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CHANDLER LEASING CORP. v. LOPEZ
Factual and Procedural Background
Chandler Leasing Corporation filed suit on May 26, 1980 in the Northern District of Illinois; the case was transferred to the Eastern District of North Carolina in August 1980. In September the Clerk requested the name of North Carolina counsel pursuant to Local Rule 2.04. Plaintiffs did not respond. The district judge entered an order on April 1, 1980 giving Chandler 20 days to hire local counsel, and after no response entered a May 18, 1981 order allowing 10 additional days. When no local counsel appeared the judge dismissed the complaint on June 2, 1981. Plaintiff's Illinois counsel, Howard Hollander, states he contacted North Carolina attorney Harold Laing before April 1981 and believed Laing would appear; Laing did not. Hollander, who was moving his office, did not learn of the May 18 order until May 26, 1980 and could not contact Laing until three days after dismissal. Laing entered an appearance on June 9, 1981, but the district judge refused to reopen the case. The district court had dismissed the action for failure to retain local counsel; Chandler appealed.
Legal Issues Presented
- Whether the district court's dismissal with prejudice for failure to retain local counsel was an appropriate sanction.
- Whether the circumstances (plaintiff counsel's attempts to secure local counsel and the prejudice to defendants) justify a sanction less drastic than dismissal with prejudice.
Arguments of the Parties
Appellant (Plaintiff) — Chandler Leasing Corporation
- Plaintiff's Illinois counsel (Howard Hollander) asserts he took steps to secure North Carolina counsel (contacting Harold Laing) and reasonably believed Laing would appear.
- Hollander states he was moving his office, which delayed his receipt of the court's orders and his ability to contact Laing in time.
Appellees (Defendants)
- Defendant's counsel stated at oral argument that he did not question Hollander's account of his activities in attempting to employ local counsel.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Davis v. Williams, 588 F.2d 69, 70 (4th Cir. 1978) | Dismissal with prejudice is a "harsh sanction" and review requires consideration of specified factors (degree of personal responsibility, prejudice to defendant, history of deliberate dilatoriness, existence of less drastic sanctions). | The court applied the Davis factors to evaluate whether dismissal with prejudice was warranted and found dismissal improper under those factors. |
| Reizakis v. Loy, 490 F.2d 1132 | Authority for applying the multi-factor test in evaluating dismissal sanctions. | The court cited Reizakis alongside Davis as governing the standard for reviewing dismissal sanctions. |
| See Bush v. United States Postal Service, 496 F.2d 42, 45 (4th Cir. 1974) | Illustrates less drastic sanctions available (payment of costs, attorneys' fees, dismissal without prejudice). | The court referenced Bush when directing the district court that it may impose lesser sanctions on remand (costs, fees, or dismissal without prejudice). |
Court's Reasoning and Analysis
The court began with the proposition that dismissal with prejudice is a harsh sanction requiring careful application. It adopted the multi-factor test from Davis and Reizakis: (1) degree of plaintiff's personal responsibility, (2) prejudice to defendant, (3) existence of a drawn-out history of deliberate dilatoriness, and (4) existence of less drastic sanctions. Applying those factors, the court found no personal responsibility on the part of the client, minimal prejudice to defendants, and available lesser sanctions. The sole contested factor was whether the plaintiff's attorney had engaged in deliberate dilatory conduct. The record showed Hollander believed he had retained local counsel, had contacted Harold Laing, and was delayed by an office move; the court found sloppiness but no deliberate pattern of dilatory conduct. Because the Davis/Reizakis factors did not support dismissal with prejudice, the court reversed and remanded, directing that local counsel be allowed to appear and noting the district judge may impose lesser sanctions (citing Bush for examples).
Holding and Implications
VACATED AND REMANDED.
Direct effect: the Fourth Circuit reversed the district court's dismissal with prejudice and remanded for allowance of local counsel's appearance for the plaintiff; the district judge may impose less drastic sanctions such as payment of costs, attorneys' fees, or dismissal without prejudice. The opinion does not announce a new legal rule beyond application of existing Fourth Circuit standards for dismissal sanctions.
PER CURIAM:
The district court dismissed Chandler Leasing Corporation's diversity suit for failure to retain local counsel. Chandler appeals, and we reverse.
On May 26, 1980, Chandler Leasing Corporation (Chandler) sued Dr. Lopez and his co-defendants in the Northern District of Illinois. The suit was transferred to the Eastern District of North Carolina in August of 1980. In September, the Clerk sent the parties a letter requesting the name of North Carolina counsel pursuant to Local Rule 2.04. Plaintiffs failed to respond, so on April 1, 1980, the district judge entered an order giving Chandler 20 days to hire local counsel. When the plaintiff still did not respond, the district court entered an order on May 18, 1981, allowing 10 additional extra days in which to comply. No local counsel appeared, so the judge dismissed the complaint on June 2, 1981.
Meanwhile, Howard Hollander, plaintiff's Illinois counsel, was attempting to comply with the local rule. He said he contacted Harold Laing, a North Carolina attorney, before April, 1981, and thought that Laing would make an appearance. However, Laing did nothing. Because Hollander was in the process of moving his office, he did not find out about the problem until May 26, 1980, when he finally received the court's May 18 order. He said he was unable to contact Laing until three days after the suit had been dismissed. Laing entered an appearance on June 9, 1981, but the district judge refused to re-open the case.
During oral argument defendant's counsel said he did not question Hollander's account of his activities in attempting to employ local counsel.
Preliminarily, we note that dismissal with prejudice is a "harsh sanction which should not be invoked lightly." Davis v. Williams, 588 F.2d 69, 70 (4th Cir. 1978). In reviewing such a dismissal, we must ascertain (1) the degree of personal responsibility of the plaintiff, (2) the amount of prejudice caused the defendant, (3) the existence of "a drawn out history of deliberately proceeding in a dilatory fashion," and (4) the existence of a sanction less drastic than dismissal. Id. at 70; Reizakis v. Loy, 490 F.2d 1132 (4th Cir. 1974).
Here we find no personal responsibility on the part of the client to obtain local counsel and very little prejudice to the defendants. Additionally, we know of sanctions less drastic than dismissal. Thus, the only question in this case is whether there is a pattern of deliberate dilatory action on the part of plaintiff's attorney. The record does not reveal any such deliberate action. Plaintiff's Illinois lawyer thought he had retained local counsel and was proceeding on the assumption that he had. Because he was moving his office, he was unable to respond in a timely manner to the court's orders of April and May and could not contact local counsel with appropriate instructions. We see sloppiness, perhaps, but certainly no history of deliberately proceeding in a dilatory fashion.
We remand to the district court to allow the appearance of local counsel for the plaintiff. The judge may take sanctions of a less drastic nature, such as payment of costs, attorneys' fees, or dismissal without prejudice. See Bush v. United States Postal Service, 496 F.2d 42, 45 (4th Cir. 1974).
VACATED AND REMANDED.
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