                                                                                                                           Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-24-2003

James Ind Inc v. Lexar Corp
Precedential or Non-Precedential: Non-Precedential

Docket 01-3697




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"James Ind Inc v. Lexar Corp" (2003). 2003 Decisions. Paper 727.
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                                                      NOT PRECEDENTIAL

     UNITED STATES COURT OF APPEALS
          FOR THE THIRD CIRCUIT




                   No: 01-3697


           JAMES INDUSTRIES, INC.,

                         v.

           LEXAR CORPORATION;
         LEXAR INTERNATIONAL LTD;
         RONALD L. SALTER, individually,

                              Lexar Corporation;
                              Lexar International LTD,
                                               Appellants


   On Appeal from the United States District Court
      for the Western District of Pennsylvania

 District Court Judge: The Honorable D. Brooks Smith
             (D.C. Civil No. 99-cv-00058)




    Submitted Under Third Circuit L.A.R. 34.1(a)
                 March 6, 2003

Before: ROTH, BARRY, and FUENTES, Circuit Judges

          (Opinion Filed: March 24, 2003 )




            OPINION OF THE COURT
FUENTES, Circuit Judge:

        Appellants Lexar Corporation and Lexar International Ltd. (“Lexar”) appeal the

decision of the United States District Court for the Western District of Pennsylvania to

dismiss their counterclaims with prejudice as a sanction for failure to comply with

discovery requests and orders to compel. Because we conclude that the District Court did

not abuse its discretion in dismissing Lexar’s counterclaims, we will affirm the Order of

October 31, 2000, dismissing Lexar’s counterclaims, as well as the Order of August 24,

2001, denying Lexar’s Motion for a New Trial.

                                    I. Facts and Procedural History

        On March 18, 1999, James Industries (“James”), a distributor and manufacturer of

toys, filed a complaint in the United States District Court for the Western District of

Pennsylvania against Lexar. The complaint alleged: (1) breach of an exclusive distribution

agreement; (2) breach of contract under the Pennsylvania Uniform Commercial Code; (3)

fraudulent misrepresentation and deceit; (4) negligent misrepresentation; (5) conversion;

and (6) unjust enrichment.

        On May 25, 1999, the Parties entered into a stipulation that set June 30, 1999 as the

deadline for Lexar to respond to the complaint; however, Lexar’s counsel filed a petition to

withdraw appearance on June 17, 1999.1 The District Court granted the petition on June 21,



        1
                Specifically, the petition stated that:


                                                      2
1999. Upon securing new counsel, Lexar filed a motion for extension of time to respond

to the complaint, which was granted on August 17, 1999. Lexar filed its answer, affirmative

defenses and counterclaims on August 30, 1999. Lexar’s counterclaims alleged: (1) breach

of a 1997 agreement; (2) breach of a 1997 purchase order; (3) breach of a 1998 agreement;

and (4) fraud. Lexar’s affirmative defenses alleged: (1) James breached the 1997

agreement and purchase order; (2) Lexar fully complied with the 1997 agreement and

purchase order; (3) the 1997 agreement was not renewed in 1998 and James and Lexar

entered into a new agreement; (4) James breached the 1998 agreement; (5) Lexar fully

complied with the 1998 agreement; (6) James’ claims are barred by fraud.

        On November 2, 1999, the District Court set a discovery deadline of March 5,

2000. On January 7, 2000, James sent Lexar notices of deposition scheduling depositions

for January 25, 2000. James sent its first request for admissions, interrogatories and

request for production of documents on January 14, 2000. Lexar then requested

postponement of the deposition of Ronald Saltel (“Saltel”), President of Lexar, scheduled

for January 25, 2000. James agreed to continue the deposition and requested Lexar to

provide alternate dates. On March 6, 2002, the Parties filed a joint motion to extend the




                Defendants and Petitioner have been unable to agree on matters relating to
                the preparation of the defense in this case including the need for timely
                transmittal to Petitioner of relevant documents and for a meeting with
                Petitioner to discuss the facts of the case. This disagreement has made it
                virtually impossible for Petitioner to adequately prepare Rule 12 motions or
                prepare an Answer and Counterclaim before the June 13, 1999, extension
                date.

                                                    3
discovery deadline by 30 days, which was granted by the District Court. At this point, Lexar

had not produced any documents or notes requested by James.

        On April 4, 2000, James filed a motion to compel depositions of defendants and for

an extension of time for the purpose of taking the depositions and filing pre-trial

statements. James claimed that despite repeated requests, the defendants had failed to

provide alternate dates for the depositions. On April 10, 2000, Lexar responded to the

motion to compel by citing Ronald Saltel’s illness as the primary reason for not

rescheduling his deposition and claiming that Saltel had returned to good health. On May

12, 2000, the Parties agreed to a joint motion to extend time, stating that the witnesses had

agreed to appear for depositions on May 17 and 18 and that the agreement of Saltel to

appear on May 17 rendered moot the motion to compel.

        The District Court extended the discovery deadline to June 30, 2000, and denied

James’ motion to compel as moot. After this extension, Lexar’s counsel contacted James

and indicated that Lexar would not appear for the depositions scheduled for May 17, 2000

due to Saltel’s continuing health problems. Lexar also failed to produce the requested

documents on May 17, 2000. James made repeated requests to take the depositions of

Lexar prior to the June 30, 2000 discovery deadline but received no response from Lexar.

