United States District Court, C.D. California
ORDER DENYING DEFENDANTS' MOTION TO DISMISS 
OTIS D. WRIGHT, II, District Judge.
Plaintiff filed the instant trademark infringement action, but did not serve Defendants within 120 days as required by Federal Rule of Civil Procedure 4(m). Defendants filed the instant Motion to Dismiss for failure to serve before that 120-day deadline. (ECF No. 16.) For the reasons discussed below, the Court DENIES Defendants' Motion to Dismiss.
II. FACTUAL BACKGROUND
On December 23, 2014, Plaintiff Fuel Industries, Inc., filed its initial Complaint for trademark infringement against Defendants Fuel, LLC, and Grantoo, LLC. (Compl., ECF No. 1.) Thus, according to Rule 4(m)'s 120-day service period, Plaintiff had until April 22, 2015, to effect service on Defendants. (Mot. 2.) However, Defendants had actual notice of the lawsuit within days of Plaintiff's filing. (Mot. 1; Opp'n 2.)
In the following weeks, the parties communicated about various aspects of the case, including settlement and service. (Mot. 1; Opp'n 2-3.) Settlement talks ultimately broke down, and Plaintiff continued investigating Defendants' conduct. (Opp'n 3.) On May 6, 2015, after conferring with one of Plaintiff's CEOs,  Plaintiff served Defendants via email fourteen days after the 120-day service period had expired. (Mot. 2; Opp'n 4, 8.) Despite being aware of Plaintiff's lawsuit, Defendants expressed surprise at service. (Mot. 4.) Plaintiff asked whether Defendants intended to contest the timing of service, and Defendants did not respond. ( Id. )
On May 27, 2015, Defendants filed a Motion to Dismiss Plaintiff's Complaint with prejudice . (ECF No. 16.) Defendants' counsel did not meet and confer with Plaintiff's counsel before filing the Motion. (Opp'n 4.) Defendants argue the Court should dismiss the case because Plaintiff served Defendants after 120 days, and dismissal should be with prejudice because Plaintiff's delay constitutes a lack of prosecution under Rule 41(b). ( Id. at 2-3.)
A. Rule 4(m)
A defendant must be served within 120 days after the complaint is filed. Fed.R.Civ.P. 4(m). If a plaintiff fails to timely effect service, the court must either "dismiss the action without prejudice or order that service be made within a specified time." Id. (emphasis added). The court has broad discretion to extend the time for service. Henderson v. United States, 517 U.S. 654, 661-62 (1996).
Rule 4(m) requires a district court to grant an extension of time for service if Plaintiff shows good cause. Efaw v. Williams, 473 F.3d 1038, 1040-41 (9th Cir. 2007). Whether good cause for the delay has been shown is determined on a case by case basis. In re Sheehan, 253 F.3d 507, 512 (9th Cir. 2001). Rule 4(m) also permits the district court to grant such an extension even absent good cause, and even after the expiration of the 120-day period. Efaw, 473 F.3d at 1041; see Mann v. American Airlines, 324 F.3d 1088, 1090 (9th Cir. 2003). When determining whether to extend time for service, the court may consider factors like prejudice to a defendant, actual notice, length of delay, and whether statutes of limitation will bar a plaintiff from refiling. Efaw, 473 F.3d at 1041.
Plaintiff argues good cause exists because settlement discussions, investigations, and Plaintiff's "relatively unavailable" CEO caused the delay. None of these reasons establish good cause. First, settlement discussions broke down before February 9, leaving Plaintiff nearly three months to serve Defendants before the deadline. Second, Plaintiff should have sufficiently investigated Defendants' conduct before filing the action. Any continuing investigations do not justify delay of service. Finally, Plaintiff fails to explain the meaning of the vague phrase "relatively unavailable, " or how the availability of one of at least two CEOs caused a nearly three-month delay in service.
Although Plaintiff has failed to show good cause, the Court nonetheless finds that the relevant factors weigh in favor of extending the service period: (1) although the better course of action would have been for Plaintiff to request an extension before the service period expired, nothing indicates that Plaintiff delayed service in bad faith; (2) Plaintiff gained no benefit and Defendants suffered no prejudice from the delay; (3) Defendants had actual notice of the action within days of its filing, and engaged Plaintiff in discussions about it soon thereafter; and (4) Plaintiff's delay was minor since service occurred only fourteen days after the 120-day service period expired.
Dismissal is a harsh penalty, and should be imposed only in extreme circumstances. Raiford v. Pounds, 640 F.2d 944, 945 (9th Cir. 1981). Moreover, even if the Court decides that dismissal is warranted, the Court must dismiss without prejudice. United States v. 2, 164 Watches, More or Less Bearing a Registered Trademark of Guess?, Inc., 366 F.3d 767, 772, 773 (9th Cir. 2004) (emphasis added); Fed.R.Civ.P. 4(m). Judicial economy is not served by dismissing and forcing Plaintiff to refile the case. The factors weigh in favor of retroactively extending ...