Petition for Writ of Certiorari — Gordon v. Hunt

1599 | Trees |

No.

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In Che eee 7

Supreme Court of the United States

October Term, 1987

RONALD GORDON, PHILIP and DOROTHY KORWEK, MARTY

FINKELSTEIN, WILLIAM L. COHN, and JAMES G. WILLIAMS,

Petitioners,

Vos

NELSON BUNKER HUNT, WILLIAM HERBERT HUNT, LAMAR

HUNT, INTERNATIONAL METALS INVESTMENT, CO., LTD.,

SHEIK MOHAMMET ABOUD AL-AMOUDI, SHEIK ALI BIN

MUSSALEM, FAISAL BEN ABDULLAH AL SAOUD, MAHMOUD

FUSTOkK, NAJI ROBERT NAHAS, BACHE HALSEY STUART

SHIELDS, INC., BACHE GROUP, INC., MERRILL LYNCH,

PIERCE FENNER & SMITH, INC., CONTICOMMODITY SER-

VICES, INC., CONTICAPITAL MANAGEMENT, INC., CONTI-

CAPITAL LTD., NORTON WALTUCH, MELVIN SCHNELL,

GILION FINANCIAL, INC., BANQUE POPULAIRE SUISSE, AD-

VICORP ADVISORY AND FINANCIAL CORPORATION, S.A.,

COMMODITY EXCHANGE, INC., THE BOARD OF TRADE OI

THE CITY OF CHICAGO, ACLI INTERNATIONAL COMMODITY

SERVICES, INC., LITRADEX TRADERS, S.A., and JOHN DOES 1

THROUGH 15,

Defendants,

MAHMOUD FUSTOK,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

DEUTSCH AND FREY

HERBERT I. DEUTSCH

VINCENT R. COFFEY*

Attorneys for Petitioners

575 Lexington Avenue

New York, NY 10022

(212) 826-0011 -

) ) , ' As

Liek -b [inte re, 203 Richmond Avenue @ Staten Island, New Yerk 10302

Te (>12) 608-7666 (718) 447-5358 — ($16) 222-2470 (914) 682-0845

aS” — CPS REP OT TG rn oe Pee eee ag ee Wiel eeiGe <ereee Penge, CO tea

i

QUESTIONS PRESENTED FOR REVIEW

1. Whether the 120 days service requirement of Fed.

R. Civ. P. 4G) applies to service on a non-resident alien

domiciled abroad who enters the U.S. on a sporadic basis.

2. Whether service pursuant to Fed. R. Civ. P.

4(1)(1)(D) is made when all the acts required by the statute

are done.

PARTIES TO THE PROCEEDINGS IN

THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

This petition is for a writ of certiorari to review a

judgment of the Second Circuit Court of Appeals entered

On two appeals which were consolidated in the Second Cir-

cuit. The caption of the case in this Court contains the

names of all parties.

Ronald Gordon was the appellant in Gordon v. Hunt,

82 Civ. 1318 (MEL) (the Gordon action). Philip and

Dorothy Korwek, Marty Finkelstein, William L. Cohn

and James G. Williams were the appellants in Korwek v.

Hunt, 84 Civ. 7934 (MEL) (the Korwe& action).

The Gordon action has been certified as a class ac-

tion. A motion is pending in the Korwek action for class

certification.

The class certified in Gordon is:

those persons who sold silver futures contracts short on the

Commodity Exchange, Inc., during the period August 8, -

1979, through and including August 30, 1979, and were net

short at the end of any trading day during that period and

i]

who liquidated those short positions during the period

August 9, 1979 through and including September 4, 1979.

The District Court has approved a settlement by

plaintiffs with Banque Populaire Suisse, one of the defen-

dants in these actions, in the sum of $9,500,000.00 plus

$545,000.00 as partial reimbursement of the costs incur-

red. This is only a partial settlement and these actions wil!

continue as to the remaining defendants.

i)

TABLE OF CONTENTS

Pages

Questions Presented For Review ........... ccc. ccccccccuccccece i

PERU BOP BENG FW VOCHOUNIIRS 5...cccccccccccccscscccccscnccccsccese

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oat es oUhutacbocasalcucnwuevesacdeeaus 2

Statutory Provisions Involved .................:cccccceeeeeeeees 2

er,

This Court Should Grant The Writ Because The Se-

cond Circuit Court GO: Appeals Has Decided Two Im-

portant Questions Of Federai Law Which Have Not

Been, But Should Be, Settled By This Court:

(a) The final sentence of Fed. R. Civ. P. 4(j) does

not exempt from the 120 days service requirement

of that rule service on a non-resident alien domici!-

ed abroad who apparently enters the United States

on a sporadic basis......... Dau eicdasknia besweceueksadudes 7

(b) Service of the Summons and Complaint is not

made on a non-resident alien domiciled abroad

when plaintiff takes all the necessary steps to effect

service under Rule 4(i)(1)(D) and all acts required

DY ENG SIMIUIE BTE GONE ..............ccccccccccccssscce: 10

SEITE SR a 12

1V

\

TABLE OF AUTHORITIES

Cases Pages

Bannercraft Clothing Co. v. Renegotiation Board,

466 F.2d 345 (D.C. Cir. 1972), rev’d on other

Og re rails BF IWOEE nobdnnustadiisuckenaculinsncscncdeeeds 9

Bersch v. Drexel Firestone, Inc., 389 F. Supp. 446

(S.D.N.Y. 1974), modified on other grounds, $19

F.2d 974 (2d Cir. 1975), cert. denied, 423 U.S. 1018

SUP THE situs vcusincnasinacahasadtoul umiiceiinlcdeie ae 1]

UN sacl aioncrancudairceleensariereaacaceu eeu nae }]

Montalbano v. Easco Hand Tools, Inc., 766 F.2d 737

ee) Rent patente aie mp D en BY wage Ata a 8-9

WE aitnesususvaditicees dina kGatedtcck erase er 10

Mullane v. Central Hanover Tr. Co., 339 U.S. 306

Le SER ee POUR OM Mu gait Aad hire Ah aca Ata SEH gtr ain 4

POU his achcih cate onunca asec ss eranaidscrinke aa ee y

Statutes

FOr. We CW. Ph. MA Wi aos iceicnceccencccnccnccdecevenson 10

POs Wes SG RED a cukauudsocasdbristienptoaiecemmaatoete 3,6,11

FOG. B. CW. FSB) ccccscesecesassctcsornentssesecsssaunuauae pm

Fed. R. Civ. P. 4G IMD)....cccscsssssessonccesstene 1,3,4,10,11

Fed. B. Civ. PAGE) cccccccesccsssacccsneviccosasessnectanenons 1]

POR RR CW. F, Be acecansessvssssssnudegerghsonsaa 1,3,7,8,9,10

Court Rules

Seems 0. BT GD isktvccccessncqsevacs cae 7

INDEX TO APPENDICES

Appendix A—Decision of the United States Court of

Appeals for the SACO CMG wsisciistacodssnccsiecancsiaesss la

Appendix B—Order of the United States Court of

Appeals for the Second Circuit Consolidating the Ap-

ORES accsincndcccciaciscususarensdespanaeceanalauatelaentieee 4a

Appendix C—Memorandum Decision and Order of

the United States District Court for the Southern

Dhserict of Mew FOGE cisidsinidenicsecsstsassassaneaee ee

Appendix D—Order and Judgment of the United

States District Court for the Southern District of New

WOOFER sc ciccascegdonctecskscesaassvdsatckcses eee 334

Appendix E—Order of the United States District

Court for the Southern District of New York ............35a

3n Che

®upreme Court of the United States

October Term, 1987

RONALD GORDON, PHILIP and DOROTHY KORWER,.

MIARTY FINKELSTEIN, WILLIAM L. COHN, and JAMES

G. WILLIAMS,

Petitioners,

Vs.

NELSON BUNKER HUNT, WILLIAM HERBERT HUNT.

LAMAR HUNT, INTERNATIONAL METALS INVEST-

MENT. CO., LTD... SHEIK MOHAMMET ABOLD Al-

AMOLDI, SHEIK ALI BIN MUSSALEM, FAISAL BEN AB-

DULLAH AL SAOUD, MAHMOUD FUSTOK,. NAJI

ROBERT NAHAS, BACHE HALSEY STUART SHIELDS.

INC., BACHE GROUP, INC., MERRILL LYNCH, PIERCE

FENNER & SMITH, INC., CONTICOMMODITY SER.-

VICES, INC... CONTICAPITAL MANAGEMENT, INC...

CONTI-CAPITAL LTD... NORTON WALTUCH, MELVIN

SCHNELL, GILION FINANCIAL, INC... BANQULE

POPULLAIRE SUISSE. ADVICORP ADVISORY AND

FINANCIAL CORPORATION, S.A... COMMODITY EX-

CHANGE, INC., THE BOARD OF TRADE OF THE CITY

OF CHICAGO, ACLI INTERNATIONAL COMMODITY

SERVICES, INC., LITRADEX TRADERS. S.A.. and JOHN

DOES 1 THROUGH 15,

Defendants,

MAHMOUD FUSTOR.

Responden:

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

OPINIONS BELOW

Gordon v. Hunt, Korwek v. Hunt, 116 F.R.D. 313

(S.D.N.Y. 1987), aff'd, 883 F.2d 482 (2d Cir. 1987).

JURISDICTION

The judgment of the Second Circuit Court of Appeals

was dated and filed on December 23, 1987. Jurisdiction of

this Court is invoked pursuant to 28 U.S.C. §1254(1).

STATUTORY PROVISIONS INVOLVED

Fed. R. Civ. P. 44) Alternative Provisions for Service

in a Foreign Country.

(1) Manner. When the federal or state law referred to

in subdivision (e) of this rule authorizes service upon a par-

ts not an inhabitant of or found within the state in which

the district court is held, and service is to be effected upon

the parts in a foreign country, it 1s also sufficient if service

of the summons and complaint is made: (A) in the manner

prescribed by the law of the foreign country for service in

that countrys in an action in any of its courts of genera!

jurisdiction; or (B) as directed by the foreign authority in

response to a letter rogatory, when service in either case 1s

reasonably calculated to give actual notice; or (C) upon an

individual, by delivery to the individual personally, and

upon a corporation or partnership or association, by

delivers to an officer. a managing or general agent; or (D)

bs any form of mail, requiring a signed receipt, to be ad-

dressed and dispatched by the clerk of the court to the par-

ty to be served; or (E) as directed by order of the court.