        On June 30, 2000, James filed its second motion to compel depositions of

defendants and for an extension of time for the purpose of taking the depositions. On July

20, 2000, the District Court issued an order extending the discovery period until

September 5, 2000, and requiring Lexar to appear for depositions within 45 days of the

                                                     4
order. Counsel for both Parties agreed on the dates of August 22 and 23, 2000 for the

depositions of Lexar. James also asked to receive the requested documents by August 16,

2000. On August 16, 2000, Lexar’s second attorney filed a petition for leave to withdraw

appearance, which was granted by the District Court. Lexar failed to appear for the August

22 and 23 depositions. Lexar failed to reschedule the depositions or to provide James with

the requested documents prior to September 15, 2000, the deadline for James pre-trial

statement at that point in time.

        On September 15, 2000, James filed a motion to dismiss Lexar’s counterclaims and

affirmative defenses pursuant to FED. R. CIV. P. 37(b) and (d) due to defendants’ failure to

provide discovery and a motion for sanctions. In an order dated October 31, 2000, the

District Court dismissed Lexar’s counterclaims with prejudice and ordered Lexar to pay

James $2,288.00 in attorneys’ fees and $3.96 in costs.

        On November 17, 2000, Saltel, proceeding pro se, filed a motion to reconsider and

for extension of time. Saltel claimed to have been unable to travel because of a lengthy

illness and stated that any delay by the defendants was the result of this illness. Saltel failed

to provide any documentation to support this claim. Saltel claimed that his second attorney

was no longer available to provide information about the lawsuit. The District Court denied

the motion to reconsider but granted the request for an extension of time, providing Lexar

until January 5, 2001 to submit its pre-trial statement.

        On January 5, 2001, Lexar retained its third attorney and filed a motion for

extension to comply with the order of October 31. On January 11, 2001, the District Court

                                                      5
issued an order granting Lexar’s motion for an extension and requiring Lexar’s depositions

to take place by January 19, 2001. The case proceeded to trial on July 23, 2001. During

the course of the trial, the District Court dismissed Saltel as a defendant. The jury returned

a verdict in favor of James in the amount of $382,401.10. Lexar then filed a motion for a

new trial under Rule 59, which was denied by the District Court on August 24, 2001. This

appeal followed.

                               II. Jurisdiction and Standard of Review

        The District Court exercised jurisdiction pursuant to 28 U.S.C. § 1332. We

exercise jurisdiction under 28 U.S.C. § 1291 over a final decision of a district

court. We review the District Court’s sanction of dismissal for an abuse of discretion. See

Poulis v. State Farm Fire and Casualty Co., 747 F.2d 863, 867-68 (3d Cir. 1984).

                                             III. Discussion

        Lexar claims that the District Court erred in dismissing its counterclaims. Federal

Rule of Civil Procedure 37(b) and (d) governs situations in which a party fails to cooperate

in discovery and fails to obey court orders. A district court must apply the following

factors in determining whether to impose a punitive dismissal under the rule: “(1) the

extent of the party’s personal responsibility; (2) the prejudice to the adversary caused by

the failure to meet scheduling orders and respond to discovery; (3) a history of

dilatoriness; (4) whether the conduct of the party or the attorney was willful or in bad faith;

(5) the effectiveness of sanctions other than dismissal, which entails an analysis of

alternative sanctions; and (6) the meritoriousness of the claim or defense.” Id. at 868. In

                                                     6
this case, the District Court properly cited the Poulis factors, performed an analysis of

Lexar’s conduct in the case, and concluded that dismissal of Lexar’s counterclaims was

warranted.

        Lexar emphasizes two arguments on appeal. First, Lexar argues that its failure to

comply with discovery requests can be explained by the continuing illness experienced by

Saltel, the company’s president. As the District Court appropriately recognized, this claim

contradicts many of the facts of record in the case. In conjunction with seeking extensions

of discovery during the case, Lexar informed the Court that Saltel had returned to good

health and was well enough to travel from Manitoba to Pittsburgh for a deposition. Lexar

also had a history of failing to cooperate with both its own and opposing counsel prior to

the alleged illness. In addition, Lexar produced little evidence to support its claim that

Saltel suffered from a prolonged and serious health condition. Finally, even if Saltel

suffered from health problems that prevented him from traveling to Pittsburgh for

depositions, Lexar’s other employees, including Saltel’s two sons, should have been able to

comply with discovery deadlines and produce requested documents.

        Second, Lexar argues that the District Court erred in not considering the sixth

Poulis factor, the meritoriousness of the claim or defense. “Poulis did not provide a magic

formula whereby the decision to dismiss or not to dismiss a plaintiff’s complaint becomes

a mechanical calculation easily reviewed by this Court. As we have already recognized, not

all of the Poulis factors need to be satisfied in order to dismiss a complaint.” Mindek v.

Rigatti, 964 F.2d 1369, 1373 (3d Cir. 1992). The dismissal must be reviewed in the

                                                     7
context of a district court’s experiences in dealing with the litigant. Id. Given Lexar’s

repeated failures to comply with discovery deadlines, obey court orders, or cooperate with

counsel, we decline to conclude that the District Court erred by not specifically evaluating

the merits of Lexar’s counterclaims, particularly given that it considered the other five

factors.

           Even if the District Court erred in dismissing Lexar’s counterclaims, Lexar was not

prejudiced by the error. In seeking dismissal of Lexar’s counterclaims, James also sought

to dismiss Lexar’s affirmative defenses. The District Court declined to dismiss Lexar’s

affirmative defenses. Lexar’s affirmative defenses largely mirrored its counterclaims. As

a result, Lexar presented the same facts and theories to the jury that were contained in its

counterclaims. The jury considered Lexar’s theory of the case and rejected it.




                                              IV. Conclusion

           Accordingly, for the reasons stated above, we affirm the judgment of the District

Court.




_____________________________
TO THE CLERK OF THE COURT:



                                                      8
Kindly file the foregoing Opinion.


                                     Julio M. Fuentes
                                     Circuit Judge




                                9
