Aura Lamp & Lighting v. Int'l Trading Corp , 325 F.3d 903 ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-1631
AURA LAMP & LIGHTING,
INCORPORATED, an Illinois
Corporation,
Plaintiff-Appellant,
v.
INTERNATIONAL TRADING
CORPORATION, a Michigan
Corporation doing business as
Lucent Lighting, Incorporated,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 C 2098—Joan B. Gottschall, Judge.
____________
ARGUED DECEMBER 12, 2002—DECIDED APRIL 9, 2003
____________
Before FLAUM, Chief Judge, MANION and ROVNER, Circuit
Judges.
ROVNER, Circuit Judge. The district court dismissed
this case for want of prosecution and the plaintiff, Aura
Lamp & Lighting Inc. (“Aura Lamp”), appeals. At oral
argument, the defendant expressed uncertainty about
our jurisdiction to hear this appeal because the complaint
contained a claim for patent invalidity. Under 28 U.S.C.
2 No. 02-1631
§ 1295(a), the United States Court of Appeals for the
Federal Circuit has exclusive jurisdiction over an appeal
from a final decision of a district court if the jurisdiction
of that court was based in whole or in part on 28 U.S.C.
§ 1338, with certain exceptions that do not apply here.
Section 1338 grants original jurisdiction to the district
courts over any civil actions arising under the federal
patent laws, among other things. We agree that the Fed-
eral Circuit has jurisdiction over this appeal. Because the
appeal is doomed, however, we dismiss rather than trans-
fer the appeal.
I.
Because the district court dismissed the case for want
of prosecution and for violations of discovery orders, the
salient facts are few. Aura Lamp and International Trad-
ing Corporation (“ITC”) allegedly entered into a number
of contracts relating to lighting products and their com-
ponents. The details of these agreements are unneces-
sary to the resolution of this appeal. Aura Lamp sued
ITC in a six-count complaint. Five of the counts allege
breach of contract. The sixth claim seeks to invalidate
a patent held by ITC. Aura Lamp filed the complaint on
April 6, 2000. A few weeks later, the district court or-
dered Aura Lamp to amend its complaint by May 19,
2000 to cure jurisdictional defects related to certain diver-
sity jurisdiction allegations in the complaint. That date
came and went without any amendment to the complaint
by Aura Lamp. ITC then moved to dismiss the complaint
or in the alternative to transfer the case. The district
court set a briefing schedule, ordering Aura Lamp to re-
ply by July 5, 2000. Again the date passed without any
action by Aura Lamp. ITC complied with the district
court’s scheduling order by filing its reply brief even
though no responsive brief had been filed by Aura Lamp.
No. 02-1631 3
Aura Lamp then belatedly filed a response brief which
the district court accepted over ITC’s objection. The dis-
trict court denied the motion to dismiss, ordered Aura
Lamp once again to amend its complaint to cure the juris-
dictional defect and threatened dismissal if Aura Lamp
continued to ignore the court’s orders. Aura Lamp then
amended the complaint.
On December 21, 2000, the court ordered the close
of written discovery by March 21, 2001 and the close of
all other discovery by August 1, 2001. Approximately
one week later, ITC served interrogatories, document re-
quests and requests for admission on Aura Lamp. Under
the Federal Rules of Civil Procedure, Aura Lamp was to
respond to this discovery within thirty days. The thirty
days passed without a response from Aura Lamp and
without any request for an extension of time to respond.
Numerous calls and letters from ITC’s counsel followed,
and Aura Lamp failed to meet two agreed extension dates.
ITC then moved to compel discovery, asking that the
requests for admission be deemed admitted, and also
seeking sanctions. The case was scheduled for a status
conference on March 22, 2001, and the court took up the
motion to compel at that time. When asked to explain the
delays in responding to discovery, Aura Lamp’s counsel
replied that he was solely responsible for the case, stat-
ing, “I wish I had somebody else to go through this stuff.”
R. 46-1, at 16. He explained that his client was a “one-man
operation” that did not have the resources to sort through
the documents requested. Id. Over ITC’s objection, the
district court elected to grant one final extension to Aura
Lamp, allowing counsel for Aura Lamp to pick the date
on which all discovery was to be produced. Several times
during the status conference, the court threatened dismiss-
al of the case if Aura Lamp failed to meet the deadline.
