Richard Zanowick v. Baxter Healthcare Corp.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
RICHARD ZANOWICK, an No. 15-56034
individual; JOAN CLARK-
ZANOWICK, an individual, D.C. No.
Plaintiffs-Appellees, 2:14-cv-06519-WGY-
PLA
v.
BAXTER HEALTHCARE
CORPORATION, sued
individually and as successor-
in-interest to American
Hospital Supply Corporation
and American Scientific
Products Erroneously Sued
As Baxter International, Inc.,
Defendant-Appellant.
RICHARD ZANOWICK, an No. 15-56047
individual; JOAN CLARK-
ZANOWICK, an individual, D.C. No.
Plaintiffs-Appellees, 2:14-cv-06519-WGY-
PLA
v.
FISHER SCIENTIFIC COMPANY, OPINION
LLC, Erroneously Sued As
Thermo Fisher Scientific,
2 ZANOWICK V. BAXTER HEALTHCARE
Inc., sued individually and
Successor by merger to Fisher
Scientific International, Inc.,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
William G. Young,* District Judge, Presiding
Submitted February 13, 2017**
Pasadena, California
Filed March 9, 2017
Before: Milan D. Smith, Jr. and John B. Owens, Circuit
Judges, and Edward R. Korman,*** District Judge.
Opinion by Judge Owens
*
The Honorable William G. Young, United States District Judge for
the District of Massachusetts, was assigned to this case for all pretrial
proceedings.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Edward R. Korman, United States District Judge
for the Eastern District of New York, sitting by designation.
ZANOWICK V. BAXTER HEALTHCARE 3
SUMMARY****
Fed. R. Civ. P. 25
The panel affirmed the district court’s order granting
plaintiffs’ motion to voluntarily dismiss their action without
prejudice pursuant to Fed. R. Civ. P. 41(a)(2).
On October 12, 2014, plaintiff Richard Zanowick died,
and plaintiffs failed to file a timely motion to substitute a new
party as required by the 90-day deadline in Fed. R. Civ. P.
25(a)(1). Plaintiff Joan Clark-Zanowick moved to dismiss
the action voluntarily without prejudice, or alternatively, to
substitute a new party or extend the Rule 25(a)(1) deadline.
Defendants contended that Rule 25(a)(1) required dismissal
with prejudice.
The panel held that Rule 25(a)(1) permitted the district
court to allow a late substitution if requested, and did not
require the district court to dismiss the federal action with
prejudice. The panel also held that the district court did not
abuse its discretion in granting the Rule 41(a)(2) motion for
dismissal without prejudice.
****
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
4 ZANOWICK V. BAXTER HEALTHCARE
COUNSEL
Steven J. Thompson and Ethan E. Trull, Nixon Peabody LLP,
Chicago, Illinois; Ronald F. Lopez, Nixon Peabody LLP, San
Francisco, California, for Defendant-Appellant Baxter
Healthcare Corporation.
Michael J. Pietrykowski, Gordon Rees Scully Mansukhani
LLP, Oakland, California; John T. Williams, Jason H. Nash,
and Joanne Moon, Hinkhouse Williams Walsh LLP, Chicago,
Illinois for Defendant-Appellant Fisher Scientific Company
L.L.C.
Benno Ashrafi, Tyler Stock, and Josiah Parker, Weitz &
Luxenberg, P.C., Los Angeles, California, for Plaintiffs-
Appellees.
OPINION
OWENS, Circuit Judge:
Defendants-Appellants Baxter Healthcare Corporation
and Fisher Scientific Company, LLC (collectively,
defendants) appeal from the district court’s order granting
Plaintiffs-Appellees Richard Zanowick and Joan Clark-
Zanowick’s (collectively, Zanowick or plaintiffs) motion to
voluntarily dismiss their action without prejudice pursuant to
Federal Rule of Civil Procedure 41(a)(2). Defendants argue
that the district court should have dismissed the action with
prejudice due to Federal Rule of Civil Procedure 25(a)(1).
