Leon et al v. Shmukler et al

Filing 120

MEMORANDUM DECISION AND ORDER. The defendant's motion to dismiss this action with prejudice pursuant to Federal Rule of Civil Procedure 41(b) is granted. Ordered by Judge Ann M. Donnelly on 2/4/2022. (Greene, Donna)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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:
ABL VENTURE CAPITAL, LLC and OS
:
RESEARCH, LLC,
Plaintiffs,
– against –
THINOMENON, INC. and GENNADY
MEDNIKOV,

: MEMORANDUM DECISION AND
ORDER
:
13-CV-3185 (AMD) (LB)
:
:
:

:
Defendants.
--------------------------------------------------------------- X
ANN M. DONNELLY, United States District Judge:
Pending before the Court is the defendants’ motion to dismiss the action with prejudice
for failure to prosecute pursuant to Federal Rule of Civil Procedure 41(b). (ECF No. 115.) For
the reasons stated below, the defendants’ motion is granted.
BACKGROUND
Familiarity with the extensive factual and procedural history of this case, which is now
nine years old, is assumed. ABL Venture Capital, LLC, OC Research, LLC and Barry Leon 1
(the “plaintiffs”) brought this action on June 4, 2013, asserting common law and statutory claims
against Igor Shmukler, 2 Thinomenon, Inc. and Gennady Mednikov (the “defendants”) based on
their alleged breach of contract and misappropriation of property owned by OS Research. (ECF
No. 1.) The plaintiffs amended the complaint three times: on October 7, 2014, November 4,

1

On September 8, 2017, the plaintiff Leon was dismissed from the action for lack of standing. (ECF Nos.
79, 80.)

2

On November 30, 2020, then-Chief Judge Roslynn R. Mauskopf adopted Magistrate Judge Lois
Bloom’s report and recommendation, which recommended dismissing Shmukler, the lead defendant,
from the action pursuant to Federal Rule of Civil Procedure 4(m) due to the plaintiffs’ failure to show
proper proof of service on Shmukler or good cause for why he was not served. (ECF Nos. 104, 114.)

2016 and again on December 20, 2016. (ECF Nos. 26, 69, 72.) The defendants answered on
October 24, 2017. (ECF Nos. 82, 83.)
Since the defendants answered the third amended complaint (“TAC”), the plaintiffs have
prosecuted this case in fits and starts, resulting in extended periods of delay. After October 24,
2017, the case lay dormant for more than a year until Magistrate Judge Anne Y. Shields issued
an order on December 18, 2018, directing the parties to appear for an initial conference in March
2019. (ECF No. 84.)
On December 19, 2018, the defendants requested a pre-motion conference for an
anticipated motion to dismiss for failure to prosecute. (ECF No. 85.) In their letter, the
defendants highlighted that the plaintiffs had taken no action since the defendants answered the
TAC in October 2017. (Id.) In addition, the defendants pointed out that the plaintiffs had not
tried to serve Shmukler or move for alternate service in the five-plus years that the action was
pending. (Id.) Citing Shmukler’s relocation from New York to Russia, the plaintiffs responded
by requesting leave to file a motion for substituted service on Shmukler. (ECF No. 86.)
Following a January 7, 2019 status conference with then-District Judge Joseph F. Bianco (ECF
No. 87), the plaintiffs moved before then-Chief Judge Mauskopf to serve Shmukler by alternate
means pursuant to Federal Rule of Civil Procedure 4(f)(3). (ECF No. 88.) 3 At the time, the
defendants decided not to file a motion to dismiss for failure to prosecute. Judge Mauskopf
referred the plaintiffs’ motion to Magistrate Judge Bloom on May 17, 2019.
In an order dated May 21, 2019, Judge Bloom determined that the plaintiffs’ motion for
substituted service was unsupported by the record, which showed that “plaintiffs [] failed to
make any effort on their own to effectuate service.” Nevertheless, Judge Bloom gave the
3

