Service Clock Runs if Nobody Is Stopping You

California ex rel. Edelweiss Fund, LLC v. JP Morgan Chase & Co., No. A158728 (D1d4 Dec. 22, 2020)

Code of Civil Procedure § 583.210 requires the plaintiff to serve a defendant within three years of filing. This, however is a California False Claims Act case, where the complaint stays sealed for at least 60 days while the AG or a local prosecutor decides to intervene. See Gov. Code § 12652(c)(8)(D). Since the point of sealing is to avoid tipping off the defendant, service of process is not permitted until the complaint is unsealed. Gov. Code § 12652(c)(2).

The AG got a number of extensions (which are permitted) and ultimately declined to intervene about 15 months after the complaint was filed. Unusually, Plaintiff then sought to extend the sealing for another nine months, ostensibly so it could reach out to other local prosecutors to see if they wanted to get involved. And then it extended the extension. And then Plaintiff just let the case sit without seeking an order unsealing for another year. 

Finally, almost four years after filing, Plaintiff asked the court to unseal the case. But it did so in a CMC statement, not by filing a motion. This exacerbated the problem because San Francisco being a master calendar court, the CMC statement went to a different department than the department responsible for unsealing. After that was finally worked out, the complaint was finally unsealed and Plaintiff started serving defendants—nearly four and a half years after the complaint was filed.

Defendants moved to dismiss under § 583.210, and the trial court agreed. The Court of Appeal affirms. The time for service is tolled during any period service is “impossible, impracticable, or futile due to causes beyond the plaintiff’s control.” § 583.240(d). That merited tolling during the window up till when the AG declined to join because service before that is prohibited by statute. 

After that, however, the ongoing sealing of the complaint was under Plaintiff’s control. Plaintiff could have asked the court to unseal—and the court would have agreed—any time after the AG declined to intervene. The fact that it would have taken a motion to lift the sealing does not change that. And since without that tolling, Plaintiff is past three years, the complaint was properly dismissed.

Affirmed.