New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

Commercial Litigation and Arbitration

New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
Commercial Litigation and Arbitration
« Back to Complex Lit Blog

Rule 41(a) and 41(d) 2-Dismissal Rules Don’t Apply If First Dismissal Is Involuntary — Inherent Power Sanctions Cannot Be Imposed Absent Notice They Are Under Consideration — “Fleeting References” in Motion Don’t Satisfy Due Process

Download PDF

Platinum Logistics, Inc. v. Platinum Cargo Logistics, Inc., 2017 WL 7689644 (9th Cir. 2017):

MEMORANDUM*

In this case, Platinum Logistics, Inc. brought its third suit against Platinum Cargo Logistics, Inc.. After Platinum Logistics filed the present action, Platinum Cargo requested and the district court awarded the costs (including attorney’s fees) that Platinum Cargo accrued in the second action. When Platinum Logistics failed to pay the award, the district court dismissed this third action with prejudice. Platinum Logistics now challenges both of these decisions. We have jurisdiction pursuant to 28 U.S.C. § 1291. We vacate and remand.

1. The district court awarded costs and attorney’s fees (accrued in the second action) pursuant to Federal Rule of Civil Procedure 41(d). Rule 41(d) provides that

[i]f a plaintiff who previously dismissed an action in any court files an action based on or including the same claim against the same defendant, the court: (1) may order the plaintiff to pay all or part of the costs of that previous action; and (2) may stay the proceedings until the plaintiff has complied.

By the plain language of the rule, a court may award costs only if the plaintiff voluntarily dismissed the prior action. Here, the second action was involuntarily dismissed without prejudice. Thus, the district court could not award costs accrued in the second action pursuant to Rule 41(d).

2. The district court failed to properly invoke its inherent power to award the costs and attorney’s fees accrued in the second action. Under our precedent, “the district court has the inherent authority to impose sanctions for bad faith, which includes a broad range of willful improper conduct.” Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001). However, when a court invokes its inherent power to impose sanctions, it triggers due process concerns. Roadway Exp., Inc. v. Piper, 447 U.S. 752, 767 n.14 (1980). Thus, Platinum Logistics was “entitled to notice, an opportunity to be heard and a finding of bad faith” prior to the district court awarding costs and attorney’s fees to Platinum Cargo under its inherent authority. See F.J. Hanshaw Enters., Inc. v. Emerald River Dev., Inc., 244 F.3d 1128, 1143 (9th Cir. 2001).

Platinum Logistics did not receive adequate notice that the court was considering inherent power sanctions nor did the court conduct a hearing on the matter. Platinum Cargo made fleeting references in its motion to the district court’s “inherent power,” but presented no argument on that issue. In its order, the district court noted that, as an alternative to Rule 41(d), it found “that [Platinum Logistic’s] conduct and tactics warrant payment of [Platinum Cargo’s] costs and fees ... as a sanction pursuant to the Court’s inherent power,” but also noted that Platinum Cargo “did not make such an argument.” Thus, Platinum Logistics did not receive adequate due process.

3. Platinum Cargo’s argument that the “two-dismissal” rule in Federal Rule of Civil Procedure 41(a) applies to the facts of this case lacks merit. Rule 41(a)(1)(A) provides that “the plaintiff may dismiss an action without a court order by filing ... a notice of dismissal ... or a stipulation of dismissal.” In addition, “if the plaintiff previously dismissed any federal or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits.” Fed. R. Civ. P. 41(a)(1)(B) (emphasis added). Here, Platinum Logistics did not file a notice of dismissal in the second action. Thus, under the plain meaning of the rule, the dismissal of the second action was not an adjudication on the merits and the “two-dismissal” rule does not apply.

4. The district court dismissed the present action with prejudice when Platinum Logistics failed to pay the costs and fees awarded to Platinum Cargo. Because we vacate the award of costs and fees, we also vacate the district court’s order dismissing the present action.

 

VACATED and REMANDED

 

The parties shall bear their own costs on appeal.