After Judge Bianco’s elevation to the Second Circuit, the case was reassigned to then-Chief Judge
Mauskopf on April 5, 2019. The case was reassigned to me on June 30, 2021.

plaintiffs another chance, and warned them that the case would be dismissed against Shmukler if
the plaintiffs did not serve him or show significant efforts to serve him within sixty days. (Id.)
When the plaintiffs did not do so within the allotted time, Judge Bloom issued a report and
recommendation, in which she recommended dismissing the action against Shmukler without
prejudice pursuant to Federal Rule of Civil Procedure 4(m). (ECF No. 104.) On November 30,
2020, in adopting Judge Bloom’s report and recommendation and overruling the plaintiffs’
objections (ECF Nos. 105, 107), Judge Mauskopf held that the plaintiffs’ limited and belated
efforts to serve Shmukler did not excuse the lack of service in the six years the action had been
pending, “particularly after generous allowances by Judge Bloom made clear both in court and in
her order[.]” (ECF No. 114 at 9.)
While the issue concerning substituted service was pending, on January 10, 2020, the
defendants requested a pre-motion conference for an intended motion for summary judgment.
(See ECF No. 109.) The plaintiffs did not respond. 4 Instead, the plaintiffs filed a status report
on September 29, 2020 that acknowledged the defendants’ January 10, 2020 request, but did not
explain their lack of response other than noting that “[u]pon information and belief, the Court has
not responded to Defendants’ most recent request.” (ECF No. 110 at 2.) 5 To date, the plaintiffs
have not responded substantively to the defendants’ request for a pre-motion conference.

4

Judge Mauskopf’s Individual Practices and Rules III.A.2 provide that a party served with a letter request
for a pre-motion conference “may serve and file a letter response, not to exceed three (3) pages, within
five (5) days of service of the letter requesting a pre-motion conference.”

5

Neither Judge Bloom nor Judge Mauskopf requested a status report. Moreover, the plaintiffs sent the
report to Magistrate Judge Shields, who had asked for a status update in an action related to this one,
involving confirmation of an arbitration award against Shmukler. See Leon v. Shmukler, No. 14-cv7140 (E.D.N.Y.). The plaintiffs then refiled a letter correctly addressed to Judge Bloom. (ECF No.
112.)

In their September 29, 2020 status report and in their subsequent October 1, 2020 letter to
Judge Bloom, the plaintiffs referred to so-called “outstanding” matters, including their motion
for alternate service on Shmukler—Judge Mauskopf had not yet adopted Judge Bloom’s report
and recommendation—and the plaintiffs’ purported need to conduct depositions, (ECF Nos. 110,
112), even though the deadline for depositions had passed a year earlier; 6 the plaintiffs did not
explain why they should be permitted to take depositions after that date. (Id.) The defendants
noted that the plaintiffs had not responded to their January 10, 2020 request for a pre-motion
conference. (ECF No. 111 at 3; ECF No. 113 at 1.) Citing the plaintiffs’ inactivity since
September 2019, the defendants concluded their letter responses by asking the Court to dismiss
the case for failure to prosecute. (ECF No. 111 at 3; ECF No. 113 at 2.)
The plaintiffs did not file anything else, or take additional action. Judge Bloom issued an
order dated July 27, 2021 directing the parties to appear for a status conference to discuss the
case and the related action, Leon v. Shmukler, No. 14-cv-7140 (E.D.N.Y.). During the
conference held on August 19, 2021, the Court reminded the parties that discovery had been
closed since February 1, 2020, and granted the defendants leave to file this motion for failure to
prosecute.
LEGAL STANDARD
Federal Rule of Civil Procedure 41(b) provides, in relevant part, that “[i]f the plaintiff
fails to prosecute or to comply with these rules or a court order, a defendant may move to
dismiss the action or any claim against it.” It is well established that this rule “gives the district
court authority to dismiss a plaintiff’s case sua sponte for failure to prosecute.” Davis v. Town of

6

Fact discovery closed on September 27, 2019, and the deadline to submit a joint proposed pre-trial order
was February 1, 2020. (See ECF Nos. 91, 92; see also Aug. 19, 2021 Order (“Discovery in this case has
been closed since February 1, 2020.”).)

