          08-4202-cv, 08-4204-cv, 08-4207-cv, 08-4209-cv
          Brown, et al. v. General Nutrition Co., et al.



1                                  UNITED STATES COURT OF APPEALS
2                                      FOR THE SECOND CIRCUIT
3
 4                                               SUMMARY ORDER
 5
 6   RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO SUM M ARY ORDERS
 7   FILED AFTER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY THIS COURT’S LOCAL RULE 32.1 AND
 8   FEDERAL RULE OF APPELLATE PROCEDURE 32.1. IN A BRIEF OR OTHER PAPER IN W HICH A LITIGANT CITES
 9   A SUM M ARY ORDER, IN EACH PARAGRAPH IN W HICH A CITATION APPEARS, AT LEAST ONE CITATION M UST
10   EITHER BE TO THE FEDERAL APPENDIX OR BE ACCOM PANIED BY THE NOTATION: “(SUM M ARY ORDER).”
11   A PARTY CITING A SUM M ARY ORDER M UST SERVE A COPY OF THAT SUM M ARY ORDER TOGETHER W ITH
12   TH E PAPER IN W HICH THE SUM M ARY ORDER IS CITED ON ANY PARTY NOT REPRESENTED BY COUNSEL
13   UNLESS THE SUM M ARY ORDER IS AVAILABLE IN AN ELECTRONIC DATABASE W HICH IS PUBLICLY
14   A C C E S S IB L E W IT H O U T P A Y M E N T O F F E E ( S U C H A S T H E D A T A B A S E A V A IL A B L E A T
15   HTTP://W W W .CA2.USCOURTS.GOV/). IF NO COPY IS SERVED BY REASON OF THE AVAILABILITY OF THE
16   ORDER ON SUCH A DATABASE, THE CITATION M UST INCLUDE REFERENCE TO THAT DATABASE AND THE
17   DOCKET NUM BER OF THE CASE IN W HICH THE ORDER W AS ENTERED.
18
19               At a stated term of the United States Court of Appeals for the Second Circuit, held at
20        the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
21        York, on the 14th day of December, two thousand nine.
22
23        PRESENT:
24                    WILFRED FEINBERG,
25                    DEBRA ANN LIVINGSTON,
26                                Circuit Judges,
27                    JOHN G. KOELTL
28                                District Judge.*
29        __________________________________________
30
31        Shawn Brown, Ozan Cirak, Luke Smith, Thomas Hannon, each individually and on behalf of all
32        others similarly situated, Harry Rodriguez, individually and on behalf of all others similarly situated,
33        Andrew Toth, individually and on behalf of all others similarly situated, Richard Zatta, individually
34        and on behalf of all others similarly situated, Everett Abrams individually and on behalf of all others
35        similarly situated,
36
37                          Plaintiffs-Appellants,
38
39                          v.                                                  08-4202-cv, 08-4204-cv, 08-
40                                                                              4207-cv, 08-4209-cv

                   *
                   The Honorable John G. Koeltl, of the United States District Court for the Southern
          District of New York, sitting by designation.
 1
 2   General Nutrition Companies, Inc., Bodyonics, Ltd., d/b/a Pinnacle, Muscletech Research and
 3   Development, Inc., AST Sport Science, Inc., Cytodyne Technologies, Inc., Twin Laboratories, Inc.,
 4   Vitamin Shoppe Industries, Inc.,
 5
 6               Defendants-Appellees.
 7   __________________________________________
 8
 9   FOR APPELLANT:                   JOHN D. GOLDSMITH, KATIE BRINSON HINTON, Trenam,
10                                    Kemker, Scharf, Barkin, Frye, O’Neill & Mullis, P.A.; CRAIG S.
11                                    HILLARD, Stark & Stark
12
13   FOR APPELLEES:                   GORDON SCHMIDT, KEVIN BATIK, McGuire Woods LLP
14

15          Appeal from a judgment of the United States District Court for the Southern District of New

16   York (Rakoff, J.).

17          UPON DUE CONSIDERATION IT IS HEREBY ORDERED, ADJUDGED, AND

18   DECREED that the judgment of the district court be VACATED and the case REMANDED to the

19   district court for further proceedings consistent with this opinion.

20          Plaintiff-Appellant Shawn Brown, the lead plaintiff in four consolidated cases against

21   Defendant-Appellee General Nutrition Co. (“GNC”), appeals from a July 29, 2008 order of the

22   district court dismissing the four cases with prejudice for failure to prosecute under Federal Rule of

23   Civil Procedure 41(b). Based on the record before us, the five factors used in this Circuit to review a

24   district court’s dismissal for failure to prosecute do not militate in favor of such a dismissal and

25   require us to vacate the order here. We assume the parties’ familiarity with the facts, procedural

26   history, and issues on appeal.