See R. 46-1, at 14-15 (“I’ll set a deadline, if the case [sic]
isn’t met, the case is going away.”); R. 46-1, at 13-14 (“I
4 No. 02-1631
want to set a date that is going to be real so that if it
isn’t met, I’m going to take severe action in this case.”);
R. 46-1, at 16 (“Due to the amount of time it’s taken the
plaintiff to respond to these discovery requests, and given
the enormous amount of time I’m giving you to respond
over the objection of the defendants, if there is not good
faith compliance by that date, I am going to seriously
consider a motion to dismiss for want of prosecution.”). See
also R. 46-1, at 12 (“I’m going to have to take some severe
action.”); R. 46-1, at 12-13 (“[I]f I set a deadline, given
all that’s transpired, it’s going to have to be it.”); R. 46-1, at
16 (“I’m setting a deadline, and I want it to be a real
deadline, and I want there to be consequences if it isn’t
followed.”). Aura Lamp’s counsel asked to set the dead-
line to the last working day in April, amounting to an
additional one and a half month extension. Shortly there-
after, ITC served a second set of document requests on
Aura Lamp.
On the very last day of April 2001, Aura Lamp served
ITC with responses that ITC characterized as incomplete
and defective. According to ITC, Aura Lamp failed to
produce a single page of documents and filed specious
objections to both the document and interrogatory requests.
Aura Lamp filed no response to ITC’s second request for
the production of documents. ITC’s counsel again tried to
resolve the matter with a letter requesting compliance.
When Aura Lamp did not respond, ITC moved to dismiss
the case for repeated violations of court orders, failure to
comply with discovery, and failure to prosecute. On June
15, 2001, the court held a status hearing on the motion.
Counsel for Aura Lamp informed the court he wanted
to reply to the motion in writing and that he intended to
file two motions of his own. Remarkably (given the tenor
of the prior hearing), he intended to move to extend time
to propound the plaintiff’s discovery requests and also for
additional time to respond to ITC’s request for the produc-
No. 02-1631 5
tion of documents. After setting out a deadline for Aura
Lamp to file these new motions and briefing schedules
for all pending motions, the court set a hearing date of
July 11, 2001.
At the July 11 hearing, the court learned that, in addi-
tion to missing several other deadlines, Aura Lamp had
failed to comply with the briefing schedule set on June 15.
R. 46-3, Tr. at 10-12. Counsel for Aura Lamp explained
that the most recent delays were due to secretarial difficul-
ties, computer problems, and scheduling challenges posed
by an ongoing trial in chancery court. He insisted that
his conduct was not wilful and wanton but rather due to
unforeseen circumstances beyond his control. The district
court replied, “I don’t think I have to find wilful and wan-
ton.” R. 46-3, Tr. at 28. Ultimately, the court found that
Aura Lamp repeatedly missed court-ordered deadlines and
failed to prosecute the case. She noted that Aura Lamp
had been granted numerous extensions both by the court
and by counsel for ITC to no avail. Aura Lamp had also
failed to follow basic court procedures by failing to sign
many of the documents filed with the court. The court
concluded, “[Y]ou brought the case, and the plaintiff has
to prosecute a case when they bring it, and the plaintiff
hasn’t. And I think to allow this to go on anymore would
just compound all the problems that have occurred by really
doing something that’s unfair to the defendants.” R. 46-3,
Tr. at 36. The court then dismissed the case for want of
prosecution and denied all other motions as moot. Aura
Lamp appeals.
II.
On appeal, Aura Lamp maintains that the district court
erred in dismissing the case under Federal Rule of
Civil Procedure 37 because that rule requires a finding of
wilful and wanton misconduct, and the court thus ap-
6 No. 02-1631
plied the wrong standard. Aura Lamp also contends that
dismissal under Rule 37 or Rule 41 requires specific warn-
ings prior to dismissal and also requires that the court
consider lesser sanctions before dismissing. Aura Lamp
argues that the court’s warnings were inadequate and
that no lesser sanctions were considered before the court
dismissed the case. Before we attend to the merits of Aura
Lamp’s appeal, we must address a question raised by ITC
at oral argument.
A.
The United States Court of Appeals for the Federal
Circuit has exclusive jurisdiction over certain appeals,
including those cases where the jurisdiction of the dis-
trict court is based, in whole or in part, on 28 U.S.C.
