United States v. McLaughlin, Thomas ( 2006 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-4726
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
THOMAS B. MCLAUGHLIN and
CHRISTINE MCLAUGHLIN,
Defendants-Appellants.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 04 C 2992—Joan Humphrey Lefkow, Judge.
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ARGUED NOVEMBER 14, 2006—DECIDED DECEMBER 8, 2006
____________
Before EASTERBROOK, Chief Judge, and POSNER and
COFFEY, Circuit Judges.
POSNER, Circuit Judge. Just five days before the expira-
tion of the 10-year statute of limitations, 26 U.S.C. § 6502(a),
the government filed a complaint in federal district court
against Thomas McLaughlin for unpaid income taxes of
almost $3 million, including penalties and interest. (His
daughter was joined as a defendant because the govern-
ment as part of its suit was seeking to foreclose a tax lien
on property that it mistakenly thought she had an interest
in. She has no stake in the case and is hereby dismissed
2 No. 05-4726
from it.) Seven weeks later the government mailed
McLaughlin a copy of the complaint and the standard
request to waive service. McLaughlin did not waive
service, though had he done so he would have avoided the
costs subsequently incurred by the government in serv-
ing him. Fed. R. Civ. P. 4(d)(2).
The normal deadline for service is 120 days from the
filing of the complaint. Fed. R. Civ. P. 4(m). But it can be
extended by the district court and was—three times—with
the result that McLaughlin was not served until 271 days
after the complaint had been filed. Although admitting
that he owes the full amount of money sought by the
government, he moved to dismiss the complaint on the
ground that the district judge should not have granted the
extensions of time. The judge denied the motion, and
McLaughlin appeals. If the appeal succeeds, the govern-
ment will not be able to file a new suit, because the stat-
ute of limitations has now expired.
Initially, because of unspecified “budgetary consider-
ations” the Justice Department lawyer handling the case
did not hire a process server to serve the complaint but
instead instructed an IRS officer to do so. The officer,
after failing to serve McLaughlin at his home, sought him
out at his office. He wasn’t there, so the officer left the
complaint with McLaughlin’s daughter, who was. Mistak-
enly believing that leaving the complaint with an adult at
the defendant’s place of business is effective service (as it
would be if it were the defendant’s home, Fed. R. Civ. P.
4(e)(2), the difference being that there might be so many
people at a defendant’s place of business that process
left with one of them might very well not reach the defen-
dant), the IRS officer told the Justice Department lawyer
that the defendant had been served. By the time the lawyer
No. 05-4726 3
discovered the error, the 120-day deadline had expired, but
she filed a motion for a 30-day extension of time any-
way, and it was granted. The government then hired
a professional process server, who tried repeatedly to
serve the defendant, without success, necessitating a sec-
ond extension of time sought from and granted by the
judge. With success still eluding the process server, the
government hired another process server, who, a third
extension of time having been requested and granted,
finally served McLaughlin.
Although the government argued in the district court
that McLaughlin had tried to evade service and that this
was good cause for the long delay in accomplishing
service, the judge disagreed and concluded (rather implau-
sibly, considering the length of time it took professional
process servers to succeed in serving McLaughlin) that he
had not tried to evade service and that therefore the
government had failed to demonstrate good cause for its
delay in serving him. Nevertheless, as we said, the judge
denied the motion to dismiss the suit.
Rule 4(m) states that if the defendant isn’t served
within 120 days, the district court “shall dismiss the
action without prejudice . . . or direct that service be ef-
fected within a specified time; provided that if the plain-
tiff shows good cause for the failure, the court shall ex-
tend the time for service for an appropriate period.” In
other words, if good cause for the delay is shown, the
court must extend the time for service, while if good
cause is not shown, the court has a choice between dis-
missing the suit and giving the plaintiff more time (“direct
that service be effected within a specified time”). Henderson
v. United States, 517 U.S. 654, 662-63 (1996); Coleman v.
Milwaukee Board of School Directors, 290 F.3d 932, 934 (7th
4 No. 05-4726
Cir. 2002). Thus the plaintiff who fails to demonstrate good
cause for his delay throws himself on the mercy of the
district court.
The rule specifies no criteria for the exercise of mercy.
Some courts think that when as in this case an extension is
sought after the 120-day deadline has passed, the plain-
tiff must show “excusable neglect,” as that is the standard
laid down by Rule 6(b)(2) for motions “made after the
expiration of the specified period” for making the motion.
