Z Payments Solution Corp. v. FISERV, Inc.

Background

Z Payments Solution Corp. filed the action in New York state court, and First Data Merchant Services LLC and Fiserv, Inc. removed it to the U.S. District Court for the Southern District of New York. Plaintiff’s original counsel was not licensed to practice in federal court and did not appear in the federal case. The court ordered Plaintiff to obtain new counsel, and new counsel appeared on May 31, 2023.

Plaintiff said it intended to file an amended complaint but repeatedly sought extensions. The court eventually allowed Plaintiff to amend its pleadings by October 9, 2023, and later extended that deadline to October 23 and then November 7. The court denied Plaintiff’s request for another extension on November 6, citing the number of extensions already granted and Plaintiff’s failure to follow the court’s requirements for requesting extensions.

Plaintiff’s counsel then sought permission to withdraw, which the court granted. The court repeatedly extended the deadline for Plaintiff to obtain new counsel and warned that the case could be dismissed if counsel did not appear. No successor counsel appeared on the docket by the January 12, 2024 deadline or by the date of the order. The opinion states that Defendants had not filed an answer or otherwise responded to the complaint.

Legal standard

Federal Rule of Civil Procedure 41(b) permits a court to dismiss an action when a plaintiff fails to prosecute the case or comply with court rules or orders. The court considered the duration of Plaintiff’s noncompliance, the warnings Plaintiff received, possible prejudice to Defendants, the court’s interest in managing its docket, Plaintiff’s opportunity to be heard, and whether a less severe sanction would be appropriate.

Court’s reasoning

The court found dismissal appropriate because Plaintiff had failed to prosecute the case for more than two months after counsel withdrew, despite repeated orders to obtain new counsel. The court also considered Plaintiff’s earlier delays and repeated requests for extensions to amend the complaint. It concluded that continued failure to dismiss the case could leave it pending indefinitely and that unreasonable delay could prejudice Defendants.

The court had given Plaintiff multiple warnings that failure to obtain counsel could result in dismissal. It nevertheless chose a less severe sanction than dismissal with prejudice. The court noted that the case was at an early stage, Defendants had not had significant substantive involvement, and the case had not substantially burdened the court’s docket.

Disposition

Judge Arun Subramanian dismissed the action without prejudice under Rule 41(b) for failure to prosecute. The Clerk of Court was directed to terminate all pending motions and close the case. The opinion did not decide the underlying merits of Plaintiff’s claims.