Hempstead, 597 F. App’x 31, 32 (2d Cir. 2015) (quoting Le Sane v. Hall’s Sec. Analyst, Inc., 239
F.3d 206, 209 (2d Cir. 2001)). In deciding whether to dismiss a case pursuant to Rule 41(b), the
Court considers five factors: (1) whether the plaintiff’s failure to prosecute caused a delay of
significant duration, (2) whether the plaintiff was on notice that further delay would result in
dismissal, (3) whether the defendant is likely to be prejudiced by further delay in the
proceedings, (4) a balancing of the court’s interest in managing its docket with the plaintiff’s
interest in receiving a fair chance to be heard and (5) whether the court has adequately
considered a sanction less drastic than dismissal. See Lewis v. Rawson, 564 F.3d 569, 576 (2d
Cir. 2009) (quoting United States ex rel. Drake v. Norden Sys., Inc., 375 F.3d 248, 254 (2d Cir.
2004)). No one factor is dispositive. Id.
DISCUSSION
These factors favor dismissal of the case. First, the plaintiffs’ inaction at various stages
of this nine-year-old case has caused considerable delay. The first period of inactivity occurred
between October 2017, when the defendants answered the TAC, (ECF Nos. 82, 83), and
December 2018, when the plaintiffs requested leave to file a motion for substituted service on
Shmukler, (ECF No. 86). During this time, the plaintiffs made limited, if any, efforts to move
the case forward. 7 This period of inactivity would in all likelihood have continued had the
defendants not requested a pre-motion conference for an intended motion to dismiss for failure to

7

The plaintiffs do not deny that there was “inactivity in the Court” during this time; instead, they claim
that they “used that time to attempt to locate the defendant.” (ECF No. 118-11 at 5.) As Judge
Mauskopf found in her November 30, 2020 decision, the plaintiffs were not diligent in attempting to
serve Shmukler during periods that encompassed the period from October 2017 to December 2018. (See
ECF No. 114 at 8-9.) The plaintiffs also cite the death of the plaintiffs’ counsel’s fiancé in February
2017. (ECF No. 118-11 at 6.) The Court sympathizes with counsel in what was undoubtedly a
devastating event. But the plaintiffs do not explain how that tragedy justifies the period of inactivity in
question.

prosecute, (ECF No. 85), prompting Judge Bianco to schedule a status conference for January
2019. (Dec. 27, 2018 Scheduling Order; Jan. 7, 2019 Minute Entry.)
Since then, the plaintiffs have caused additional delays that have spanned years. After
the plaintiffs responded to the defendants’ discovery requests in August 2019, the record
establishes that the plaintiffs were generally unresponsive, and did little to advance the case. The
plaintiffs did not respond to the defendants’ deficiency letter, did not identify an expert or
produce an expert report by the deadline, did not respond to the defendants’ January 10, 2020
request for a pre-motion conference and did not communicate with the defendants about
submitting a joint-proposed pretrial order by the February 1, 2020 deadline. (ECF No. 115-9 at
9-10.) The plaintiffs concede that after the exchange of discovery, “there were outstanding
discovery issues by both parties that were never addressed with the Court.” (ECF No. 118-11 at
7.) They do not, however, explain why they did not raise those issues with the defendants or the
Court. Instead, the plaintiffs seem to blame “the lapse of activity . . . after the exchange of
written discovery” on the COVID-19 pandemic. (Id. at 2, 7.) This claim ignores that the lapse in
activity started in August 2019, six months before the pandemic began in the United States in
March 2020. The plaintiffs do not identify any actions they took to prosecute their case during
this six-month period.
Another period of inactivity occurred between November 30, 2020, when Judge
Mauskopf issued her opinion dismissing claims against Shmukler (ECF No. 114), and July 27,
2021, when Judge Bloom directed the parties to appear for a status conference on August 19,
2021. (July 27, 2021 Order.) Since the August 19, 2021 conference, the plaintiffs have taken no
further action in this case, except to oppose the defendants’ motion for failure to prosecute.
(ECF No. 118.)