Service under (C) or (E) above may be made by any person

who is not a party and is not less than 18 years of age or

who is designated by order of the district court or by the

foreign court. On request, the clerk shall deliver the sum-

mons to the plaintiff for transmission to the person or the

foreign court or officer who will make the service.

(2) Return. Proof of service may be made as prescrib-

ed by subdivision (g) of this rule, or by the law of the

foreign country, or by order of ihe court. When service is

made pursuant to subparagraph (1)(D) of this subdivision,

proof of service shall include a receipt signed by the ad-

dressee or other evidence of delivery to the addressee

satisfactory to the court.

Fed. R. Cis. P. 4(j) Summons: Time Limit for Ser-

Vice.

It a service of the summons and complaint is not made

upon a defendant within 120 days after the filing of the

complaint and the party on whose behalf such service was

required cannot show good cause why such service was not

made within that period, the action shall be dismissed as to

that defendant without prejudice upon the court's own in-

itiative with notice to such party or upon motion. This sub-

division shall not apply to service in a foreign country pur-

suant to subdivision (i) of this rule.

STATEMENT OF THE CASE

Mahmoud Fustok (‘‘Fustok’’) is a domiciliary of

Saudi Arabia who maintains a business office in London,

England (7a). He is a non-resident alien and has no regular

or continuous presence in the United States. He is a named

defendant in Gordon and Korwek. The complaints in both

actions are largely identical.

Petitioners contend that Fustok, acting with the Hunt

family of Texas and others, entered into a conspiracy to

manipulate and attempt to corner the silver futures market

in the United States during the period July, 1979 through

March, 1980. In September, 1979, Fustok had more than

$120 million in open silver futures positions, and, by

4

February, 1980, his holding had increased to $1.1 billion.

By March, 1980, he had shipped over 16 million ounces of

silver out of COMEX depositories to Europe.

He is a defendant in the United States District Court

for the Southern District of New York in four other in-

dividual actions and in every one of them he was served by

mail at his London office.

Gordon was filed on March 4, 1982 (7a). On May 28,

1982 and again on September 13, 1982 the Clerk of the

Court, at plaintiffs’ direction, mailed the Gordon sum-

mons and complaint to Fustok’s London address by

registered mail return receipt requested (8a). No return

receipt or other acknowledgment of service was received

(8a) and the envelopes were never returned.

Judge Lasker agreed that **. . . plaintiffs [in Gordon]

took all the necessary steps to effect service under Rule

4(i)(1)(D). . . 22’ (25a) and ‘*. .. made numerous other

good faith efforts to effect service on him.’’ (29a).

Korwek was filed on November 2, 1984 (7a). Because,

in Gordon, both mailings to London had been without

response or return, no similar attempt at service was made

in Korwek. It was viewed as a useless act (9a) because, al

that time, there was no basis to rely on the continued ef-

ficac\ of Fustok’s London address.

Nevertheless, petitioners made several other attempts

to serve Fustok (9a-10a) and repeatedly, but unsuccessful-

ly, requested Fustok’s counsel in the Minpeco case,* in

which Fustok is a defendant and which had been con-

solidated with Gordon and Korwek for discovery, either to

accept service or to supply an address for service (26a).

*Minpeco, S.AL vy. Cont Commodi Services, Inc., 81 Civ. 7619

(MEL).

‘n

In late 1983 or early 1984, the Gordon plaintiffs at-

tempted to serve Fustok in Kentucky but the Louisville

Sheriff advised that service could not be effected (9a).

Similarly, plaintiffs attempted, unsuccessfully, to

serve Fustok on Long Island (9a). Since then, Fustok has

unequivocally impeached his claim that he owned the

Long Island property at the relevant time (7a n.2).

In addition, petitioners unsuccessfully explored the

possibility of serving Fustok in Florida (9a).

In both Gordon and Korwek, plaintiffs attempted to

serve Fustok in the courthouse of the Southern District of

New York (10a). This attempt failed because of erroneous

instructions given to the process server by the courthouse

security guard (28a).

In addition, service was attempted in both actions in

London by officers of the Roval Courts of Justice, acting

on the request of petitioners, but without success: the

bailiff was told that Fustok is only an occasional visitor to

his London office (10a-11a).

In December, 1986, when Fustok was in New York

for Court ordered discovery in these actions and in

Minpeco, he was personally served in Gordon and Korwek

(lla). Fustok moved to dismiss this December, 1986 ser-

vice on the ground that service was untimely.

The District Court, Lasker, J., specifically determin-

ed both that Fustok suffered no substantial prejudice and

that Fustok had actual notice of attempted service:

. Fustok has suffered no substantial prejudice as a

result of the untimely service. It is undisputed that for

imi ilaamitaa a

6

years Fustok had actual notice that he was named as a

defendant in Gordon. Moreover, . . . in the Gordon case,

his counsel has attended most—and may have participated

in at least some—of the discovery in the action. Because

discovery in Gordon and Korwek has been consolidated

with the discovery in Minpeco v. ContiCommodity Ser-

vices, 81 Civ. 7619 (MEL), in which Fustok is a defendant

and has been timely served, it is difficult to be sure whether

Fustok’s counsel intended to participate in such discovery

only as it related to Minpeco or whether he actually par-

ticipated in all three cases. Indeed, it can be argued

that the fact that discovery in the three silver-related ac-

tions has proceeded on a consolidated basis makes such

distinctions meaningless. Furthermore, Fustok’s argument

that plaintiffs ‘lulled [him] into inaction for almost five

vears’ by their failure to serve him is not compelling. Plain-

tiffs’ counsel have credibly represented that on several oc-

casions he informed Fustok’s counsel that he was trying to

serve Fustok and sought counsels’ assistance in doing so.

Although Fustok’s counsel was not responsible to help

plaintiffs serve their client, Fustok cannot now complain

tha: he did not know that efforts were being made to serve

him.

(28a-26a).

Nevertheless, Judge Lasker dismissed both actions as

to Fustok. He did so despite his determination that:

[E]ven though the dismissal of Fustok from these actions Is

technically ‘without prejudice’ to refiling, in practical et-

fect this dismissal would appear to be final. The latest 1l-

legal act attributed to Fustok—or any defendant—in the

Gordon and Korwek complaints occurred in May 1980,

over seven years ago. . . . Hence the applicable statutes of

limitation have run on all claims asserted against Fustok,

barring the Gordun and Korwek plainuffs from refiling

these claims against him. (31a).

~

The District Court’s basis for dismissal in Gordon ap-

pears to be that ‘‘[t]he court is aware of no case in which

good cause was found for untimely service under Rule 4(j)

where the delay in service was so long.’’ (28a). In Korwek,

the District Court found that plaintiffs did not explain

“*. . . their failure...” to try and serve Fustok within the

120-day period as required by Fed. R. Civ. P. 4(j) (30a).

The Court later ordered that ‘‘counsel [for Fustok]

should continue to participate in the pre-trial proceedings

in these cases so that if my decision is reversed neither

counsel nor the court will have to repeat proceedings

already had.’’ (35a).

Subsequently, the Second Circuit affirmed the

dismissals for the reasons stated in Judge Lasker’s Opi-

nion (3a). The Second Circuit has decided two important

questions of federal law which have not been, but should

be, settled by this Court. Sup. Ct. R. 17.1(c).

REASONS FOR GRANTING THE WRIT

POINT I

THE COURT SHOULD GRANT THE WRIT TO

DETERMINE IF THE 120 DAYS REQUIREMENT

OF FED. R. CIV. P. 4(j) APPLIES TO SERVICE

ON A NON-RESIDENT ALIEN DOMICILED

ABROAD WHO APPARENTLY ENTERS THE

UNITED STATES ON A SPORADIC BASIS. THE

SECOND CIRCUIT COURT OF APPEALS HAS

DECIDED THAT IT DOES, AND THIS IS AN IM-

PORTANT QUESTION OF FEDERAL LAW

WHICH HAS NOT BEEN, BUT SHOULD BE,

SETTLED BY THIS COURT.

The effect of the decisions below is to hold petitioners

to the constraints of Fed. R. Civ. P. 4(j) without any

showing that compliance was possible. Fustok is not a

citizen, domiciliary, inhabitant or permanent resident

alien of this country. He is a citizen and domiciliary of

Saudi Arabia.

On the sole occasion when petitioners knew he was

here, in early 1986, they hired a process server to effect

service. Without fault of the petitioners, the process server

was unsuccessful. But even this attempt was long after the

expiration in both actions of the 120 days period. Even if it

had been successful, it also would have been susceptible to

the same claimed deficiency as the services later that same

vear and the subject of this petition.

Fed. R. Civ. P. 4(j) provides, in part, that ‘‘[t]his sub-

division shall not apply to service in a foreign country pur-

suant to subdivision (i) of this rule.’’ Fed. R. Civ. P. 4(i)

applies to ‘‘service upon a party not an inhabitant of or

found within the state in which the district court is held,

and service is to be effected upon the party in a foreign

country... ."

Fustok falls squarely within the language of the ex-

ception to Fed. R. Civ. P. 4(4)). He was not an inhabitant

of or to be found in New York. Certainly he has not

documented any regular entry into this country and has

contradicted his asserted regularity of his visits to this

country. Indeed, he appears to have been a moving target.

The petitioners exhausted all known avenues for service in

the United States.

The Second Circuit has suggested that Fed. R. Civ. P.

4(j) does not apply where a plaintiff attempts service pur-

suant to Rule 4(i) in a foreign country. Montalbano vy.

9

Easco Hand Tools, Inc., 766 F.2d 737, 740 (2d Cir. 1985).

