Dartell v. Tibet Pharmaceuticals, Inc. et al

REPLY BRIEF to Opposition to Motion

D.N.J.September 30, 2016

SHER TREMONTE LLP Scott Cargill, Esq. (No. 007991999) 80 Broad Street, 13th Floor New York, New York 10004 Attorneys for Youhang Peng UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ROBIN JOACHIM DARTELL, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiff, vs. TIBET PHARMACEUTICALS, INC, HONG YU, TAYLOR Z. GUO, SABRINA Y. REN, WENBO CHEN, YOUHANG PEN, SOLOMON CHEN, ANDERSON & STRUDWICK INCORPORATED, STERNE AGEE GROUP, INC., HAYDEN ZOU, L. MCCARTHY DOWNS III and ACQUAVELLA, CHIARELLI, SHUSTER, BERKOWER & CO., LLP, Defendants. Civil Action No.: 14-CV-03620 (JMV) (JBC) REPLY MEMORANDUM OF LAW IN SUPPORT OF YOUHANG PENG’S RENEWED MOTION TO DISMISS THE CONSOLIDATED AMENDED CLASS ACTION COMPLAINT PURSUANT TO FED. R. CIV. P. 12(B)(2), 12(B)(4) AND 12(B)(5) Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 1 of 13 PageID: 5888 TABLE OF CONTENTS TABLE OF AUTHORITIES .............................................................................................. ii PRELIMINARY STATEMENT ........................................................................................1 FACTUAL BACKGROUND ..............................................................................................1 ARGUMENT ......................................................................................................................4 A. No Good Cause Exists for Missing Service Deadline .................................4 B. Extending the Time for Plaintiffs to Serve Peng is Unwarranted ................5 CONCLUSION ....................................................................................................................9 Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 2 of 13 PageID: 5889 ii TABLE OF AUTHORITIES Cases Adams v. AlliedSignal Gen. Aviation Avionics, 74 F.3d 882 (8th Cir. 1996) .................... 8 Barrentine v. New Jersey Transit, Civ. No. 12-3936 (KM) 2013 WL 4606781 (D.N.J. Aug. 28, 2013) ................................................ 7 Boley v. Kaymark, 123 F.3d 756 (3d Cir. 1997) ................................................................ 6 Chiang v. U.S. Small Bus. Admin., 331 Fed. Appx. 113 (3d Cir. 2009) ........................ 6, 7 Jumpp v. Jerkins, No. CIV. 08-6268 (RBK/KMW) 2010 WL 715678 (D.N.J. Mar. 1, 2010) ..................................................... 5 Petrucelli v. Bohringer, GMBH, 46 F.3d 1298 (3d Cir. 1995) .......................................... 5 Sanders-Darigo v. CareersUSA, 847 F. Supp.2d 778 (E.D. Pa. 2012) ............................. 5 Statutes Fed. R. Civ. P. 4(m) ........................................................................................................ 5, 6 Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 3 of 13 PageID: 5890 Youhang Peng (“Peng”) through his counsel, Sher Tremonte LLP, submits this reply memorandum of law in further support of his motion to dismiss the Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(4) and 12(b)(5). PRELIMINARY STATEMENT Plaintiffs have failed to proffer any facts to support their pursuit of claims against Peng following Plaintiffs’ multi-year delay in service and fatal errors appearing on the face of the summons. Good cause does not exist to excuse Plaintiffs’ failure to timely serve Peng. No proof has been offered to support Plaintiffs’ alleged attempted but failed prior efforts to serve Peng in Texas. Nor have Plaintiffs explained the multi-month delay in effecting service once Peng’s Texas address was “confirmed” by Plaintiffs. Moreover, the circumstances here do not warrant the exercise of judicial discretion to permit Plaintiffs’ case to proceed in the absence of good cause. Such judicial discretion is generally only exercised in cases involving minimal delays in service and when defendants have actual notice of the suit, circumstances materially different from the facts of this case. For better or worse, for years Plaintiffs chose to follow a strategy that did not include pursuing Peng, while actively pursuing claims against other Defendants. The time has long passed for the Plaintiffs to reconsider