Court Opinion

ID: 9909783
Source: CourtListenerOpinion
Date Created: 2023-12-14 01:00:38.134966+00
Date Added: 2024-06-11T12:49:44.410230
License: Public Domain

Case: 23-10494          Document: 00517000149              Page: 1       Date Filed: 12/13/2023

              United States Court of Appeals
                   for the Fifth Circuit
                                                                                      United States Court of Appeals
                                                                                               Fifth Circuit

                                       ____________                                          FILED
                                                                                      December 13, 2023
                                         No. 23-10494                                   Lyle W. Cayce
                                       ____________                                          Clerk

   Eric Lucero; Whitnie Potts,

                                                                     Plaintiffs—Appellants,

                                               versus

   Wheels India, Limited,

                                                 Defendant—Appellee.
                       ______________________________

                      Appeal from the United States District Court
                          for the Northern District of Texas
                                USDC No. 2:20-CV-207
                      ______________________________

   Before Jolly, Engelhardt, and Oldham, Circuit Judges.
   E. Grady Jolly:*
          This appeal presents the dismissal of a complaint alleging claims of
   strict liability and negligence against a foreign defendant that, despite efforts
   of the plaintiffs, 1 has not been properly served. The district court found that
   Plaintiffs’ delay in serving the defendant was intentional and inexcusable.
   The court then dismissed Plaintiffs’ complaint and denied their motion to
   serve the defendant through electronic means. We hold that the dismissal
          _____________________
          *
              This opinion is not designated for publication. See 5th Cir. R. 47.5.
          1
              Plaintiffs in this suit are Eric Lucero and his common law spouse Whitnie Potts.
Case: 23-10494        Document: 00517000149              Page: 2       Date Filed: 12/13/2023

                                          No. 23-10494

   was an abuse of discretion. Accordingly, we VACATE the dismissal,
   REVERSE the denial of Plaintiffs’ motion to serve the defendant through
   electronic means, and REMAND for further proceedings not inconsistent
   with this opinion.
                                                I.
           In August 2018, Plaintiff Eric Lucero was injured while working on a
   Caterpillar wheel loader when “the explosive separation of the split tire ring
   blew the ring off the tire causing the ring to strike” him, resulting in serious
   injuries. Defendant Wheels India, Ltd., a company located in the country of
   India, is one of four entities that could have either manufactured or sold the
   split tire ring that was involved in the accident. Plaintiffs originally filed this
   suit in the Texas state court. A codefendant removed the action to federal
   court on September 9, 2020. 2
           Plaintiffs then began their attempts to serve Wheels India. Because
   Wheels India is a foreign defendant, Plaintiffs are bound by Rule 4(f), which
   requires a party to effect service in accordance with the Hague Service
   Convention. 3 Fed. R. Civ. P. 4(f)(1). 4 On October 21, 2020, Plaintiffs
           _____________________
           2
               Plaintiffs also sued Caterpillar Inc., but they later settled and voluntarily
   dismissed Caterpillar from this case. Caterpillar thoroughly litigated this case against the
   Plaintiffs up to the settlement. Caterpillar is not a party to this appeal. Plaintiffs also
   initially sued two other defendants, though they were soon voluntarily dismissed under a
   tolling agreement of October 7, 2020.
           3
              Convention on the Service Abroad of Judicial and Extrajudicial Documents in
   Civil or Commercial Matters, art. 5, Nov. 15, 1965, 20 U.S.T. 361, 362 T.I.A.S. No. 6638
   (1969) [hereinafter “Hague Service Convention” or “Convention”]. Plaintiffs are required
   to effect service under the terms of this Convention because both the United States and
   India are State Parties to the Convention.
           4
              Specifically, Rule 4(f)(1) allows a plaintiff to serve an individual in a foreign
   country “by any internationally agreed means of service that is reasonably calculated to
   give notice, such as those authorized by the Hague Convention on the Service Abroad of
   Judicial and Extrajudicial Documents.”