§ 1338(a). See 28 U.S.C. § 1295(a)(1); Christianson v. Colt
Indus. Operating Corp., 486 U.S. 800, 807 (1988); Unique
Concepts, Inc. v. Manuel, 930 F.2d 573, 574 (7th Cir. 1991).
Section 1338 grants original jurisdiction to the district
courts over any civil actions arising under the federal
patent laws, among other things. Unique Concepts, 930 F.2d
at 574. To determine whether the district court’s jurisdic-
tion is based on section 1338, we must “apply the well-
pleaded complaint rule: if the plaintiff must succeed on a
question of patent law in order to prevail, then jurisdiction
is founded on § 1338, and if not, not.” Id. In addition to five
counts alleging breach of contract, Aura Lamp’s complaint
contains a claim for patent invalidity. R. 1, ¶¶ 69-76. Thus,
the jurisdiction of the district court was based, at least
in part, on the patent laws and jurisdiction over the appeal
lies exclusively with the Federal Circuit. This is true
even though the district court resolved the case without
reference to patent law. Recall the court dismissed the
case for want of prosecution. We have held that “[i]f the
district court’s jurisdiction rests on a patent claim, then
No. 02-1631 7
an appeal from an entirely non-patent disposition goes to
the federal circuit.” In re BBC Int’l, Ltd., 99 F.3d 811, 813
(7th Cir. 1996). See also Kennedy v. Wright, 851 F.2d 963,
968-69 (7th Cir. 1988) (jurisdiction under the patent laws
in the district court is a necessary and sufficient condi-
tion of the Federal Circuit’s appellate jurisdiction).
Having determined that the Federal Circuit has jurisdic-
tion over the appeal and that we necessarily lack jurisdic-
tion, we are left with a single question. We must decide
whether to dismiss the case or, in the interest of justice,
transfer it to the Federal Circuit. See 28 U.S.C. § 1631;
Christianson, 486 U.S. at 818; Phillips v. Seiter, 173 F.3d
609, 610 (7th Cir. 1999). ITC urges us to dismiss rather
than transfer the case. At this stage of the proceedings, we
may “take a peek” at the merits because whether the ap-
peal has any possible merit bears significantly on our
decision to transfer or dismiss the appeal. Phillips, 173
F.3d at 610-11. We may do so even though we lack juris-
diction to decide the merits. Phillips, 173 F.3d at 611.
B.
ITC moved to dismiss the complaint with prejudice
“pursuant to Fed.R.Civ.Proc. 37(d) and/or 41(b).” R. 25, at
4. The district judge ultimately dismissed the case for
want of prosecution pursuant to Rule 41(b) but she also
discussed and may have relied upon Aura Lamp’s viola-
tions of orders related to discovery. In an abundance of
caution we will therefore address Aura Lamp’s Rule 37
arguments as well. As we concluded above, we may con-
sider the consequences of transfer before deciding wheth-
er to transfer. Phillips, 173 F.3d at 611. “[T]here is no rea-
son to raise false hopes and waste judicial resources by
transferring a case that is clearly doomed[.]” Id. Here,
because the case was dismissed for want of prosecution
and violations of discovery orders, the district court’s rul-
8 No. 02-1631
ing rests on procedural matters not unique to patent law.
The ruling would thus be reviewed under the law of our
own circuit. Haworth, Inc. v. Herman Miller, Inc., 998 F.2d
975 (Fed. Cir. 1993). In our Circuit, we review for abuse
of discretion the district court’s decision to sanction a plain-
tiff by dismissing a suit. Williams v. Chicago Bd. of Educ.,
155 F.3d 853, 857 (7th Cir. 1998); Newman v. Metropolitan
Pier & Exposition Auth., 962 F.2d 589, 592 (7th Cir. 1992).
Our review of a dismissal for want of prosecution is highly
deferential. Ball v. City of Chicago, 2 F.3d 752, 760 (7th Cir.
1993). In order to find an abuse of discretion, the district
court’s decision must strike us as fundamentally wrong.
Williams, 155 F.3d at 857; Ladien v. Astrachan, 128 F.3d
1051, 1056 (7th Cir. 1997) (we are obligated to affirm the
dismissal unless it is clear that no reasonable person could
concur in the trial court’s assessment).
