Next Millennium Telecom Co. v. American Signal Corporation

112 F.4th 481

• Court: Court of Appeals for the Seventh Circuit
• Decided: August 12, 2024
• Docket: 23-2446
• Status: Published

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ No. 23-2446 NEXT MILLENNIUM TELECOM CO., Plaintiff-Appellant, v.

AMERICAN SIGNAL CORPORATION, Defendant-Appellee. ____________________

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:20-cv-00178 — J. P. Stadtmueller, Judge. ____________________

ARGUED MAY 15, 2024 — DECIDED AUGUST 12, 2024 ____________________

Before BRENNAN, KIRSCH, and LEE, Circuit Judges. KIRSCH, Circuit Judge. The government of Saudi Arabia en- gaged Next Millennium Telecom Co. (Nextel), a Saudi Ara- bian corporation, to set up an emergency siren system in Saudi Arabia. Nextel paid American Signal Corporation, a Wisconsin corporation, approximately $11 million to supply the sirens and related components for the system, which Nextel installed. Nextel claims that, after assembly and instal- lation, the sirens did not operate correctly. American Signal, 2 No. 23-2446

Nextel says, declined Nextel’s requests to repair or replace the defective parts (or compensate Nextel for doing so) and would not refund Nextel’s payments. So Nextel sued Ameri- can Signal in federal court under the court’s diversity jurisdic- tion for, among other things, breach of contract. The case progressed slowly and was marked by Nextel’s uncooperative conduct, which prevented the identification of key facts and otherwise hindered the progress of the litiga- tion. Consequently, at the final pretrial conference, the district court remarked on how little discovery had been accom- plished on the dispute’s core factual issues. It ordered Nextel, on penalty of dismissal for failure to prosecute, to accomplish certain steps necessary for the case to proceed to trial. Namely, it required Nextel to: (1) obtain local counsel; (2) meaningfully confer with American Signal; and (3) file an outline on how it would arrange for testing the sirens and se- curing visas for its witnesses. Nextel filed a plan, but the court found that it failed to comply with its order and dismissed the case. Nextel appeals the dismissal, as well as the court’s denial of its request to allow its witnesses to testify remotely. Nextel’s challenge to the court’s dismissal for failure to prosecute requires that we “look to the entire procedural his- tory of the case,” so we weave the particulars of the proce- dural history in with our analysis. Long v. Steepro, 213 F.3d 983, 986 (7th Cir. 2000). We review a dismissal for failure to prosecute for abuse of discretion. Thomas v. Wardell, 951 F.3d 854, 862 (7th Cir. 2020). “So long as the district judge’s analy- sis was not tainted by a legal error or the failure to consider an essential factor, we will reverse only if the decision strikes us as fundamentally wrong.” McMahan v. Deutsche Bank AG, 892 F.3d 926, 931 (7th Cir. 2018) (cleaned up). No. 23-2446 3

Courts “generally have broad authority to dismiss a case for failure to prosecute.” Wardell, 951 F.3d at 862. The court here relied on multiple sources for its authority: Federal Rule of Civil Procedure 41(b); its inherent power, Harrington v. City of Chicago, 433 F.3d 542, 548 (7th Cir. 2006); and the local rules, E.D. Wis. Civ. R. 41(c) (authorizing dismissal if a plaintiff “is not diligently prosecuting the action”). Courts must “spar- ingly” exercise their authority to dismiss under these sources and only do so “when there is a clear record of delay or con- tumacious conduct.” Salata v. Weyerhaeuser Co., 757 F.3d 695, 699 (7th Cir. 2014) (quotation omitted). Given “the procedural history of the case and the situation at the time of the dismissal,” the court did not abuse its dis- cretion and we affirm: there is an adequate record of Nextel’s dilatory and insubordinate conduct such that we cannot con- clude that “no reasonable person could concur” with the court’s dismissal. Daniels v. Brennan, 887 F.2d 783, 785–86 (7th Cir. 1989). While the district court could have done more to push the case forward without having to resort to the sanction of dismissal (for example, it waited over a year to issue a scheduling order), ultimately, “the duty of moving a case to trial is on the plaintiff and not on the court.” Washington v. Walker, 734 F.2d 1237, 1238 (7th Cir. 1984). Nextel shirked its obligation to diligently prosecute its case, and its “pattern of delay and indifference” supports dis- missal. Salata, 757 F.3d at 700 (quotation omitted). First, in per- sistently equivocating when American Signal sought to con- duct inspections of the sirens to identify any defects, Nextel prevented the development of fundamental facts in the case. Second, Nextel caused delays by failing to cooperate in sched- uling depositions. Third, it repeatedly disregarded the local 4 No. 23-2446