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                                          No. 23-10494

   sent the summons and service packet to Ancillary Legal Corporation, 5 an
   international process service company. Ancillary Legal delivered the packet
   to the Central Authority in India in order to serve Wheels India pursuant to
   the Convention. 6 Plaintiffs’ counsel contacted Ancillary Legal on December
   29, 2020, to request a status update regarding service. Since November
   2020, the district court has issued ten orders extending the deadline for
   Plaintiffs to either effect service on Wheels India or demonstrate good cause
   for their failure to do so. Plaintiffs continually asserted that they were waiting
   for the Central Authority to serve their documents on Wheels India.
           In early August 2022, after Ancillary Legal’s failure to provide any
   update from the Central Authority in India, Plaintiffs retained a separate
   group—Viking Advocates, LLC—to serve Wheels India via the Central
   Authority. 7 Thus, the Central Authority had been contacted twice and had
   been expected to effect service on Wheels India. The Central Authority
   confirmed receipt of this packet on August 16, 2022. Plaintiffs requested
   another 90-day extension in October 2022 after they were informed that the
   service packet could not be served on Wheels India based on an “address

           _____________________
           5
             Ancillary Legal Corporation is a domestic and international process service
   corporation located in Atlanta, Georgia. Plaintiffs retained Ancillary Legal to help them
   comply with the terms of the Convention.
           6
             The Central Authority is the governmental agency that must be designated by
   each State Party to the Hague Service Convention. This agency is organized under the laws
   of each individual State and has the obligation to receive requests for service coming from
   other States. The agency must then effect service in conformity with the State’s internal
   law for the service of documents. Hague Service Convention, arts. 2, 5, 20 U.S.T. 361.
           7
              Upon being hired, Viking Advocates advised the Plaintiffs that India’s Central
   Authority—a small, overworked entity—could take two years to serve process, in part,
   because of the COVID-19 pandemic. This advice from Viking was conveyed to the district
   court in a declaration supporting Plaintiffs’ motion to stay the proceedings pending service
   on Wheels India.

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                                       No. 23-10494

   issue.” Soon thereafter, Plaintiffs received confirmation from a bailiff in
   India that the notice was refused by the addressee. 8
          Believing that they were no longer constrained by the Hague Service
   Convention, which only applies when the address of the party to be served is
   known, Plaintiffs moved the court, on December 12, 2022, to allow them to
   serve Wheels India electronically under Rule 4(f)(3). See Fed. R. Civ. P.
   4(f)(3) (allowing service of process on a foreign defendant “by other means
   not prohibited by international agreement”); see also Hague Service
   Convention, art. 1, 20 U.S.T. 361. Three days later, the district court denied
   the Plaintiffs’ motion because they had failed to demonstrate reasonable due
   diligence or good cause for failure to effect timely service. The district court
   then dismissed the Plaintiffs’ claims against Wheels India without prejudice.
   Plaintiffs now appeal.
                                            II.
          Although the district court’s dismissal was without prejudice, the
   district court noted that the statute of limitations likely bars future litigation.
   We therefore treat the dismissal as a with-prejudice dismissal. Lozano v.
   Bosdet, 693 F.3d 485, 489–90 (5th Cir. 2012) (quoting Millan v. USAA Gen.
   Indem. Co., 546 F.3d 321, 326 (5th Cir. 2008)). We review a district court's
   dismissal of a claim with prejudice for abuse of discretion. See id. Our review,
   however, is more exacting and requires heightened scrutiny when the
   dismissal bars further litigation. Coleman v. Sweetin, 745 F.3d 756, 766 (5th
   Cir. 2014). We have noted that such dismissals should be in the interest of
   justice because dismissal with prejudice “is an extreme sanction that

          _____________________
          8
               This development is significant because this address issue and refusal led
   Plaintiffs to believe that they did not know the proper address for Wheels India.

