The opinion of the court was delivered by: WEBER
We previously dismissed this federal securities fraud and RICO action based on the res judicata effect of a state court order dismissing an earlier state court action. In the earlier suit these same plaintiffs asserted claims based on the same events described in this action. Pending at this time is plaintiffs' motion for reconsideration.
This case has a rather tortuous history and for the sake of clarity we review it here.
On November 18, 1983, plaintiffs instituted suit in the Court of Common Pleas of Warren County by the issuance of summons. The defendants were the same as those named in the later federal suit.
On August 16, 1984, pursuant to Warren County Local Rule 37, the court advised plaintiffs that the action would be dismissed if the case was not placed on the trial list within 240 days of commencement of suit. By September 1984, 10 months had passed since the issuance of the summons and no Complaint had been filed. On September 17, 1984 the Court of Common Pleas ordered plaintiffs to file a Complaint on or before December 16, 1984 and complete discovery by January 15, 1985. Despite this order plaintiffs did not file a Complaint or initiate discovery, and no request for extension of time was filed.
On January 21, 1985 defendants moved to dismiss the Complaint. Only then did plaintiffs request an extension of time, a motion which the court did not rule on. Although untimely, plaintiffs then filed their Complaint on April 25, 1985. The state court heard argument on defendants' motion and by Opinion and Order dated September 24, 1985 dismissed plaintiffs' action for failure to comply with the Court's order setting deadlines. In its Order, the Common Pleas Court specified that dismissal was "with prejudice".
Plaintiffs appealed to the Pennsylvania Superior Court which affirmed. Plaintiffs then sought allocatur from the Pennsylvania Supreme Court.
On February 17, 1987 plaintiffs filed the present federal action, alleging the same facts recited in the state action but asserting federal securities laws and RICO claims absent in the Warren County suit. Defendants moved to dismiss on various grounds, including the preclusive effect of the state court's order of dismissal.
On May 6, 1987 we issued an Opinion and Order dismissing this action as barred by the res judicata effect of the state court's order. Plaintiffs promptly sought reconsideration and oral argument. Before we could rule on the motion counsel advised us that the Pennsylvania Supreme Court had granted allocatur on the state court action. We, therefore, stayed all action until the Supreme Court had ruled.
Unfortunately the Supreme Court later withdrew the grant of allocatur, allowing the dismissal order to stand. The parties then renewed their efforts for and against the plaintiffs' motion for reconsideration pending before us. Based on several recent decisions on statute of limitations issues, defendants have also asserted alternative grounds for dismissal of the Complaint.