Servipronto De El Salvador, S.A. v. McDonald's Corporation

Filing 52

OPINION AND ORDER re: 48 MOTION to Amend/Correct Order filed by Servipronto De El Salvadors, S.A.: For the reasons set forth above, Plaintiff's Motion to Clarify is hereby GRANTED, and the Court confirms that the March 28, 2 014 Order (Dkt. #47) dismissing this action did so WITHOUT PREJUDICE. The Clerk of Court is directed to terminate the motion pending at Docket No. 48, to reopen this case, and to amend the case caption to conform to the caption set forth above. (Signed by Judge Katherine Polk Failla on 9/24/2014) (tn)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
SERVIPRONTO DE EL SALVADOR, S.A., :
:
Plaintiff,
:
v.
:
:
MCDONALD’S CORPORATION,
:
:
Defendant. :
:
----------------------------------------------------X

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
September 24, 2014
DATE FILED: ______________

11 Civ. 4519 (KPF)
OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:
On May 13, 2014, the instant case was reassigned to the undersigned
from the Honorable Paul A. Crotty, United States District Judge for the
Southern District of New York. Before that reassignment, (i) in June 2011,
Plaintiff filed a motion for summary judgment in New York State Supreme
Court (Dkt. #1, 22-30); (ii) in July 2011, Defendant removed the matter to this
Court (Dkt. #1); (iii) in August 2011, Defendant filed a motion to dismiss or to
stay the case (later withdrawn) (Dkt. #8-10, 15-17, 19); (iv) throughout 2012
and 2013, the parties monitored, and periodically reported to the Court
concerning, proceedings in related litigation in El Salvador (see, e.g., Dkt. #31);
(v) in July 2013, the parties separately wrote to the Court seeking clarification
concerning the pending summary judgment motion (Dkt. #44-46); and (vi) on
March 28, 2014, the Court entered an order of dismissal (the “March 28
Order”) (Dkt. #47).
Before the Court is Plaintiff’s April 10, 2014 Motion to Clarify or Correct
Order (Dkt. #48), in which Plaintiff seeks clarification of the Court’s March 28

Order. That Order stated: “The above entitled action has been on the Court’s
active docket since July 1, 2011, and there having been no activity since July
18, 2013, it is[] ORDERED that the above-entitled action is DISMISSED. The
Clerk of Court is directed to close this case.” (March 28 Order).
Plaintiff argues that clarification is necessary because that Order does
not specify whether dismissal was “with” or “without” prejudice. (Pl. Br. 4).
Plaintiff contends that the circumstances of the case suggested that the
dismissal was “without prejudice,” but that Federal Rule of Civil Procedure
41(b) creates the possibility that, absent an explicit statement to the contrary,
a dismissal is “with prejudice.” (Id. at 4-5 (citing Fed. R. Civ. P. 41(b) (“Unless
the dismissal order states otherwise, a dismissal under this subdivision (b) and
any dismissal not under this rule … operates as an adjudication on the
merits.”)). Defendant’s response does not argue against clarification; that
application goes unopposed. For the reasons set forth by Plaintiff, the Court
agrees that further clarification as to the nature of the dismissal is necessary.
Plaintiff next argues that dismissal with prejudice is entirely
unwarranted. Plaintiff points out that it has not failed to comply with any
rules or court orders, has not been charged with any improper action or
inaction, and never received any notice that a dismissal due to inactivity was
pending. (Pl. Br. 5-6). Reviewing Second Circuit law describing the severity of
the dismissal sanction, Plaintiff contends that no such severe sanction is
defensible here. (Id.). In opposition, Defendant argues that the action should
be considered to have been dismissed with prejudice because it is moot. (Def.

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Br. 1). In particular, Defendant recites that it has paid the entire judgment of
$23,977,493.40 that Plaintiff seeks to enforce (which judgment pertains to the
litigation in El Salvador that, the Court is advised, is currently in the appellate
stage), and therefore contends that there is no actionable controversy. (Id.).
In support of its position, Defendant relies on the substantive arguments
that it has proposed to put forward in a motion to dismiss. (See July 8, 2014
Letter (Dkt. #45)). But Defendant was not given leave to file that motion to
dismiss, and no such motion was pending before the Court at the time of the
March 28 Order. The Court did not issue its dismissal order based on
substantive arguments put forward by the parties; instead, it dismissed the
case because there had “been no activity since July 18, 2013.” (March 28
Order). There was no finding that Plaintiff had failed to prosecute, or
undertook some action that warranted the sanction of dismissal. These
circumstances counsel in favor of finding that the Court dismissed the action
without prejudice pursuant to its inherent powers to control its own docket
and calendar.
Moreover, dismissal with prejudice is a “harsh remedy, not to be utilized
without a careful weighing of its appropriateness.” Martens v. Thomann, 273
F.3d 159, 179 (2d Cir. 2001). “The remedy [of dismissal for a failure to
prosecute] is pungent, rarely used, and conclusive. A district judge should
employ it only when he is sure of the impotence of lesser sanctions.” Id.
(alteration in original) (citing Chira v. Lockheed Aircraft Corp., 634 F.2d 664,
665 (2d Cir. 1980)). The record is silent as to any “careful weighing of []

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appropriateness.” Particularly in view of the Court’s July 18, 2013
endorsement stating that, at that time, there was “no basis for this Court to do
anything further,” it is clear that the dismissal served as a housekeeping
measure in a case that appeared to have noiselessly resolved itself. (Dkt. #44).
This case is clearly not resolved.
The parties shall appear at a conference on October 14, 2014, at 2:30
p.m. in Courtroom 618 of the Thurgood Marshall Courthouse, 40 Foley
Square, New York, New York. By Thursday of the week prior to that
conference, the parties shall submit via e-mail
([e-mail]) a joint letter, not to exceed four
pages, regarding the status of the case. The letter should include the following
information in separate paragraphs:
(1)

A report on the status of the litigation in El Salvador;

(2)

A report on the status of payment to Plaintiff;

(3)

A statement of whether the parties anticipate filing or refiling
motions for summary judgment or to dismiss and the
contemplated grounds of those motions; and

(4)

Any other issue that the parties would like to address at the
conference or any information that the parties believe may
assist the Court in advancing the case.

For the reasons set forth above, Plaintiff’s Motion to Clarify is hereby
GRANTED, and the Court confirms that the March 28, 2014 Order (Dkt. #47)
dismissing this action did so WITHOUT PREJUDICE. The Clerk of Court is

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directed to terminate the motion pending at Docket No. 48, to reopen this case,
and to amend the case caption to conform to the caption set forth above.
SO ORDERED.
Dated:

September 24, 2014
New York, New York

__________________________________
KATHERINE POLK FAILLA
United States District Judge

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