Petitioners in Gordon attempted such service twice,

and, in Korwek, justifiably refrained from doing so

because of its apparent futility. It is clear that ‘‘useless’’

acts or ‘‘idle formality’’ are not required. Cf. Stewart v.

United States, 327 F.2d 201, 203 (10th Cir. 1964). Certain-

ly, reasonable attempts do not ‘‘. . . require parties to be

‘buffeted from ‘pillar to post’ in a vain search... .’ (cita-

tion omitted).’’ Cf. Bannercraft Clothing Co. vy.

Renegotiation Board, 466 F.2d 345, 359 (D.C. Cir. 1972),

rev'd on other grounds, 415 U.S. 1 (1974). Based on the

experiences of plaintiffs in Gordon up to that time, plain-

tiffs in Korwek did not believe that due process would be

satisfied by mailing process to Fustok in London. Peti-

tioners’ knowledge at that time did not justify the conclu-

sion that a third mailing was ‘‘notice reasonably

calculated, under all the circumstances, to apprise in-

terested parties of the pendency of the action and afford

them an opportunity to present their objections.’’ Mullane

v. Central Hanover Tr. Co., 339 U.S. 306, 314 (1950) (em-

phasis added). It was only much later that petitioners

learned that the London address had remained in effect

for Fustok at all times.

Unless service on non-resident alien defendants such

as Fustok is subject to the exception built into Fed. R. Civ.

P. 4(j) service on such defendants will depend, for its

validity, on the whims of chance. The fact that a foreign

defendant becomes available for service in the United

States after the running of the 120 days cannot be permit-

ted to bootstrap plaintiffs back into the 120-day require-

ment after the 120 days have already expired. This 1s exact -

ly what happened with Fustok. This was not the intent of

Rule 4G) and it was to avoid such anomalous results that

the exception was built into the Rule.

10

POINT Il

THIS COURT SHOULD GRANT THE WRIT TO

DETERMINE IF SERVICE OF THE SUMMONS

AND COMPLAINT IS MADE ON A NON-

RESIDENT ALIEN DOMICILED ABROAD

WHEN PLAINTIFF TAKES ALL THE

NECESSARY STEPS TO EFFECT SERVICE

UNDER FED. R. CIV. P. 4(i)}1)(D) AND ALL

ACTS REQUIRED BY THE STATUTE ARE

DONE. THE SECOND CIRCUIT COURT OF AP-

PEALS HAS DECIDED THAT IT IS NOT AND

THIS IS AN IMPORTANT QUESTION OF

FEDERAL LAW WHICH HAS NOT BEEN, BUT

SHOULD BE, SETTLED BY THIS COURT.

The Second Circuit has previously observed, in sus-

taining service under Fed.R.Civ.P.4(c)(2)(C)(i1), “*[p]lain-

tiff’s actions in this case conformed with these exact re-

quirements of the rule. .. . ‘Service is complete when all

the required acts are done.’ ’”’ Morse v. Elmira Country

Club, 752 F.2d 35, 39 (2d Cir. 1984).

Similarly, Judge Lasker found that here ‘*. . . it is un-

disputed that plaintiffs [in Gordon] took all the necessary

steps to effect service under Rule 4(i)(1)(D). . . .”’ (2Sa).

This was completed within 120 days even though Fed. R.

Civ. P. 4G) did not even become effective until 1983, long

after Gordon was filed. Judge Lasker nevertheless refused

to sustain this service because ‘‘even if service under Rule

4(1)(1)(D) may be deemed complete without evidence of

delivery, it would still have tc be concluded that service

here was never perfected.’’ (13a).

Fustok is not an inhabitant of and was not to be

found in New York (or anywhere else) and so, in Gordon,

1]

plaintiffs served pursuant to Fed. R. Civ. P. 40)(1)(D).

The rule was complied with on the actual mailing by

registered mail. Hunt v. Mobil Oil Corp., 410 F. Supp. 4,

9 (S.D.N.Y. 1975). The sufficiency of service is not con-

tingent on the return of the receipt card, which is needed,

if at all, for the proof of service. Fed. R. Civ. P. 4(i)(2).

Failure to make proof of service does not affect the validi-

ty of the service. Fed. R. Civ. P. 4(g). The absence of a

receipt does not invalidate service. Bersch v. Drexel

Firestone, Inc., 389 F. Supp. 446, 462-463 (S.D.N.Y.

1974), modified on other grounds, 519 F.2d 972 (2d Cir.

1975), cert. denied, 423 U.S. 1018 (1975).

In Gordon, Fustok was served when the Clerk of the

Court, at plaintiff's direction, sent the Gordon summons

and complaint to Fustok’s London business office by

registered mail in May and September, 1982 (lla). The

Statute does not require anything further. Service on

Fustok was made at that point and well within the 120

davs of the filing of the Gordon complaint and before that

120 davs requirement even came into effect.

12

CONCLUSION

For all of the foregoing reasons, the petitioners sub-

mit that a writ of certiorari should issue to review the judgz-

ment and opinion of the Second Circuit Court of Appeals.

Dated: March 15, 1988

Respectfully submitted,

DEUTSCH AND FREY

HERBERT |. DEUTSCH

VINCENT R. COFFEY*

Attorneys for Petitioners

575 Lexington Avenue

New York, NY 10022

(212) 826-001 |

la

APPENDIX A—Decision of the United States Court of

Appeals for the Second Circuit

Ronald GORDON, Philip and Dorothy Korwek, Marty

Finkelstein, William L. Cohn, and James G. Williams,

Plaintiffs-Appellants,

v.

Nelson Bunker HUNT, William Herbert Hunt, Lamar

Hunt, International Metals Investment Co., Ltd., Sheik

Mohammet Aboud Al-Amoudi, Sheik Ali Bin Mussalem,

Feisal Ben Abdullah Al Sacud, Mahmoud Fustok, Naji

Robert Nahas, Bache Halsey Stuart Shields, Inc., Bache

Group, Inc., Merrill Lynch, Pierce Fenner & Smith, Inc.,

Conticommodity Services, Inc., Conticapital Manage-

ment, Inc., ContiCapital Ltd., Norton Waltuch, Melvin

Schnell, Gilion Financial, Inc., Banque Populaire Suisse,

Advicorp Advisory and Financial Corporation, S.A.,

Commodity Exchange, Inc., the Board of Trade of the Ci-

ty of Chicago, ACLI International Commodity Services,

Inc., Litradex Traders, §.A., and John Does ] through 15,

Defendants,

Mahmoud Fustok, Defendant-Appellee.

Nos. 437, 438, Dockets 87-7670, 87-7696.

United States Court of Appeals, Second Circuit

Argued Dec. 10, 1987.

Decided Dec. 23, 1987.

[835 F.2d 452]

Appeal! from orders and final judgments entered by

the United States District Court for the Southern District

of New York, Morris E. Lasker, Judge, dismissing actions

with respect to appellee Fustok by reason of the untimely

service of the complaints under Fed.R.Civ.P. 4(1) and (j).

Judgment affirmed.

a

2a

Vincent R. Coffey, New York City (Deutsch and

Frey. New York City, of counsel), for plaintiffs-

appellants.

Turner P. Smith, New York City (Curtis, Mallet-

Prevost, Colt & Mosle, New York City, of counsel), for

defendant -appellee.

Before OAKES. PIERCE and PRATT, Circuit

Judges

PER CURIAM:

Appeal from orders and final judgments entered by

the United States District Court for the Southern District

of New York, Morris E. Lasker, Judge, dismissing actions

with respect to appellee Fustok by reason of the untimely

service of the complaints under Fed.R.Civ.P. 4(j). Rule

4()) provides that service of the summons and complaint

must be made upon a defendant within 120 days after the

filing of the complaint, unless ‘‘good cause’’ can be shown

for the failure to serve within that time.

Mahmoud Fustok was a named defendant in two of

the many lawsuits charging a conspiracy to corner the

silver future market in the United States in 1979 and 1980.

While the complaints in these two related actions were fil-

ed on March 4, 1982 and November 2, 1984, appellee was

not personally served in both matters until December 15,

1986. Appellants had unsuccessfully attempted to serve

Fustok by mail sent to his office in London under

Fed.R.Civ.P. 4(i), and sporadically sought to serve him

personally at various locations in the United States, failing

each time. Fustok had been served without difficulty in

four other silver conspiracy lawsuits, and was present in

the courtroom in the Southern District of New York each

day during a four-week trial in which he was a plaintiff in

3a

February and March of 1986, even eating lunch in the

courthouse cafeteria upon occasion. At no time was per-

mission requested of the trial judge in that case to serve

Fustok nor was any request made under Fed. R. Civ. P.

6(b) for an enlargement of time for service. Fustok moved

to dismiss both actions as to him without prejudice for un-

timely service under Fed.R.Civ.P. 4(j). Judge Lasker, in a

lengthy opinion, dismissed both actions

.

For the reasons stated in Judge Lasker's wel

reasoned opinion, 116 F.R.D. 313 (S.D.N.Y. 1987), we af-

4a

APPENDIX B—Order of the United States Court of Ap-

peals for the Secend Circuit Consolidating the Appeals

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Nos. 87-7670, 87-7696

SDNY, 82 cv 1318, 84 cv 7934 LASKER

ORDER OF CONSOLIDATION

Upon agreement of the parties, these two appeals are

hereby ordered consolidated

ELAINE B. GOLDSMITH, Clerk

Stanley A. Bass

COUNSEI

b \

STAFI

Dated: Sept. 25, 1987

Sa

APPENDIX C—Memorandum Decision and Order of the

United States Dist.ict Court for the Southern District of

New York

Nos. 82 Civ. 1318 (MEL), 84 Civ.

7934 (MEL).

United States District Court,

S.D. New York.

June 22, 1987.

[116 F.R.D. 313]

[The synopsis, Syllabi and Key Number

Classification Constitute no part of the

Opinion of The Court.]