We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
ZANOWICK V. BAXTER HEALTHCARE 5
I. Factual Background and Procedural History
In July 2014, Richard Zanowick sued defendants in state
court, and alleged that their products exposed him to
asbestos, leading to terminal mesothelioma. Mrs. Joan
Clark-Zanowick also sued for loss of consortium. In August
2014, defendants removed the case to federal court on
diversity grounds.
On October 12, 2014, Mr. Zanowick died. On November
17, 2014, plaintiffs filed and electronically served a notice of
Mr. Zanowick’s death. Federal Rule of Civil Procedure
25(a)(1) then required plaintiffs to file, by February 19, 2015,
a motion to substitute a new party for Mr. Zanowick.
Plaintiffs failed to do so.
In the meantime, on February 13, 2015, Mrs. Zanowick
and her children filed a new lawsuit in state court. This
second action alleged the same claims (except for her loss of
consortium claim) against the same defendants, plus
additional defendants that arguably preclude diversity
jurisdiction.1 In April 2015, defendants filed a motion to
dismiss the federal case with prejudice for noncompliance
with Rule 25(a)(1)’s 90-day substitution requirement.
On May 1, 2015, a few months after the Rule 25(a)(1)
deadline had expired, Zanowick moved to dismiss the federal
action voluntarily without prejudice under Rule 41(a)(2), or
in the alternative, to substitute a new party or extend the Rule
1
Defendants contend that these new defendants are merely shams
designed to defeat diversity, and they intend to remove the action to
federal court pending jurisdictional discovery. We express no opinion on
whether diversity jurisdiction exists in this new lawsuit.
6 ZANOWICK V. BAXTER HEALTHCARE
25(a)(1) deadline. At the June 2015 hearing, the district court
made its views clear. Referring to defendants’ Rule 25(a)(1)
motion to dismiss, the court stated: “if ever there were
motions that were more the exultation of form over substance,
I don’t think I’ve ever seen them.” Because Rule 25 was not
jurisdictional, the court reasoned that it could allow the
substitution of a party despite non-compliance with the
90-day rule. After confirming that Zanowick preferred
dismissal without prejudice even if late substitution were
permitted, the district court granted Zanowick’s Rule 41(a)(2)
motion to dismiss without prejudice. The district court
concluded: “I’m going to allow this case voluntarily to be
dismissed and so it’s dismissed without prejudice and we’ll
see where ultimately it lands. . . . I don’t mean anything I said
critically but cases should be addressed on their merits and
this is the best way to address it on the merits.” This appeal
followed.
II. Discussion
A. Standard of Review
We review for an abuse of discretion a district court’s
decision to grant a motion to voluntarily dismiss an action
under Rule 41(a)(2). Westlands Water Dist. v. United States,
100 F.3d 94, 96 (9th Cir. 1996). “The district court abuses its
discretion when it bases its decision on an erroneous view of
the law or a clearly erroneous assessment of the facts.” Id.
(internal quotation marks and citation omitted).
“The proper interpretation of Rule 25(a) is a question of
law that we review de novo.” Barlow v. Ground, 39 F.3d
231, 233 (9th Cir. 1994). “Factual findings relevant to the
application of Rule 25(a) are reviewed for clear error.” Id.
ZANOWICK V. BAXTER HEALTHCARE 7
B. Rules 41(a)(2) and 25(a)(1)
Rule 41(a)(2) “allows a plaintiff, pursuant to an order of
the court, and subject to any terms and conditions the court
deems proper, to dismiss an action without prejudice at any
time.” Westlands Water Dist., 100 F.3d at 96. And “[w]hen
ruling on a motion to dismiss without prejudice, the district
court must determine whether the defendant will suffer some
plain legal prejudice as a result of the dismissal.” Id. “Legal
prejudice” is “prejudice to some legal interest, some legal
claim, some legal argument.” Id. at 97.
To establish prejudice, defendants posit the following:
Rule 25(a)(1) required the district court to dismiss the action
with prejudice, as Zanowick failed to comply with its 90-day
substitution requirement. Armed with that ruling, defendants
could then assert res judicata in the new state court
proceeding and take out that case. But because the court
failed to dismiss the federal case with prejudice, defendants
lacked their res judicata weapon in state court. Hence, they
suffered prejudice.2
While constructing an excellent issue spotting question
for an advanced civil procedure exam, defendants overlook
the purpose of and history behind Rule 25(a)(1). Rule
25(a)(1) provides:
2
Defendants also argue that the loss of a federal forum prejudiced
them, as they are now focusing on a second action in state court.
