4th Circuit Vacates Dismissal: Former Employee Can Cure Defective Service of Process After Defendant Removes Case to Federal Court

Under Virginia law, service of process should be perfected on defendants within one-year of the date a plaintiff files a lawsuit.  A plaintiff’s failure to timely serve often leads to dismissal of the plaintiff’s case with prejudice.  In a recent case, a plaintiff’s former employee waited more than one year to serve her former employers with service of process in her harassment lawsuit, and the U.S. District Court for the Eastern District of Virginia dismissed the Plaintiff’s case with prejudice.  Thereafter, the Plaintiff appealed.  In vacating the dismissal, the Fourth Circuit held that the federal court should have granted the Plaintiff with additional time to cure the defective service of process because Defendants removed the case.

The case is Jacqueline Rice v. Alpha Security, Inc., et al., No. 13-1644 (4th Cir. Feb. 25, 2014), and it stands as a warning to business defendants that seek to remove a case to federal court.  If a plaintiff’s service of process in state court was defective, it may be more advantageous for a defendant to seek dismissal of the case at the state court level rather than removing to federal court prior to filing for dismissal.

Ms. Rice initiated a sexual harassment lawsuit against her former employers, and filed the lawsuit in the state circuit court of Fairfax County on August 15, 2011.  Rice did not immediately serve the complaint and summons upon Defendants.  On August 14, 2012, the day before the one-year mark for service was to expire, the Court granted Rice’s motion for nonsuit.  In Virginia, a party may take one nonsuit as a matter of right, and additional nonsuits are available with permission from the court.  In this case, Rice likely nonsuited to avoid expiration of the one-year service deadline, and this was absolutely permissible under Virginia law.  A nonsuit is an “expansive and powerful weapon” for a plaintiff and can be taken by a plaintiff for a myriad of reasons.

Approximately two weeks after her nonsuit was granted, however, Rice requested that the court vacate its order granting the nonsuit.  The state court did vacate its order; and the very next day, Rice effectuated service upon Defendants.  Once Rice’s nonsuit was vacated, it was as if it never existed, and therefore could no longer effectively increase the time period for which to serve process.   Thus, service was untimely, as it was completed more than one year after initiation of Rice’s lawsuit.  (Interestingly, Rice may have been able to avoid this result had she left the nonsuit order alone, and simply re-filed her lawsuit.)

Once served, Defendants removed the case to federal court under federal question jurisdiction, and then moved to dismiss the case because of Rice’s failure to effectuate service.  The motion to dismiss was heard in federal court, and the federal court dismissed Plaintiff’s case with prejudice.  Plaintiff appealed.

The Fourth Circuit determined that although Rice’s service of process in state court was untimely under Virginia law, Defendants’ removal of the case to federal court provided Rice with an additional opportunity to cure her defect.  If the case had not been removed, the Plaintiff could have taken another nonsuit in state court to cure the service defect.  According to the Fourth Circuit, “Because Rice still had options left in state court to pursue her cause of action, the removal of the case to federal court should not change that outcome.”  The Fourth Circuit vacated the district court’s dismissal, remanded the case, and instructed the district court to allow Rice with 120 days to serve process on Defendants in accordance with the Federal Rules of Civil Procedure.

Although a plaintiff has the powerful ability to use a nonsuit to terminate her case at practically any given point with very little consequences in state court, a defendant may be able to curtail the plaintiff’s ability to do so by filing a dispositive motion in state court.   Thus, there may be strategic reasons for a business defendant and its counsel to consider keeping the case at the state-court level instead of seeking removal, even though persuasive arguments for removal exist.