27   I.     Background

28          In 2002, the various plaintiffs filed class actions against GNC in state courts in Florida, New

29   York, New Jersey, and Pennsylvania. These cases alleged consumer fraud and unjust enrichment

                                                       2
 1   against GNC related to GNC’s sale of products containing certain steroid hormones. In January

 2   2006, one of the manufacturers of the steroid products, MuscleTech, filed for bankruptcy in the

 3   Southern District of New York. Thereafter, GNC filed notices of removal to federal court in each of

 4   the state court actions on the basis that, under 28 U.S.C. § 1334(b), the cases were “related to” the

 5   pending bankruptcy case. In May 2006, the plaintiffs filed motions to remand the case back to the

 6   state courts, and GNC filed motions to transfer all of the cases from their respective district courts to

 7   the Southern District of New York. The plaintiffs’ motions were denied, GNC’s were granted, and

 8   the cases were transferred to the Southern District of New York.

 9          The four cases were assigned in 2006 and 2007 to the Southern District of New York as part

10   of pending multidistrict litigation proceedings (“MDL proceedings”) regarding personal injury

11   arising from the use of ephedra. James Niss serves as a Special Master in these proceedings.

12          Several Case Management Orders (“CMO”) set forth the rules for motions practice in the

13   MDL proceedings. CMO No. 1 sets forth procedures and times for the serving and filing of papers.

14   CMO No. 3 ¶ 8 explains that, because of the large number of pending and prospective motions in

15   the multidistrict litigation, “the Court has asked the Special Master to review and summarize motion

16   papers before they are considered by the Court. Accordingly, on the day when the briefing of any

17   motion is completed, the moving party is directed to e-mail the Special Master a complete set of the

18   motion papers of all parties.”

19          Most relevant here, CMO No. 10 ¶ 5 instructs “[a]fter serving and filing papers within the

20   times provided in Case Management Order No. 1, the moving party must deliver courtesy copies to

21   Chambers and send in PDF format a complete set of papers, including answering papers, to the

22   Special Master; the motion will then be heard at the next status conference not less than one week


                                                       3
 1   after the courtesy copies have been delivered.” CMO No. 10 ¶ 5 also instructs the moving party to,

 2   within one business day of filing, “send all other parties who have appeared a list of each moving

 3   paper to be considered by the Court.” Finally, CMO No. 10 ¶ 5 warns parties that “[n]o papers will

 4   be considered by the Court unless they are listed as specified” in the CMO.

 5           In August and September 2007, GNC and Brown engaged in an email exchange with Niss in

 6   which plaintiffs inquired about filing a remand motion addressing the district court’s subject matter

 7   jurisdiction. On September 28, 2007, the parties entered into a Joint Stipulation of Dismissal with

 8   Prejudice, which dismissed the plaintiffs’ claims against GNC that related to GNC’s sale of

 9   MuscleTech products. On October 9, 2007, Niss emailed the parties a briefing schedule for

10   plaintiffs’ anticipated remand motions in all four of the cases pending in the MDL proceedings. The

11   email provided, in relevant part, as follows:

12           In light of [plaintiffs’] e-mail copied below, I hereby set the briefing schedule for
13           plaintiffs’ remand motions in all four cases pending in the Ephedra MDL as follows:
14
15                   October 29  Last day for plaintiffs to file moving papers
16                   November 21 Last day for defendants to file answering papers
17                   November 29 Last day for plaintiffs to file a reply, if any, and to comply
18                               with the moving party’s obligations under CMO#1 §§ IV &
19                               VIII.C, CMO#3 ¶8 & CMO#10 ¶5.
20                   December 6 Oral argument
21
22           The Court will not consider substantive motions unless and until it denies the remand
23           motion. All parties should read and follow the CMO provisions I’ve cited. For your
24           convenience, I’ve attached copies.
25
26           Plaintiffs filed remand motions on October 29, 2007, and GNC filed briefs in opposition.

27   On November 28, 2007, plaintiffs emailed Niss to make a joint request for an extension of time

28   for plaintiffs to file their reply brief, indicating that the parties were “in the process of attempting

29   to schedule a mediation in mid-December or January.” Niss granted an extension of “the time


                                                        4
 1   for filing plaintiffs’ reply and delivering the courtesy copies to January 31, 2008.” Plaintiffs

 2   never filed a reply brief, nor did they furnish a list of the papers to be submitted to the court or

 3   provide a set of papers to Niss or to the district court as required by CMO No. 10, which was

 4   both referenced in Niss’s email of October 9, 2007 and attached to it. As a result of the failure to

 5   submit papers to Niss and to the district court, the remand motions submitted by the plaintiffs

 6   were never placed on the agenda for any status conference and were never presented to the

 7   district court for consideration.