However, “while a change from federal to state court might create a
tactical disadvantage to [defendants], that [is] not legal prejudice.” Smith
v. Lenches, 263 F.3d 972, 976 (9th Cir. 2001).
8 ZANOWICK V. BAXTER HEALTHCARE
If a party dies and the claim is not
extinguished, the court may order substitution
of the proper party. A motion for substitution
may be made by any party or by the
decedent’s successor or representative. If the
motion is not made within 90 days after
service of a statement noting the death, the
action by or against the decedent must be
dismissed.
Fed. R. Civ. P. 25(a)(1) (emphasis added). This 90-day
deadline may be extended by Rule 6(b), including after its
expiration if the party failed to act due to “excusable neglect.”
Fed. R. Civ. P. 6(b). Rule 6(b) “works in conjunction with
Rule 25(a)(1) to provide the intended flexibility in enlarging
the time for substitution.” Zeidman v. Gen. Accident Ins. Co.,
122 F.R.D. 160, 161 (S.D.N.Y. 1988).
Rule 25(a)(1) uses the phrase “must be dismissed,” but
does not specify whether the dismissal “must” be with
prejudice. Defendants insist that “must be dismissed” always
means with prejudice, so the district court abused its
discretion in permitting Zanowick to dodge the Rule 25 bullet
through voluntary dismissal. Unfortunately for defendants,
the “history of Rule 25(a) and Rule 6(b) makes it clear that
the 90 day time period was not intended to act as a bar to
otherwise meritorious actions, and extensions of the period
may be liberally granted.” Cont’l Bank, N.A. v. Meyer, 10
F.3d 1293, 1297 (7th Cir. 1993) (citation omitted); see also
United States v. Miller Bros. Constr. Co., 505 F.2d 1031,
1035 (10th Cir. 1974) (stating that under Rule 25, a
“discretionary extension should be liberally granted absent a
showing of bad faith on the part of the movant for
substitution or undue prejudice to other parties to the
ZANOWICK V. BAXTER HEALTHCARE 9
action”); 7C Charles Alan Wright et al., Federal Practice and
Procedure § 1955 (3d ed. 2017) (“Dismissal is not mandatory,
despite the use of the word ‘must’ in the amended rule.”).
In 1963, both Rule 6(b) and Rule 25(a)(1) were amended
to give district courts discretion to enlarge the period of time
to substitute a deceased party. See Fed. R. Civ. P. 6 advisory
committee’s note to 1963 amendment; Fed. R. Civ. P. 25
advisory committee’s note to 1963 amendment. Prior to these
amendments, “Rule 25(a)(1), together with . . . Rule 6(b),
result[ed] in an inflexible requirement that an action be
dismissed as to a deceased party if substitution is not carried
out within a fixed period measured from the time of the
death.” Fed. R. Civ. P. 25 advisory committee’s note to 1963
amendment. These rules were amended because otherwise
this “unyielding requirement” led to “hardships and
inequities.” Id.; see also Staggers v. Otto Gerdau Co., 359
F.2d 292, 296 (2d Cir. 1966) (“The amendments of Rules
6(b) and 25(a)(1) provided needed flexibility. It was assumed
that discretionary extensions would be liberally granted.”).
The intersection between Rules 6(b) and 25(a) usually
plays out in one of two ways. First, a party misses the 90-day
deadline, and seeks leave to file a late substitution. Rule 6(b)
governs these requests.3 Second, a party cannot make a
proper substitution in 90 days. When this occurs, district
3
See, e.g., Gravelle v. Kiander, No. C13-1911JLR, 2016 WL
194741, at *2–5 (W.D. Wash. Jan. 15, 2016); Brown v. Mt. Grant Gen.
Hosp., No. 3:12-CV-00461-LRH-WGC, 2013 WL 4523488, at *10-11 (D.
Nev. Aug. 26, 2013); Liberty Life Ins. Co. v. Myers, No. CV
10-2024-PHX-JAT, 2013 WL 593861, at *2–3 (D. Ariz. Feb. 11, 2013);
Foster ex rel. Foster v. Nat’l R.R. Passenger Corp., No.
