Tuesday, August 26, 2014

A Review of the Proposed Change to FRCP 4(m)

In my intended continuing series reviewing the proposed amendments to the Federal Rules of Civil Procedure currently pending before the Judicial Conference of the United States, I move on to Rule 4(m).  For background, see my earlier post here.

The proposed change to Rule 4(m) is:

(m) Time Limit for Service.  If a defendant is not served within 120 90 days after the complaint is filed, the court -- on motion or on its own after notice to the plaintiff -- must dismiss the action without prejudice against that defendant or order that service be made within a specified time.  But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period.  This subdivision (m) does not apply to service in a foreign country under Rule 4(f) or 4(j)(1) or to service of a notice under Rule 71.1(d)(3)(A).

The Advisory Committee had originally proposed a reduction of the time within which plaintiff must serve process from 120 days to 60 days, but after public comment, it split the difference at 90 days. 

It found "particularly persuasive" the comment that the proposed reduction to 60 days would eliminate, as a practical matter, the plaintiff's option to request waiver of service under Rule 4(d).  (May 2014 Advisory Committee Report to the Standing Committee.)  The Advisory Committee also reported to the Standing Committee that the comments offered many "reasons why 60 days is not enough time to serve process," including an evasive defendant, a multitude of defendants, or a pro se plaintiff.  

It is unclear who first generated the idea of reducing the time to serve process.  It was not the focus of any of the panelists at the 2010 Duke Conference that kicked off this round of amendments, nor did the Advisory Committee mention reducing the time to serve process in its Report to the Chief Justice about the Duke Conference.  The current 120-day allowance has been in the rules since 1983, when it was added to account for the transfer of responsibility for serving process from the U.S. Marshal to the plaintiff. 

The written comments on the proposed amendment to Rule 4(m) were approximately 7-to-1 against the proposal.  In addition to detailing some of the difficulties encountered in effectuating service, commenters also noted that even if the dismissal was without prejudice, the plaintiff would incur costs to refile, and predicted an increase in motion practice as plaintiffs would need to move for extensions more frequently.

At the November 2013 public hearing on the proposed amendments, one plaintiff's lawyer did not shy away from offering his "suspicion" that the Committee, which is made up mostly of federal judges, was proposing the time reduction to shorten the time that a case pends from filing date to terminal date.  The speaker was referring to the number of months to case disposition, a statistic reported by the Administrative Office of the United States Courts.  The Civil Justice Reform Act of 1990 requires district court and magistrate judges, twice a year, to report all cases that have been pending before them for more than three years.  As a result, judges have an incentive to reduce their case disposition times.

Besides the obvious effect of cutting the plaintiff's time to serve process by 25%, a second, less-noticed result of the 30-day reduction in time will be to reduce the statute of limitations period on any defendant which plaintiff attempts to add in an amended complaint filed after the running of the statute of limitations.  Rule 15(c)(1)(C) allows a claim against a newly-added defendant to relate back to the date of the original complaint (and thus avoid the bar of the statute of limitations) if the new defendant received notice of the action "within the period provided by Rule 4(m)."  (It is a bit more complicated than that, but that is the gist of it.) 

Thus, for example, assume that plaintiff filed a complaint against Defendant A on February 1, the statute of limitations ran on March 1, and the plaintiff moved to amend her complaint to add a claim against new Defendant B on August 1.  The new claim would relate back to February 1 if Defendant B had received notice of the action by approximately June 1 (February 1 plus the 120-day period for service currently allowed by Rule 4(m).)  Under the proposed amendment reducing the 4(m) period to 90 days, plaintiff will only be able to avoid the bar of the statute of limitations if Defendant B received notice of the action by approximately May 1 (February 1 plus 90 days). 

The Committee briefly noted the relationship between Rule 4(m) and Rule 15(c)(1)(C), stating cryptically that "[t]his relationship has in fact been considered throughout the development of this proposal."  However, it did not explain the rationale for this windfall to defendants, other than that the reduction in time to serve would supposedly "reduce delay at the beginning of litigation."  But neither plaintiffs nor defendants complained about delay at the beginning of litigation: plaintiffs complained about delay caused by motion practice and obstructive tactics in discovery, and defendants complained about delay caused by overuse of discovery and excessive burdens in preserving electronically stored information.  And there is one source of delay both sides agreed upon: there was "wide frustration in overall delays by judges in ruling on motions."       

There are numerous reported cases in which plaintiffs' request of an extension of the 120-day time to serve process was denied.  Courts deny requests for extensions and dismiss the case even when the running of the statute of limitations means that a dismissal "without prejudice" will actually operate as a dismissal with prejudice.  This result occurs despite a 1993 Advisory Committee Note to the contrary that "[r]elief may be justified, for example, if the applicable statute of limitations would bar the refiled action. . ."

The Advisory Committee Note to the proposed amendment to Rule 4(m) states:

Shortening the presumptive time for service will increase the frequency of occasions to extend the time for good cause.  More time may be needed, for example, when a request to waive service fails, a defendant is difficult to serve, or a marshal is to make service in an in forma pauperis action. 

Notably, the Committee Note does not include the running of the statute of limitations as an example of the need for an extension.  And based on the large number of reported cases in which courts denied plaintiff's request for an extension, the Committee's apparent optimism that courts will grant more extensions in the future does not appear well-founded.  The actual standard for granting an extension as stated in the text of the rule will not change.  




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