rules. Finally, Nextel did not comply with the court’s order at the final pretrial conference: it did not obtain local counsel or meaningfully converse with American Signal, and its plan was short and unsupported. The totality of this behavior was sufficient to justify dismissal for failure to prosecute, even if no single instance was particularly egregious. A Nextel bears responsibility for the failure to conduct in- spections of the sirens, inhibiting the determination of essen- tial facts—whether and how the sirens were defective. Amer- ican Signal made consistent efforts to arrange for the inspec- tion and testing of the sirens. It first indicated the need to con- duct such inspections in July 2021, but Nextel said it was not sure where the sirens were located. In September, American Signal continued to press for inspections, sending interroga- tories asking Nextel to identify where the sirens were located; Nextel demurred, objecting to the interrogatories without providing an answer. Then in March 2022, American Signal provided Nextel with a proposed schedule and plan for in- spections for later that month but agreed to delay because Nextel indicated that American Signal might need permission from the Saudi government to inspect the sirens. When Amer- ican Signal repeatedly followed up, seeking information on how to get permission and access the sirens, Nextel did not give a straight answer. It equivocated regarding who had con- trol of the sirens, where they were located, and how American Signal could get authorization from the Saudi government to access them—though Nextel had itself gained access to the si- rens for its own expert to examine them. American Signal reached out to numerous government entities and officials in No. 23-2446 5

Saudi Arabia seeking to access the sirens to no avail, so no in- spections were done. It was, again, Nextel’s responsibility, as plaintiff, to move the case forward to trial. Sisk v. United States, 756 F.2d 497, 501 (7th Cir. 1985). But, because Nextel had stymied any inspec- tions, it was entirely unclear why (or if) the sirens did not function, so the case was far from ready for trial. As the dis- trict court identified at the final pretrial conference, less than two weeks before trial was set to begin, there were “huge problems with the core facts of this case” largely because there had “been no serious effort at identifying exactly what the problem is with respect to the inoperability of these si- rens.” Nextel, however, resists this conclusion and argues that, in its motion for clarification after the conference, it noted that its witnesses identified specific defects in their depositions. But American Signal was not obligated to credit Nextel’s wit- nesses and desist from conducting inspections. And, despite having witnesses with information regarding the sirens’ par- ticular problems, Nextel gave vague responses when asked about those problems throughout the litigation—in its re- sponses to interrogatories, at hearings, and even in the joint final pretrial report. Accordingly, Nextel inhibited the uncov- ering of these key facts both by hampering inspections and giving elusive responses. It thereby did not meet its obligation to move the case forward. B Nextel additionally restrained the case’s progress by fail- ing to cooperate in scheduling depositions. American Signal notified the court that it had made almost 50 written requests 6 No. 23-2446