that strategy and suddenly bring Peng into litigation that is drawing to a close. To do so would be highly prejudicial to Peng and would impose significant and unnecessary burdens on other parties and on judicial resources. Accordingly, the Amended Complaint should be dismissed against Peng. FACTUAL STATEMENT The facts supporting Peng’s motion are set forth in the memorandum of law in support of his Motion to Dismiss, the Declaration of Scott Cargill, dated August 5, 2016, and its attached Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 4 of 13 PageID: 5891 2 exhibits. (Dkt. Nos. 219-221.) The following facts address allegations in Plaintiffs’ memorandum in opposition. (Dkt. No. 236, hereinafter “Pls. Mem.”) Plaintiffs contend that there were “several failed attempts by the process server obtained by Plaintiffs to serve Peng at the Texas address listed on the summons.” (See Pls. Mem., 3.) There is no evidentiary support for this contention. Indeed in their sworn answer to Peng’s interrogatories, Plaintiffs only stated that “a process server was retained in August of 2013 to effect personal service on Peng at his address in Coppell, Texas but . . . Plaintiffs no longer possess information concerning the dates on which service were [sic] attempted.” (Cargill Decl., Ex. B, Response No. 2 (Dkt. No. 221-2).) Because Plaintiffs cannot provide any email, letter, invoice, or communication, let alone an affidavit from the process server that allegedly unsuccessfully attempted to serve Peng in 2013, Plaintiffs’ contention that there were several (or any) attempts to serve Peng should be afforded no weight. Plaintiffs also reference documents purporting to support their supposed belief that Peng was in China during the years between the commencement of this lawsuit and at least as late as November 2015. Plaintiffs offer into evidence documents attached as Exhibits 3 and 4 to the Declaration of Sarah Fuks, dated September 6, 2016. (Dkt. Nos. 236-4 & 236-5). However, both exhibits are simply pageviews from websites with date stamps of April 28, 2016 and August 29, 2016, and are not probative of any beliefs Plaintiffs or their counsel may have had at the time that service should have occurred pursuant to the applicable Federal Rules of Civil Procedure. Plaintiffs provide, as Exhibit 2 to the declaration of Sarah Fuks, an excerpt from a spread sheet purportedly showing a transfer from HSBC to an entity with Peng’s Texas address, which was received by Plaintiffs in November 2015. (Dkt. No. 236-3.) The Fuks Declaration and the supporting memorandum of law fail to offer any evidence as to why, with this supposedly “new” Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 5 of 13 PageID: 5892 3 information that Peng was residing in Texas, it took an additional four months for Plaintiffs to retain a process server, especially when Plaintiffs were aware that the fact discovery deadline was April 29, 2016. (See Pretrial Scheduling Order, dated April 10, 2015 (Dkt. No. 147).) Peng has provided sworn evidence that he did not have any notice of this lawsuit until he was served in March 2016. (See Cargill Decl., Ex. A, Response No. 8 (Dkt. No. 221-1).) Plaintiffs’ contend that Peng somehow had actual notice because Tibet was served in 2012 through its registered agent. (Pls. Mem., 9.) Elsewhere, Plaintiffs contend that the operative Complaint in this action was filed in 2013. (Id. at 2.) Plaintiffs do not allege that Tibet was served with the 2013 Complaint at that time or subsequently. Plaintiffs’ mere speculation as to what notice Peng may have received is contradicted by Peng’s sworn testimony that he did not have notice of this lawsuit and, accordingly, Plaintiffs’ contentions should not be given any weight. The noncompliant subpoena duces tecum served on Peng in March 2016 is also addressed in Plaintiffs’ Memorandum. In Peng’s initial motion to dismiss, filed in April 2016, he referenced the subpoena he received for two reasons: (1) because he was served with an unsigned subpoena duces tecum and (2) because when they served him with a non-party subpoena, Plaintiffs indicated that they did not, in fact, consider him to be a party to this