Dezign NA, LLC v. Seamless Capital Group LLC

Background

Dezign NA, LLC and Jeremy Keith Ritter sued Seamless Capital Group LLC, United Fund USA, LLC, Libertas Funding, LLC, Cloudfund LLC, Meged Funding Group Corp., and John and Jane Doe defendants. The plaintiffs also filed a motion seeking a temporary restraining order and preliminary injunction.

The court stated that, since January 2023, the plaintiffs had repeatedly ignored its directives. They had made no filings or otherwise indicated that they wanted to continue the case, despite several opportunities to do so. Although the action had begun on November 29, 2022, the plaintiffs had not filed proof of service for any defendant, and several defendants had not appeared.

Warnings and Prior Proceedings

On March 31, 2023, the court warned that it could dismiss the claims against United Fund USA, Libertas Funding, and Cloudfund if the plaintiffs did not show good cause for failing to serve those defendants. The plaintiffs did not respond.

On July 19, 2023, after granting Meged’s motion by default to stay the case and compel arbitration, the court warned that the plaintiffs’ claims against the other defendants, along with their request for injunctive relief, would be dismissed for failure to prosecute unless the plaintiffs showed good cause for not following the court’s orders by August 8, 2023. The plaintiffs again did not respond.

Court’s Analysis

The court relied on Federal Rule of Civil Procedure 41(b), which allows a district court to dismiss an action when a plaintiff fails to prosecute—that is, fails to move the case forward. The court applied five factors: the length of the plaintiff’s noncompliance, whether the plaintiff received notice that dismissal could result, likely prejudice to defendants from additional delay, the balance between court administration and the plaintiff’s opportunity to be heard, and whether a less severe sanction would be appropriate.

The court found that the plaintiffs’ failure to comply lasted more than seven months and that they had received clear warnings. It concluded that further delay would likely prejudice the defendants and that the plaintiffs’ abandonment of the case burdened the court and other litigants. The court also found that a lesser sanction would not be appropriate because the plaintiffs had shown no interest in continuing the case. The opinion did not decide the underlying claims’ merits.

Disposition

Judge Rearden ordered that the plaintiffs’ claims against Seamless Capital Group LLC, United Fund USA, LLC, Libertas Funding, LLC, Cloudfund LLC, and John and Jane Does be dismissed for failure to prosecute. The plaintiffs’ claims against Meged Funding Group Corp. were to remain stayed pending arbitration, consistent with the July 19 order. The Clerk was directed to terminate the plaintiffs’ motion for a temporary restraining order and preliminary injunction as to Seamless and dismiss the listed defendants from the action.