Marcia Harris v. Orange Business Services U.S., Inc.

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-10553
Non-Argument Calendar
________________________
D.C. Docket No. 1:14-cv-00641-TWT
MARCIA HARRIS,
Plaintiff-Appellant,
versus
ORANGE S.A., et al.,
Defendants,
ORANGE BUSINESS SERVICES U.S., INC.,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(December 30, 2015)
Before MARTIN, JILL PRYOR and ANDERSON, Circuit Judges.
PER CURIAM:
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Marcia Harris appeals the district court’s dismissal of her complaint against
Orange Business Services U.S., Inc. (“OBS”), a Delaware corporation located in
Georgia; Orange S.A. (“Orange”), a corporation located in France; Almerys S.A.S.
(“Almerys”), a corporation located in France; Dr. Patrice Cristofini; Dr. Yves
Miaux; Barbara Ngouyombo; Hammond Bale Solicitors L.L.P. (“HB”), a law firm
located in the United Kingdom; Griffin and King Ltd (“GK”), a law firm located in
the United Kingdom; and Landwell & Associés/Partners (“Landwell”), a
partnership located in France, in her action alleging violations of the Georgia Trade
Secrets Act, Ga. Code Ann. §§ 10-1-760 et seq. (“GTSA”), the federal Racketeer
Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. §§ 1961 et seq.,
the Georgia RICO Act, Ga. Code Ann. §§ 16-14-1 et seq., and common law fraud.
On appeal, Harris argues that the district court erred in dismissing her claims
against the non-OBS defendants for failure to serve them. She further argues that
the district court erred in concluding that she lacked standing to bring federal
RICO claims, state RICO claims, and claims under the GTSA against OBS.
Finally, as to her fraud claims, she argues—for the first time on appeal—that the
district court erred in dismissing her fraud claims for failure to state a claim on the
basis that OBS did not owe her a fiduciary duty. After careful consideration, we
affirm.
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I. BACKGROUND
Harris, who proceeds pro se but is licensed to practice law, filed a complaint
alleging violations of the GTSA against all defendants (Count 1), violations of the
federal RICO Act against all defendants (Count 2), violations of the Georgia RICO
Act against all defendants (Count 3), and common law fraud against OBS and
Orange (Count 4).
Harris was a director, shareholder, and employee of Anoigma Ltd.
(“Anoigma”), a British high tech health care company. Initially, she, Ngouyombo,
and Miaux were the company’s only shareholders. 1 During her time at Anoigma,
the company developed medical-records software that constituted new intellectual
property (the “IP”). Harris and Ngouyombo presented the IP to Cristofini, who
represented Orange at the time. She alleges that Orange then discussed the IP with
OBS, Orange’s United States affiliate.
After OBS discovered the IP’s profit potential, it encouraged Orange to
express interest in Anoigma and to install Cristofini as a shareholder and officer
there. Not long after, Cristofini became the fourth shareholder of Anoigma and
obtained a director position in the company. Sometime after Cristofini joined
Anoigma, he, Miaux, and Ngouyombo secretly created a new company, Cloud
1
At the motion to dismiss stage, we accept the well-pleaded allegations in the complaint
as true and view them in the light most favorable to Harris. See Chaparro v. Carnival Corp., 693
F.3d 1333, 1335 (11th Cir. 2012).
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Sante S.A.S. (“CS”), and transferred the IP to CS. The defendants then began
efforts to remove Harris from her directorship of Anoigma, which they ultimately
succeeded in doing.
Harris brought an action in England against Anoigma and CS, alleging,
among other things, wrongful termination. Neither Anoigma nor CS appeared to
contest Harris’s allegations. The English court awarded Harris a monetary
judgment consisting of loss of earnings, loss of statutory rights, improperly
deducted wages, and other costs.
After her removal as director, Harris entered negotiations to purchase the IP,
with the intention of setting up a company to market it in the United States. She
became aware of the IP’s transfer to CS during the course of these negotiations.
Before Harris could collect her wrongful termination judgment or complete her
purchase of the IP, the defendants deliberately moved Anoigma into bankruptcy.