case. (See Memorandum in Support of Peng’s Motion to Dismiss, 2 & fn. 2 (Dkt. No. 191).) When the Court directed that the parties conduct limited discovery on the issues raised in Peng’s motion to dismiss, Peng sought discovery on, inter alia, the discrepancy between the version of the subpoena Peng received (unsigned but initialed by the process server) and the version of the subpoena provided by Plaintiffs’ counsel to Defendants’ counsel (signed but with no initials). (See Cargill Decl., Ex. B, Interrogatory No. 10 (Dkt. No. 221-2).) Notwithstanding that Peng Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 6 of 13 PageID: 5893 4 raised the subpoena discrepancies in April 2016, Plaintiffs assert in their Responses and Objections to Peng’s Interrogatories that “there do not appear to be any differences to [sic] the Subpoena Duces Tecum served on Peng on March 22, 2016 and the Subpoena Duces Tecum attached to the March 30th email.” (Id.) Now Plaintiffs contend: “Peng asserts that he was served with an unsigned subpoena and accuses Plaintiffs of falsely swearing that Peng was signed [sic] with a signed subpoena. (Dkt. 22 [sic] at fn. 2). . . Plaintiffs were unaware that Peng was served with an unsigned subpoena. Rather than point out the fact that Peng was served with what appeared to be an unsigned subpoena it was Peng’s counsel that evasively asked Plaintiffs’ counsel in an interrogatory to [explain the difference between the two versions of the subpoena]. Plaintiffs’ counsel had no knowledge that Peng was served with an unsigned subpoena. The only explanation for Peng’s assertion . . . is that the signature on the subpoena transmitted to Plaintiffs’ counsel to the process server . . . was not dark enough to print. (Pls. Mem., fn. 1.) The copy of the subpoena served on Peng, and then transmitted to undersigned counsel by Peng, is neither light nor faded. (See Cargill Decl., Ex. D (Dkt. No. 221-4).) ARGUMENT A. No Good Cause Exists for Missing Service Deadline Plaintiffs half-heartedly contend that there was good cause for their failure to serve Peng prior to March 2016. First, Plaintiffs have not established that they attempted to serve Peng at his Texas address around the time that the Amended Complaint was filed in 2013 because there is no record of Plaintiffs’ retaining a process server or having any communications about attempts at service.1 (See Cargill Decl., Ex. B, Response No. 2 (Dkt. No. 221-2).) Second, in order to establish the reasonableness of their belief that Peng was not at his stated address, but at 1 Plaintiffs’ inability to locate a single record of their attempts at service, if there were any, underscores exactly the type of prejudice that Peng would suffer if he were required to defend at this late date. Not only have the recollections of witnesses faded, but documents and computer records are likely difficult or impossible to obtain because of the passage of time caused by Plaintiffs’ lengthy delay. Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 7 of 13 PageID: 5894 5 large in China, Plaintiffs point to various printouts from the Internet. (See Fuks Decl., Exs. 3 & 4 (Dkt. Nos. 236-4 & 236-5).) However, this supposed documentary support for their false belief that Peng was resident in China was printed in 2016 and is not probative of Plaintiffs’ knowledge and belief at the relevant periods in 2013 and 2014. Third, inconsistent with Plaintiffs’ argument that they believed Peng was in China, Plaintiffs made no efforts whatsoever to serve Peng there or ask the court for more time to effect service or permission to accomplish service by alternate means. (Cargill Decl., Ex. B, Response No. 4 (Dkt. No. 221-2).) Fourth, even after Plaintiffs confirmed in November 2015 that Peng was indeed resident at the same Texas address they had listed for him for several years, Plaintiffs did not even bother to attempt to serve Peng for another four months. When Peng was finally served, there remained less than six weeks until the fact- discovery deadline in this case. B. Extending the Time for Plaintiffs to Serve Peng is Unwarranted Plaintiffs correctly state that courts in the Third Circuit can exercise discretion