Ronald GORDON, Plaintiff,

We

Nelson Bunker HUNT, William Herbert Hunt, Lamar

Hunt, international Metals Investment Co., Ltd., Sheik

Mohammet Aboud Al-Amoudi, Sheik Ali Bin Mussalem,

Faisal Ben Abdullah Al Saound, Mahmoud Fustok, Naji

Robert Nahas, Bache Halsey Stuart Shields, Inc., Bache

Group, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc.,

ContiCommodity Services, Inc., Conti-Capital Manage-

ment, Inc., Conti-Capital Ltd., Norton Waltuch, Melvin

Schnell, Gilion Financial, Inc., Banque Populaire Suisse,

Advicorp Advisory and Financial Corporation, S.A.,

Commodity Exchange, Inc., the Board of Trade of the Ci-

ty of Chicago, Acli International Commodity Services,

Inc., Litardex Traders, S.A., and John Does Nos. 1

through 15, Defendants.

Philip and Dorothy KORWEK, Marty

Finkelstein, William 1. Cohn and

James G. Williams, Plaintiffs,

6a

Vs

Nelson Bunker HUNT, William Herbert Hunt, Lamar

Hunt, International Metals Investment Co., Ltd., Sheik

Mohammet Aboud Al-Amoudi, Sheik Ali Bin Mussalem,

Faisal Ben Abdullah Al Saoud, Mahmoud Fustok, Naji

Robert Nahas, Bache Halsey Stuart Shields, Inc., Bache

Group, Inc. (Prudential Bache Securities, Inc.), merrill

Lynch, Pierce, Fenner & Smith, Inc., ContiCommodity

Services, Inc., Conti-Capital Management, Inc., Conti-

Capital Ltd., Norton Waltuch, Melvin Schnell, Gilion

Financial, Inc., Banque Populaire Suisse, Advicorp Ad-

visory and Financial Corporation, S.A., Commodity Ex-

change, Inc., the Board of Trade of the City of Chicago,

Donaldson, Lufkin & Jenrette Acli Futures, Inc., former-

ly, Acli International Commodity Services, Inc., litardex

Traders, S.A., Walter Goldschmidt, Contiental Grain

Co., Defendants.

Curtis, Mallet-Prevost, Colt & Mosle, New York Ci-

ty, for defendant Mahmoud Fustok; Herbert Stoller, of

counsel.

Deutsch and Frey, New York City, for plaintiffs;

Herbert I. Deutsch, of counsel.

LASKER, District Judge.

Mahmoud Fuskok is named as a defendant in Gor-

deon v. Hunt, 82 Civ. 1318 (MEL) and Korwek v. Hunt,

84 Civ. 7934 (MEL), two related actions which concern the

alleged manipulation of the silver and silver futures

market in 1979. Fustok moves to dismiss both actions as to

him without prejudice for untimely service under

Fed.R.Civ.P. 4(j), which was added to Rule 4 by statute in

1983, provides that service of the summons and complaint

must be made upon a defendant within 120 days after the

ee ee

7a

filing of the complaint, unless ‘‘good cause’’ can be shown

for the failure to serve within that time. Gordon was filed

on March 4, 1982. Korwek was filed on November 2,

1984. Fustok alleges that he was not served in either Gor-

don or Korwek until December 15, 1986.

Plaintiffs respond(1) that Fustok was timely served in

Gordon in 1982 by mail pursuant to Fed.R.Civ.P.

4(i)(1)(D); (2) that there was good cause for untimely ser-

vice in both actions (if untimely service is found in Gor-

don) because a) Fustok evaded service and b) plaintiffs

made numerous diligent and good faith efforts to effect

timely service on Fustok; and (3) that Fustok has waived

his right to object to service. Fustok’s motions to dismiss

both actions as to him are granted.

Facts

A) Fustok’s Presence in the United States

Fustok is a domiciliary of Saudi Arabia who main-

tains a business office in London, England. He alleges that

since at least 1981 he has regularly visited the United

States.’ He states specifically that 1) he has spent the

winter each year since at least 1981 in an apartment which

he owns in Fort Lauderdale, Florida; 2) he has attended

the annual thoroughbred sales in Keeneland, Kentucky

each July since at least 1981; 3) he owned a house in Mut-

tontown, New York “‘[u]ntil a year or so ago,’’ which he

“‘visited briefly once or twice a year;’’? and 4) he visited

1. See Verified Statement of Mahmoud Fustok (‘‘Fustok Af-

fidavit’’) (Feb. 25, 1987).

2. Fustok Affidavit at paragraph 5. However, in 1986 Fustok

testified on deposition that he had sold his home in Long Island three

years earlier. See Affidavit of Herbert 1. Deutsch In Opposition to

Motion to Dismiss by Defendant Mahmoud Fustok (Feb. 18, 1987) at

paragraph 23 and Exhibit 3.

8a

New York City on several occasions in connection with

litigation in cases related to the present action, and attend-

ed each day the trial before this court of Fustok v. Con-

tiCommodity Services, Inc., 82 Civ. 1538(MEL), which

began on February 18, 1986 and ended on March 17, 1986.

B) Plaintiff’s (sic) Attempts to Serve Fustok in Gordon.

The Gordon plaintiffs first made attempts to serve

Fustok by mail at his London office pursuant to Rule

4(i)(1)(D). On May 28, 1982 and on September 13, 1982,

the Clerk of the United States District Court for the

Southern District of New York, at the Gordon plaintiffs’

direction, mailed the Gordon summons and complaint to

98 Baker Street in London, England, which is Fustok’s

London business address. These mailings were made by

registered mail, return receipt requested.’ In neither case

was a return receipt or other acknowledgment ever receiv-

ed by the Clerk of Court from these mailings. Kamal

Moukarzel, who describes himself as Fustok’s ‘‘personal

accountant,’’ and who ‘‘maintain[s] an office at .. . 98

Baker Street, London . . . where Mr. Fustok also main-

tains an Office,’’* has submitted an affidavit stating that

[nJo mail containing summonses, complaints or

amended complaints in either the Gordon case or the

Korwek case were ever received at the 98 Baker Street

office. If such mail had been received, I would have

known about it since there are only four or five peo-

ple who work in this office and one of them would

have been brought [sic] such mail to my attention.*

3. See Deutsch Affidavit at Exhibits 7 and 8 (February 18, 1987).

4. Affidavit of Kamal Moukarzel (‘‘Moukarzel Affidavit**) at

paragraph | (Feb. 25, 1987).

§ Moukarze! Affidavit at paragraph 4.

——————— ST

9a

Fustok himself states that he ‘‘never received and never

saw a summons or complaint or amended complaint in

either the Gordon case or the Korwek case

until . . . December 15, 1986.’’®

Second, in ‘‘late 1983 or early 1984’’ the Gordon plain-

tiffs attempted to serve Fustok at a horse farm in

Louisville, Kentucky, in which Fustok allegedly had an in-

terest, but the Louisville sheriff informed plaintiffs’

counsel ‘‘that Fustok was not at the farm and therefore,

service could not be effected.’”’

Third, plaintiffs allege that they attempted to serve Fustok

at a house in Muttontown, New York in which Fustok was

alleged to have an interest. However, the process server

hired to make service reported that ‘‘the estate was gated

off and he could not get access and no one would answer

his ring from the gate.’’®

Finally, plaintiffs’ counsel states that while he ‘‘learned

that Fustok attended the races in Florida in the

winter ... fhe] was not able to ascertain an address for

him there.’’°

C) Plaintiffs’ Attempts to Serve Fustok in Both Gordon

and Korwek

After the Korwek action was filed on November 2,

1984, the Korwek plaintiffs did not attempt to serve

Fustok by mail under Rule 4(/)(1)(D), because plaintiffs’

counsel ‘‘considered it to be a useless act in view of the

fact that [he] had twice caused service to be mailed in Gor-

don with no response.’’'® However, plaintiffs counsel did

6. Fustok Affidavit at paragraph 1.

7. Deutsch Affidavit at paragraph 22.

8. Jd. al paragraph 23.

9. Jd. at paragraph 24.

10. Deutsch Affidavit at paragraph 25.

OSS SE

10a

make several other attempts to serve Fustok in both Gor-

don and Korwek, after Korwek was filed.

First, plaintiffs attempted to serve Fustok in both

Gordon and Korwek when Fustok was in New York for

the trial before this court of Fustok v. ContiCommodity

Services, Inc. in February-March, 1986. Plaintiffs claim

that they were advised by a courthouse security guard that

‘“‘service was not permitted in the Courthouse under any

circumstances, but that once Fustok was on the sidewalk

Outside service was proper.’’'' Plaintiffs, however, have

presented no evidence that such a rule prohibiting service

within the courthouse actually exists, and no such rule has

ever come to the court’s attention. Plaintiffs also state that

Fustok could never be found entering or exiting the cour-

thouse during the month-long trial, and that he prevented

them from finding him because when he left the cour-

troom he ‘‘would exit through a door, surrounded by his

employees and bolt down the stairs.’’'? Fustok, however,

disputes this description of his behavior. He states that

during the course of the trial he entered and lei? the cour-

thouse daily through the front door of the courthouse, us-

ing the elevators to reach and leave the courtroom. He also

states that he often had lunch in the courthouse

cafeteria,'* and there is no dispute that he did indeed lunch

there on more than one occasion.

Second, on September 23, 1986 plaintiffs’ counsel

sent the process in Gordon and Korwek to the Senior

Master of the Supreme Court of Judicature in the Royal

Courts of Justice in London for service on Fustok at his

London business office. However, on October 20, 1986,

counsel was informed that the Senior Master could not

serve Fustok at that address because he had been informed

11. Jd. at paragraph 28.

12. Jd. at paragraphs 31-32.

13. Fustok Affidavit at paragraph 6.

lla

that ‘‘Mr. Fustok is only an occasional visitor to the ad-

dress, and that his last visit was in June this year.’’'

Finally on December 15, 1986, over four years after

the Gordon action was filed and over two years after the

Korwek action was filed, Fustok was personally served in

both actions when he attended a deposition in Minpeco vy.

ContiCommodity Service, Inc., 81 Civ. 7691 (MEL), in

New York City.

Discussion

A) Service Under Rule 4(i)(1)(D)

The Gordon plaintiffs’ first argument is that Fustok

was served in Gordon under Fed.R.Civ.P. 4(i)(1)(D)

within the 120-day period required by Rule 4(j).