Certain principles guide the district court in determin-
ing whether to dismiss a case for want of prosecution
pursuant to Rule 41. Ideally, the district court should
consider the frequency and magnitude of the plaintiff’s
failure to comply with deadlines for the prosecution of the
suit, the apportionment of responsibility for those failures
between the plaintiff and his counsel, the effect of those
failures on the judge’s calendar and time, the prejudice
if any to the defendant caused by the plaintiff’s dilatory
conduct, the probable merits of the suit, and the conse-
quences of dismissal for the social objectives of the type
of litigation that the suit represents. Ball, 2 F.3d at 759-
60. “There is no ‘grace period’ before dismissal for failure
to prosecute is permissible and no requirement of grad-
uated sanctions, but there must be an explicit warning
before the case is dismissed.” Ball, 2 F.3d at 760. Aura
Lamp asks us to find the district court abused its discre-
tion in dismissing the case because (1) the court did not
adequately warn Aura Lamp that the case would be
dismissed; (2) the court failed to consider whether lesser
No. 02-1631 9
sanctions would be effective; (3) Aura Lamp’s violations
were not of sufficient frequency or magnitude to warrant
dismissal; (4) in apportioning the fault between the par-
ties, the district court should have found that ITC’s conduct
was responsible for more egregious delays than Aura
Lamp’s; (5) neither the court nor the defendant suffered
prejudice due to Aura Lamp; (6) Aura Lamp’s claims are
meritorious.
We begin with the issue of warning. The district judge
is not obliged to warn the plaintiff repeatedly nor is the
court required to issue a formal rule to show cause before
dismissing a case. Ball, 2 F.3d at 755. “A judge is not
obliged to treat lawyers like children” Ball, 2 F.3d at 755.
All that is required is explicit warning. Here, the court
repeatedly and expressly warned Aura Lamp that it was
contemplating dismissal during the March 22 status
conference. See R. 46-1, at 14-15 (“I’ll set a deadline, if
the case [sic] isn’t met, the case is going away.”); R. 46-1, at
13-14 (“I want to set a date that is going to be real so that
if it isn’t met, I’m going to take severe action in this case.”);
R. 46-1, at 16 (“Due to the amount of time it’s taken the
plaintiff to respond to these discovery requests, and
given the enormous amount of time I’m giving you to
respond over the objection of the defendants, if there is
not good faith compliance by that date, I am going to
seriously consider a motion to dismiss for want of prosecu-
tion.”). This is by no means a complete list of the court’s
warnings but is merely a representative sample. These
warnings are more than adequate. Aura Lamp was on
notice of the consequences of further failures to respond to
the court’s orders.
Aura Lamp also faults the court for failing to consider
the efficacy of lesser sanctions first. Although we recom-
mend that courts consider sanctioning a misbehaving
lawyer before the sanction of dismissal is imposed on a
possibly faultless plaintiff, we do not require that courts
10 No. 02-1631
do so. Ball, 2 F.3d at 758. At the July 11 hearing, as the
court was ruling on the motion to dismiss, counsel for Aura
Lamp asked the court to allow him to resign from the case
and find someone else who could handle the case proper-
ly. The court replied that it was too late for such a maneu-
ver. The district judge acknowledged that both counsel
and his client had difficulties in prosecuting the case but
that ultimately the plaintiff was responsible for prosecut-
ing the case and had failed to do so. Clearly the court
believed this was the only effective sanction at the time.
Especially in light of counsel’s earlier admission that his
client was a “one-man operation” without the resources
to respond to discovery, it would appear that the court
did not abuse its discretion in refusing to impose lesser
sanctions. See also Dickerson v. Board of Educ. of Ford
Heights, Ill., 32 F.3d 1114, 1117 (7th Cir. 1994) (where a
pattern of dilatory conduct is clear, dismissal need not be
preceded by the imposition of less severe sanctions).
Aura Lamp next argues that its violations were not
sufficiently egregious and were too infrequent to warrant
such a harsh sanction. This claim is easily answered by
merely listing the violations. In addition to failing to sign
pleadings filed with the court, Aura Lamp repeatedly
missed court-imposed deadlines for both discovery and
motion practice, ignored agreed extensions, and failed to
amend its complaint to cure a jurisdictional defect for
several months after the court ordered it do so. Moreover,
Aura Lamp asked permission to propound discovery on the
defendant after the court-ordered discovery cut-off date, a
date that Aura Lamp’s counsel had himself selected at
the court’s invitation. We have upheld dismissals in cases
where the violations were comparable to or less severe
than they are here, and no court would find an abuse of
discretion in these circumstances. Dickerson, 32 F.3d at
1117; Ball, 2 F.3d at 753.