2:07-CV-01493-MCE-KJM, 2008 WL 3863695, at *1–2 (E.D. Cal. Aug.
19, 2008).
10 ZANOWICK V. BAXTER HEALTHCARE
courts exercise their discretion and decide whether to dismiss
the case with or without prejudice.4 If without prejudice, a
substitute may be located and the lawsuit re-filed. As one
district court explained:
In case there is any doubt, the court is no
longer required to dismiss with prejudice
under Rule 25(a). The original Rule 25(a)
functioned as a statute of limitations.
Anderson v. Yungku, 329 U.S. 482, 485
(1947). As such, Rule 25(a) dismissals were
with prejudice because “the normal policy of
a statute of limitation is to close the door –
finally, not qualifiedly or conditionally.” Id.
at 486. However, the 1963 amendments that
provide the current Rule 25(a) were meant to
liberalize substitution after death. 7C Charles
Alan Wright, Arthur R. Miller, & Mary Kay
Kane, Federal Practice and Procedure § 1955
(3d ed. 2007). Therefore, the court is no
longer required to dismiss with prejudice
under Rule 25(a).
Sydow v. Weyerhaeuser Co., No. 14-CV-219-WMC, 2015
WL 6962698, at *1 n.2 (W.D. Wis. Nov. 10, 2015).
This appeal features both branches of the Rules 6(b) and
25(a)(1) tree – the district court made clear that it would have
granted more time to substitute a new party, but Zanowick
4
See, e.g., Gruenberg v. Maricopa Cty. Sheriff’s Office, No. CV 06-
0397-PHX-SMM (DKD), 2008 WL 2001253, at *2 (D. Ariz. May 7,
2008); Gutierrez v. Gunderson, No. 04-2627 (JRT/JSM), 2008 WL
170009, at *2 (D. Minn. Jan. 16, 2008).
ZANOWICK V. BAXTER HEALTHCARE 11
preferred to dismiss the case without prejudice in lieu of the
state court lawsuit. In its discretion, the district court granted
Zanowick’s request.
Defendants are correct that district courts have dismissed
cases with prejudice for failure to comply with Rule 25.5 Yet
defendants cannot deny that district courts have dismissed
cases without prejudice for the same Rule 25 deadline
failure.6 Indeed, defendants – each having filed its own set of
briefs – cannot cite a single court, a treatise, or even a fortune
cookie message that supports the “Game Over, Man!”7
5
See, e.g., Fair v. I.R.S., No. 3:12-CV-1714-AC, 2014 WL 458568,
at *1 (D. Or. Feb. 4, 2014); McCree v. Cal. Dep’t of Conservation, No.
12-CV-04127-JST, 2013 WL 5946962, at *4 (N.D. Cal. Nov. 5, 2013);
Anderson v. Valspar Corp., 2:10-CV-03182-GEB-EFB, 2013 WL 552001,
at *20 (E.D. Cal. Feb. 12, 2013); Branch v. Piazza, No. 05-CV-6187-CJS,
2012 WL 1790412, at *2 (W.D.N.Y. May 16, 2012); Magee v. Hous.
Auth. of South Bend, No. 3:09-CV-337-TS, 2010 WL 2950449, at *2
(N.D. Ind. July 21, 2010); Scott v. Vasquez, No. CV 02-05296 GAF
(AJW), 2009 WL 4907031, at *8 (C.D. Cal. Dec. 11, 2009); Strope v.
Astrue, No. 08-CV-6136L, 2009 WL 1924935, at *1 (W.D.N.Y. July 1,
2009).
6
See, e.g., United States ex. rel. Lewis v. Bullitt Cty. Pub. Sch., No.
3:09-CV-00927, 2012 WL 1999261, at *1 (W.D. Ky. June 4, 2012);
Keating v. Leviton Mfg. Co., Inc., No. 06-CV-6027(JFB)(ARL), 2009 WL
234654, at *1 n.1 (E.D.N.Y. Jan. 30, 2009); Rohlman v. Florida, No.