I find these delays more than sufficient to satisfy the first factor. “[F]ailure to prosecute
under Rule 41(b) can evidence itself either in an action lying dormant with no significant activity
to move it or in a pattern of dilatory tactics.” Zappin v. Doyle, 756 F. App’x 110, 112-13 (2d.
Cir. 2019) (internal quotation marks and citation omitted). At various stages of this case, the
plaintiffs have either failed to act, or done the bare minimum, leaving the case pending for years
without substantial progress. See id. at 112 (delay of 49 days can favor dismissal); Lyell Theatre
Corp. v. Loews Corp., 682 F.2d 37, 42-43 (2d Cir. 1982) (delay by plaintiff can warrant
dismissal of a case “after merely a matter of months”); Juliao v. Charles Rutenberg Realty, Inc.,
No. 14-CV-0808, 2018 WL 5020167, at *8 (E.D.N.Y. July 23, 2018) (dismissing case where “a
closer look at Plaintiff’s conduct reveals neither meaningful activity nor adherence to Court
directives,” despite plaintiff’s “flurry of activity over the years” and “personal[] appear[ances] at
court conferences”), report and recommendation adopted, No. 14-CV-0808, 2018 WL 4502172
(E.D.N.Y. Sept. 20, 2018). The first factor therefore favors dismissal.
Second, the plaintiffs received sufficient notice that a failure to prosecute could result in
dismissal. “Courts favor dismissal when plaintiff was notified of the possibility of dismissal,
even though notice is not a prerequisite to dismissing an action.” Vidales v. Sergio’s on the Blvd
Pizzeria, Inc., No. 19-CV-1840, 2021 WL 3742765, at *3 (E.D.N.Y. Aug. 5, 2021), report and
recommendation adopted, No. 19-CV-1840, 2021 WL 3741537 (E.D.N.Y. Aug. 24, 2021). The
plaintiffs were first alerted to the possibility of dismissal in December 2018, when the defendants
requested a pre-motion conference for an intended motion to dismiss for failure to prosecute.
(ECF No. 85.) The plaintiffs were notified again in October 2020 when the defendants
submitted letters urging the Court to dismiss the case due to “the second time in the history of
this action that Plaintiffs failed to prosecute for over one year.” (ECF No. 113 at 2; see also ECF

No. 111 at 3 (“[T]his action has been looming against Defendants for seven years while Plaintiffs
made no serious effort to move it forward.”).) Courts in the Second Circuit have found similar
filings by a defendant sufficient to satisfy Rule 41(b)’s notice factor. See, e.g., Yourman v.
Metro. Transp. Auth., No. 20-CV-779, 2021 WL 4027014, at *4 (S.D.N.Y. Sept. 2, 2021)
(finding that the defendants’ letter seeking leave to file a motion to dismiss pursuant to Rule
41(b) was adequate notice of the possibility of dismissal).
Third, additional delay will prejudice the defendants. As explained above, the plaintiffs
have let this action linger on multiple occasions, causing delays to an action that is already quite
old. Because the plaintiffs have been inactive for long periods without adequate justification, the
Court can presume that further delays would be prejudicial. See Caussade v. United States, 293
F.R.D. 625, 630 (S.D.N.Y. 2013) (“A rebuttable presumption that a defendant was prejudiced
may arise where the delay was lengthy and inexcusable.” (internal quotation marks and citation
omitted)); Beauford v. Doe #1, No. 04-CV-7533, 2007 WL 549432, at *1 (S.D.N.Y. Feb. 16,
2007) (presuming that further delay would prejudice defendants where plaintiff did not respond
to an outstanding discovery request for more than a year). Allowing this case, now in its ninth
year of litigation, to move forward would cause prejudice to the defendants.
Fourth, the Court’s need to reduce docket congestion outweighs any rights the plaintiffs
may have. “Under the fourth factor, a court considers ‘the balance between district court
calendar congestion and the plaintiff’s right to an opportunity to be heard.’” Caussade, 293
F.R.D. at 631 (quoting Drake, 375 F.3d at 257); accord Vidales, 2021 WL 3742765, at *4.
Courts consider whether a plaintiff has been given an opportunity to be heard on the issue of
failure of prosecute, and also whether a plaintiff has shown interest in prosecuting its case. See,
e.g., id. Throughout the lifespan of this case, the Court has given the plaintiffs numerous