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   deprives a litigant of the opportunity to pursue his claim.” Gonzalez v.
   Firestone Tire & Rubber Co., 610 F.2d 241, 247 (5th Cir. 1980).
          To determine if a dismissal that effectively forecloses further litigation
   is in the interest of justice, we inquire whether there is “a clear record of
   delay or contumacious conduct by the plaintiff.” Millan, 546 F.3d at 326
   (quotation marks and citation omitted). Contumacious conduct is “stubborn
   resistance to authority” sufficient to justify a dismissal with prejudice.
   McNeal v. Papasan, 842 F.2d 787, 792 (5th Cir. 1988) (quotation marks and
   citation omitted). Contumacious conduct is not negligence—regardless of
   how exasperating or careless. Id. Further, to justify such a dismissal, a delay
   must be “characterized by significant periods of total inactivity.” Millan, 546
   F.3d at 326-27 (quotation marks and citation omitted).
                                         III.
          The question before us is whether the district court abused its
   discretion by dismissing a Complaint in which service had failed under the
   Hague Service Convention after a period of twenty-two months.
          Because dismissal is the effective death knell of this case, the conduct
   upon which the district court dismissed the case must be contumacious,
   meaning, essentially, there is no reasonable justification for the plaintiffs’
   conduct. See Millan, 546 F.3d at 326 and McNeal, 842 F.2d at 792. In
   applying this standard of review here, we find that the conduct of insisting on
   exhausting service under the Hague Service Convention before resorting to
   Rule 4(f)(3) does not justify dismissal of the Complaint.
          We have generally only affirmed dismissals with prejudice in the
   presence of aggravating factors, such as when the delay: (1) was caused by the
   plaintiff itself, as opposed to by counsel; (2) resulted in actual prejudice to
   the defendants; or (3) was caused by intentional conduct. McNeal, 842 F.2d
   at 792. We reserve dismissals with prejudice for “cases where the plaintiff’s

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   conduct has threatened the integrity of the judicial process, often to the
   prejudice of the defense, leaving the court no choice but to deny that plaintiff
   its benefits.” Rogers v. Kroger Co., 669 F.2d 317, 321 (5th Cir. 1982).
          Such factors do not point toward dismissal based on the record before
   us. First, the circumstances do not indicate that the Plaintiffs themselves
   caused this delay. The delay was caused by a foreign governmental entity,
   which neither Plaintiffs nor the court can control. Internal issues at India’s
   Central Authority, exacerbated by the COVID-19 pandemic, thwarted
   expedient process service. But these issues and delays were beyond the
   control of client and counsel.
          Plaintiffs have abided by district court deadlines and have requested
   extensions when needed. Plaintiffs twice attempted to effect service on
   Wheels India through the Central Authority, followed up with the company
   that initially submitted the service packet to the Central Authority, hired a
   second company to again attempt service, and requested—and were
   granted—ten extensions to serve Wheels India. Although the district court
   ultimately perceived Plaintiffs’ explanations for requesting extensions as
   inadequate and substantially similar, this “understandably exasperating”
   conduct does not rise to the level of contumely. McNeal, 842 F.2d at 792.
          Second, the record does not demonstrate that the delay unduly
   prejudiced Wheels India. Any minor, time-based prejudice is likely mitigated
   if, as Plaintiffs assert, Wheels India is aware of the case against it. Lozano,
   693 F.3d at 490 (actual prejudice is no concern where facts indicate that an
   unserved defendant is aware of proceedings against them).
          Third, nothing in the record indicates that the Plaintiffs’ failure to
   serve process was intentional. The district court reasoned that Plaintiffs
   failed to demonstrate reasonable due diligence or good cause for their failure
   to timely effect service because Plaintiffs should have sought electronic