When service is authorized pursuant to Fed.R.Civ.P.

4(i)(1) upon a party who is “‘not an inhabitant of or found

within the state in which the district court is held, and ser-

vice is to be effected upon th[at] party in a foreign coun-

try ...,’’ Rule 4(i)(1)(D) provides that such service may

be accomplished ‘‘by any form ot mail, requiring a signed

receipt, to be addressed and dispatched by the clerk of

court to the party to be served.”’

It is undisputed that the Clerk of Court, at the Gor-

don plaintiffs’ direction, sent the Gordon summons and

complaint to Fustok’s London business office by

registered mail twice, in May 1982 and September 1982;

but that, however, no return receipt or any other form of

acknowledgement of service was ever received by the Clerk

of Court (sic) from these mailings.

The Gordon plaintiffs argue that service was com-

plete upon the mailing of the summons and complaint,

and hence that Fustok was timely served in 1982. They

14. Deutsch Affidavit at paragraph 34 and Exhibit 10.

}2a

contend that the lack of any acknowledgement of service

does not render service invalid because Fed.R.Civ.P. 4g)

provides that ‘‘[flailure to make proof of service does not

affect the validity of the service.”’

Fustok answers that ‘‘the mere fact of mailing [does]

not constitute valid service’’ under Rule 4(i)(1)(D)"’,

because Fed.R.Civ.P. 4(i)(2) requires that when service is

made pursuant to Rule 4(i)(1)(D) ‘‘proof of service shall

include a receipt signed by the addressee or other evidence

of delivery to the addressee satisfactory to the court.’’

Plaintiffs’ argument raises the question whether Rule

4(2)’s statement that failure to make proof of service does

not invalidate service applies to service by mail in a foreign

country pursuant to Rule 4(i)(1)(D), or put differently,

whether service by mai! under Rule 4(i)(1)(D) can be effec-

tive without any proof of service despite Rule 4(i)(2)’s re-

quirement of evidence of delivery.

Nothing in the wording of Rule 4 itself excepts service

under Rule 4(i)(1)(D) from Rule 4(g)’s statement that

failure to make proof of service will not defeat service

which is otherwise valid. Indeed, one commentator has

stated that ‘‘[t]here is no reason to believe that proof of

service under Rule 4(j)(2) is not controlled by the state-

ment in Rule 4(g) that failure to make proof of service

does not affect the validity of the service.’” 4C. Wright &

A. Miller, Federal Practice and Procedure § 1136 (2d ed.

1969).

However, for several reasons plaintiffs’ attempts to

serve Fustok pursuant to Rule 4(i)(1)(D) cannot be con-

sidered effective. First, the 1963 Advisory Committee

Notes to Rule 4 state that ‘‘[t]he special provision for pro-

15. Reply Memorandum in Support of Motion to Dismiss as to

Defendant Mahmoud Fustok (‘‘Fustok Reply Memorandum”’) at 3

(Feb. 25, 1987).

l3a

of of service by mail is intended as an additional safeguard

when that method is used,’’ indicating the special impor-

tance of proof of service when service is made under Rule

4(i)(1)(D).

Second, in a number of cases construing Rule

4(i)(1)(D), courts have grappled with the issue of how

much evidence of delivery is necessary to prove service

under Rule 4(i)(1)(D), in the absence of a return

receipt. See, e.g., Trak Microcomputer Corp. v. Wearne

Bros., 628 F.Supp. 1089, 1092 (N.D.Ill.1985) (markings

on envelope returned to sender suggested that actual

delivery of the complaint had been made); Lumbard v.

Shasha, No. 84-0009 (S.D. N.Y. Sept. 21, 1984) [Available

on WEST-LAW, DCT database] (evidence that foreign

post office had received complaint and delivered it to cor-

rect address); Puerto Rico Maritime Shipping Authority v.

Almogy, 510 F.Supp. 873, 879 (S.D.N.Y.1981) (evidence

that defendant received complaint and forwarded it to

counsel); Bersch v. Drexel Firestone, Inc., 389 F.Supp.

446, 463 (S.D.N.Y.1974) (postmarks and other official

markings on returned envelope enough to convince court

that delivery had been made), aff'd in part and rev’d in

part on other grounds, 519 F.2d 974 (2d Cir.), cert.

denied, 423 U.S. 1018, 96 S.Ct. 453, 46 L.Ed.2d 389

(1975). The care taken in these cases to establish that there

was sufficient evidence of delivery strongly suggests that if

there is mo evidence of delivery, service should not be

deemed to have been effected.

Third, and most important, even if service under Rule

4(i)(1)(D) may be deemed complete without evidence of

delivery, it would still have to be concluded that service

here was never perfected. In this case, not only is there no

evidence of delivery, but Fustok has presented affirmative

evidence of non-delivery. Fustok’s accountant has sworn

that service was never delivered to Fustok’s London of-

fice, and that, if it had been, he would have known of it.

l4a

Fustok himself has sworn that he did not receive service

until he was personally served at his deposition in New

York in December, 1986. Although the mailing of a notice

pursuant to standard office procedure creates a presump-

tion that notice was received, see Mecke/l v. Continental

Resources Co., 758 F.2d 811, 817 (2d Cir. 1985); United

States v. Jack Cozza, Inc., 106 F.R.D. 264, 267

(S.D.N.Y.1985), here, Fustok has produced sufficient

evidence to rebut that presumption.'®

In sum, because there is no evidence of delivery of the

Gordon process, and Fustok and his accountant have

positively denied that the process was ever delivered, it

cannot be concluded that Fustok was served by mail under

Rule 4(i)(1)(D) in December, 1982.

B) Dismissal Under Rule 4(j)

Fustok argues that because he was not served in either

Gordon or Korwek within 120 days after the complaints in

those actions were filed, both actions must be dismissed as

to him. Plaintiffs respond first, that Fustok’s ‘‘evasion of

service’’ represents good cause for the delay in service, and

second, that because plaintiffs ‘‘made a resonable effort

to serve defendant, the failure to serve within 120 days

16. In a case dealing with an analogous rule, Morse v. Elmira

Country Club, 752 F.2d 35, 39-40 (2d Cir. 1984), the court of appeals

for this circuit held that service by mail under Rule 4(c)(2)(C)(ii) is

complete and effective upon mailing, and that ‘‘service [under Rule

4(c)(2)(C)ii)] may be effective without a return [of acknowledgment

of service]."’ The Morse court found that service of process was valid

and complete within the statute of limitations period when the sum-

mons and complaint was properly mailed under Rule 4(c)(2)(C)(ii)

within the required period, despite the fact that the acknowledgement

of service was never returned. However, in Morse there was no indica-

tion that service had not been received, and the court was able to con-

clude that ‘‘[i]Jn the absence of any contrary indication we assume

delivery in due course.’’ /d. at 36n.2. Here, in contrast, both Fustok

and his London accountant have stated that the Gordon service of

process never arrived at the London office and never was received by

Fustok.

lSa

does not mandate dismissal.’’'’

Fed.R.Civ.P. 4(j), which was added to the Federal

Rules of Civil Procedure in 1983, states that:

If a service of the summons and complaint is not

made upon a defendant within 120 days after the fil-

ing of the complaint and the party on whose behalf

such service was required cannot show good cause

why such service was not made within that period, the

action shall be dismissed as to that defendant without

prejudice. ...

The scope of the ‘‘good cause’’ exception to Rule 4(j) has

not been defined by the Court of appeals (sic) for this cir-

cuit. Hence, we look for assistance first, to the history of

Rule 44), and second, to discussions of the ‘‘good cause”’

exception by other courts.

Prior to the 1983 amendments to Rule 4 there was no

time limit for the service of process. If a plaintiff delayed

service, a defendant could move for dismissal for failure

to prosecute under Fed.R.Civ.P. 41(b), and the plaintiff

17. Memorandum in Opposition To Motion By Fustok to Dismiss

Under Fed.R.Civ.P. 4 (‘‘Plaintiffs’ Memorandum’’) at 5 (Feb. 18,

1987). Plaintiffs also argue that the 120-day limit of Rule 4(j) does not

apply to Fustok because Fustok is not a resident of the United States.

This argument is meritless. Rule 4(j) states that ‘‘[t]his subdivision

shall not apply to service in a foreign country pursuant to subdivision

(i) of this rule.’’ However, this exception applies only to service in a

foreign country, not to residence in a foreign country. The untimel)

service upon which this motion to dismiss is based did not take place

‘in a foreign country’’: it took place in New York City, when Fustok

was personally served at a deposition in December, 1986. Hence the

exception does not apply. Cf. Montalbano v. Easco Hand Tools Inc.,

766 F.2d 737, 740 (2d Cir. 1985) (foreign country exception to the

120-day period for service does not apply where service found to be

defective took place in United States).

i

16a

would be held to a flexible ‘‘due diligence’’ standard. A

finding of lack of due diligence depended on two factors:

first, whether the delay was ‘‘unreasonable’’ or

**moderate or excusable,’’ and second, if the delay fell in-

to the latter category, whether the delay in service had

caused ‘‘actual prejudice’’ to the defendant. See Lyell

Theater Corp. v. Loews Corp., 682 F.2d 37, 42-43 (2d

Cir.1982); Messenger v. United States, 231 F.2d 328, 331

(2d Cir.1956).

Rule 4 was amended to include, inter alia, the 120-<day

service rule by the Federal Rules of Civil Procedure

Amendments Act of 1982 (“‘“FRCPAA"’), a statute which

became effective on February 26, 1983.'" The sole

legislative document which comments on the FRCPAA, a

section-by-section analysis of the bill submitted by a

member of the House Judiciary Committee,'* does not

discuss or define the new ‘‘good cause’’ exception to Rule

4(j) except to state that “‘[i]f the putative defendant moves

to dismiss and the failure to effect service is due to that

person's evasion of service, a court should not dismiss

because the plaintiff has ‘good cause’ for not completing

service.’ 1982 U.S. Code Cong. & Ad. News at 4446 n.