under Rule 4(m) to permit cases to go forward even in the absence of good cause for a plaintiff’s delay in properly serving a defendant. See, e.g., Petrucelli v. Bohringer, GMBH, 46 F.3d 1298, 1305 (3d Cir. 1995); Jumpp v. Jerkins, No. CIV. 08-6268 (RBK/KMW), 2010 WL 715678, at *6 (D.N.J. Mar. 1, 2010). However, the cases cited by Plaintiffs do not support the denial of a defendant’s motion to dismiss on facts similar to those at issue here. In Jumpp the court was willing to forgive a delay of a few months where the record established that the defendant had actual knowledge of the suit. 2010 WL 715678, at *11-12. Similarly, in Sanders-Darigo v. CareersUSA, the court exercised its discretion where service was only 11 days late and where the defendant had previously indicated its willingness to waive service if the plaintiff consented to an extension of time to file a responsive pleading. 847 F. Supp.2d 778, 783 (E.D. Pa. 2012). Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 8 of 13 PageID: 5895 6 In Boley v. Kaymark, the Third Circuit remanded to the district court to reevaluate its decision to dismiss the action where (1) the defendant had actual notice and (2) the defendant moved for an extension of time to serve within five months of missing the deadline for service. 123 F.3d 756, 758-60 (3d Cir. 1997). However, where a delay in service is extensive, as it is here, it is not an abuse of discretion to dismiss the cause of action. Thus, in Chiang v. U.S. Small Bus. Admin., cited by Plaintiffs, the Third Circuit affirmed the lower court’s granting of defendant’s motion to dismiss where the plaintiffs took almost four years to properly effect service, even when the dismissal meant that plaintiff’s claims were time-barred. 331 Fed. Appx. 113, 116 (3d Cir. 2009). Among the factors to be considered by a court when exercising its discretion to deny a defendant’s motion to dismiss under Rule 4(m) are (1) actual notice of the legal action; (2) prejudice to the defendant; (3) the statute of limitations on the underlying causes of action; (4) the conduct of the defendant; and (5) whether the plaintiff is represented by counsel, in addition to any other factor that may be relevant. See id. First, Peng has sworn that he was not aware of this lawsuit until he was served in March 2016. While Plaintiffs attempt to argue that service on Tibet (of which Peng was an officer) in 2012 charged him with notice, such argument fails because (1) the operative pleading in this case was the 2013 Complaint and (2) because Peng’s statements that he was unaware of the case before March 2016 have not been contradicted. Second, Peng would suffer extreme prejudice were he required to defend himself at this late date. Years of litigation have already taken place and a number of threshold matters have already been resolved, such as standing, venue and choice of law, in which Peng never had an opportunity to participate. Depositions of the lead Plaintiffs have already taken place and Peng had no opportunity to participate. If the case is not dismissed, Peng would have to be afforded Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 9 of 13 PageID: 5896 7 the right to make procedural motions concerning venue, standing, choice of law, and scope of discovery and would need to depose all the individuals who have already given testimony, causing further delays and expense to all parties. In addition, the actions at issue are now more than five years old and it would be prejudicial to Peng to defend himself where files, both paper and electronic, may no longer exist, and where the recollections of all parties involved have faded. The third factor to be considered is statute of limitations. The expiration of the statute of limitations is not a sufficient reason to deny a defendant’s motion to dismiss. As the Third Circuit noted in Chiang, “[t]he running of the statute of limitations may be “a factor supporting the discretionary granting of an extension of time to make service under Rule 4(m), but it does not require the district court to extend time for service of process. . . . [A district court may] still dismiss the case, even after considering that the statute of limitations has run and the refiling of an action is barred.” 