Confusion from the Federal Circuit on Voluntary Dismissals and Attorney Fees

by Dennis Crouch

O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC (Fed. Cir. 2020)

Attorney Fees following Voluntary Dismissal: I recently posted a note on the Keith Manufacturing decision allowing for an attorney fee motion following a Fed. R. Civ. Pro. R. 41(a)(1)(A)(ii) stipulated dismissal with prejudiceMossberg involves attorney fees following a R. 41(a)(1)(A)(i) dismissal without prejudice.  The appellate court ultimately refused to award attorney fees against Mossberg because the dismissal was “without judicial imprimatur” and thus leaving no “prevailing party.”  As I note bellow, Keith and Mossberg are in some tension, even though both were penned by Judge Hughes and published less than 1-week apart.

FRCP Rule 41(a) covers voluntary dismissal of lawsuits:

(a)(1)(A) Voluntary Dismissal by the Plaintiff Without a Court Order:

… [T]he plaintiff may dismiss an action without a court order by filing:

(i) a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment; or

(ii) a stipulation of dismissal signed by all parties who have appeared.

(B) Effect. Unless the notice or stipulation states otherwise, the dismissal is without prejudice.

In Mossberg, the patentee sued Timney for infringement, but the district court almost immediately stayed the action awaiting the outcome of a series of USPTO reexaminations filed by Timney.  After 5+ years, Timney ultimately prevailed at the USPTO and the asserted claims were invalidated.  Back at the district court Mossberg voluntarily dismissed its lawsuit under R. 41(a)(1)(A)(i) without prejudice.   The district court then entered a docket order stating that the case was dismissed without prejudice.

Following dismissal, Timney asked for attorney fees — arguing that it won the lawsuit. Although the lawsuit was dismissed without prejudice, the collateral cancellation meant that Mossberg would not be able to sue again. Complete win for Timney.

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

35 U.S. Code § 285.  The district court refused to award attorney fees — holding that the dismissal without prejudice was “not a decision on the merits and thus cannot be a judicial declaration altering the legal relationship between the parties.” O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC, No. 3:12-CV-00198, 2018 WL 4398249, at *6 (D. Conn. Sept. 14, 2018).

While the district court’s statement of the law is off a bit, the Federal Circuit affirmed the holding that attorney fees are not available for this type of voluntary dismissal.  In particular, the court decision does not need to be “on the merits,” but it must result in a “material alteration of the legal relationship of the parties” and “be marked by judicial imprimatur.” CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642, 1646 (2016).  CRST involved a Title VII action for employment discrimination.  That provision of the Civil Rights Act of 1964 includes a “prevailing” party provision for attorney fees that is similar to the Patent Act (“the court, in its discretion, may allow the prevailing party … a reasonable attorney’s fee.”).

Here, the Federal Circuit found no “judicial imprimatur” because the voluntary dismissal is “effective immediately upon plaintiff’s filing of the notice of dismissal.” Here, the district court did include a docket entry dismissing the case — but by that time the case had already been dismissed by the plaintiff.  “A properly filed Rule 41(a)(1)(A)(i) voluntary dismissal becomes effective immediately upon plaintiff’s filing of the notice of dismissal.” That make sense since the rule is titled voluntary dismissal “without a court order.”  Thus, the court explained that “[a]lthough the district court in this case entered a dismissal order after Timney filed its notice of voluntary dismissal, that dismissal order had no legal effect.”

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Both Mossberg and Keith were penned by Judge Hughes.  Hughes is seemingly a good choice for these cases because of his decades of experience as a civil litigator at the Department of Justice.  But, the two cases are in tension.

In Mossberg, the court explains that there was not “judicial imprimatur” because the case was voluntarily dismissed by the parties under R.41(a)(1).  In distinguishing from prior cases where courts had dismissed cases on non-merits grounds, Judge Hughes writes “[i]n this case, there was no such final court decision [because a] properly filed Rule 41(a)(1)(A)(i) voluntary dismissal becomes effective immediately upon plaintiff’s filing of the notice of dismissal. . . . Because there is no final court decision here, Timney cannot be a prevailing party for purposes of attorney’s fees under § 285.”