18. The FRCPAA was approved on January 12, 1983 and took

effect 48 days later. Pub.L. No. 97-462, §4, 96 Stat. 2527, 2530 (1983).

19. The Act's legislative history is sparse: neither the House nor

the Senate submitted a report with the legislation. Congressman Ed-

wards of the House Committee on the Judiciary, did, however, submit

a section-by-section analysis of the bill to the Congressional Record.

128 Cong. Rec. No. 17, H9,884-9,856 (Dec. 15, 1982), reprinted in

1982 U.S.Code Cong. & Ad. News 4434 and 96 F.R.D. 81 (1983). This

report has been described as providing ‘“‘the most extensive statement

of background and intent on the amendment."’ Siegel, Practice Com-

mentary of Amendment of Federal Rule 4 (Eff. Feb. 26, 1983) with

Special Statute of Limitations Precautions, 96 F.R.D. 81 (1983)

(‘Siegel Commentary"’).

ee

17a

25; 96 F.R.D. at 122 n. 25. In the present case, as discuss-

ed below, there is no evidence that the defendant has evad-

ed service.

Courts which have considered the definition and .

scope of the ‘‘good cause”’ exception to Rule 4(j) have

relied, in varying degrees, upon the same factors which us-

ed to be relied upon in determining, under the unamended

rule, whether a plaintiff who was tardy in service could

establish ‘“‘due diligence’ to defeat a Rule 41(b) motion

for dismissal to prosecute: the plaintiff's diligence and the

prejudice to the defendant. See Shuster v. Conley, 107

F.R.D. 755, 757 (W.D.Pa. 1985) (‘‘Most courts have

adopted the old diligence standard in determining when a

party has shown good cause [under Rule 4(j)]. . . .”’).

The first factor which courts have considered in deter-

mining whether good cause exists for service outside the

120-day limit is whether the delay in service was ‘‘the

result of mere inadvertence,’’ or whether there has been a

**reasonable effort’’ to effect service. Geller v. Newell, 602

F.Supp. 501, 502 (S.D.N.Y. 1984). There is some support

for this interpretation in the legislative history of the

FRCPAA. The Judiciary Report which accompanied the

bill states that:

the status of the plaintiff's cause of action turns upon the

plaintiff's diligence. If the plaintiff has not been diligent,

then the court will dismiss the action for failure to serve

within 120 days. . . . If, on the other hand, the plaintiff

has made reasonable efforts to effect service, then the

plaintiff can move under Rule 6(b) to enlarge the time

within which to serve or can oppose dismissal for failure to

serve. A court would undoubtedly permit such a plaintiff

additional time within which to effect service. Thus, a

diligent plaintiff can preserve the cause of action. This

result is consistent with the policy behind the time limit for

a

18a

service and with statutes of limitation, both of which are

designed to encourage prompt movement of civil actions in

the federal courts.

1982 U.S. Code Cong. & Ad. News at 4442; 96 F.R.D. at

120. This passage has been interpreted broadly as an in-

dication that Congress intended that the complaint of a

diligent plaintiff who has made reasonable efforts to effect

service should survive a motion to dismiss. See Geller, 602

F.Supp. at 502 (*‘Where plaintiff has made a reasonable

effort to serve defendant, Congress intended that the 120

day deadline be extended.’’); Quann v. Whitegate-

Edgewater, 112 F.R.D. 649, 659 (D.Md. 1986) (‘‘Rule 4(j)

leads this court to examine the reasonableness and

diligence of plaintiff's efforts to serve process.”’).

However, it less clear where the line should be drawn

between reasonable and ‘‘inadvertent’’ non-service. Clear-

ly, a lawyer’s failure to serve within the 120-day limit is

**inadvertent’’ when it results from failure to remember to

serve, see, e.g., Wei v. State of Hawaii, 763 F.2d 370, 372

(Mh Cir.1985); Coleman v. Greyhound Lines, Inc., 100

F.R.D. 476 (N.D.II1.1984), or when the lawyer gives no

reason at all for the delay, see, e.g., Burks v. Griffith, 100

F.R.D. 491, 492 (N.D.N.Y. 1984).

What is less clear is whether the ‘‘good cause’’ excep-

tion covers the situation where the plaintiff has made one

or more reasonable and good faith efforts at service within

the 120-day limit but has been unsuccessful, either through

his own mistake, or through adverse circumstances. Some

courts have found good cause where there has been a good

faith but unsuccessful effort at timely service but these

have generally been cases where the ineffective service was

promptly followed by effective service. In Geller vy.

Newell, 602 F.Supp. at 501, for instance, plaintiff had ef-

19a

fected service on a person who had been the defendant’s

agent but no longer was. After discovering the mistake,

plaintiff made immediate efforts to locate the defendant

and served him as soon as he was located, three months

after the defective service and only fourteen days beyond

the 120-day limit. The court denied the Rule 4(j) motion to

dismiss, stating that ‘‘[t}he harsh sanction of Rule 4(j) is

appropriate to those cases in which non-service was the

result of mere inadvertence,’’ but that, here, ‘‘plaintiff

was diligent in his efforts to serve defendant and he did, in

fact, complete service only 14 days after the deadline,”’

602 F.Supp. at 502. The court understandably stated that

under these circumstances, there was ‘‘no difficulty con-

cluding that plaintiff had good cause for the 14 day delay

at issue here.’’ Jd. Similarly, in Arroyo v. Wheat, 102

F.R.D. 516, 518 (D.Nev.1984), the court, stating that ‘‘[iJt

was not intended that Rule 4(j) would be enforced

harshly,’’ found good cause for failure to serve within

120-days because the defective service was the result of

confusion over amendments in Rule 4, and effective ser-

vice was made promptly after the ineffective service was

attempted. See also Federal Deposit Insurance Corp. v.

Sims, 100 F.R.D. 792, 797 (N.D.Ala.1984) (granting

plaintiff additional time to serve defendant because

‘‘plaintiff’s abortive efforts at obtaining service [were con-

strued as] bona fide’’).

However, courts have been more reluctant to find

good cause where a plaintiff’s initial timely but ineffective

attempt at service is followed by repeated, failed attempts

to serve. In Quann v. Edgewater, for instance, the court

concluded that where plaintiff was on notice that his time-

ly attempt at service by mail was ineffective and his subse-

quent efforts to serve were both untimely and ineffec-

tive—and in fact service was apparently never ef-

fected—the case ‘‘boil[ed] down to inadvertence on the

eo

20a

part of counsel.’’ Quann, 112 F.R.D. at 662. See also

Norlock v. City of Garland, 768 F.2d 654, 657 (Sth Cir.

1985) (no ‘‘good cause’’ where single defective attempt at

service never followed by attempt to correct service);

United States v. Kenner General Contractors, Inc., 764

F.2d 707, 710 (9th Cir. 1985) (no ‘‘good cause’’ where

‘‘counsel took some steps to effect service before the

deadline, but the record shows the efforts to have been

half-hearted at besi’’); cf. Montalbano v. Easco Hand

Tools, Inc., 766 F.2d 737, 740 (2d Cir. 1985)(‘‘the 120 day

time limit imposed by Rule 4(j) seems therefore perfectly

proper, especially since Easco has not exactly bent over

backward to effect service’’) (dicta).

The second factor which was considered in a Rule

41(b) motion to dismiss for failure to prosecute based on

untimely service—prejudice to the defendant—presents a

more difficult question. Courts are divided on the issue

whether lack of prejudice to the defendant should be con-

sidered as a factor in determining whether good cause ex-

ists for untimely service under the present Rule 4(j). At

least One court has taken the position that because the

amended Rule 4(j) on its face does not require a showing

of prejudice on the part of the moving party, a showing of

prejudice is irrelevant to a determination of good cause for

tardy service. See Quann, 112 F.R.D. at 661; see also 2 J.

Moore & J. Lucas, Moore’s Federal Practice par. 4.46 at

4-433 n. 8 (2d ed. 1986) (‘‘Since the policy behind the

120-day limit is primarily ‘to encourage prompt

movements of civil actions in federal courts,’ ... the

absence of prejudice to the defendant would not appear to

be a relevant consideration.’’) However, other courts, in-

cluding two in this circuit, have considered lack of pre-

judice as a pertinent factor in determining whether good

cause exists. See, e.g., United States v. Jack Cozza, Inc.,

106 F.R.D. 264, 268 (S.D.N.Y. 1985); Geller v. Newell,

21a

602 F.Supp. at 502; Peters v. E.W’. Bliss Co., 100 F.R.D.

341, 343 (E.D.Pa.1983). None of these decisions discusses

the rationale for considering lack of prejudice as relevant

to a determination of good cause. However, it would seem

appropriate that a determination of ‘‘good cause’’, which

is a legal term traditionally broadly defined, should take

into account an equitable consideration such as hard-

ship—or lack thereof —to the defendant. Accordingly, any

lack of prejudice will be considered a relevant factor here.

Another factor which some courts have considered in

determining whether good cause has been established is

whether or not the plaintiff has moved under

Fed.R.Civ.P. 6(b) for an enlargement of time in which to

effect service. See, e.g., Norlock v. City of Garland, 768

F.2d 654, 658 (Sth Cir. 1985); Quann, 112 F.R.D. at 661

(citing cases). An application for enlargement of time in

which to serve might well reflect a plaintiff’s diligence in

trying to effect service. However, failure to make such a

motion certainly is not by itself fatal to a plaintiff's efforts

to establish good cause. See Geller, 602 F.Supp. at 502

(‘‘While it would be prudent for a plaintiff who will be

unable to complete service within the statutory period to

move for an enlargement of time under Rule 6(b) prior to

the running of the 120 days, the failure to do so does not

mandate dismissal under Rule 4(j).”’)

Finally, a factor which must be considered with

regard to Gordon action only is that Gordon was filed on

March 3, 1982, almost a year before the effective date of

the FRCPAA, which was February 26, 1983. Neither

Fustok nor plaintiffs has addressed the issue of whether

Rule 4(j)’s 120-day service requirement should be applied

to Gordon.

