defendant has been commenced and the statute of limitations
continues to run. Id. at 691. See also Derdiarian v.
Futterman Corp., 36 F.R.D. 192, 194 (S.D.N.Y. 1964) (filing of
complaint commences action provided there is not undue delay).
Indeed, failure of service has been held even to nullify the
filing of the complaint. Application of the Royal Bank of
Canada, 33 F.R.D. 296, 299-303 (S.D.N.Y. 1963).
Camotex argues that Grosser's "repeated" attempts to serve BPS
by registered mail in the first few months of the Grosser
class action constitute "good cause" to excuse untimely service
under Fed.R.Civ.P. 4(j). However, although Grosser's initial
attempts to serve BPS may indeed have been reasonable and
timely, Camotex offers no justification for the utter
abandonment of these efforts, except the pendency of multiple
motions to dismiss which might have disposed of the action.
But, while the pendency of such motions may explain, it does
not justify the discontinuance of actions to serve BPS. After
the first "several months" of the Grosser action, no further
attempts to serve BPS were made until after the Grosser class
was decertified and the present action was filed — a delay of
five years.*fn3 Such a checkered history simply does not
attain the level of diligence required under the "good cause"
exception. See, e.g., Gordon v. Hunt, 116 F.R.D. 313, 325
(S.D.N.Y.), aff'd, 835 F.2d 452 (2d Cir. 1987), cert.
denied, 486 U.S. 1008, 108 S.Ct. 1734, 100 L.Ed.2d 198 (1988)
(untimely service not excused for good cause where plaintiff
made five attempts to serve defendant and then ceased its
efforts during the remaining four years of the action).
The record establishes that there was no unusual obstacle to
service. In fact, plaintiffs in a number of other "silver
cases" all managed to serve BPS without difficulty. See,
e.g., Strax v. Commodity Exchange, Inc., 79 Civ. 5366 (MEL);
Fustok v. Banque Populaire Suisse, 81 Civ. 4139 (EW); Minpeco
v. ContiCommodity Services, Inc., 81 Civ. 7619 (MEL); Gordon v.
Hunt, 82 Civ. 1318 (MEL); Korwek v. Hunt, 84 Civ. 7934 (MEL).
Moreover, neither Grosser nor Camotex ever "came to the court
to explain their problems with service and seek the court's
assistance." Gordon, 116 F.R.D. at 325. Thus, in view of the
ample time and opportunity afforded Grosser to serve BPS, the
undue delay in service had "the effect of negating the fact
that a complaint was ever filed." Gleason, 869 F.2d at 691.
Camotex also contends that Grosser's failure to serve BPS
should be ignored because, since BPS had actual notice of the
claims against it, it would suffer no prejudice by being held
as a defendant in this case. Actual notice, however, is no
substitute for valid service of process. Omni Capital Int'l,
Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104, 108 S.Ct.
404, 409, 98 L.Ed.2d 415 (1987). See Martin v. New York State
Dep't of Mental Hygiene, 588 F.2d 371, 373 (2d Cir. 1978)
(defendant's actual knowledge of an action is not sufficient to
deny motion to dismiss for failure to serve); Gordon v. Hunt,
116 F.R.D. at 323 (a delay in service could not be excused
despite the defendant's awareness that he had been named a
defendant). Thus, although actual notice on the part of BPS is
certainly a factor to consider in determining whether or not to
excuse the incomplete service, it is simply not determinative
in light of the five-year period during which all attempts at
service were abandoned.
Moreover, the absence of prejudice, even if such were the case,
is not determinative in matters such as this, where the sheer
length of the delay is sufficient grounds for dismissal. See,
e.g., Joseph Muller Corp. Zurich v. Societe Anonyme de Gerance
et d'Armement, 508 F.2d 814, 815 (2d Cir. 1974) ("unreasonable
delay in service constitute[s] grounds for dismissal without
regard to any showing of actual prejudice"); Gordon v. Hunt,
116 F.R.D. at 323 (motion to dismiss granted due to a four-year
delay in service despite finding that defendant was not
prejudiced). In the present case, the five-year delay in
serving BPS is sufficient to constitute grounds for dismissal
without the need to show prejudice.
In any event, BPS did in fact suffer prejudice as a result of
the five-year delay in service of process. It has often been
held that a defendant is prejudiced where "witnesses have died
or become unavailable" during the time from the filing of the
complaint to the service of process upon the defendant. Saylor
v. Lindsley, 71 F.R.D. 380, 385 (S.D.N.Y. 1976), aff'd,
623 F.2d 230 (2d Cir. 1980). A number of BPS officials with
potentially relevant knowledge have died or left the
organization, thereby adding to BPS' potential difficulties in
defending against Camotex's present claims. These officials
were undoubtedly potential witnesses because most were deposed
or notified that they were to be deposed in Minpeco v.
ContiCommodity Services, Inc., 81 Civ. 7619 (MEL), and Gordon
v. Hunt, 82 Civ. 1318 (MEL).*fn4 Camotex argues further that
BPS' failure to object to improper service during the Grosser
action constitutes a waiver of the defense of insufficiency of
process. However, having never been made a defendant to the
Grosser action because of failure of service, BPS was under
"no obligation to do anything", let alone make a motion to
dismiss. Finley v. Parvin/Dohrmann Co., Inc., 520 F.2d 386,
391 (2d Cir. 1975). The Second Circuit rejected a similar
argument in Gleason v. McBride, 869 F.2d at 692, ruling that,
despite defendant's failure to move to dismiss based on
improper service, the court could order dismissal sua sponte
without giving notice to the parties.
Camotex's final argument is that tolling the statute of
limitations as to its claims against BPS is consistent with the
policies underlying limitations periods and therefore should be
allowed. However, in Cullen v. Margiotta, 811 F.2d 698, 726
(2d Cir.), cert. denied, 483 U.S. 1021, 107 S.Ct. 3266, 97
L.Ed.2d 764 (1987), the Second Circuit held that the class
action tolling doctrine is "inapplicable to persons who were
not defendants, since commencement of a suit against others is
insufficient to give a nondefendant notice of the assertion of
claims against him." BPS was never made a defendant to the
Grosser class action by virtue of the complete failure to
serve BPS with process. Thus, Camotex's assertion that BPS had
actual notice of the claims against it is not sufficient to
toll the statute of limitations during the pendency of the
Grosser class action.
Merrill Lynch's and Bache's motion to dismiss is granted to the
extent of determining that the date of injury is March 27, 1980
and the statute of limitations is tolled during the pendency of
the Grosser action, but not the Zeltser action. Decision on
the issue of fraudulent concealment is deferred. BPS' motion to
dismiss is granted.