The defendants then transferred the IP from CS to Almerys, a subsidiary of
Orange, and engineered the bankruptcy of CS.
Harris filed suit against Orange, Cristofini, Miaux, Ngouyombo, and HB in
the Northern District of Illinois (the “Illinois Action”) alleging claims similar to
those she alleges here. The district court in that case dismissed the action on the
basis of forum non conveniens, noting that Harris should have brought her
complaint in a foreign court. Harris did not appeal the district court’s judgment.
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Harris then filed the current action, contending that both transfers of the IP
were fraudulent. Her complaint alleges that, as a result of the fraudulent transfers
of the IP and the bankruptcies, she was deprived “of the value of her shares,”
prevented from collecting on the money judgment awarded to her by the English
court, and prevented from purchasing the IP “for commercialization in the U.S.”
She seeks to distinguish this action from the Illinois Action by naming additional
defendants and adding allegations of fraud arising from declarations made during
the Illinois Action. She alleges that these declarations “were designed to divert
attention away from the central role of OBS, a U.S. company,” in the alleged
conspiracy, thereby compelling dismissal of the action on forum non conveniens
grounds and allowing the defendants to further the conspiracy. She also contends
that she relied on fraudulent omissions the defendants committed during the
Illinois Action in deciding not to appeal the court’s dismissal of that action, and
“was damaged thereby in terms of the costs of the previous lawsuit, and the loss of
time (and potential loss of evidence) in pursuing the present lawsuit.”
OBS moved to dismiss Harris’s claims against it. The district court granted
OBS’s motion to dismiss on November 28, 2014 (the “November Order”). The
court noted that Harris had not addressed the issue of standing in opposing
dismissal and concluded that she lacked standing to assert a federal or Georgia
RICO claim because “to the extent that there is a plausible RICO claim . . . it
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belongs to Anoigma, not the Plaintiff.” The court also concluded that Harris
lacked standing to assert her GTSA claim because she had no legal interest in the
trade secret. Finally, the district court ruled that Harris had failed to state a claim
for fraud, noting that the only fraud she alleged concerned OBS’s failure to
disclose certain facts, and that she had failed to establish that OBS owed her any
duty to disclose. Harris appealed the November Order.
The district court next issued an order to show cause why the action as to the
remaining defendants should not be dismissed for lack of service, observing that
the action had, at that point, been pending for more than eight months without any
proof of service or substantial proceedings of record taking place with respect to
any defendant other than OBS. Harris argued in response that the six-month time
limit to effectuate service in the Federal Rules of Civil Procedure does not apply to
service in a foreign country. She also requested that the district court not enter its
proposed order due to her pending appeal of the November Order.
The district court dismissed the action against the non-OBS defendants,
noting that Harris’s only response to the show cause order was that the rules of
service do not apply in a foreign country. The court ruled that Harris was required
to show diligence in serving foreign defendants and had failed to do so. The court
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then entered a final judgment dismissing the action against all remaining
defendants. 2
II. STANDING
We first address the district court’s dismissal of Harris’s federal and Georgia
RICO and GTSA claims against OBS for lack of standing. When a district court
dismisses a plaintiff’s claim for lack of standing, we review the court’s legal
conclusions de novo, and its factual findings for clear error. McCullum v. Orlando
Reg’l Healthcare Sys., Inc., 768 F.3d 1135, 1141 (11th Cir. 2014).
RICO Claims
The federal RICO act makes it illegal “for any person employed by or
associated with any enterprise engaged in, or the activities of which affect,
interstate or foreign commerce, to conduct or participate, directly or indirectly, in
the conduct of such enterprise’s affairs through a pattern of racketeering activity.”