Keith also involved a voluntary dismissal under R.41(a)(1) and did not require a court order. Judge Hughes explained this as part of his decision:

In April 2017, the parties filed a stipulation of dismissal with prejudice pursuant to Rule 41(a)(1)(A)(ii). Such a dismissal requires no court order.

In his decision in Keith, however, Judge Hughes held that the voluntary dismissal without a judicial statement counted as a judgment for attorney fees purposes under Fed. R. Civ. P. 54(d)(2)(A).

Judge Hughes should have included a statement in Mossberg distinguishing Keith. There are two basic ways to distinguish these: (1) Keith focused on the “judgment” language found in R. 54(d) while Mossberg focused on the “prevailing party” language of 285. That distinction is strictly true, but both judgment and prevailing party indicate a sense of judicial action and the court offers no reason why that element of the analysis should be different for the two different statutes. (2) A second way to distinguish the cases is that Keith was a dismissal with prejudice; while Mossberg was without prejudice.  The dismissal with prejudice is accompanied by substantial judicial action if the parties ever attempt to relitigate; while the dismissal without prejudice is seen as a full reset.

= = = = =

As you might guess from the parties, the case involves a trigger assembly for a firearm.

5 thoughts on “Confusion from the Federal Circuit on Voluntary Dismissals and Attorney Fees

  1. 4

    Would love to know why this couldn’t have been decided under exceptional case standard given that it took 3 reexamination requests to determine invalidity, making Plaintiff’s case hardly seem unreasonable.

  2. 3

    Hey– Sorry, just read the other comment. This is a more complex area than I thought. Keep up the good work everybody!!

  3. 2

    Thanks again for all posts. DC! I had to read this one twice — maybe because I’m still drinking coffee and waking up, but all along I’m thinking prejudice… and then you made me laugh when I realized your last pic — terminated with *extreme* prejudice… anyone who’s gone through those ‘full resets’ can appreciate the difference!! But it would be nice for the courts to keep it simple too (and this will help the future remember the difference too).

    1. 2.1

      Sorry, just read the other comment. This is a more complex area than I thought. Keep up the good work everybody!!

  4. 1

    This is the kind of sloppy jurisprudence that breeds confusion in the district courts. You cannot reconcile these cases, period.

    The result in Mossberg rests entirely on the fact that there was no court order or judgment, period, because the voluntary dismissal under Rule 41(a) was self-executing upon filing and required no court action. Accordingly, there was no alteration of the legal relationship of the parties “marked by judicial imprimatur.”

    But the stipulated dismissal in Keith Manufacturing was materially identical. Even though the dismissal was “with prejudice,” and stipulated rather than voluntary, it was also effective upon filing with no court action required. The decision in Keith thus should have gone the exact same way as Mossberg.

    The with/without prejudice issue is also not a basis to distinguish the cases, based on recent precedent. The B.E. Technologies v. Facebook case from late 2019, cited in the opinion, was a dismissal without prejudice (based on mootness), but the CAFC still found that prevailing party costs could be awarded because there was an actual court order effectuating the dismissal.

    The only way to reconcile the Keith and Mossberg decisions is note that the CAFC only responds to the specific arguments the parties raise on appeal, and it appears that the parties in Keith Manufacturing focused only on the question of whether a stipulated dismissal with prejudice satisfied the Rule 54/judgment requirement. It isn’t clear anyone in that case actually raised the separate question of a stipulated dismissal with prejudice involved a “material alteration of the legal relationship of the parties,” marked “by judicial imprimatur.”

    So I agree, Dennis, these two cases are going to create needless confusion unless the CAFC issues an amended opinion (in one case or the other) pointing out the differences in the issues and arguments raised by the parties.

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