Schrier v. Zhang

Background

Richard Schrier and William C. Shayne brought defamation claims against Xiyan Zhang, Peter Wolfgram, and Stratum Law, LLC. The plaintiffs alleged that the defendants were responsible for statements in a June 28, 2022 publication concerning allegations that Schrier and Shayne had submitted falsified lien documents in a related case. The opinion identifies Schrier and Shayne as attorneys for May Yan Chen and Ability Customs in that related litigation. Zhang and Wolfgram were attorneys for Ameriway Corporation, and Stratum Law was their law firm; the opinion also states that Zhang was the proprietor of Eagle Trading.

The plaintiffs filed this action in June 2023 and refiled the complaint in July 2023 after receiving an electronic filing error notification. An electronic summons issued for all defendants on July 6, 2023. The defendants did not appear, and the plaintiffs did not complete service or take other action in the case for more than a year.

After issuing an order requiring the plaintiffs to explain why the case should not be dismissed for untimely service, the court received the plaintiffs’ motion for an extension. Schrier said that a law-office intern emailed the summons and complaint to the defendants and asked them to accept service. Zhang replied that the defendants would not accept service but were willing to consider a request to waive service. Schrier said he instructed the intern to agree with that proposal and later believed service had been completed. The opinion notes that Schrier did not state whether the intern accepted Zhang’s proposal.

Court’s analysis

Federal Rule of Civil Procedure 4(m) generally requires service within 90 days after the complaint is filed. If service is not completed, the court must dismiss the action without prejudice or order service within a specified period. If the plaintiff shows good cause for the failure, the court must extend the service deadline. The plaintiff bears the burden of showing good cause, which requires exceptional circumstances beyond the plaintiff’s control and consideration of diligence and prejudice.

The court held that the plaintiffs’ explanations did not establish good cause. First, the court rejected the plaintiffs’ attempt to blame the intern and the defendants for the failure to complete service. Under Rule 4(c)(1), the plaintiff—not the defendant—is responsible for having the summons and complaint served. The court characterized Schrier’s failure to oversee the intern and confirm service as neglect rather than an excuse for the delay.

Second, the court rejected the plaintiffs’ argument that a discovery stay in the related case prevented activity in this case. The court explained that marking cases as related is an administrative assignment procedure, not a consolidation or joinder of the cases. Unless otherwise stated, an order in one case does not apply to another case merely because the cases are related. The court therefore concluded that the discovery stay did not suspend the service deadline in this action.

The court also considered whether to grant a discretionary extension even without good cause. The relevant factors were whether a statute of limitations would bar refiling, whether the defendants had actual notice, whether the defendants concealed the service defect, and whether an extension would prejudice them. The court found that the first two factors favored the plaintiffs: the one-year limitations period for defamation claims under New York law would likely bar the action if refiled, and the defendants received actual notice through the intern’s email. The other two factors favored the defendants because they had not concealed the service defect and would be prejudiced by having to defend the case after the service period and likely limitations period had expired.

The court declined to exercise its discretion to extend the deadline. It emphasized that the plaintiffs allowed the case to remain inactive for more than a year and acted only after the court required an explanation. The court expressly stated that it was not deciding the merits of the defamation claims.

Disposition

The court denied the plaintiffs’ motion to extend the deadline to complete service. It dismissed the plaintiffs’ claims without prejudice under Rule 4(m) and directed the Clerk of Court to terminate the action.