other words, since the day of the dismissal,
Ethicon has possessed all of the information it would have had
26
if Plaintiffs had timely filed their Plaintiff Profile Form and
had then been selected to participate in the discovery pool.
Ethicon advanced no other grounds for prejudice, and none is
apparent from the record.
The district court’s refusal to reinstate the case is
particularly baffling given its previous decision denying
Ethicon’s Rule 37 motion to dismiss the case with prejudice.
The district court explicitly rejected Ethicon’s argument in
support of dismissal with prejudice, concluding that Ethicon had
“not provided sufficient support to dismiss this action with
prejudice.” J.A. 371. The court nevertheless found some merit
to Ethicon’s position and agreed to dismiss the case without
prejudice as a sanction for Plaintiffs’ failure to file the
Plaintiff Profile Form. Immediately following the court’s
dismissal, Plaintiffs fully complied with their discovery
obligations by serving the Plaintiff Fact Sheet, which contained
all of the information required under Order 17. Yet when
Plaintiffs requested reinstatement of the case--having cured the
single defect that prompted dismissal--the district court
refused.
Why would the district court, having determined that there
was insufficient evidence to dismiss the case with prejudice at
a time when Plaintiffs’ discovery remained outstanding, refuse
to reinstate the case once the discovery had been served? What
27
did the district court mean when it dismissed the case without
prejudice? Without prejudice to what, if not reinstatement?
Nothing in the record suggests a satisfactory answer to these
questions. Nothing occurred between the dismissal without
prejudice and the order denying reinstatement to explain the
district court’s abrupt change of heart.
These unanswered questions are especially concerning in
light of the district court’s suggestion that central blame for
the dismissal lay with “strategic decisions made by the
plaintiffs’ counsel.” J.A. 438. We have long recognized that,
in granting judgment against a party based on the failings of
counsel, the court should first carefully consider the
availability of less severe sanctions. See, e.g., Hillig, 916
F.2d at 174 (“A dismissal sanction is usually inappropriate when
it unjustly penalizes a blameless client for the attorney’s
behavior.”);
Reizakis, 490 F.2d at 1135 (“Rightfully, courts are
reluctant to punish a client for the behavior of his lawyer.”).
Here, there is no evidence the district court considered lesser
sanctions.
In sum, the district court ended Plaintiffs’ case without
engaging in the balancing test we have, for years, required to
ensure that the “harsh sanction of dismissal” is “reserved for
only the most flagrant case” evincing “bad faith and callous
disregard for the authority of the district court[.]” Hillig,
28
916 F.2d at 174-75 (quotation marks omitted). The district
court’s refusal to reinstate the case results in manifest
injustice to Plaintiffs, who have been denied their day in court
without the requisite showing of bad faith or prejudice.
Because nothing in this case indicates that Plaintiffs
“deceive[d] [the] court or abuse[d] the process at a level . . .
utterly inconsistent with the orderly administration of justice”
or otherwise “undermine[d] the integrity of the [judicial]
process,” Projects
Mgmt., 734 F.3d at 373, I would hold that the
district court abused its discretion in denying Plaintiffs’
motion for reconsideration and reinstatement. Accordingly, I
respectfully dissent.
29