331 F. App’x at 116 (citations and quotations omitted, emphasis in the original) (affirming district court’s denial of an extension of time to serve after plaintiff’s four- year delay.) Plaintiffs cite to Barrentine v. New Jersey Transit in support of their assertion that the running of the statute of limitations favors denying Peng’s motion. (Pls. Mem., 10.) However, the facts of Barrentine are distinguishable from the situation here: the plaintiff was for much of the time proceeding pro se, the state defendant was on notice of all relevant claims, having received the complaint plaintiff filed with the EEOC, and discovery had not even begun in earnest. Civ. No. 12-3936 (KM) 2013 WL 4606781, *8 (D.N.J. Aug. 28, 2013). Each of these facts points to the opposite outcome in the case at bar. The fourth factor, the conduct of the defendant, also clearly weighs heavily towards granting Peng’s motion. There are no allegations that Peng avoided service. Indeed, once Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 10 of 13 PageID: 5897 8 Plaintiffs actually retained a process server, they were able to serve him within a matter of days at the exact address they had in their files for years. Moreover, once served, Peng timely filed a motion to dismiss and has participated in the action to assert his rights without evasion or delay. Similarly, the fifth factor - that Plaintiffs are represented by counsel - squarely points to dismissal of the Complaint. Plaintiffs have demonstrated a lack of adherence to the Federal Rules of Civil Procedure. Plaintiffs’ repeated failures to diligently pursue claims against Peng (e.g., failing to request an extension of time to serve Peng, misspelling Peng’s name in the caption of the case, serving him with an outdated summons, serving him with a subpoena used for non-parties, delivering a copy of a subpoena to counsel that was different than the one actually served on Peng, and waiting until just before the discovery deadline to retain a process server) must have consequences. Here, Plaintiffs made a strategic decision not to expend resources on pursuing Peng in this action for years. “At some point, a litigant must bear the consequences of conscious strategic or tactical decisions of this kind.” Adams v. AlliedSignal Gen. Aviation Avionics, 74 F.3d 882, 887 (8th Cir. 1996) (affirming district court’s denial of discretionary relief from the 120-day service rule). Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 11 of 13 PageID: 5898 9 CONCLUSION For the foregoing reasons, Peng respectfully requests that this Court grants his Motion to Dismiss. Dated: September 30, 2016 SHER TREMONTE LLP By /s/ Scott Cargill . Scott Cargill Michael Tremonte (admitted pro hac vice) Justin Gunnell (admitted pro hac vice) 80 Broad Street, 13th Floor New York, New York 10004 Tel: 212.202.2600 Fax: 212.202.4156 Email: scargill@shertremonte.com mtremonte@shertremonte.com Attorneys for Youhang Peng Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 12 of 13 PageID: 5899 10 CERTIFICATE OF SERVICE I hereby certify that this document was served via ECF on counsel of record on September 30, 2016: Laurence M. Rosen, Esq. Sara Fuks, Esq. THE ROSEN LAW FIRM, PA 275 Madison Avenue, 34th Floor New York, New York 10016 lrosen@rosenlegal.com sfuks@rosenlegal.com Nicole B. Liebman, Esq. Peter J. Larkin, Esq. (pro hac vice) William J. Kelly, Esq. (pro hac vice) WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP 150 E. 42nd Street New York, New York 10017 Nicole.liebman@wilsonelser.com Peter.larkin@wilsonelser.com William.Kelly@wilsonelser.com Robert S. Brener, Esq. LECLAIR RYAN 1037 Raymond Blvd. Newark, New Jersey 07102 Email: Robert.Brener@leclairryan.com A. Neil Hartzell, Esq. (admitted pro hac vice) LECLAIR RYAN One International Place, 11th Fl. Boston, Massachusetts 02110 Email: neil.hartzell@leclairryan.com Richard J. Davis, Esq. Carl S. Burkhalter, Esq. MAYNARD, COOPER & GALE, P.C. 1901 6th Avenue North, Suite 2400 Birmingham, Alabama 35203 Email: rdavis@maynardcooper.com Case 2:14-cv-03620-JMV-JBC Document 244 Filed 09/30/16 Page 13 of 13 PageID: 5900