 8           On June 4, 2008, the district court issued a Notice of Motion to Dismiss 23 cases,

 9   including the four at issue here, with prejudice for “fail[ure] to prosecute . . . as required by this

10   Court’s case management orders.” The Notice of Motion to Dismiss indicated that the court was

11   instituting this action “on its own motion” and requested that papers in opposition to the motion

12   be submitted by July 7, 2009. Plaintiffs filed an untimely response on July 9, 2008. On July 14,

13   2008, the parties appeared before the district court judge, who issued an oral opinion indicating

14   that he had considered sanctions and other alternative penalties, but decided against them

15   because “plaintiffs’ counsel not only violated the orders of this Court repeatedly and egregiously,

16   but did so because plaintiffs’ counsel really had abandoned any desire to move these court cases

17   forward, except to the extent he could try to extort through mediation some nuisance value of

18   settlement.” On July 27, 2008, the district court issued an order dismissing the Plaintiffs’ cases

19   for “failure to prosecute them as required by briefing schedules set by the Court and the

20   applicable case management orders.” Plaintiffs timely appealed, and the cases were consolidated

21   on this appeal by stipulation of the parties and order of this Court.

22   II.     Analysis


                                                        5
 1           We review a district court’s dismissal of a case for failure to prosecute for abuse of

 2   discretion. Ruzsa v. Rubenstein & Sendy Attys at Law, 520 F.3d 176, 177 (2d Cir. 2008); Wynder

 3   v. McMahon, 360 F.3d 73, 76 (2d Cir. 2004). We review the district court’s decision by

 4   employing a five-factor analysis:

 5               [whether] (1) the plaintiff's failure to prosecute caused a delay of significant
 6               duration; (2) plaintiff was given notice that further delay would result in
 7               dismissal; (3) defendant was likely to be prejudiced by further delay; (4) the
 8               need to alleviate court calendar congestion was carefully balanced against
 9               plaintiff's right to an opportunity for a day in court; and (5) the trial court
10               adequately assessed the efficacy of lesser sanctions.
11
12   Ruzsa, 520 F.3d at 177 (quoting U.S. ex rel Drake v. Norden Sys., Inc., 375 F.3d 248, 254 (2d

13   Cir. 2004)). None of the five factors is dispositive, and we review the dismissal in light of the

14   record as a whole. Drake, 375 F.3d at 254.

15           Although we recognize the difficulties that district courts face in managing their dockets,

16   especially in the context of multidistrict litigation, the five-factor test does not permit us to

17   conclude that dismissal with prejudice here was permissible.1

18           With regard to the first factor, we ask (a) whether the delay can be attributed to the


             1
               We note that plaintiffs briefly argue on appeal that the district court did not have
     jurisdiction over this case and therefore could not dismiss it with prejudice. Because plaintiffs’
     jurisdictional argument is statutory and not constitutional, we may exercise hypothetical
     jurisdiction and decide the merits of the Rule 41(b) question without addressing the jurisdictional
     question, which we leave to the district court in the first instance. Ajlani v. Chertoff, 545 F.3d
     229, 237 (2d Cir. 2008); Amimbola v. Ashcroft, 378 F.3d 173, 180 (2d Cir. 2004). We add,
     however, that we regard with skepticism the plaintiffs’ argument that once the parties stipulated
     to dismiss claims against GNC relating to GNC’s sale of MuscleTech products, the district court
     no longer had subject matter jurisdiction because this case was no longer “related to” a
     bankruptcy proceeding. Generally, the existence of federal jurisdiction depends on the facts as
     they exist when the action is commenced. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S.
     826, 830 (1989); FDIC v. Four Star Holding Co., 178 F.3d 97, 100 (2d Cir. 1999). As stated,
     however, we leave the jurisdictional question to the district court to decide in the first instance.
     Similarly, we leave plaintiffs’ statutory abstention argument for the district court.

                                                        6
 1   plaintiffs, and (b) whether the delay was of significant duration. Drake, 375 F.3d at 255. The

 2   delay here was occasioned when the plaintiffs failed to file a PDF version of their papers with the

 3   Special Master and a courtesy copy with the district court and to notify both that briefing was

 4   complete, as required by CMO No. 10. The delay can be calculated to be from January 31, 2008,

 5   when plaintiffs’ reply was due, through June 4, 2008, when the district court introduced the

 6   motion to dismiss. This Circuit has noted that delay of a “matter of months” may warrant

 7   dismissal, Lyell Theatre Corp. v. Loews Corp., 682 F.2d 37, 43 (2d Cir. 1982), so plaintiffs’

 8   four-month delay cannot be said to be of insignificant duration for this analysis.

