Wu v. Wang, Inc.

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 05a0369p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellant, -
TUNG-HSIUNG WU (SEAN TUNG-XIUNG WU),
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No. 04-2102
v.
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T.W. WANG, INC. d/b/a WORLD JOURNAL USA, -
Defendant-Appellee. -
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Appeal from the United States District Court
for the Eastern District of Michigan at Bay City.
No. 03-10187—David M. Lawson, District Judge.
Submitted: July 7, 2005
Decided and Filed: August 26, 2005
Before: GUY, BATCHELDER, and GILMAN, Circuit Judges.
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COUNSEL
ON BRIEF: Eric C. Grimm, CALLIGARO & MEYERING, Taylor, Michigan, for Appellant.
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OPINION
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RONALD LEE GILMAN, Circuit Judge. Tung-Hsiung Wu (Sean Wu) sued T.W. Wang,
the publisher of World Journal, for false-light invasion of privacy in August of 2003. World Journal
submitted a stipulated order to the district court in March of 2004, seeking to stay the proceedings
pending the outcome of a related case in Taiwan. Assuming that the order would be entered, World
Journal did not file an answer to Wu’s complaint and Wu did not seek a default judgment against
World Journal. The district court, however, took no action on the proposed order. Instead, on the
basis of its prior order to show cause why the case should not be dismissed for failure to serve
process, it dismissed Wu’s lawsuit. For the reasons set forth below, we REVERSE the judgment
of the district court and REMAND the case for further proceedings consistent with this opinion.
I. BACKGROUND
Wu, a professor and businessman, filed suit against World Journal in August of 2003,
alleging that the newspaper had falsely reported that he was a felon and an adulterer. In February
of 2004, the district court issued an order to show cause why the case should not be dismissed for
failure to properly serve the summons and complaint on World Journal. Wu’s attorney, Eric Grimm,
filed a response to the court’s order several days later, stating that counsel for World Journal had
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accepted the summons and complaint in August of 2003. Grimm also stated that the defendant had
agreed to file an answer on or before March 31, 2004 rather than filing a waiver of service or a
declaration with the court.
In March of 2004, before the answer was due, counsel for World Journal submitted a
stipulated order to the district court that would stay the proceedings pending the resolution of a
related case that was being litigated in Taiwan. The parties sought the stay because they believed
that the outcome of the Taiwanese proceedings would have an impact on the present case.
Assuming that the stay would be granted, World Journal did not file an answer and Wu did not seek
a default judgment.
World Journal’s attorneys, according to Wu’s brief on appeal, contacted the district court
clerk’s office on at least eight occasions regarding the status of the stipulated order. The court,
however, never responded one way or the other. Instead, with no further warning, the court entered
an order in July of 2004 dismissing Wu’s lawsuit without prejudice. The order stated that
[t]he plaintiff filed a response on February 11, 2004 stating that he expected an
answer by the defendants to be filed on or before March 31, 2004, and that he had
no intention of seeking a default or default judgment. However, no action has been
taken in the matter since February 11, 2004, and no proof of service of the summons
and complaint on the defendant has been filed.
Wu then filed a motion for relief under Rule 60 of the Federal Rules of Civil Procedure,
seeking to have his lawsuit reinstated in light of the parties’ proposed stipulated order to stay the
proceedings that had been submitted in March of 2004. World Journal did not oppose this motion
for relief. The district court nevertheless denied Wu’s motion, ruling that “the plaintiff [had] failed
to proceed.” It explained that,
[a]lthough the parties in this case sought to stay the matter, the Court did not agree
and an order staying the case was not entered. The Court’s decision not to stay the
case and its show cause order provided the plaintiff with a clear indication that he
needed to proceed with his case or it would be dismissed.
This timely appeal, in which World Journal has elected not to participate, followed.
II. ANALYSIS
A. Standard of review
We apply the abuse-of-discretion standard when reviewing a district court’s decision to
dismiss a lawsuit for failure to prosecute. Little v. Yeutter, 984 F.2d 160,162 (6th Cir. 1993). The
dismissal of “a claim for failure to prosecute ‘is a harsh sanction which the court should order only
in extreme situations showing a clear record of contumacious conduct by the plaintiff.’” Stough v.
Mayville Cmty. Schs., 138 F.3d 612, 614-15 (6th Cir.1998) (quoting Carter v. City of Memphis, 636
F.2d 159, 161 (6th Cir.1980)).
B. The district court erred in dismissing Wu’s lawsuit for failure to prosecute
We consider four factors in reviewing the decision of a district court to dismiss a case for
failure to prosecute:
(1) whether the party’s failure is due to willfulness, bad faith, or fault; (2) whether
the adversary was prejudiced by the dismissed party’s conduct; (3) whether the
dismissed party was warned that failure to cooperate could lead to dismissal; and
No. 04-2102 Wu v. Wang, Inc. Page 3
(4) whether less drastic sanctions were imposed or considered before dismissal was
ordered.