No. 02-1631 11
Aura Lamp maintains that ITC caused at least some of
the delay. But in apportioning the fault between Aura
Lamp and ITC, Aura Lamp offers no valid evidence of
dilatory conduct by ITC that contributed to any of Aura
Lamp’s failures. The sum and substance of Aura Lamp’s
argument on this point is that ITC did not tell Aura Lamp’s
counsel that his extraordinarily late responses to discov-
ery were evasive and incomplete. Aura Lamp also com-
plains that ITC did not contact its counsel concerning
responses to ITC’s request for production of documents.
Aura Lamp claims it made the documents available for
inspection and ITC did not take advantage of the opportu-
nity to review them. However, Aura Lamp fails to mention
that ITC specifically requested that Aura Lamp photo-
copy the documents and forward them to ITC. This argu-
ment is frivolous. So too is Aura Lamp’s claim that neither
the court nor the defendant suffered any prejudice at its
hands. The district court specifically listed the motions
that ITC was forced to bring to protect its interests in the
case, adding needless expense to the case and clogging
the court’s docket. R. 46-3, at pp. 34-36. We conclude that
this is not a close question. On the Rule 41 issues, the
appeal is doomed and need not be transferred to the Fed-
eral Circuit.
There is no more merit to Aura Lamp’s Rule 37 argument.
The only issue here is whether the court applied the
wrong standard when it dismissed the case without ex-
pressly finding that Aura Lamp’s conduct was wilful and
wanton. We have held that when a court enters a default
judgment as a discovery sanction, the court must find
that the party against whom sanctions are imposed dis-
played wilfulness, bad faith or fault. In re Golant, 239 F.3d
931, 936 (7th Cir. 2001). Although we strongly encourage
courts to make this finding explicitly, we may infer it, if
necessary, from the sanction order itself. Id. The court here
stated that it did not need to find “wilful and wanton”
12 No. 02-1631
conduct, and that is correct. “Wilful and wanton” implies
a more culpable level of conduct than wilful. Aura Lamp
has cited no case applying Rule 37 (and we could find none)
requiring a court to find that a plaintiff has acted in a wil-
ful and wanton fashion before the court may impose the
sanction of dismissal. Indeed, some of our cases suggest the
court need not find even wilfulness. See Golant, 239 F.3d
at 936 n.1 (collecting cases). We will presume for the pur-
poses of this appeal that the court was required to find
at least a wilful violation of discovery orders before dis-
missing a case. Evidence of the court’s implicit finding on
wilfulness appears in its final remarks before dismissing
the case:
I don’t want to hear any more argument. I can’t bend
over anymore. I just think that yes, there may have
been excuses for what happened in April, but you can’t
look at excuses for what happened in April when you’re
trying to find excuses for what happened in January,
February and March. And it’s just inadequate. I mean,
I don’t even have to deal with the fact that I’m getting
all these things from the clerk’s office telling me that
you’re not complying with the basic rules of filing
documents, like signing it. I mean, you don’t need a
word processor to sign a document.
R. 46-3, at p. 35. The court thus found that Aura Lamp
had no adequate excuse for its repeated failures to com-
ply with discovery for a period of at least three months.
Indeed, Aura Lamp had failed to propound discovery on the
defendant as of July 2001, more than a year after filing the
case. This serves as evidence both of failure to prosecute
the case and failure to comply with discovery orders. The
court’s palpable exasperation with the plaintiff is more
than sufficient to infer a finding of wilfulness. The court
did not abuse its discretion in granting the sanction of
dismissal for Aura Lamp’s repeated, unexplained failures
to comply with discovery orders.
No. 02-1631 13
III.
We conclude that we should dismiss the case rather
than transfer it to the Federal Circuit. See 28 U.S.C. § 1631;
Christianson, 486 U.S. at 818; Phillips, 173 F.3d at 610.
Under the deferential standards the Federal Circuit would
employ to review a dismissal under Rules 37 and 41, Aura
Lamp would not prevail. The appeal is “clearly doomed” and
there is no reason to waste judicial resources or the re-
sources of the parties by transferring the case. Phillips,
173 F.3d at 611. The appeal is therefore
DISMISSED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-9-03