Yourish v. CA. Amplifier

• Decision Date: 15 July 1999
• Docket Number: No. 98-56932,98-56932
• Citation: 191 F.3d 983
• Parties: (9th Cir. 1999) NORMAN YOURISH, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, Plaintiff-Appellant, and KENNETH YOURISH,ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, Plaintiff, v. CALIFORNIA AMPLIFIER; IRA CORON; DAVID NICHOLS; MICHAEL FERRON; ARTHUR HAUSMAN; WILLIAM McKENNA, Defendants-Appellees
• Court: U.S. Court of Appeals — Ninth Circuit

Page 983

191 F.3d 983 (9th Cir. 1999)

NORMAN YOURISH, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, Plaintiff-Appellant and KENNETH YOURISH,ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, Plaintiff, v. CALIFORNIA AMPLIFIER; IRA CORON; DAVID NICHOLS; MICHAEL FERRON; ARTHUR HAUSMAN; WILLIAM McKENNA, Defendants-Appellees.

No. 98-56932

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted July 15, 1999--San Francisco, California

Filed October 8, 1999

[Copyrighted Material Omitted] Eric A. Isaacson, Milberg, Weiss, Bershad, Hynes & Lerach, San Diego, California, for the plaintiff-appellant.

Daniel S. Floyd, Gibson, Dunn & Crutcher, Los Angeles, Caliornia, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California; Consuelo B. Marshall, District Judge, Presiding. D.C. No. CV-97-04293-CBM.

Before: Charles Wiggins, Ferdinand F. Fernandez, and Sidney R. Thomas, Circuit Judges. Opinion by Judge Wiggins

WIGGINS, Circuit Judge:

I

Norman and Kenneth Yourish ("Plaintiffs") filed this class action on behalf of a class of investors who purchased California Amplifier, Inc. ("Cal Amp") common stock between September 12, 1995, and August 8, 1996. Plaintiffs allege that Cal Amp and its top insiders¹ (collectively "Defendants") made a series of false and misleading statements to securities analysts and the market to manipulate and inflate the price of Cal Amp common stock during the class period. The complaint asserted claims under S 10(b) and S 20(a) of the Securities and Exchange Act of 1934, see 15 U.S.C.SS 78j(b) & 78t(a), as well as under Rule 10b-5, see 17 C.F.R. S240.10b5.

Defendants filed a motion to dismiss the complaint on several grounds. Counsel for Plaintiffs and Defendants appeared at the hearing on the motion on February 23, 1998. Due to heavy rains that day, however, the district court judge was prevented from traveling to the courthouse when her train was canceled. The district judge's clerk informed the parties that Judge Marshall's tentative ruling was to grant the motion and allow ten days leave to amend.

After discussing the matter with Defendants, Plaintiffs agreed to waive oral argument on the motion and submit to the judge's tentative ruling if Plaintiffs were given sixty days to amend. After the clerk contacted the judge, who agreed to the stipulation, and relayed the information to the parties, Plaintiffs' counsel informed the clerk that a written order explaining the reasons for dismissal would be helpful. Although the judge's minute order dismissing the complaint with sixty days leave to amend was entered in the clerk's civil minutes, no written order ever issued.²

Plaintiffs never filed an amended complaint. On April 24, 1998, sixty days after the hearing was scheduled, Plaintiffs' counsel checked the court's docket. Although she discovered the civil minutes, she apparently did not contact the district court or opposing counsel. Instead, on May 15, 1998, Plaintiffs filed a motion styled as a Motion for Entry of A Written Order Re Dismissal of Complaint Without Prejudice and For Leave to Use State Discovery to Amend Complaint. Defendants filed a Motion for Entry of Order of Final Dismissal and Entry of Judgment based on Plaintiffs' failure to file an amended complaint within sixty days of the dismissal.

The district court granted Defendants' motion without oral argument, dismissing the case with prejudice under Rule 41(b) of the Federal Rules of Civil Procedure for failing to obey the court's order to file an amended complaint within sixty days. The court also denied Plaintiffs' motion. Plaintiffs now timely appeal the dismissal of their case with prejudice to this court.

II

The first issue we must resolve is whether Judge Marshall's "minute order" was an order, the noncompliance with which justified dismissal under Rule 41(b) of the Federal Rules of Civil Procedure.³ We review the district court's dis-missal of a complaint pursuant to Rule 41(b) for abuse of discretion. See Ferdik v. Bonzelet, 963 F.2d 1258, 1260 (9th Cir. 1992). Whether or not the "minute order" was an order for purposes of Rule 41(b) is a question of law that we review de novo. We find that Judge Marshall's minute order, under the circumstances of this case, was an "order" within the meaning of Rule 41(b), the noncompliance with which gave Judge Marshall the discretion to dismiss the complaint.