18 U.S.C. § 1962(c). As relevant here, the Georgia RICO statute makes it
“unlawful for any person, through a pattern of racketeering activity or proceeds
2
Apparently not having received the final judgment, Harris subsequently filed a motion
requesting that the district court amend the November Order to state that it presented a
controlling question of law to allow Harris to file an interlocutory appeal in the event the
November Order was not considered a final judgment. She also filed a separate motion
requesting that, in the event the district court did not amend the November Order as requested,
the court transform the November Order into a final judgment pursuant to Federal Rule of Civil
Procedure 54(b). The court denied both motions as moot, as it had already entered final
judgment of dismissal. We issued to the parties a question regarding the finality of the order
under appeal. The appeal ultimately was allowed to proceed because, even if Harris’s Notice of
Appeal from the November Order was premature, it was cured by the subsequent entry of final
judgment.
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derived therefrom, to acquire or maintain, directly or indirectly, any interest in or
control of any enterprise, real property, or personal property of any nature,
including money.” Ga. Code Ann. § 16–14–4(a). It also makes it “unlawful for
any person employed by or associated with any enterprise to conduct or participate
in, directly or indirectly, such enterprise through a pattern of racketeering activity.”
Ga. Code Ann. § 16–14–4(b).
In order to state a civil claim under either statute, a plaintiff must establish
that the alleged injury directly was caused by the RICO violation. Bivens Gardens
Office Bldg., Inc. v. Barnett Banks of Florida, Inc., 140 F.3d 898, 906 (11th Cir.
1998). 3 The plaintiff must have been injured in her business or her property by the
racketeering conduct constituting the violation, and the damages must flow from
commission of the predicate acts. Williams v. Mohawk Indus., Inc., 465 F.3d 1277,
1291 (11th Cir. 2006). Thus, “a party whose injuries result ‘merely from the
misfortunes visited upon a third person by the defendant’s acts’ lacks standing to
pursue a claim under RICO.” Bivens, 140 F.3d at 906 (quoting Holmes v. Sec.
Investor Prot. Corp., 503 U.S. 258, 267 (1992)). Applying this principal, we have
held that “losses suffered by a company’s stakeholders as a result of racketeering
activity against the company do not give them standing under RICO” because
3
Because the Georgia RICO statute was modeled on and is analogous to the federal
RICO statute, we look to federal authority in determining standing to sue under the state statute.
Williams v. Mohawk Indus., Inc., 465 F.3d 1277, 1294 (11th Cir. 2006).
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“[s]uch an injury is too indirect or ‘derivative’ to confer RICO standing.” Bivens,
140 F.3d at 906. Notably, “[a] plaintiff’s status as a creditor or stockholder,
however, does not preclude standing for RICO violations if the plaintiff has alleged
an injury proximately caused by the defendants’ acts of racketeering that target the
plaintiff.” Beck v. Prupis, 162 F.3d 1090, 1096 n.10 (11th Cir. 1998) aff'd, 529
U.S. 494 (2000).
The critical question in determining whether a shareholder has standing to
file a RICO action is whether or not the plaintiff suffered a harm that stands
separate and distinct from the harm suffered by the corporation. Bivens, 140 F.3d
at 908. Our precedent is clear that a shareholder lacks RICO standing “if the injury
alleged was suffered only as a result of harm to the corporation.” Id. In other
words, the harm suffered by the plaintiff shareholder cannot be “purely contingent”
on the harm suffered by the corporation. Holmes, 503 U.S. at 271.
Harris’s claims fail this test. Each of Harris’s primary alleged injuries
flowed from her status as a shareholder and the diminution in the value of her
shares.4 Indeed, she explicitly stated as much eight times in her complaint,
alleging that her injuries were “based on her shareholding.” Her complaint
4
In her brief, Harris asserts that the defendants also “wrested” her shares from her.
Though this injury arguably may be sufficiently distinct to confer standing, see Bivens, 140 F.3d
at 907, Harris raises this argument for the first time on appeal. We therefore do not consider it.
See Timson v. Sampson, 518 F.3d 870, 874 (11th Cir. 2008).
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principally alleged that she received no compensation as a shareholder of Anoigma
when the company’s IP was transferred to CS, was deprived of the value of her
shares in Anoigma, and was prevented from purchasing the IP.
