Su v. Hailu Asian Bistro Inc.

Background

Plaintiffs Yu Hing Su, Jian Ou, and Jian Bin Lin sued Hailu Asian Bistro Inc., doing business as Hailu Asian Bistro, and several individual defendants. They moved for reconsideration of an earlier order that denied their request to affirm service or, alternatively, to extend the time to serve the individual defendants.

The action was filed in December 2017, and plaintiffs attempted service in early February 2018. They then took no action until July 2019, when they sought certificates of default against all defendants. Although default was entered, plaintiffs did not act on it. In November 2019, one individual defendant filed for bankruptcy, triggering an automatic stay. The bankruptcy court lifted the stay in April 2020. After the case was transferred to Judge Vyskocil, the court issued a conditional dismissal order for failure to prosecute in March 2020, and plaintiffs then informed the court about the bankruptcy stay. Plaintiffs filed their service motion in May 2020.

Arguments and analysis

The court explained that reconsideration is available only for compelling reasons, such as a change in controlling law, new evidence, clear error, or manifest injustice. It said reconsideration is not a way to relitigate old issues or present arguments that could have been raised earlier. Because plaintiffs’ motion relied only on arguments they had made or could have made in their original service motion, the court denied reconsideration.

The court also stated that the result would be the same even if it reconsidered the underlying request for more time. Plaintiffs argued that their delay was supported by good cause under Rule 4(m). The court rejected that argument because plaintiffs had not diligently prosecuted the case. It identified a seventeen-month period between the attempted service and the request for certificates of default, followed by another period of inaction before the bankruptcy stay. The court said the delay was sufficient to support dismissal for failure to prosecute and therefore also supported denying additional time for service.

Plaintiffs argued that the individual defendants had actual notice and therefore would not be prejudiced. The court found that plaintiffs had shown, at most, that one individual defendant may have known about the case because plaintiffs’ counsel’s firm appeared on a creditor list in that individual’s bankruptcy case. Plaintiffs had not shown that the other four individual defendants knew about the case.

The court also rejected plaintiffs’ request for a discretionary extension even without good cause. Plaintiffs argued that the two-year limitation period for their Fair Labor Standards Act claims would prevent refiling if service in 2018 was ineffective. The court nevertheless declined to use its discretion to relieve plaintiffs from their decisions not to serve the individual defendants adequately or to prosecute the case. It noted that the corporate defendant appeared to have been properly served and that the case continued against that defendant.

Ruling

Judge Mary Kay Vyskocil denied the motion for reconsideration. The order did not grant additional time to serve the individual defendants. The court also stated that plaintiffs’ intended motion for a default judgment against the corporate defendant had to be filed by June 30, 2020.