for depositions of Nextel’s corporate representative and ex- pert, resorting to subpoenas because Nextel never provided dates in response. The court emphasized Nextel’s unrespon- siveness in granting American Signal’s motion to preclude Nextel’s expert’s testimony, finding that Nextel, by not coop- erating, had “gross[ly] mishandl[ed]” the expert’s deposition. C Beyond its dilatory behavior, Nextel flouted the local rules, which can support a finding of contumacious conduct. Cartwright v. Silver Cross Hosp., 962 F.3d 933, 936 (7th Cir. 2020). Nextel filed a motion to compel discovery that ex- ceeded the page limit imposed by the local rules, E.D. Wis. Civ. R. 7(h)(2), though it did refile and move for leave to sub- mit the brief with excess pages. Despite this correction, Nextel again exceeded the page limit in responding to American Sig- nal’s motion to preclude expert testimony. And Nextel did not adhere stringently to the requirement that parties meet and confer before filing discovery motions. E.D. Wis. Civ. R. 37. Even if none of these errors was grievous, the court properly considered these violations in exercising its author- ity to dismiss the case because district courts are entitled to require strict compliance with their local rules. Hinterberger v. City of Indianapolis, 966 F.3d 523, 528 (7th Cir. 2020). D Finally, Nextel did not substantively comply with the court’s order issued during the pretrial conference, confirm- ing that it would not make an effort to push the case to trial. Dorsey v. Varga, 55 F.4th 1094, 1104 (7th Cir. 2022) (“[A] district court has the inherent power to dismiss for failure to comply with its orders.”). Nextel contends that all the order required No. 23-2446 7

was that it file an outline of its plan for securing local counsel, arranging for testing of the sirens, and acquiring visas for its witnesses. That is not the case. The court first described two tasks Nextel had to complete. After noting that Nextel’s local counsel had withdrawn, it explicitly invoked Local Rule 83(c)(3) to require Nextel to obtain local counsel and renewed its admonishment that the parties have a meaningful conver- sation about “how to get to the bottom of the facts of this case.” Then, it stated that Nextel needed to obtain visas for its witnesses and find people who could do the testing with the Saudi government’s agreement. It was only after describing these other necessary steps that the court ordered Nextel to file an outline on how it would accomplish them. Indeed, im- mediately after noting that Nextel’s counsel should tell its cli- ent that “we’re going to have to get these sirens tested … and all the witnesses in this case are going to be here and testify in person,” the court ordered it to file an outline “on how you’re going to accomplish this.” If Nextel was confused, it could have sought clarification. But, in its motion for clarification, it failed to request any additional information as to what the court’s order required, either in terms of what the plan should include or what tasks Nextel had to accomplish. Nextel timely filed a plan but failed to obtain local counsel or have a meaningful conversation with American Signal, breaching the court’s order. Acknowledging that it had not secured counsel, Nextel noted in its plan that it had contacted numerous attorneys and was in negotiations with a couple of attorneys. Even if we leniently construe the court’s order to only require Nextel to file a plan on how it would secure local counsel, Nextel provided nothing to verify its efforts. It of- fered no specifics on when it had reached out to such attor- neys or even those attorneys’ names. As to the requirement 8 No. 23-2446

that Nextel meaningfully converse with American Signal, Nextel never contacted American Signal after the pretrial con- ference to discuss how to move forward, in contravention of the court’s order. We find no issue with the district court’s determination that Nextel’s plan for testing and securing visas for its wit- nesses did not meaningfully comply with its order: the plan was brief, undetailed, and uncorroborated. Nextel did not in- clude potential dates, identify the individuals it claimed to have found to examine the sirens, or outline any steps Amer- ican Signal might need to take to gain access to the sirens. Sim- ilarly, without any corroborating documentation, Nextel claimed that its witnesses had applied for visas. While the court’s order did not explicitly require Nextel to provide supporting documentation, the failure to attach any- thing to verify its plan indicated to the court that Nextel was not seeking to expeditiously move the case along or genuinely comply with its order. Rather, Nextel sought to minimally comply with the order and thus defied the order’s purpose: to spur Nextel into making progress on the key issues in the case and move the case to trial. Given this failure to comply with a court order, along with Nextel’s other dilatory and contuma- cious conduct during the case, the district court did not abuse its discretion in dismissing the action for failure to prosecute. And because we affirm the dismissal, we need not address Nextel’s argument that the court erred in denying its request for its witnesses to testify remotely. See Flynn v. Kornwolf, 83 F.3d 924, 927 n.1 (7th Cir. 1996). AFFIRMED