Under Ninth Circuit precedent, when a plaintiff fails to amend his complaint after the district judge dismisses the complaint with leave to amend, the dismissal is typically considered a dismissal for failing to comply with a court order rather than for failing to prosecute the claim. See id. at 1260 ("In this case we address whether the district court abused its discretion in dismissing Ferdik's case because he failed to obey the court's order requiring him to refile a second amended complaint . . . in a timely manner or face dismissal of his case.") (emphasis added)⁴.

Judge Marshall dismissed the Plaintiffs' complaint with prejudice for failing to comply with a court order. See Order Filed on Sept. 21, 1998, at 2 ("When a party fails to comply with any district court order within the time period given for compliance, the district court may dismiss the action pursuant to Fed. R.Civ. P. 41(b).").

Although this court has never addressed the issue of whether any particular formalities are necessary for an order that serves as the basis of a Rule 41(b) dismissal, we have addressed the closely analogous issue of whether or not particular formalities are necessary in order for a court's discovery order to serve as the basis of Rule 37(b)(2) sanctions for a party's noncompliance with a court's discovery order.⁵ In Henry v. Sneiders, 490 F.2d 315 (9th Cir. 1974), a district court entered a default judgment against a defendant after she refused to produce records that were ordered produced by the district judge. On appeal, we affirmed the default judgment as a Rule 37(b)(2) sanction for noncompliance with a court order. In a claim that was similar to Plaintiffs' claim in the current appeal, the plaintiff argued that "[s]ince default under Fed. R. Civ. P. 37(b)(2) is permitted only for refusal to comply with a court order for discovery, . . . default was improper." Henry, 490 F.2d at 318. We rejected this argument even though the district court had not issued a written order directing the defendant to produce the records. We affirmed the default judgment, notwithstanding the absence of a written order, because "[i]t [was] clear from an examination of the oral proceedings . . . that the district court had orally ordered appellant to produce the records" and "[w]here oral proceedings unequivocally give a litigant notice that certain documents are to be produced, the absence of a written order does not preclude the entry of a default judgment for failure to comply." Id. (emphasis added). We feel that Henry's reasoning is equally applicable in this case. Just as an oral order is an "order," the noncompliance with which justifies Rule 37(b)(2) sanctions, Judge Marshall's minute order was an "order," the disobedience of which justified dismissal under Rule 41(b).

Relying upon inapposite precedents that concern Rule 58's separate document requirement for dispositive orders,⁶ Plaintiffs contend that Judge Marshall's minute order was insufficient to serve as the basis of her later dismissal for failing to amend the complaint. Plaintiffs' argument is premised upon this court's opinion in Calhoun v. United States , 647 F.2d 6, 8 (9th Cir. 1981), and its progeny. In Calhoun , we held that a minute order noted in the clerk's civil docket did not satisfythe separate document requirements of Rule 58. See Calhoun, 647 F.2d at 9. Without strict compliance with the separate document requirement, the court found that it was impossible to determine whether a notice of appeal was timely filed. See id. at 10.

Plaintiffs' reliance on Calhoun and its progeny, however, is misplaced. As Judge Marshall noted, Calhoun 's mechanical application of the separate document requirement of Rule 58 only concerns dispositive orders, from which a party must timely file a notice of appeal. As Henry makes clear, an oral minute order, noted in the clerk's docket, can serve as the basis for a sanction for noncompliance when the parties have knowledge of the order's contents. Although Henry involved a party's disobedience of a discovery order, we feel that its reasoning is more analogous to this case than the dispositive orders in Calhoun and its progeny, which involved deadlines for filing a notice of appeal. We therefore conclude that Plaintiffs' noncompliance with Judge Marshall's minute order, which confirmed the parties' stipulation, granted Judge Marshall the discretion to dismiss the case under Rule 41(b).⁷

III

The next issue we must address is the propriety of Judge Marshall's dismissal of the complaint without informing Plaintiffs of the reason for the dismissal. We review the district court's dismissal of an action for failure to comply with the court's order requiring submission of an amended complaint in a timely manner for an abuse of discretion. See Ferdik, 963 F.2d at 1260. Relying primarily upon this court's decision in Bonanno v. Thomas, 309 F.2d 320 (9th Cir. 1962), Plaintiffs claim that the district judge abused her discretion in dismissing the complaint because the district judge failed to inform them of the reason for dismissal. We find that Judge Marshall did not abuse her discretion in this case because Plaintiffs had consented to the tentative ruling which they now attack. Because of Plaintiffs' consent to the tentative ruling, Judge Marshall was not obligated to provide them with the type of explanation envisioned in Bonanno and did not abuse her discretion by failing to provide them with an explanation.

In Bonanno, the district court dismissed a...