The FRCPAA provided that the amendments to Rule

22a

4 would not become effective until forty-five days after

enactment of the statute. The section-by-section analysis

states that ‘*[t]he delayed effective date means that service

of process issued before the effective date will be made in

accordance with current [as of Dec. 15, 1982] Rule 4,’’

1982 U.S. Code Cong. & Ad. News at 4447; 96 F.R.D. at

122-23 (1983), and that the purpose of this 45-day delay

between the Rule 4 amendments becoming law and taking

effect was to give the bench and bar ‘‘an opportunity to

prepare to implement the changes made by the

legislation,’’ id. See also Siegel commentary, 96 F.R.D. at

93. However, it is unclear whether this statement extends

to Rule 4(j)’s 120-day service limit or applies only to the

new methods of service added to Rule 4 by the FRCPAA.

Courts which have addressed the issue of whether Rule

4(j)’s 120-day limit should apply to actions which were fil-

ed before the FRCPAA’s effective date have reached dif-

fering conclusions. In Verri v. State Automobile Mutual

Insurance Co., 583 F.Supp. 302, 306 (D.R.I. 1984), the

court held that Rule 4(j)’s 120-day limit does not apply to

such actions, because ‘‘it seems unduly harsh to dismiss a

complaint for failure to comply with arule not in existence

when it was filed—especially absent a clear statement from

Congress that it intended this result.’’ See also Baranski v.

Serhant, 602 F.Supp. 33, 35 (E.D.IIl.1985) (denying Rule

4(j) motion to dismiss on various grounds, including ap-

proval of Verri holding); Peters v. E.W. Bliss Co., 100

F.R.D. 341, 342-43 (E.D.Pa.1983) (FRCPAA legislative

history indicates that 120-day limit does not apply to ac-

tions filed before FRCPAA effective date); cf. Coleman v.

Holmes, 789 F.2d 1206, 1207-08 (Sth Cir. 1986) (date of is-

suance of summons determines whether Rule 4(j) should

be applied).

However, in Coo/ v. Police Department of the City of

Yonkers, 40 F.Serv.2d 857, 859 (S.D.N.Y.1984), a court

23a

in this district reached the opposite conclusion, holding

that:

No basis exists for assuming that Congress’ statement that

‘‘service of process issued before the effective date . . . be

made in accordance with current Rule 4’’ applies to Rule

4(j) at all. Rule 4(j) does not address the methods by which

service ‘‘will be made.’’ It merely establishes a 120-day

period within which service in accordance with Rule 4 must

be made unless good cause is shown for the delay. Further-

more, no practical purpose would be served by limiting the

application of Rule 4(j) to complaints filed after the effec-

tive date. Unlike the provisions of new Rule 4 outlining

manner of service, Rule 4(j) does not change the methods

by which service is made. Enforcing its time limitations

would not cause any of the confusion or potential injustice

that allowing service by anew method during the transition

period would cause.

See also Sanders vy. Marshall, 100 F.R.D. 480, 482

(W.D.Pa.1984)(dismissing action filed prior to FRCPAA

effective date because service was not made within 120

days after that date).

The court of appeals for this Circuit has not yet ad-

dressed the issue of the applicability of Rule 4(j) to actions

filed before the effective date of the FRCPAA. Despite the

absence of such guidance, two points are clear. First, it is

clear that the Gordon action cannot be dismissed for

failure to serve within 120 days of the filing of the Gordon

complaint, because the FRCPAA had not yet been enacted

at that time, and no 120-day service limit existed. Second,

however, it is equally clear that the Gordon plaintiffs’

failure to serve Fustok until almost three years after the ef-

fective date of the amended Rule 4 outlasted any

reasonable transition period between the old and the

amended Rule 4. For these reasons, it is not unduly harsh

to apply Rule 4(j) to the Gordon action, measuring the

24a

120-day period from February 26, 1983, the effective date

of the FRCPAA.

With these factors in mind, Fustok’s motions to

dismiss are considered, first as to Gordon, and second as

to Korwek, because the two actions present different ques-

tions.

1) Gordon

Plaintiffs’ first argument in support of a finding of

good cause for untimely service is that

the total picture presented by the repeated mailings to

Fustok’s admitted office address in London, Fustok’s

counsel’s refusal to accept service, the frustrated attempts

to serve Fustok on Long Island, in Kentucky, in New York

and in London and the repeated refusals by Fustok’s

representatives to tell counsel for plaintiffs when Fustok

would be in New York, or even where he could be found

for service, present all the indicia of evasion of service.”°

This claim is unsupported. First, no reason has been

shown not to believe the sworn statements of Fustok and

his accountant that the two mailings sent to his London

office were never received there. Second, Fustok’s counsel

was under no legal obligation to help plaintiffs serve their

client or to tell them where Fustok could be found. Final-

ly, the ‘‘frustrated attempts’’ to serve Fustok can not be

attributed to any evasive action on Fustok’s part, because

no evidence of evasive behavior or intent has been

presented.

Plaintiffs next contend that their numerous, good

faith attempts to serve Fustok support a determination of

good cause. Three of the factors discussed above support

the Gordon plaintiffs’ position: 1) the fact that when Gor-

20. Plaintiffs’ Memorandum at §.

25a

don was filed, no 120-day limit on service existed; 2) the

reasonableness of plaintiffs’ first efforts to serve Fustok;

and 3) the lack of prejudice to Fustok from the delay in

service.

First, as discussed above, plaintiffs’ failure to serve

Fustok within 120 days after the filing of the action can

hardly be called inadvertent or heedless when no such re-

quirement was imposed by Rule 4 until a year after the ac-

tion was filed.

Second, the Gordon plaintiffs made two good faith

efforts to serve Fustok by mail under Rule 4(i)(1)(D)

within the first six months after the action was filed. As

discussed above, it cannot be concluded that these two ef-

forts to serve were successful, because there is no indica-

tion that service was received, and Fustok and his

representative have in fact sworn that service was never

received. However, it is undisputed that plaintiffs took all

the necessary steps to effect service under Rule 4(i)(1)(D),

and the fact that service apparently was not received is not

due to lack of diligence on plaintiffs’ part. In sum, plain-

tiffs two efforts to serve Fustok by mail were reasonable,

and the failure to effect service by mail was not “‘the result

of mere inadvertence.’* Geller, 602 F.Supp. at 502.

Third, Fustok has suffered no substantial prejudice as

a result of the untimely service. It is undisputed that for

years Fustok has had actual notice that he was named as a

defendant in Gordon. Moreover, although Fustok has

never submitted an answer or made a motion in the Gor-

don case, his counsel has attended most—and may have

participated in at least some—of the discovery in the ac-

tion. Because discovery in Gordon and Korwek has been

consolidated with the discovery in Minpeco v. ContiCom-

modity Service, 81 Civ. 7619 (MEL), in which Fustok is a

26a

defendant and has been timely served, it is difficult to be

sure whether Fustok’s counsel intended to participate in

such discovery only as it related to Minpeco or whether he

actually participated in all three cases.’' Indeed, it can be

argued that the fact that discovery in the three silver-

related actions has proceeded on a consolidated basis

makes such distinctions meaningless. Furthermore,

Fustok’s argument that plaintiffs ‘‘lulled [him] into inac-

tion for almost five years’’?? by their failure to serve him is

not compelling. Plaintiffs’ counsel have credibly

represented that on several occasions he informed

Fustok’s counsel that he was trying to serve Fustok and

sought counsel’s assistance in doing so.*’ Although

Fustok’s counsel was not responsible to help plaintiffs

serve their client, Fustok cannot now complain that he did

not know that efforts were being made to serve him.

However, Fustok makes a further claim of prejudice

which is more substantial. In letters submitted to the court

after the announcement that a settlement had been reach-

ed with Banque Populaire Suisse in Gordon and Korwek,

Fustok’s counsel argues that Fustok has suffered prejudice

because ‘‘[i]f Fustok had been timely served in the Gordon

and Korwek cases, he would have filed cross-claims

against BPS for indemnification and contribution. . . .’’**

Fustok argues that he did not file cross-claims against BPS

because by doing so he would have waived his right to ob-

ject to untimely service. In support of this proposition,

Fustok cites Merz v. Hemmerle, 90 F.R.D. 566

21. Compare Deutsch Affidavit at paragraphs 41-44 with

Fustok’s Reply Memorandum ai pp. 10-11.

22. Fustoh Memorandum at 4

23. Deutsch Affidavit at paragraphs 2] and 22.

24. Letter to the Court from Herbert Stoller, April 2, 1987.

27a

(E.D.N.Y.1981), for the proposition that by filing a cross-

claim a defendant may waive an otherwise timely objec-

tion to improper service.

This argument of prejudice is serious. However, it is

far from clear that if Fustok had filed a pleading in Gor-

don and Korwek, in which he had both objected to un-

timely service and asserted a cross-claim against BPS, the

assertion of the cross-claim alone would have been held to

waive Fustok’s right to object to service. In Merz, for in-

Stance, the defendant who was found to have waived her

right to object to improper service not only had filed a

cross-claim but also had obained the court’s approval to

file a third-party complaint after the party against whom

the cross-claim was asserted was dismissed from the case,

and had waited until two years after filing her cross-claim

to move to dismiss on the grounds of improper service. It

was the totality of these circumstances which led the Merz

court to conclude that the defense of improper service had

been waived. See Merz, 90 F.R.D. at 568-69. Further-

more, the trend of recent court decisions has been toward

liberally allowing parties to assert all responses in one

pleading. See Chase v. Pan-Pacific Broadcasting, Inc.,

750 F.2d 131, 132 (D.C.Cir.1984) (‘‘Under the Federal

Rules, no answering plea is, by reason of its character,

automatically repugnant to, or repellent of, any other, and

no waiver or other penalty should attend combining all

responses in a single pleading.’’) and cases cited therein.

For these reasons, Fustok’s argument is too speculative to

establish substantial prejudice.

However, in addition to the three factors discussed

above which weigh toward a determination that plaintiffs

have established good cause for the tardy service in Gor-

don, several other factors weigh against such a determina-

tion. First, service was not made on Fustok until over four

28a

years after Gordon was filed and over three years after the

effective date of the FRCPAA. The court is aware of no

case in which good cause was found for untimely service

under Rule 4(j) where the delay in service was so long.