3:08CV182/MCR/MD, 2009 WL 36456, at *1 (N.D. Fla. Jan. 5, 2009);
Gruenberg, 2008 WL 2001253, at *2; Gutierrez, 2008 WL 170009, at *2;
Steward v. City of New York, No. 04-CV-1508(CBA)(RML), 2007 WL
2693667, at *1 (E.D.N.Y. Sept. 10, 2007).
7
Cf. Aliens (20th Century Fox 1986) (statement by Private Hudson).
12 ZANOWICK V. BAXTER HEALTHCARE
reading of Rule 25 that they urge us to adopt.8 The rule, its
history, and the courts applying it for more than 50 years
make clear that dismissal with prejudice under these
circumstances is not mandatory – either a dismissal without
prejudice or an extension of the 90-day deadline are
discretionary options for the district court.
Rule 25(a)(1) permitted the district court to allow a late
substitution if requested, and it did not require the district
court to dismiss the federal action with prejudice.9 Based on
the record before it, both decisions were well within the
8
Defendants’ argument that Rule 25(a)(1) requires dismissal with
prejudice because it is akin to a Rule 41(b) involuntary dismissal is not
well-taken. For one thing, contrary to defendants’ contention, Rule 41(b)
does not preclude a district court’s discretion to dismiss without prejudice.
See Fed. R. Civ. P. 41(b) (stating that a dismissal under this subdivision
“operates as an adjudication on the merits” “[u]nless the dismissal order
states otherwise” (emphasis added)); see also 9 Charles Alan Wright et al.,
Federal Practice and Procedure § 2373 (3d ed. 2017) (“Rule 41(b)
expressly provides that the district court may specify that a dismissal is
without prejudice.”); cf. Semtek Int’l Inc. v. Lockheed Martin Corp., 531
U.S. 497, 503 (2001) (“Rule 41(b) sets forth nothing more than a default
rule for determining the import of a dismissal[.]”).
9
Defendants’ argument that the district court’s failure to explicitly
rule on their motion to dismiss with prejudice under Rule 25(a)(1) in and
of itself constituted an abuse of discretion is unavailing. The court
effectively denied defendants’ motion by granting Zanowick’s motion to
dismiss without prejudice under Rule 41(a)(2). Moreover, it made clear
that it would have extended the time to allow for substitution and that it
was not going to grant defendants’ request to dismiss with prejudice.
Defendants’ argument that the district court abused its discretion by
allowing Zanowick’s “procedural gamesmanship” to avoid dismissal with
prejudice under Rule 25(a)(1) is also unavailing.
ZANOWICK V. BAXTER HEALTHCARE 13
district court’s ambit.10 And for the same reasons, the district
court did not abuse its discretion in granting the Rule 41(a)(2)
motion for dismissal without prejudice.11
III. Conclusion
For the above reasons, we reject defendants’ contentions
that Rule 25(a)(1) required dismissal with prejudice, and we
affirm the district court’s order dismissing this action without
prejudice under Rule 41(a)(2).
AFFIRMED.
10
Although the district court did not explicitly address whether
Zanowick had shown “excusable neglect” for an extension under Rule
6(b)(1)(B), our review of the record satisfies us that the district court
would not have abused its discretion in allowing a late substitution. See
Bateman v. U.S. Postal Serv., 231 F.3d 1220, 1223–24 & n.3 (9th Cir.
2000) (discussing factors to determine whether neglect is excusable and
conducting equitable analysis where district court failed to because “it
would be inefficient to remand the issue”). In any case, whether Rule 6(b)
allowed an extension ultimately matters little. What does matter is that
Rule 25(a)(1) is not the Thulsa Doom that defendants wish it to be. See
Conan the Barbarian (Universal Pictures 1982).
11
Defendants argue that Mrs. Zanowick lacked standing to
voluntarily dismiss Mr. Zanowick’s claims because she did not file a
successor-in-interest declaration under California Code of Civil Procedure
section 337.32. However, defendants waived this issue by failing to raise
it in the district court. See City of Los Angeles v. Cty. of Kern, 581 F.3d
841, 845 (9th Cir. 2009) (stating that unlike Article III standing, prudential
standing can be waived if not raised in the district court).