Dismissals With Prejudice

by Dennis Crouch

This is a non-precedential pro-se case and so a bit quirky, but its support of dismissing a case for improper venue with prejudice is likely to be cited as an example in other cases. 

Nazir & Iftikhar Khan v. Hemosphere Inc. (Fed. Cir. 2020)

In their lawsuit, Khans (both MDs) sued Hemosphere as well as 300+ hospitals and individual physicians for infringing their U.S. Patent No. 8,747,344 (AV shunt). The case did not get far.  The district court dismissed the case – with prejudice – for want of prosecution, insufficient service, improper venue, and misjoinder. The Federal Circuit has now affirmed.

The Khans represented themselves pro se at both the district court and on appeal. Their complaint alleges infringement based upon Hemosphere’s HeRO Graft shunt.

The Khans had mailed out the summons & complaint to the defendants with a waiver request — but did not actually serve the defendants in the manner required by FRCP 4.

The district court found that the Khans had not attempted to personally serve any defendant. Instead, the Khans asserted that they completed service by mailing the summons and complaint to the defendants, despite contrary instruction from the district court. The district court explained that Rule 4(e) does not permit personal service via mail and the Khans had not identified any state laws that would otherwise allow service by mail. The district court further found that the Khans had failed to comply with the [90 day] timeliness requirement of Rule 4(m).

The district court also noted that dismissal was proper for failure to plausibly allege proper venue 28 U.S.C.  § 1400(b) and for improper joinder under 35 U.S.C. § 299.

When dismissing for lack of venue, improper joinder, or failure to prosecute, the usual approach is a dismissal without prejudice. That result would allow the plaintiffs to re-file the lawsuit at a later date (perhaps with the assistance of an attorney). For instance, R.4(m) states that the court “must dismiss the action without prejudice” based upon failure to serve. Here, however, the district court dismissed with prejudice.  I read through the district court order and it does not actually provide any fact finding or discussion of why dismissal with prejudice is appropriate in this case other than the following one-liner regarding failure to prosecute:

Such a dismissal may be with prejudice “if the plaintiff’s delay in obtaining service is so long that it signifies failure to prosecute.”  Williams v. Illinois, 737 F.3d 473 (7th Cir. 2013).

Khan v. Hemosphere Inc., No. 18-cv-05368, 2019 WL 2137378, at *1 (N.D. Ill. May 16, 2019) (dismissal and sanction order).

On appeal, the Federal Circuit affirmed the dismissal. Although the Khans had attempted to obtain waivers of service, the vast majority defendants refused to waive service. At that point, service is required under R.4(e).  And, without service or waiver of service, the district court must dismiss.

Regarding dismissal with prejudice, the Federal Circuit wrote explained that the 250 day delay in serving process for the vast majority of defendants was a form of “extreme delay” that sufficient to justify dismissal with prejudice. Note here that the court actually wrote: “nearly all of the over 300 defendants had not been properly served.”  My comment on that line — make sure your law clerks are great writers.

For the improper venue  dismissals, the appellate panel also concluded that that dismissal with prejudice was proper (rather than without prejudice), but did not provide any reasoning for that conclusion.

Khans have failed to convince us that the district court erred in determining that venue under that statute was improper. . . . Accordingly, we conclude that the district court did not abuse its discretion in dismissing the action with prejudice.

Slip Op. Here, the court should have done a better job of explaining why this case overcomes the presumption set forth in R.41(b) that an involuntary dismissal on venue / joinder grounds is not on the merits.

Sanctions:  Although the district court denied that the case was “exceptional” under 35 U.S.C. § 285, the court still awarded $95k in attorney fees to out-of-state defendants for violation of FRCP 11(b). On appeal, the Federal Circuit affirmed writing that the rules do not “preclude sanctions for frivolous venue
and service assertions.”

7 thoughts on “Dismissals With Prejudice

  1. 5

    Someone help meowt:

    what’s wrong with this sentence? “nearly all of the over 300 defendants had not been properly served.”

  2. 4

    It’s entirely unrelated to the issues on appeal, but for what it’s worth, this was my old art unit, and the Kahn’s patent has serious merits problems as well.

    1. 4.1

      Thanks, it may be more unrelated than you think, if it was one of the reasons they did not get patent attorney representation.

  3. 3

    I disagree that this case “is likely to be cited as an example in other cases.” This decision rested on unique facts that any district court and practitioner would immediately recognize, making it an asterisk in the otherwise unbroken line of cases holding that the proper remedy for a failure of timely service is dismissal without prejudice. This case wouldn’t have been dismissed with prejudice if a plaintiff simply sued a few defendants and didn’t timely serve them, and had some facially plausible explanation for the inability to effect service.

    The plaintiffs here sued 300+ defendants, and thus in turn created a massive burden on the defendants and the court system. The district court opinion made clear that, beyond service, there were other significant problems including misjoinder and improper venue (as the plaintiffs relied on the Federal Circuit decision in TC Heartland decision that was reversed by the Supreme Court a year before filing), and the plaintiffs had repeatedly stated to the district court that they served or secured service waivers from defendants, when they had done neither. It looks like from the record that the district court did try to cut the plaintiffs some slack on account of them being unrepresented, but they either didn’t understand, or didn’t heed, the district court’s attempted guidance.

    I am sure the district court’s clerks and the defendants referred to this case as a “clusterf*ck,” or something similar, and the court likely understood that the plaintiffs would never have secured counsel willing to represent them in this case given the specious nature of the allegations. In the end, the district court chose to avoid further waste of resources, knowing that a “without prejudice” dismissal would have simply resulted in the plaintiffs simply refiling the same lawsuit a second time (but perhaps spread across a lot of districts to fix the venue issue the district court repeatedly warned them about), with more attendant burdens on the federal court system and the same eventual result of dismissal given the conduct of these pro se plaintiffs.

    I agree that, under proper procedure, the district court should have articulated more reasoning to justify a “with prejudice” involuntary dismissal under Rule 41. But the Federal Circuit could affirm if the grounds for a with prejudice dismissal were evident from the court’s order (which they were here), so a remand for the ministerial purpose of forcing the district court to expressly tie those grounds to Rule 41 would have been a waste and would have with certainty generated a second wasteful Federal Circuit appeal.

  4. 2

    It looks like a composition of matter (a medical device), not a medical procedure.

    (A) the term “medical activity” means the performance of a medical or surgical procedure on a body, but shall not include (i) the use of a patented machine, manufacture, or composition of matter in violation of such patent, (ii) the practice of a patented use of a composition of matter in violation of such patent, or (iii) the practice of a process in violation of a biotechnology patent.

  5. 1

    Besides these pro se MDs ignoring and denying, even after being clearly told, that their service and venue was improper, they might have had another lesser known problem: 35 U.S.C. § 287(c). That statute eliminates remedies against physicians for infringement of many medical procedure patent claims.

    1. 1.1

      To paraphrase Inigo Montoya, I do not think 287(c) provides the exemption from liability that you think it does for these defendants. Hint: look at claim 13, the claim asserted in the litigation.

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