## Facts

- Homeowners Lefteri and Athena Poulis sued their fire insurer, State Farm, seeking policy benefits after a fire damaged their residence; State Farm disputed coverage, citing defenses including arson and misrepresentation.
- The action was removed to federal court on diversity jurisdiction.
- The district court set deadlines for discovery, pretrial statements, and a pretrial conference.
- Plaintiffs conducted no discovery and never answered State Farm’s interrogatories.
- Plaintiffs failed to file their pretrial statement by the court-ordered deadline, did not seek an extension, and did not timely cure after being notified by chambers.
- The district court dismissed the case with prejudice for failure to file the pretrial statement.
- Plaintiffs’ counsel moved under Rule 60(b) to set aside the dismissal, attributing the noncompliance to illness and family circumstances; the district court denied relief.
- On an earlier appeal, the Third Circuit vacated and remanded, stressing that dismissal is a severe sanction and that the plaintiffs themselves were not responsible; it directed consideration of alternative sanctions.
- On remand, plaintiffs’ sanctions brief was filed late; the district court again dismissed with prejudice, concluding lesser sanctions were unsuitable, and plaintiffs appealed.

## Issues

1. Whether the district court abused its discretion by dismissing the action with prejudice as a sanction for missed deadlines and discovery failures largely attributable to counsel.
2. What factors a court must consider before imposing dismissal with prejudice under Rule 41(b) and related sanctioning authority.

## Decision

- The Third Circuit vacated the dismissal with prejudice and remanded for further proceedings.
- The court held the district court abused its discretion by imposing the ultimate sanction without an adequate, on-the-record balancing of relevant considerations and without sufficient attention to lesser sanctions.
- The court formalized a six-factor framework to guide dismissal-as-sanction determinations.

## Legal Principles

- Dismissal with prejudice for litigation misconduct is an extreme sanction and should be used only after careful evaluation of the record.
- Before dismissing, a court must consider and balance: (1) the party’s personal responsibility; (2) prejudice to the adversary; (3) a history of dilatoriness; (4) whether the conduct was willful or in bad faith; (5) the effectiveness of sanctions other than dismissal; and (6) the meritoriousness of the claim or defense.
- The factors are not a mechanical checklist; not all must favor dismissal, but the court must meaningfully address them to permit review.
- When a client is not personally at fault, courts should give particular attention to sanctions aimed at counsel (e.g., costs, fees, fines, preclusion orders, or other disciplinary measures) before terminating the client’s case.
- Prejudice requires more than inconvenience; it may include lost evidence, faded memories, or substantial, nonremediable burdens, and may sometimes be mitigated through measures short of dismissal.

## Conclusion

The Third Circuit held that terminating the Poulises’ case with prejudice was disproportionate on the record, particularly given the plaintiffs’ lack of personal fault and the availability of effective lesser sanctions, and it required an explicit balancing of the six Poulis factors before dismissal may be imposed.


Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863 (3d Cir. 1984)