Paraiba.com Challenges Court Dismissal of Suit

AGTA argues that the judges decision in the $120 Million Paraiba lawsuit is final. Updated 10/31 at 5:15 p.m.

Gary Roskin, G.G., FGA, Senior Editor -- JCK Online, 10/29/2008 6:45:00 PM

A federal court dismissed the case brought by Paraiba.com, against the American Gem Trade Association and others, for failure to prosecute, and for failing to respond to the court’s order to show cause. However, the owner of the Web site said he has filed a motion to challenge the dismissal—a filing that AGTA says he cannot make.

The U.S. District Court for the Northern District of California, San Jose Division, issued the dismissal order Monday for the lawsuit that David Sherman, Paraiba.com chief executive officer, originally filed in April.

Sherman and his attorney, John P Hannon II, failed to file an initial “case management” statement required by California law and never appeared before the court on Sept. 22 to address their failure to file the statement or explain to U.S. District Judge Ronald M. Whyte why the case should not be dismissed for failure to diligently prosecute, according to court documents.

The court set a deadline of Oct. 10 for the plaintiffs to file a response. The plaintiffs failed to file a response, according to court documents. The plaintiffs also failed to appear at a hearing on the matter on Oct. 17.

Therefore, the court ordered that the case be dismissed with prejudice for failure to respond to the court’s order to show cause and for failure to diligently prosecute.

However, Sherman told JCK that a "Rule 60" motion was placed on the court docket Wednesday, in order to decide whether the case can be returned to the court.

A Rule 60 motion is one where the plaintiffs are asking for a relief from judgment or order, with reasons that could include mistakes, oversights, inadvertence, surprise, excusable neglect, or any other reason that justifies relief. The Rule 60 motion is scheduled to be heard on Dec. 5, according to Sherman.

However, AGTA argues the dismissal of the case is final.

“Judge Whyte's Order of Dismissal was accompanied by a Judgment in favor of all of the Defendants, and operates as a judgment on the merits, with the same legal effect as a judgment after trial,” AGTA said in a statement issued Friday afternoon. “The plaintiffs are barred from re-filing the case.”

“We are pleased by the court’s ruling in this case,” said Douglas K. Hucker, AGTA chief executive officer. “We felt from the beginning that the suit had no merit and that the industry organizations had acted appropriately when accepting a widely used trade name.”

The original lawsuit claims that the place name Paraíba has been hijacked by the AGTA and others, using the decision by the Laboratory Manual Harmonization Committee to allow the use of the name Paraíba as a varietal name for cuprian elbaite, gems which could originate from other localities, other than Paraíba, Brazil.

According to the LMHC, “Paraíba is a gem variety of elbaite tourmaline containing copper and manganese. (The variety name ‘paraíba’ is derived from the Brazilian locality where this gemstone was first mined, however today it may come from a number of localities.) Or, if paraíba is not used in the variety description - This copper and manganese bearing elbaite tourmaline may also be called ‘paraíba tourmaline’ in the trade. (The name ‘paraíba’ is derived from the Brazilian locality where this gemstone was first mined, however today it may come from a number of localities.)”