Turner v. City of Taylor, 412 F.3d 629, 650 (6th Cir. 2005);
McGuire v. Turnbo, 137 F.3d 321, 324 (5th Cir. 1998). We
disagree. Rule 4(m) authorizes the district court, in a
case in which the 120 days have elapsed, to “direct that
service be effected within a specified time”; only if the
plaintiff failed to meet the new deadline and filed a mo-
tion for an extension of time would Rule 6(b)(2) come into
play. E.g., Troxell v. Fedders of North America, Inc., 160 F.3d
381, 383 (7th Cir. 1998); Horenkamp v. Van Winkle & Co., 402
F.3d 1129, 1132 (11th Cir. 2005); United States v. 2,164
Watches, More or Less, Bearing a Registered Trademark of
Guess?, Inc., 366 F.3d 767, 772 (9th Cir. 2004); Committee
Note to 1993 Amendments, Rule 4(m). Rule 6(b)(2) is less
generous to dawdlers than Rule 4(m), not only in requir-
ing the plaintiff to show excusable neglect if his motion
for an extension is itself untimely, but also in not requiring
the judge to grant the motion even if good cause is shown.
The difference in standards may be accidental, or may
reflect the fact that ignoring litigation deadlines delays the
finality of litigation, see Committee Note to 1946 Amend-
ment of Rule 6, Subdivision (b), whereas missing service
deadlines merely postpones the commencement of litiga-
tion. Whatever the explanation, the difference is plain
enough.
No. 05-4726 5
Conceivably (no stronger word is possible), it could
make a difference in this case whether, as we do not
believe, a finding of excusable neglect is a precondition to
granting an untimely motion for an extension of time
within which to serve the complaint. Neglect is excusable
(though not justifiable—“neglect” implies lack of justifica-
tion) if there is a reason, which needn’t be a compelling
reason, to overlook it. Pioneer Investment Services Co. v.
Brunswick Associates Limited Partnership, 507 U.S. 380, 394-95
(1993); United States v. Guy, 140 F.3d 735 (7th Cir. 1998). A
common reason is that the neglect didn’t harm anyone,
United States v. Coney, 407 F.3d 871, 875 (7th Cir. 2005), but
it will not suffice if no excuse at all is offered or if the ex-
cuse is so threadbare as to make the neglect inexplicable.
Marquez v. Mineta, 424 F.3d 539, 541-42 (7th Cir. 2005);
United States v. Guy, supra, 140 F.3d at 736; Prizevoits v.
Indiana Bell Tel. Co., 76 F.3d 132, 134 (7th Cir. 1996). Service
of process can be tricky, but the government has not
much in the way of excuses for missing the deadline in this
case by almost five months, if (a big if) the judge’s find-
ing that McLaughlin did not evade service is accepted;
and though we are skeptical, we do not think the find-
ing clearly erroneous and so we accept it as a premise of
our consideration of the appeal. So if McLaughlin was
not trying to evade service, why did it take the government
nine months to serve him? Why did “budgetary con-
siderations” induce the government’s lawyer to have
service attempted by someone who apparently didn’t
know Rule 4, yet not prevent the subsequent hiring of
professional process servers in the same case?
It is a nice question whether only the government’s
first motion for an extension should be considered un-
timely, or the second and third as well since they too
6 No. 05-4726
(obviously) were filed after the 120-day period had
elapsed. We need not decide, since, as we have said, we
do not consider excusable neglect the test for extending
the deadline for service. This case is a good example of the
wisdom of Rule 4(m) in allowing a judge to excuse a
delay in service even if the plaintiff has no excuse at all.
Since McLaughlin admits liability, he could not be preju-
diced by having to defend a case that might have become
harder to defend by passage of time, for example because
of the death or fading memory of defense witnesses. Boley
v. Kaymark, 123 F.3d 756, 758 (3d Cir. 1997). Anyway he
received a copy of the complaint within the 120-day
period—probably two copies; almost certainly his
daughter showed him the ominous document that the
IRS officer had left with her addressed to him. He knew
he’d been sued, and armed with that knowledge he
could begin his defensive efforts if he wished to contest
liability—which he did not. He could not have been
prejudiced to even the slightest extent by the govern-
ment’s service fumbles.
When delay in service causes zero prejudice to the
defendant or third parties (or the court itself), the grant-
ing of extensions of time for service, whether before or
after the 120-day period has expired, cannot be an abuse of
discretion. United States v. 2,164 Watches, More or Less,
Bearing a Registered Trademark of Guess?, Inc., supra, 366 F.3d
at 773; Coleman v. Milwaukee Board of School Directors, supra,290 F.3d 932, 934. The icing on the cake is that the suit if
dismissed could not be reinstated, the statute of limita-
tions having expired five days after the complaint was
filed, see Panaras v. Liquid Carbonic Industries Corp., 94
F.3d 338, 341 (7th Cir. 1996); Horenkamp v. Van Winkle &
Co., supra, 402 F.3d at 1133; Mann v. American Airlines, 324
No. 05-4726 7
F.3d 1088 (9th Cir. 2003); Committee Note, supra, and the
defendant having admitted liability, dismissal would have
presented him with a windfall—and a big one. It would
have amounted to fining the government $3 million for
doing something that did no harm to anyone and handing
over the proceeds of the fine to a wrongdoer.
AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—12-8-06