Huang v. Hong Kong and Shanghai Banking Corporation LTD

Background

Yen Hwa Huang alleged that, in 2019, scammers posing as investigators persuaded her to make several wire transfers from her bank accounts to accounts at HSBC Hong Kong. She sued HSBC Hong Kong, which allegedly accepted the transfers; HSBC Bank USA, which allegedly acted as an intermediary; and Does 1 through 100, whom she described as the scammers. Her claims were for aiding and abetting fraud, aiding and abetting conversion, negligence, and violation of Article 4A of the Uniform Commercial Code.

Earlier Rulings

HSBC Bank USA moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal for failure to state a legally sufficient claim. In a September 2022 opinion, the court dismissed Huang’s common-law claims with prejudice for failure to state a claim. It dismissed the Article 4A claim without prejudice and allowed Huang to seek permission to amend.

Huang then filed a motion for permission to amend and a proposed second amended complaint. In November 2022, the court denied that motion because the proposed amendment would have been futile. As a result, all claims against HSBC Bank USA were dismissed with prejudice. The court also ordered Huang to explain by December 3, 2022, why the case should not be dismissed against HSBC Hong Kong and Does 1 through 100. HSBC Hong Kong had not appeared, and the Does had not been identified.

Failure to Prosecute

The court explained that every litigant, including a person represented by a lawyer, must pursue claims diligently. Under Rule 41(b), a court may dismiss a case when a plaintiff fails to prosecute it. The court considered five factors: the length of the delay, whether the plaintiff was warned, likely prejudice to the defendants, the court’s interest in managing its docket, and whether a less severe sanction would be effective.

The first two factors favored dismissal. Huang had taken no specific action against HSBC Hong Kong or Does 1 through 100 since filing her amended complaint in October 2020, and more than two years had passed. She also failed to comply with the court’s explicit warning and order to show cause, despite being represented by counsel.

The other three factors weighed against dismissal with prejudice. The court found little risk of prejudice because the Does had not been identified and HSBC Hong Kong had taken no action in the case. The court also found that Huang’s inaction had caused minimal judicial inefficiency and that a less severe sanction was appropriate.

Disposition

The court dismissed Huang’s claims against HSBC Hong Kong and Does 1 through 100 without prejudice for failure to prosecute. The Clerk of Court was directed to enter judgment consistent with the earlier order and this memorandum order and to close the case. The order was signed by Chief United States District Judge Laura Taylor Swain.