United States District Court, D. Maryland
Mindboard, Inc. et al.
before the Court is Defendants', Mindboard, Inc.
(“Mindboard”), Abhijit Verekar, Tarak Shah, and
Jody Moscaritolo, Motion to Dismiss for Failure to Prosecute
(ECF No. 30). The Motion is ripe for disposition, and no
hearing is necessary. See Local Rule 105.6 (D.Md.
2016). For the reasons outlined below, the Court will deny
Rahim, Inc. (“Rahim”) is an Ohio corporation with
its principal place of business in Cleveland, Ohio. (Compl.
¶ 1, ECF No. 1-1). Rahim, a management consulting
company, is now defunct. (See id. ¶¶ 5,
45). Verekar, Shah, and Moscaritolo are former Rahim
employees but now work for Mindboard. (Id.
¶¶ 9, 11, 15, 27). Mindboard is also a management
consulting company; it is a Virginia corporation with its
principal place of business in Sterling, Virginia.
(Id. ¶¶ 2, 5). Rahim alleges that
Defendants stole Rahim's trade secrets and confidential
information, and Defendants conspired to transfer Rahim's
contracts to Mindboard. (Id. ¶¶ 27, 37,
filed the present action on May 12, 2015 in the Court of
Common Pleas for Cuyahoga County, Ohio. (Compl.). In its
ten-count Complaint, it alleges: Misappropriation of Trade
Secrets (Count I); Punitive Damages for Misappropriation of
Trade Secrets (Count II); Injunctive Relief (Count III);
Breach of Fiduciary Duty (Count IV); Tortious Interference
with Contracts (Count V); Tortious Interference with Business
Relationships (Count VI); Unjust Enrichment (Count VII);
Civil Conspiracy (Count VIII); Breach of Employment Agreement
(Count IX); and Wrongful Disclosure of Confidential
Information (Count X). (Id.). On February 3, 2016,
Defendants removed the case to the United States District
Court for the Northern District of Ohio. (ECF No. 1). On
April 18, 2016, Judge Donald C. Nugent granted
Defendants' Motion to Transfer Venue (ECF No. 5) on the
basis of forum non conveniens under 28 U.S.C. §
1404(a). (ECF No. 19). On April 19, 2016, the Northern
District of Ohio transferred the action to this Court. (ECF
April 20, 2016, after the Court received the action, the
Clerk notified all counsel that they are not in good standing
of the bar of the Court and that they must notify the Court
within fourteen days whether they will be seeking admission
to the bar or if another attorney will be entering an
appearance in their place. (ECF No. 21). On May 4, 2016, the
Court granted counsel for Defendants' Motions to Appear
Pro Hac Vice. (ECF Nos. 24, 25). Rahim failed to respond to
the Clerk's letter. On May 6, 2016, the Court issued an
Order noting that Rahim's counsel has yet to enter an
appearance and that the Court will not issue a scheduling
order. (ECF No. 28). The Court directed Rahim to file a
status report within ten days addressing when its counsel
intends to enter an appearance. (Id.). Rahim failed
to do so within ten days. Defendants moved to dismiss the
Complaint for failure to prosecute the action on August 18,
2016. (ECF No. 30). Rahim's counsel then entered his
appearance on January 24, 2017. (ECF No. 32). Rahim filed an
Opposition to the Motion on January 27, 2017. (ECF No. 35).
On February 10, 2017, Defendants filed a Reply. (ECF No. 36).
Rule of Civil Procedure 41(b) provides, in pertinent part:
“If the plaintiff fails to prosecute or to comply with
. . . a court order, a defendant may move to dismiss the
action or any claim against it.” Rule 41(b) further
provides that unless stated otherwise, the dismissal
“operates as an adjudication on the merits, ”
that is, with prejudice. Fed.R.Civ.P. 41(b). A dismissal with
prejudice under Rule 41(b) is “a harsh sanction which
should not be invoked lightly, ” particularly because
in the Fourth Circuit, there is “the sound public
policy of deciding cases on their merits.”