 

Share this article:

Facebook
Twitter
LinkedIn
Email

Recent Posts

RICO Causation: Parents of Children with Disabilities Deprived In-Person Education and Services during the Pandemic Were Not Causally Injured by Teachers’ False Assurances to Federal Authorities That IDEA-Complaint Policies Were in Place, Which Caused Funds to Issue But Not to the Benefit of the Disabled Children — Damages Too Indirect — Proper Plaintiff Is U.S. Government — Private Injunctive Relief Under RICO Uncertain in Third Circuit

Sanctions: Rule 37(b)(2) Dismissal — Sixth Circuit Factors

Inherent Power Sanctions — Extrajudicial Misconduct: Sanctions Power Extends to Conduct Intended to Sabotage Court’s Ability to Adjudicate the Case Before It, Here, By Commencing State Court Actions Seeking to Enjoin the Federal Plaintiffs from Proceeding with Their Federal Litigation — Sanctions Fee Awards: The Factors Used For Calculating A Fee Award To A Prevailing Party Do Not Govern — Under Goodyear, the Relevant Inquiry Is Whether There Is A Sufficient Causal Link Between The Sanctioned Misconduct And The Fees Awarded

RICO: Members of Association-in-Fact Enterprise Must Act with a Common Purpose—Mere Allegation That Various Defendants Agreed at Different Times to Engage in Various Fraudulent Schemes Does Not Plausibly Support the Essential Inference, That They Acted with s Sufficiently Common Purpose

RICO Causation: (1) State’s Misrepresentation to Federal Government That It Was Providing Plaintiffs with Mandated Special Education Did Not Cause Plaintiffs’ Injury Because The Failure to Provide The Education Was Not Caused by the Fraud on the Federal Government — (2) The Three Factors for Assessing RICO Causation — (3) Limits of the Second Circuit’s Decision in Alix v. McKinsey That Causation Can Be Established Where A Fraud On The Judiciary “Or Other Governmental Entity” Resulted In A Resource Going To Someone Less Deserving

Rule 41(b): Five Factors to Be Weighed in Deciding Whether Dismissal Is Appropriate (Second Circuit) — Is A Finding of Bad Faith or Fault Required if Dismissal Is Without Prejudice? — Undecided If Truly Without Prejudice But It Is Required If the Without Prejudice Dismissal Will Act as a Dismissal on the Merits (Here, Because of the Statute of Limitations) — Failure To Consider A Lesser Sanction Than Dismissal Is Generally An Abuse Of Discretion

Spoliation Sanctions/Mootness: Stipulation Resolving “All Pending Discovery Disputes,” Which Are Enumerated, Does Not Moot Subsequent Sanctions Motion for ESI Spoliation — Postjudgment Sanctions Order Is Appealable When District Court Has Finally Disposed of Both Liability and Amount

Rule 37 Default Judgment Sanction: (1) Default Judgment Appropriate Only As a Last Resort, When Less Drastic Sanctions Would Not Ensure Compliance with the Court’s Orders — (2) Default Judgment Sanction Requires Willful or Bad Faith Failure to Obey Discovery Order — (3) Fugitive Defendant’s Failure to Appear at Court-Ordered, Remote Deposition Despite Court Warning That Sanctions Could Follow Disobedience Warrants Default Judgment — (4) District Court Afforded Wide Discretion in Interpreting Its Own Orders — (5) Filing a Notice of Appeal from a Non-Appealable Order (Here, a Discovery Order) Does Not Deprive the District Court of Jurisdiction over the Case

RICO and Injunctions: (1) State Court Actions Designed to Perpetuate and Monetize a RICO Violation Are Enjoinable under RICO, Even Though They Are Not Themselves Alleged to Be Predicate Acts [Note: Noerr Pennington Applies in RICO Actions] — (2) Although Civil RICO’s Text and Legislative History Fail to Reveal Any Intent to Override the Provisions of the Federal Arbitration Act, Arbitrations Are Enjoinable Under the “Effective Vindication” Doctrine Where They Operate As a Prospective Waiver of a Party’s Right to Pursue Statutory RICO Remedies — (3) Arbitration Findings May Be Given Collateral Estoppel Effect in a Civil RICO Action — (4) Injunction of Non-Corrupt State Court Litigations That Furthers a RICO Violation Are Enjoinable Under the Anti-Injunction Act’s “Expressly Authorized” Exception — (5) “The Irreparable Harm Requirement Is The Single Most Important Prerequisite For The Issuance Of A Preliminary Injunction” (Good Quote) — (6) When Injunction Is Based on “Serious Questions on the Merits” Rather Than “Likelihood of Success,” Court May Rely on Unverified Pleadings and Attached Exhibits to Assess the Merits, Unless the Opponent Has Raised Substantial Questions (Here, the Opponent Failed to Request an Evidentiary Hearing) — (7) Whether Amended Pleading Moots An Appeal Turns on Whether It Materially Changes the Substantive Basis for the Appeal — (8) Meaning of “In That” (“Used To Introduce A Statement That Explains Or Gives More Specific Information” About A Prior Statement)

RICO: Fraudulent Concealment Must Prevent Discovery of the Injury to Toll Statute of Limitations

Archives
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

New York Office

© 2024 Joseph Hage Aaronson LLC  
Disclaimer | Attorney Advertising Notice | Legal Notice