Richard Zanowick v. Baxter Healthcare Corp., 850 F.3d 1090

Background

In July 2014 Richard Zanowick sued Baxter and Fisher in state court alleging asbestos exposure; Joan Clark‑Zanowick asserted loss of consortium. Defendants removed the case to federal court on diversity grounds.
Zanowick died on October 12, 2014; plaintiffs served a notice of death on November 17, 2014, triggering Rule 25(a)(1)’s 90‑day substitution deadline (deadline: Feb 19, 2015).
Plaintiffs did not move to substitute within 90 days. Instead, in February 2015 Mrs. Zanowick and children filed a new state action asserting essentially the same claims against the same defendants plus additional parties.
Defendants moved in federal court to dismiss the federal case with prejudice for failure to comply with Rule 25(a)(1). Months later, Zanowick moved to voluntarily dismiss the federal case without prejudice under Rule 41(a)(2) (or alternatively to substitute or extend the Rule 25 deadline).
The district court denied dismissal with prejudice, indicated it would have granted an extension to substitute, and granted Zanowick’s Rule 41(a)(2) motion — dismissing without prejudice. Defendants appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule 25(a)(1) required mandatory dismissal with prejudice for failure to move to substitute within 90 days after notice of death	Zanowick argued the court retained discretion — dismissal without prejudice or extension under Rule 6(b) is proper; Rule 25 is not automatic bar	Defendants argued Rule 25(a)(1)’s “must be dismissed” mandates dismissal with prejudice, so failure to timely substitute extinguished the claim	Court held Rule 25(a)(1) does not compel dismissal with prejudice; district court had discretion to allow substitution or dismiss without prejudice
Whether the district court abused its discretion by granting voluntary dismissal under Rule 41(a)(2) without dismissing with prejudice under Rule 25(a)(1)	Zanowick sought voluntary dismissal without prejudice and preferred that to late substitution	Defendants argued they suffered legal prejudice (lost res judicata tool and federal forum) and that the court should have granted their Rule 25 dismissal with prejudice	Court held no abuse of discretion: Rule 41(a)(2) dismissal without prejudice was permissible and defendants did not show the required legal prejudice
Whether Rule 6(b) could have authorized a late substitution (excusable neglect) and whether district court’s failure to rule on that was reversible error	Zanowick contended court would have granted an extension for excusable neglect and thus Rule 25 relief was available	Defendants contended the 90‑day deadline had run and dismissal with prejudice was required	Court noted it would not have abused its discretion in granting a Rule 6(b) extension but found the ultimate dispositive point is that Rule 25 is not an automatic bar
Whether Mrs. Zanowick lacked standing to dismiss Mr. Zanowick’s claims for failure to file a successor‑in‑interest declaration under California law	Zanowick did not raise successor‑in‑interest requirement as an obstacle below	Defendants argued state procedural requirement barred her dismissal authority	Court held defendants waived this issue by not raising it in district court

Key Cases Cited

Westlands Water Dist. v. United States, 100 F.3d 94 (9th Cir.) (standard for Rule 41(a)(2) dismissal and “legal prejudice” inquiry)
Barlow v. Ground, 39 F.3d 231 (9th Cir.) (interpretation of Rule 25(a) reviewed de novo)
Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (U.S. 2001) (Rule 41(b) dismissal effect defaults and judgment‑preclusive considerations)
Cont’l Bank, N.A. v. Meyer, 10 F.3d 1293 (7th Cir.) (history and purpose of Rule 25 and liberality of extensions)
Smith v. Lenches, 263 F.3d 972 (9th Cir.) (change of forum from federal to state is tactical, not legal prejudice)
Bateman v. U.S. Postal Serv., 231 F.3d 1220 (9th Cir.) (factors for excusable neglect under Rule 6(b))