Accepting Harris’s allegations as true, her injuries are indistinguishable from
the injuries inflicted on Anoigma. In the absence of injury to Anoigma, Harris
would not have been harmed. By fraudulently transferring the IP to CS, the
defendants irreparably damaged Anoigma’s value, and in so doing, necessarily
harmed the proportionate value of Anoigma owned by Harris. In a very real sense,
as the owner of approximately 19% of Anoigma’s outstanding shares, Harris
suffered approximately 19% of the same harm Anoigma suffered. Similarly,
Harris’s injury in being unable to benefit from purchasing the IP mirrors
Anoigma’s injury in being unable to benefit from selling it. In either case, Harris
alleged no injury distinct from that suffered by Anoigma.
In apparent recognition of this Court’s clear precedent as regards
shareholder standing, Harris attempts to distinguish her circumstances by arguing
that she suffered a distinct and peculiar injury not suffered by Anoigma’s other
shareholders. She reasons that Miaux, Ngougombo, and Cristofini all became
shareholders of CS, the entity to whom the IP was transferred. As such, in a sense,
she was the only party deprived of the value of the IP. She contends that suffering
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an injury distinct from other shareholders (but not the corporation) is sufficient to
confer standing.
We are unpersuaded by Harris’s argument because it misconstrues the
relevant case law. True, some courts have recognized standing in situations
“where the shareholder suffers an injury which is separate and distinct from that of
other shareholders.” Grafman v. Century Broad. Corp., 727 F. Supp. 432, 435
(N.D. Ill. 1989). However, far from creating an exception to the general rule that a
shareholder must suffer an injury distinct from that of the corporation to have
standing, these cases are wholly consistent with it. Tellingly, none of the cases
Harris cites held that a plaintiff shareholder has individual standing to sue for an
injury suffered by a corporation. In fact, most of the cases Harris cites explicitly
note the general rule “that there is no shareholder standing to assert RICO claims
where the harm is derivative of harm to the corporation.” Sparling v. Hoffman
Constr. Co., 864 F.2d 635, 640 (9th Cir. 1988); see also Leach v. FDIC, 860 F.2d
1266, 1273-74 (5th Cir. 1988) (recognizing cases holding that “minority
shareholders lacked standing under RICO to sue because they had not alleged any
injury to their property that was distinct from any injury the corporation may have
suffered”); Rand v. Anaconda-Ericsson, Inc., 794 F.2d 843, 849 (2d Cir. 1986)
(holding that plaintiffs lacked standing because “[t]he legal injury, if any, was to
the firm”).
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The few cases Harris cites that have recognized a plaintiff shareholder’s
standing to sue concerned injuries inflicted directly on the plaintiff shareholder, not
the corporation. In Bivens, for example, we recognized standing for a creditor to
sue for the undervaluation of a company’s assets during bankruptcy proceedings
because “[t]he sale of the [asset] for a higher price would have directly benefitted
major creditors . . . because they would have been able to recover a greater
percentage of the debts owed to them. In contrast, the sale of the [asset] for a
higher price would have little impact on the shareholders and the corporation,
since the additional funds from the sale would have been used to satisfy creditors
instead of going to shareholders.” 341 F.3d at 908 (emphasis added). Another
case, Grafman, recognized a plaintiff’s standing to sue defendants who had acted
to dilute his voting shares. 727 F. Supp. at 434. These actions singled out the
plaintiff from other shareholders and harmed him. Importantly, however, they did
not harm the corporation at all. In fact, the district court in that case explicitly
dismissed any “allegations concern[ing] harm to [the corporation].” Id. at 435.
Unlike the plaintiffs in Bivens and Grafman, Harris has not suffered a distinct
injury. She therefore lacks standing to pursue her claims.