Knoll v. Am. Tel. & Tel. Co., 176 F.3d 359, 363 (6th Cir. 1999). These factors have been applied
“more stringently in cases where the plaintiff’s attorney’s conduct is responsible for the dismissal.”
Harmon v. CSX Transp., Inc. 110 F.3d 364, 367 (6th Cir. 1997).
1. Willfulness, bad faith, or fault
For a plaintiff’s actions to be motivated by bad faith, willfulness, or fault, his conduct “must
display either an intent to thwart judicial proceedings or a reckless disregard for the effect of [his]
conduct on those proceedings.” Mulbah v. Detroit Bd. of Educ., 261 F.3d 586, 591 (6th Cir. 2001)
(citation and quotation marks omitted) (alteration in original). Wu’s conduct in failing to seek a
default or default judgment prior to the date when the parties had agreed that the answer was due
did not rise to that level. Rather, Wu and his attorney were relying on the fact that a stipulated order
to stay the proceeding was pending before the district court and on the parties’ mutual belief that the
order would be entered. Even if this reliance was unreasonable or unwarranted, as the district court
concluded, it was not motivated by bad faith, willfulness, or fault. See id. at 592 (holding that the
“[p]laintiff’s failure to file proper discovery requests does not necessarily indicate a stubborn effort
to delay trial”).
2. Prejudice
The second factor that the court must consider is “whether the adversary was prejudiced by
the dismissed party’s conduct.” Knoll, 176 F.3d at 363. See Harmon, 110 F.3d at 368 (holding that
the defendant was prejudiced by the plaintiff’s failure to cooperate in discovery because the
defendant “waste[d] time, money, and effort in pursuit of cooperation which [the plaintiff] was
legally obligated to provide”). Here, World Journal as the defendant is the party seeking to stay the
proceedings and consequently could not have suffered any prejudice as a result of Wu’s reliance on
World Journal’s own proposed order. Moreover, the fact that World Journal is not opposing Wu’s
efforts to reinstate the lawsuit indicates that it has no claim of prejudice resulting from Wu’s failure
to prosecute.
3. Fair warning
This court has repeatedly “reversed district courts for dismissing cases because litigants
failed to appear or to comply with pretrial orders when the district courts did not put the derelict
parties on notice that further noncompliance would result in dismissal.” Harris v. Callwood, 844
F.2d 1254, 1256 (6th Cir. 1988). Here, the district court did not provide the required notice.
Although the court explained that its “decision not to stay the case and its show cause order provided
the plaintiff with a clear indication that he needed to proceed with his case or it would be
dismissed,” the court did not notify either party of its decision regarding the proposed stipulated
order to stay the proceedings. Its lack of response to the proposed stay order is hardly a “clear
indication” that it intended to dismiss Wu’s case if he did not take further action.
The show-cause order, which the district court issued before World Journal submitted its
proposed stipulated order, required only that the plaintiff show cause why the case should not be
dismissed without prejudice for failure to serve process. Wu’s attorney filed a response to the show-
cause order nine days later. The district court did not notify the parties that the response was
inadequate or that any further action was required. Thus, the show-cause order was at that point
insufficient to provide notice that the case might be dismissed. Harris, 844 F.2d at 1256 (“[I]n the
absence of notice that dismissal is contemplated[,] a district court should impose a penalty short of
dismissal unless the derelict party has engaged in ‘bad faith or contumacious conduct.’”).
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4. Alternative sanctions
This court has held that “[t]he sanction of dismissal is appropriate only if the attorney’s
actions amounted to failure to prosecute and no alternative sanction would protect the integrity of
the pretrial process.” Mulbah, 261 F.3d at 589 (citation and quotation marks omitted) (emphasis in
original). In Little v. Yeutter, 984 F.2d 160 (6th Cir. 1993), this court addressed the competing
concerns regarding whether a district court should dismiss an action for failure to prosecute:
On the one hand, there is the court’s need to manage its docket, the public’s interest
in expeditious resolution of litigation, and the risk of prejudice to a defendant
because the plaintiff has failed to actively pursue its claims. On the other hand is the
policy which favors disposition of cases on their merits. In recognizing those
competing concerns, this circuit has stated that dismissal of an action is a harsh
sanction which the court should order only in extreme situations . . . .
Id. at 162 (citations omitted).
The situation in the present case was not extreme. Instead, Wu’s lack of action was the result
of an innocent misunderstanding caused by the district court’s failure to properly communicate its
intentions to the parties. Nor did the district court consider the imposition of less severe alternative
sanctions before dismissing the case. In sum, we conclude that the district court abused its
discretion in dismissing Wu’s complaint for failure to prosecute.
III. CONCLUSION
For all of the reasons set forth above, we REVERSE the judgment of the district court and
REMAND the case for further proceedings consistent with this opinion.