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                                          No. 23-10494

   service under Rule 4(f)(3) 9 earlier.            Thus, the district court reasoned,
   Plaintiffs were negligent in failing to pursue alternative methods of service.
   Plaintiffs contest this reasoning, arguing that adherence to the Hague Service
   Convention is mandatory. They, therefore, could not pursue alternate means
   of service under Rule (4)(f)(3) until they could show the treaty was
   inapplicable. See Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694,
   705 (1988) (“[C]ompliance with the Convention is mandatory in all cases to
   which it applies”). Plaintiffs assert that they were bound by the Hague
   Service Convention until they received the letter from the Central Authority
   informing them that service of process had been refused. See Hague Service
   Convention, art. 1, 20 U.S.T. 361.
           The Plaintiffs’ decision to exhaust service under the treaty before
   seeking alternative service under Rule 4(f)(3) cannot be intentional delay
   because the Supreme Court has not provided guidance as to how the
   requirements of the Convention interact with a court’s authority to order
   alternative service under Rule 4(f)(3). Although the Convention itself
   contemplates alternative means of service “by postal channels” or “through
   judicial officers, officials, or other individuals in the State of destination,”
   India has expressly objected to this Article. Hague Service Convention, art.
   10, 20 U.S.T. 361.         We have held, however, that the Hague Service
   Convention does not displace Rule 4(f)(3). Nagravision SA v. Gotech Int’l
   Tech. Ltd., 882 F.3d 494, 498 (5th Cir. 2018). But this precedent does not
           _____________________
           9
             Rule 4(f)(3) states, “Unless federal law provides otherwise, an individual—other
   than a minor, an incompetent person, or a person whose waiver has been filed—may be
   served at a place not within any judicial district of the United States[] by other means not
   prohibited by international agreement, as the court orders.” Fed. R. Civ. P. 4(f)(3).
   We note that, here, Wheels India is a foreign corporation, and thus, Rule 4(h) is the proper
   rule for service. Rule 4(h)(2), however, allows for service of process of a foreign
   corporation “in any manner prescribed by Rule 4(f) for serving an individual.” Fed. R.
   Civ. P. 4(h)(2). Accordingly, we only discuss service under Rule 4(f)(3).

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   mean that the Plaintiffs’ failure to invoke Rule 4(f)(3) earlier constitutes
   contumacious conduct.
          Given the fact that both the United States and India are parties to the
   Convention and considering the numerous efforts and occasions to effect
   service under the treaty, we cannot say that the conduct leading up to the
   dismissal was contumacious and warrants dismissal. Although Plaintiffs’
   failure to attempt service under Rule 4(f)(3) earlier may have been negligent,
   mere negligence is not contumacious. McNeal, 842 F.2d at 792.
          We note, in passing, that the record does not indicate “significant
   periods of total inactivity” in the case itself, or in the Plaintiffs’ attempts at
   service. Millan, 546 F.3d at 326. As we have held, the deadline for service
   mandated in Rule 4(m) does not apply when serving foreign defendants; in
   such cases, “[g]ood faith and reasonable dispatch are the proper yardsticks.”
   Lozano, 693 F.3d at 489; see also Fed. R. Civ. P. 4(m). Plaintiffs initially
   dispatched their service packet within a month of the case’s removal to
   federal court. This timely dispatch shows that Plaintiffs attempted to
   properly effect service soon after the case was removed. Thus, given the
   absence of a clear record of purposeful delay, or contumacious conduct, or
   any other aggravating factors, the district court abused its discretion by
   dismissing Plaintiffs’ claims against Wheels India. It follows that the denial
   of the motion to serve process under Rule 4(f)(3) was erroneously denied.
                                          IV.
          Accordingly, the district court’s dismissal of Wheels India is
   VACATED, the denial of Plaintiffs’ motion to serve Wheels India under Rule
   4(f)(3) is REVERSED, and the case is REMANDED for further proceedings
   not inconsistent with this opinion.
                          VACATED, REVERSED, AND REMANDED.

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