This result becomes clear when considering the policy goals governing
RICO standing requirements. In evaluating whether a plaintiff has suffered a
direct injury sufficient to confer standing, we consider the motivating principles
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animating the injury requirements in RICO cases. See Williams, 465 F.3d at 1288
(quoting Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 458 (2006)) (discussing
the proximate cause standard in RICO cases). 5 These principles include (1)
reducing the difficulty in ascertaining the amount of damages attributable to the
RICO violation as distinct from other independent factors and (2) reducing the risk
of duplicative recoveries. Id. Granting standing to Harris in this case would
advance neither of these principles. First, it would be difficult, if not impossible,
to determine accurately the proportionate reduction in Anoigma’s value
attributable to the defendants’ conduct as opposed to factors like market
conditions, poor business practices, or failure to anticipate developments in the
financial markets. See Holmes, 503 U.S. at 272-73. Second, to the extent that the
defendants’ conduct has harmed Anoigma’s value, Anoigma can be counted on to
vindicate that interest. See id. Recognizing Harris’s right to sue for the same
injury would only increase the risk of duplicative recovery, particularly since she
proposes no method of apportioning a possible recovery between herself and
Anoigma. See id.
Harris did allege one injury that is unrelated to her status as an Anoigma
shareholder. She pled that the defendants’ racketeering activity moved Anoigma
5
There is “significant overlap” between proximate cause and standing requirements in
RICO cases. Williams, 465 F.3d at 1287. “[A] plaintiff who lacks standing to vindicate a
derivative injury also will be unable to show proximate cause.” Id. at 1287 n.4 (quoting
Trollinger v. Tyson Foods, Inc., 370 F.3d 602, 613 (6th Cir. 2004)).
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and CS into bankruptcy, thus preventing her from collecting on her English
judgment for wrongful termination. Although this injury does not arise out of
Harris’s status as a shareholder, it does arise out of her status as a creditor. It thus
raises analogous standing issues as her other injuries. Like a shareholder, “[a]
creditor will have RICO standing only when his injury passes the directness test . .
. which will not be the case if the injury alleged was suffered only as a result of
harm to the corporation. Bivens, 140 F.3d at 908. This injury, like the others
Harris alleges, is insufficient to confer RICO standing. Harris’s inability to collect
on her English judgment is a direct result of harm to Anoigma and CS. Had the
defendants never harmed Anoigma and CS by deliberately moving them into
bankruptcy, Harris would have collected her judgment and suffered no injury.
GTSA Claims
To file a claim under the GTSA, Ga. Code Ann. § 10–1–760 et seq., a
plaintiff must prove that “(1) it had a trade secret and (2) the opposing party
misappropriated the trade secret.” Penalty Kick Mgmt. Ltd. v. Coca Cola Co., 318
F.3d 1284, 1290-91 (11th Cir. 2003) (internal quotation marks omitted). The
GTSA defines “misappropriation” as “[a]cquisition of a trade secret of another by
a person who knows or has reason to know that the trade secret was acquired by
improper means.” Ga. Code Ann. § 10–1–761(2)(A) (emphasis added). The
precise meaning of “a trade secret of another” is unclear. In fact, “whether
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ownership is a necessary element for standing to bring a GTSA claim is an open
question in Georgia.” Candy Craft Creations, LLC v. Gartner, No. CV 212-091,
2015 WL 1541507, at *17 (S.D. Ga. Mar. 31, 2015).
But we need not decide that issue here. Regardless of whether mere
possession of misappropriated property is sufficient to confer standing or whether
ownership is required, Harris failed to allege that she had an actionable interest in
the IP. She admitted in her complaint that “the actual owner of the trade secret was
Anoigma.” Moreover, she alleged neither that she is in possession nor that she was
ever in possession of the IP. Indeed, such an allegation seemingly would conflict
with her claim that she was injured by deprivation of an opportunity to purchase
that same IP. Further, Harris advances no legal authority supporting her assertion
that the deprivation of an opportunity to purchase property is an interest sufficient
to confer standing. Absent any actionable interest in the IP, Harris’s GTSA claim
fails for lack of standing.
III. FAILURE TO STATE A CLAIM
Harris’s next claim is for common law fraud. We review de novo the district
court’s dismissal for failure to state a claim. Oxford Asset Mgmt., Ltd. v. Jaharis,
297 F.3d 1182, 1187 (11th Cir. 2002). In doing so, we accept the plaintiff’s factual
allegations as true. Id. at 1188. We note, however, that conclusory allegations and
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conjecture are insufficient to survive a motion to dismiss. Am. United Life Ins. Co.
v. Martinez, 480 F.3d 1043, 1064 (11th Cir. 2007).