 9          However, with regard to factor two, plaintiffs were not given notice that further delay

10   would result in dismissal. This factor requires us to examine whether there was notice that

11   dismissal would result if there was “further delay.” Drake, 375 F.3d at 255. The district court

12   stated at the hearing on July 18, 2008 that plaintiffs’ counsel had violated the court’s orders

13   “repeatedly and egregiously.” The court, however, provided no information as to specific

14   instances of such violations of court orders, nor did it specify what, if any, warnings had

15   previously issued, or suggest what the plaintiffs could do to avoid dismissal. See id. (finding that

16   lack of notice cut against dismissal when trial court gave plaintiff little opportunity to save case

17   after notice of dismissal). Based on the record before us, the first notice that plaintiffs received

18   that their case was in danger of being dismissed was when the district court issued the June 4,

19   2008 motion to dismiss for failure to prosecute. This did not suffice to put plaintiffs on notice

20   that future inattention to the litigation and failure promptly to comply with court orders would

21   result in dismissal, and it did not provide them with the opportunity to cure any previous

22   deficiency.


                                                       7
 1          GNC argues that, with regard to factor three, whether it was prejudiced by the delay, the

 2   district court’s finding that it “put off allowing [GNC] to file for summary judgment” was

 3   sufficient prejudice. Although we have found that “prejudice to defendants resulting from

 4   unreasonable delay may be presumed,” there are no indications that the delay here, for example,

 5   “increased the litigation costs defendants had to bear or reduced (perhaps due to decaying

 6   evidence) their likelihood of success on the merits.” LeSane v. Hall’s Sec. Analyst, Inc., 239

 7   F.3d 206, 210 (2d Cir. 2001). Thus, we find that if there was prejudice to GNC, it was minimal.

 8          In assessing the fourth factor, we take into consideration the type of delay perpetrated by

 9   the plaintiffs. When the delay was “silent and unobtrusive rather than vexatious and

10   burdensome,” meaning the plaintiff simply “did not make submissions required by the court”

11   instead of “swamp[ing] the court with irrelevant or obstructionist filings,” this factor tends to

12   favor the plaintiff. Id. Indeed, “[t]here must be compelling evidence of an extreme effect on

13   court congestion before a litigant's right to be heard is subrogated to the convenience of the

14   court.” Lucas v. Miles, 84 F.3d 532, 535 (2d Cir. 1996). Although we are sympathetic to the fact

15   that the district courts must have discretion to manage their dockets, particularly in the context of

16   multidistrict litigation, here there is no evidence that the plaintiffs abusively contributed to

17   calendar congestion.

18          Finally, the district court expressly noted that it “considered other alternatives” to

19   dismissing the case, but ultimately decided upon dismissal because “plaintiffs’ counsel really had

20   abandoned any desire to move these court cases forward.” Without the benefit of knowing what

21   sanctions were considered and rejected, however, it is difficult for us to review this decision

22   under an abuse of discretion standard. See Martens v. Thomann, 273 F.3d 159, 180 (2d Cir.


                                                        8
 1   2001) (noting that “a decision to dismiss stands a better chance on appeal if the appellate court

 2   has the benefit of the district court’s reasoning”).

 3          In sum, we find that a review of the five factors requires us to vacate the district court’s

 4   decision to dismiss the plaintiffs’ case with prejudice for failure to prosecute under Rule 41(b).

 5   Such a ruling may be justified in the future in the event plaintiffs’ counsel’s failure to prosecute

 6   imposes further delay in connection with this litigation. The present record, however, considered

 7   as a whole, does not provide an adequate basis to uphold the district court’s judgment.

 8          For the foregoing reasons, the judgment of the district court is hereby VACATED and

 9   REMANDED for proceedings consistent with this opinion.2

10

11

12                                                  FOR THE COURT:

13                                                  Catherine O’Hagan Wolfe, Clerk

14

15                                                  By:__________________________




            2
               Plaintiffs have additionally requested in their brief that because of statements Judge
     Rakoff made questioning the merits of plaintiffs’ case that, upon remand, their case be assigned
     to a different district judge. We find no basis for plaintiffs’ request. Liteky v. United States, 510
     U.S. 540, 555 (1994) (“[J]udicial rulings alone almost never constitute a valid basis for a bias or
     partiality motion.”); see also United States v. Johnson, 567 F.3d 40, 54 (2d Cir. 2009) (rejecting
     defendant’s request for new judge on remand); Kensington Int’l Ltd. v. Republic of Congo, 461
     F.3d 238, 245 (2d Cir. 2006) (same).

                                                        9