Second, there is no adequate explanation for plain-

tiffs’ failure to serve Fustok in the years which passed

from the failure of their attempts to serve Fustok by mail

in 1982 to the successful personal service in December,

1986. Plaintiffs have detailed five unsuccessful attempts to

effect personal service on Fustok during this period: 1) at a

horse farm in Louisville; 2) at Fustok’s house at Mutton-

town, New York; 3) at the races in Florida; 4) at Fustok’s

London office; and 5) during the trial of Fustok v. Con-

tiCommodity Services, Inc. Plaintiffs’ descriptions of the

first four attempts to serve are completely credible and

each attempt was in and of itself reasonable. Plaintiffs’

description of the fifth attempt to serve Fustok—at the

Fustok trial—is puzzling, to say the least, because the

court’s personal observations of Fustok’s behavior at the

trial and in the courthouse contradict the allegations that

Fustok behaved ffurtively during the Fustok trial.

However, the court does credit plaintiffs’ assertions that

they believed in good faith that Fustok could not be served

inside the courthouse and that, for whatever inexplicable

reason, plaintiffs were unable to observe Fustok as he

entered and exited the courthouse.

Yet even if there were a reasonable excuse for the

failure of each of these individual attempts to serve, taken

as a whole, these unsuccessful efforts to serve Fustok—all

of which took place two years or more after Gordon was

filed and more than 120 days after the effective date of

Rule 4())—must be debited to plaintiffs’ position. While

Fustok may have been difficult to serve because of his con-

stant travel, he has been a regular visitor to the United

States at predictable times and places since 1981. Further-

29a

more, the plaintiffs in four of the other actions arising

from the same series of events as Gordon and Korwek, in-

cluding the pro se plaintiff in Michelson v. Merrill Lynch,

Pierce, Fenner & Smith, 83 Civ. 8898(MEL) have all

managed to serve Fustok.’’ In sum, although there may

have been good cause for plaintiffs’ failure to serve Fustok

within the first year after Gordon was filed, there is no

adequate explanation for the failure to serve from 1982 to

1986. It is also significant that plaintiffs never came to the

court to explain their problems with service and seek the

court’s assistance. See Norlock v. City of Garland, 768

F.2d at 658.

For these reasons, it is determined that it would be an

abuse of discretion to hold that the Gordon plaintiffs have

‘*so0d cause’’ for the untimely service under Rule 4(j).

This conclusion is reached with reluctance, because plain-

tiffs made two diligent, reasonable and timely attempts to

serve Fustok and made numerous other good faith efforts

to effect service on him. However, it would be highly un-

just to require Fustok to continue as a defendant in this ex-

tensive litigation if in fact he has not been properly served

within the requirements of Rule 4(j). Without further

guidance from the court of appeals for this Circuit on the

scope of the ‘‘good cause’’ exception, it is concluded that

to find good cause in this situation would be beyond the

court’s discretion.

2) Aorwek

In the Korwek action it is easier to conclude that there

is no good cause for the delay in service and that dismissal

under Rule 4(j) is appropriate. First, for the reasons

discussed above, there is no evidence that Fustok evaded

25. See Fustok Reply Memorandum at 6-7

30a

service. Second, in Korwek, which was filed on November

2, 1984, well after the Rule 4(j)’s 120-day rule became ef- —-+

fective, there was no attempt to serve Fustok in a timely

fashion, either by mail under Rule 44)(1)(D) or by any

other fashion. Indeed, according to plaintiffs’ counsel’s

own account, no effort was made to serve Fustok in

Korwek until February 1986, over a year after the action

was filed.** Because the Korwek plaintiffs made no efforts

to serve Fustok within the 120-day period, and have not

explained their failure to do so, a determination of ‘‘good

cause’’ for failure to effect-timely service would be an

abuse of discretion.

C) Heiver

Plaintiffs in both Gordon and Aorwek argue that

Fustok has submitted himself ‘“‘irrevocably ... to the

jurisdiction of [this] court’’ by seeking a court order which

would require the Gordon and Korwek plaintiffs to reim-

burse Fustok for expenses Fustok incurred by paying for

certain costs arising from depositions taken jointly in

Minpeco, Gordon, and Korwek.*’ Plaintiffs cite Merz for

the proposition that Fustok cannot deny the jurisdiction

of the court over him on the one hand and, on the other,

seek from the court affirmative relief.

Plaintiffs’ claim is without merit. As discussed above,

discovery in the three actions has been consolidated, and

the fact that Fustok has sought reimbursement from the

Gordon and Korwek plaintiffs for what is allegedly their

share of the costs of consolidated discovery has simply no

bearing on Fustok’s current motion to dismiss in Gordon

26. Deutsch Affidavit at paragraphs 28-27

27. Letter of Herbert 1. Deutsch to the Court, April 6, 1987

Tl

3la

and Aorwek. It certainly can not be seen as a submission

by Fustok to the court’s jurisdiction in these two actions.

D. Rule $4(b) Certification

This decision will have the effect of dismissing Fustok

as a defendant without prejudice under Rule 4(j) in both

the Gordon and Korwek actions. For the following

reasons, it is concluded that there is no just reason for

delay of an appeal of this decision, and a final judgment is

directed to be entered as to Fustok pursuant to

Fed.R.Civ.P. 54(b).

First, the judgment as to Fustok in Gordon and

Aorwek is final because it is an ultimate disposition of all

of plaintiffs’ claims against Fustok. Rule 4(j) provides that

when a particular defendant is not served within the

120-day limit, and good cause has not been shown for un-

timely service, ‘‘the action shall be dismissed as to that

defendant without prejudice. . . .”” However, even though

the dismissal of Fustok from these actions is technically

‘‘without prejudice’’ to refiling, in practical effect this

dismissal would appear to be final. The latest illegal act at-

tributed to Fustok—or any defendant—in the Gordon and

Aorwek complaints occurred in May 1980, over seven

years ago. See Korwek First Amended Complaint at

paragraphs 118-24 (Feb. 22, 1985); Korwek v. Hunt, 646

F.Supp. 953, 957 (S.D.N.Y.1986). Hence the applicable

statutes of limitation have run on all claims asserted

against Fustok, barring the Gordon and Korwek plaintiffs

from refiling these claims against him. See Korwek, 646

F.Supp. at 967-973.

Second, there is no just reason for delaying the entry

of a final judgment as to Fustok because considerations of

judicial economy and administration tip decidedly in favor

i

32a

of immediate review. See Curtiss-Wright Corp. v. General

Electric Co., 446 U.S. 1, 8, 100 S.Ct. 1460, 1464-65, 64

L.Ed.2d 1 (1980). This is not a case where the adjudicaed

claims and the pending claims are closely related. See

Cullen v. Margiotta, 618 F.2d 226, 228 (2d Cir. 1980). The

decision to dismiss Fustok as a defendant on these two ac-

tions is based solely on this court’s determination that

failure to do so would be an abuse of discretion under

Rule 4(j) and is unrelated to the merits of plaintiffs’ claims

against Fustok or any of the other defendants. The ap-

pellate court will not be called upon to decide these issues

twice, because Fustok is the only defendant in the two ac-

tions to have made such a motion.

Finally, delay in the entry of judgment and appeal of

this decision—which turns on the interpretation of a

recently amended rule of procedure on which the court of

appeals for this circuit has not yet provided any

guidance—would burden plaintiffs by requiring them to

try their actions twice, first as to all the other defendants,

and second as to Fustok alone, in the event that the deci-

sion to dismiss Gordon and Korwek as to Fustok is revers-

ed by the court of appeals for this circuit. For these

reasons, Rule 54(b) certification is justified despite the

usual policy of avoiding piecemeal appeals. See Ansam

Associates, Inc. v. Cola Petroleum, Ltd., 760 F.2d 442,

445 (2d Cir.1985), and cases cited therein.

It is so ordered.

P

33a

APPENDIX D—Order and Judgment of the United

States District Court for the Southern District of New

York

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

RONALD GORDON,

Plaintiff,

-against-

NELSON BUNKER HUNT, et al.,

Defendants.

PHILIP KORWEK, et al.,

Plaintiff,

-against-

NELSON BUNKER HUNT, et al.,

Defendants.

84 Civ. 7934 (MEL)

ORDER AND JUDGMENT

Defendant Mahmoud Fustok, having moved this

Court to dismiss the above-captioned actions as to him

without prejudice by reason of the untimely service of the

complaints under Fed.R.Civ.P. 4(j); this Court having

considered the parties submissions and heard oral argu-

ment on the motion; and the Court by its Opinion dated

June 22, 1987, having granted the motion, it is ordered

that judgment be, and hereby is, entered as follows:

(1) The above-captioned complaints are dismissed as

to Fustok, without prejudice, for untimely service under

Fed.R.Civ.P. 4());

34a

(2) Whereas all the claims by plaintiffs have been

dismissed as to Fustok, and there is no just reason for

delay of an entry of final judgment as to Fustok, final

judgment dismissing Fustok is hereby entered pursuant to

Fed.R.Civ.P. 54(b).

New York, New York

July 10, 1987

SO ORDERED:

s/ U.S.D.J.

35a

APPENDIX E—Order of the United States District Court

for the Southern District of New York

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

UNITED STATES COURT HOUSE

New York, NY 10007

Chambers of

Judge Morris E. Lasker

June 26, 1987

TO: Herbert I. Deutsch, Esq.

Herbert Stoller, Esq.

RE: Gordon v. Hunt, 82 Civ. 1318(MEL)

Korwek v. Hunt, 84 Civ. 7934(MEL)

This 1s to confirm the substance of our telephone con-

ference today, in which I advised you that because of the

possibility of the reversal of my decision dismissing these

cases as to Mr. Fustok, it is my view that counsel should

continue to participate in the pre-trial proceedings in these

cases so that if my decision is reversed neither counsel nor

the court will have to repeat proceedings already had.

Very truly yours,

s’ Morris E. Lasker

MEL:cw