Under Georgia law, a plaintiff asserting a claim for fraudulent
misrepresentation must prove five essential elements: (1) the defendant made
representations, (2) knowing they were false, (3) intentionally and for the purpose
of deceiving the plaintiff, (4) which the plaintiff reasonably relied on, (5) with the
proximate result that the plaintiff incurred damages. Williams v. Dresser Indus.,
Inc., 120 F.3d 1163, 1167 (11th Cir. 1997).
Harris does not allege that OBS made any affirmative misrepresentations to
her. Instead, she argues that OBS had an obligation to disclose certain facts about
its involvement in the e-health industry and her prior lawsuit. The suppression of a
material fact that a party is under obligation to communicate may constitute fraud.
Williams, 120 F.3d at 1167. Generally speaking, “[w]here one person sustains
towards another a relation of trust and confidence, his silence when he should
speak or his failure to disclose what he ought to disclose constitutes fraud in law
just as do actual affirmative false representations.” Tigner v. Shearson-Lehman
Hutton, Inc., 411 S.E.2d 800, 802 (Ga. Ct. App. 1991) (citing Perkins v. First
Nat’l. Bank of Atlanta, 143 S.E.2d 474, 484 (Ga. 1965)). This obligation to
communicate or disclose may arise from the confidential relations of the parties or
from the particular circumstances of the case, but it must exist before a party may
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be found liable for fraud based upon an omission or concealment. Williams, 120
F.3d at 1167. Business relationships generally are not confidential relationships,
unless the parties have a history of business dealings or the kind of relationship
that is not arms-length. Id. at 1168.
Here, the district court did not err in dismissing Harris’s fraud claim. The
only argument she advances on appeal is that Cristofini was acting as an agent for
OBS, and that because Cristofini owed her a fiduciary duty as a fellow shareholder
of Anoigma, as Cristofini’s principal, OBS owed her the same duty. She reasons
that because of this duty, OBS’s failure to affirmatively disclose a number of facts
(concerning its true involvement in the e-health industry and her prior lawsuit)
constituted fraudulent misrepresentation.
Although Harris alleged in her complaint that Cristofini was acting as an
agent for OBS, she never explained to the district court why or how an agent’s
individual fiduciary duty to a third party arising out of the agent’s relationship with
the third party would create an affirmative obligation on the part of his principal to
disclose material facts about its own operations to the third party. Even now, she
cites no legal authority for that proposition. Harris’s shareholder relationship with
Cristofini may have imposed on Cristofini an affirmative obligation to disclose
information to her, but she had no such relationship with OBS. Her relationship
with OBS—to the extent there was a relationship prior to the Illinois Action—was
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hardly one of “trust and confidence.” Tigner, 411 S.E.2d at 802. Harris presents
no basis for any obligation on the part of OBS to disclose to her. Regardless,
Harris failed to raise this issue before the district court, and, as a result, we need
not consider it. Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th
Cir. 2004).
IV. FAILURE TO EFFECT TIMELY SERVICE ON NON-OBS
DEFENDANTS
Harris’s only remaining claims concern the non-OBS defendants. 6 We
review for abuse of discretion the district court’s dismissal of the claims against the
non-OBS defendants for failure to effectuate timely service on those defendants.
Rance v. Rocksolid Granit USA, Inc., 583 F.3d 1284, 1286 (11th Cir. 2009).
Under this standard, we will affirm unless the district court made a clear error of
judgment or applied the wrong legal standard. Id.
Federal Rule of Civil Procedure 4 generally requires a plaintiff to effectuate
service on a defendant within 120 days after a complaint is filed. Fed. R. Civ. P.
4(m). That time limit does not apply, however, when a plaintiff is attempting to
serve an individual in a foreign country. Id. We have not held in a published
decision whether or what time constraints apply to service on foreign defendants.
See Regenicin, Inc. v. Lonza Walkersville, Inc., 997 F. Supp. 2d 1304, 1317 (N.D.
