Tuesday, September 4, 2012

Fifth Circuit Adopts “Flexible Due Diligence” Standard For Service of a Foreign Defendant

In Lozano v. Bosdet et al., No. 11-60736 (5th Cir. Aug. 31, 2012), a Mississippi citizen sued the driver of a rental car, her passengers, and Enterprise Rent-A-Car for a traffic accident on the last day before the statute of limitations expired.  Enterprise removed the case to federal district court (and was later granted summary judgment).  The other defendants were individuals believed to be living in England.  Within 120 days of the complaint’s filing, plaintiff attempted service by restricted delivery mail and also hired a private process server to communicate with a local agent of two of the defendants.  At the end of the 120 days, plaintiff moved for and was granted an additional 120-day period, and later an additional 30-day period, in which to complete service.  Still failing service, plaintiff moved for yet another extension, stating that steps were underway to accomplish service according to Rule 4(f)’s provisions for service outside the U.S.  The district court denied the final request and dismissed the suit without prejudice. 

Upon plaintiff’s appeal, the Fifth Circuit reversed.  The court held that the 120-day service requirement in Rule 4(m) was subject to an express exception for service of individuals abroad under the Hague Convention.  However, the court did not view the time allotted for service unlimited but subject to a “flexible due diligence standard” measured by “good faith and reasonable dispatch.” 

Further, the court held that because the plaintiff would likely be barred from refiling a dismissed suit due to the statute of limitations, a higher standard applicable to a with-prejudice dismissal applied.  In such a case, dismissal should only be granted when there was a “clear record of delay  or contumacious conduct by the plaintiff,” and “when the delay (1) was caused by the plaintiff himself, as opposed to by counsel; (2) resulted in actual prejudice to the defendants; or (3) was caused by intentional conduct.”  The court held that this standard had not been met and reversed the dismissal.



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