opportunities to move the action forward, but the plaintiffs have shown little interest in
prosecuting it. For six years, they were not diligent in attempting to serve the lead defendant,
even after receiving a generous allowance of 60 additional days. (See ECF No. 114.) The
plaintiffs have missed deadlines, 8 and have allowed the case to remain dormant, only to reappear
intermittently to do the bare minimum. See Caussade, 293 F.R.D. at 631 (dismissing case where
plaintiff was not in contact with counsel for approximately five months and failed to respond to
deposition requests). Because the plaintiffs have shown little interest in pursuing their claims, it
would not be an efficient use of the Court’s resources to allow this case to stay on the docket for
longer than it already has. Accordingly, the fourth factor favors dismissal.
Finally, as to the fifth factor, dismissal with prejudice is the appropriate sanction. Courts
consider “whether lesser sanctions would [be] sufficient to remedy any prejudice resulting from
plaintiff’s delay,” Drake, 375 F.3d at 257 (citation omitted), though “courts are not required to
exhaust possible lesser sanctions before imposing dismissal or default if such a sanction is
appropriate on the overall record.” Caussade, 293 F.R.D. at 631 (quoting S. New England Tel.
Co. v. Global NAPs Inc., 624 F.3d 123, 148 (2d Cir. 2010). The defendants move to dismiss the
case with prejudice pursuant to Federal Rule of Civil Procedure 41(b). (ECF No. 115-9 at 6, 21;
ECF No. 119 at 12.) Dismissal is an appropriate remedy where, as here, the plaintiffs
demonstrate little or no interest in litigating their case. See Vidales, 2021 WL 3742765, at *4
(“[B]ecause [plaintiffs] have shown no interest in litigating this case, there is no efficacious
option but dismissal.”); Juliao, 2018 WL 5020167, at *8 (finding dismissal with prejudice
appropriate because “any lesser sanction will not secure the compliance necessary to move this
8

On April 15, 2019, the plaintiffs sought an extension of time to serve initial disclosures, which were due
three days earlier. Although Judge Bloom granted the extension, her order dated April 16, 2019
cautioned counsel that they must “file any future request for an extension of time before the deadline
expires.”

case forward”). A lesser sanction of dismissal without prejudice is inadequate. The plaintiffs
have been given multiple opportunities to move this case forward. As their sporadic conduct
over the course of years shows, they do not intend to pursue their claims with any diligence.
Moreover, giving the plaintiffs any further opportunities to refile this case—in which they have
shown such little interest—would be unfair to the defendants. See Zappin v. Doyle, No. 17-CV8837, 2018 WL 2376502, at *9 (S.D.N.Y. Apr. 10, 2018) (dismissal without prejudice
insufficient where “[the Defendants] ought not to have Plaintiff’s claims looming over them
indefinitely”), report and recommendation adopted, 756 F. App’x 110 (2d Cir. 2019).
Therefore, the final factor favors dismissal.
CONCLUSION
For these reasons, the defendant’s motion to dismiss this action with prejudice pursuant
to Federal Rule of Civil Procedure 41(b) is granted.

SO ORDERED.

s/Ann M. Donnelly
___________________________
ANN M. DONNELLY
United States District Judge
Dated: Brooklyn, New York
February 4, 2022