E.g., Shlikas v. SLM Corp., No.
WDQ-09-2806, 2011 WL 2118843, at *3 (D.Md. May 25, 2011)
(quoting Davis v. Williams, 588 F.2d 69, 70 (4th
Cir. 1978)) (internal quotation marks omitted),
aff'd, 546 F.App'x 290 (4th Cir. 2013). When
deciding whether Rule 41(b) is warranted, courts consider
four factors: (1) the degree of plaintiff's personal
responsibility; (2) prejudice to the defendant; (3) whether
plaintiff has a “drawn out history of deliberately
proceeding in a dilatory fashion;” and (4) whether
sanctions less drastic than dismissal are available.
Id. (quoting Herbert v. Saffell, 877 F.2d
267, 270 (4th Cir. 1989)) (internal quotation marks omitted).
Defendants first argue that because Rahim declined
Defendants' attempts to schedule depositions, Defendants
suffered prejudice under the second factor of Rule 41(a) and
Rahim has been acting in a dilatory fashion under the third
Rule 41(a) factor. The Court disagrees. Defendants rely on
various cases where the plaintiff was not responsive to
defendant's discovery requests. All of those cases share
one important element in common- discovery already commenced.
Here, however, Local Rule 104.4 provides that
“discovery shall not commence . . . until a
scheduling order is entered” (emphasis added). And
the Court has not entered a scheduling order in this case.
Defendants are arguably violating Local Rule 104.4 by
attempting to pursue discovery nonetheless. At minimum, Rahim
is under no obligation to comply with Defendants'
discovery requests until the Court issues a scheduling order.
Thus, the Court concludes Rahim was not acting in a dilatory
fashion for declining Defendants' attempts to schedule
next argue that Rahim's counsel's delay in entering
his appearance, in violation of the Clerk's April 20
letter and the Court's May 6 Order requiring Rahim's
counsel to enter his appearance, warrants dismissal under
Rule 41(a). Rahim argues that Rule 41(a) dismissal is
not appropriate because the delay in Rahim's counsel
entering his appearance was the result of Rahim's
financial inability to secure counsel. The Court agrees with
to secure counsel because of financial inability is not
sufficiently prejudicial to Defendants under the second Rule
41(b) factor, nor is it dilatory conduct by Rahim under the
third Rule 41(b) factor. See Ulyssix Techs., Inc. v.
Orbital Network Eng'g, Inc., No. ELH-10-2091, 2011
WL 5555853, at *1, 3 (D.Md. Nov. 15, 2011) (holding that
under Rule 41(b), party's financial inability to secure
replacement counsel was not “accompanied by a degree of
culpability or prejudice to other parties” supporting
dismissal with prejudice). In fact, a district court abuses
its discretion when it denies an unrepresented corporate
party's request for a reasonable continuance to secure
counsel. RZS Holdings AVV v. PDVSA Petroleo S.A.,
506 F.3d 350, 356-57 (4th Cir. 2007); see also Local
Rule 101.1(a) (requiring non-individuals to be represented by
counsel). So at most, Rahim failed to apprise the
Court of its financial troubles by not requesting a
continuance to secure counsel. This lone failure does not
warrant dismissal under Rule 41(b), particularly in light of
the Fourth Circuit's “sound public policy of
deciding cases on their merits.” Shlikas, 2011
WL 2118843, at *3 (quoting Davis, 588 F.2d at 70)
(internal quotation marks omitted). Accordingly, the Court
will deny the Motion.
foregoing reasons, Defendants' Motion to Dismiss for
Failure to Prosecute (ECF No. 30) is DENIED. Defendant
Abhijit Verekar shall file an Answer within fourteen days of
the date of this memorandum. Despite the informal nature of
this memorandum, it shall constitute an Order of this Court,
and the Clerk is directed to docket it accordingly.
L. Russell, III United States District Judge.