6
Harris asserted common law fraudulent misrepresentation claims against those
defendants.
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Ga. 2014). Indeed, there is a considerable difference of opinion among circuits
regarding what—if any—time limits apply to service of process on a foreign
defendant. Compare Lucas v. Natoli, 936 F.2d 432, 432-33 (9th Cir. 1991) (no
time limit), with Nylok Corp. v. Fastener World Inc., 396 F.3d 805, 807 (7th Cir.
2005) (time is “not unlimited), and Mentor Ins. Co. (U.K.) Ltd. v. Brannkasse, 996
F.2d 506, 512 (2d Cir. 1993) (attempt to serve must be made within 120 days).
Specific time limits aside, “[m]ost courts faced with a challenge to the
timeliness of foreign service have applied a ‘flexible due diligence’ standard to
determine whether the delay should be excused.” Lozano v. Bosdet, 693 F.3d 485,
488-89 (5th Cir. 2012) (internal quotation marks omitted). We have affirmed
decisions based on similar considerations in the context of domestic service of
process. Lepone-Dempsey v. Carroll Cty. Comm’rs, 476 F.3d 1277, 1282 (11th
Cir. 2007). We see no reason why such a standard would fail to apply to foreign
service of process. We thus join the majority of circuits to have considered the
issue in holding that a plaintiff’s complaint may be dismissed upon a showing that
she failed to exercise diligence in attempting to effectuate service on a foreign
defendant.
On appeal, Harris admits that she made no effort to serve the foreign
defendants. Rather, she asserts that she misunderstood the service requirements.
Having appealed the November Order, she claims she assumed that she would not
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need to serve the non-OBS defendants until she received a decision from this Court
concerning the viability of her claims vis-à-vis OBS.
We find no abuse of discretion in the district court’s decision to dismiss
Harris’s claims against the foreign defendants for failing to exercise diligence in
attempting service. The fact that Harris may have erred in good faith does not
immunize her claims from dismissal. The district court operated well within its
discretion in rejecting her explanation. To avoid dismissal for lack of diligence, a
plaintiff must demonstrate “at least as much as would be required to show
excusable neglect, as to which simple inadvertence or mistake of counsel or
ignorance of the rules usually does not suffice.” Lambert v. United States, 44 F.3d
296, 299 (5th Cir. 1995) (quoting Winters v. Teledyne Movible Offshore, Inc., 776
F.2d 1304, 1306 (5th Cir. 1985)) (emphasis omitted); see also Lepone-Dempsey,
476 F.3d at 1282 (“While the plaintiffs might have had good reason to think that
they could rely on [the agent for service’s] assertion that he would sign and return
the waiver forms, the plaintiffs were responsible for formally serving the
defendants when the waiver forms were not returned.”).
Furthermore, Harris’s alleged mistake does little to excuse her lack of
diligence. The only explanation she advances for her delay in serving the non-
OBS defendants is that she was waiting for this Court to resolve her appeal from
the November Order. But nothing excuses her puzzling failure to make any
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attempt to serve the non-OBS defendants prior to her receipt of the November
Order. Harris filed her initial complaint in the Northern District of Georgia on
March 4, 2014; the district court issued a preliminary order dismissing her claims
against OBS on November 26, 2014. 7 More than twice the number of days
allowed by Rule 4(m), 268 days, elapsed before the district court entered the
November Order. During this time, Harris failed to serve a single one of the eight
non-OBS defendants. Indeed, it does not appear from the record that she made any
attempt whatsoever to do so. In the absence of any excuse for this failure, it was
well within the district court’s discretion to determine that she failed to prosecute
her action.
V. CONCLUSION
The district court did not err in dismissing Harris’s federal and Georgia
RICO and GTSA claims for lack of standing, nor did it err in dismissing her
common law fraud claims for failure to state a claim. Further, as to the non-OBS
defendants, the district court did not abuse its discretion in dismissing Harris’s
claims for failure to effectuate service of process.
AFFIRMED.
7
The order was later modified on November 28, 2014.
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