In Re: Bath Kitche ( 2008 )

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
7-28-2008
In Re: Bath Kitche
Precedential or Non-Precedential: Precedential
Docket No. 07-1520
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 07-1520
IN RE: BATH AND KITCHEN FIXTURES
ANTITRUST LITIGATION
SAMUEL GORDON ARCHITECTS, P.C.;
WATERTOWN PLUMBING AND HEATING
SUPPLY COMPANY, INC.;
REPUBLIC PLUMBING SUPPLY COMPANY, INC.;
THAMES VALLEY WINNELSON COMPANY;
EAST COAST PETROLEUM;
JERMOR PLUMBING & HEATING, INC.;
COLONIAL SUPPLY CORPORATION;
BIS BIS IMPORTS BOSTON, INC.;
SCHAEFFER PLUMBING SUPPLY COMPANY, INC.;
SECURITY SUPPLY COMPANY;
DONATUCCI KITCHENS & APPLIANCES;
G.J. OLSON ARCHITECTS;
TRUMBULL INDUSTRIES, INC.;
OWNER SUPPLIED, LLC;
NORTH SHORE FAUCETS, INC.;
THE PLUMBING SOURCE, INC.;
NEENAN COMPANY, INC.,
Appellants
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
D.C. Civil Action Nos. 05-cv-1232, 05-cv-1065,
05-cv-1075, 05-cv-1044, 05-cv-0869, 05-cv-0801,
05-cv-0774, 05-cv-0689, 05-cv-1861, 05-cv-0678,
05-cv-0677, 05-cv-0626, 05-cv-0585, 05-cv-0535,
05-cv-0565, 05-cv-0537, 05-cv-0510
(Honorable Mary A. McLaughlin)
Argued January 28, 2008
Before: SCIRICA, Chief Judge,
RENDELL, Circuit Judge, and THOMPSON, District Judge *
(Filed : July 28, 2008)
ROBERT J. LaROCCA, ESQUIRE (ARGUED)
Kohn, Swift & Graf
One South Broad Street, Suite 2100
Philadelphia, Pennsylvania 19107
*
The Honorable Anne E. Thompson, United States District
Judge for the District of New Jersey, sitting by designation.
2
STEVEN A. ASHER, ESQUIRE
Weinstein, Kitchenoff & Asher
1845 Walnut Street, Suite 1100
Philadelphia, Pennsylvania 19103
GERALD J. RODOS, ESQUIRE
Barrack, Rodos & Bacine
3300 Two Commerce Square
2001 Market Street
Philadelphia, Pennsylvania 19103
WARREN RUBIN, ESQUIRE
Law Offices of Bernard M. Gross
John Wanamaker Building, Suite 450
Juniper & Market Streets
Philadelphia, Pennsylvania 19107
Attorneys for Appellants
JOSEPH R. BAKER, ESQUIRE (ARGUED)
RICHARD J. FAVRETTO, ESQUIRE
MARK W. RYAN, ESQUIRE
Mayer Brown
1909 K Street, N.W.
Washington, D.C. 20006
BARBARA W. MATHER, ESQUIRE
Pepper Hamilton
3000 Two Logan Square
3
18th & Arch Streets
Philadelphia, Pennsylvania 19103
Attorneys for Appellee,
Trane Inc.
ERIC J. McCARTHY, ESQUIRE
MARGARET M. ZWISLER, ESQUIRE
Latham & Watkins
555 11th Street, N.W., Suite 1000
Washington, D.C. 20004
Attorneys for Appellee,
Masco Corporation
STEPHEN W. ARMSTRONG, ESQUIRE
PETER BRESLAUER, ESQUIRE
Montgomery, McCracken, Walker & Rhoads
123 South Broad Street, 24th Floor
Philadelphia, Pennsylvania 19109
CHARLES G. CURTIS, JR., ESQUIRE
Heller Ehrman
One East Main Street, Suite 201
Madison, Wisconsin 53703-5118
ROBERT A. ROSENFELD, ESQUIRE
Heller Ehrman
333 Bush Street, Suite 3320
San Francisco, California 94104
4
Attorneys for Appellee,
Kohler Company
ADAM K. LEVIN, ESQUIRE
MITCHELL E. ZAMOFF, ESQUIRE
Hogan & Hartson
555 13th Street, N.W.
Washington, D.C. 20004
Attorneys for Appellee,
Eljer Plumbingware
OPINION OF THE COURT
SCIRICA, Chief Judge.
Plaintiffs appeal the District Court’s order striking as
untimely their notice of voluntary dismissal filed under Fed. R.
Civ. P. 41(a)(1)(A)(i). We will vacate and remand with
instructions to enter an order dismissing the complaint without
prejudice.
I.
Purchasers of bath and kitchen plumbing fixtures filed
putative class action complaints against manufacturers, alleging
a price-fixing conspiracy in violation of Section 1 of the
Sherman Act, 15 U.S.C. § 1. Seventeen cases were consolidated
5
in the District Court. Instead of filing an answer, defendants
moved to dismiss the consolidated and amended complaint for
failure to state a claim under Fed. R. Civ. P. 12(b)(6).1
On July 19, 2006, the District Court issued a
memorandum opinion finding plaintiffs needed to plead more
facts to meet the notice standard of Fed. R. Civ. P. 8(a)(2). The
memorandum stated in relevant part:
[T]he Court will not dismiss the consolidated and
amended complaint with prejudice at this time as
the defendants request. At oral argument, the
Court asked counsel for the plaintiffs if there were
any supplemental facts that could be pled to
address the defendants’ arguments that the
consolidated and amended complaint did not
provide sufficient notice of the grounds upon
which the conspiracy claim was based. Counsel
implied that they might possess more information
than was alleged in the pleadings, but did not
supplement the complaint. . . . The Court,
nevertheless, will allow the plaintiffs an
opportunity to amend their pleadings. . . . An
1
The four defendants divided into two groups, each of which
separately filed a motion to dismiss. There is no relevant
difference between the motions for the purpose of this appeal.
6
appropriate Order follows.2
The window for amendment was due to close on August 18,
2006, but on August 17, 2006, the District Court granted
plaintiffs’ unopposed motion for an extension through
September 1, 2006. On August 30, 2006, instead of amending
the complaint, plaintiffs filed a notice under Fed. R. Civ. P.
41(a)(1)(A)(i), voluntarily dismissing the action (the “Notice”).3
With one exception, not applicable here, a timely notice of
voluntary dismissal is without prejudice. Fed. R. Civ. P.
41(a)(1)(B). Defendants, seeking instead a dismissal with
prejudice, filed a “Motion for Entry of Judgment in Accordance
with the Court’s Memorandum and Order of July 19, 2006,”
contending plaintiffs could no longer voluntarily dismiss by
notice because the District Court already had granted
defendants’ motion to dismiss on July 19, 2006. Defendants
asked the District Court to strike the Notice and enter an order
of dismissal with prejudice. Plaintiffs opposed the motion. On
2
Although the July 19, 2006, order indicates the motions to
dismiss are “granted,” it also states the “Court will not dismiss
the consolidated and amended complaint at this time, but will
allow the plaintiffs thirty (30) days to amend their complaint.”
The District Court’s subsequent letter to counsel and January 24,
2007, order acknowledged the apparent ambiguity in the July 19,
2006, order as to whether the complaint had been dismissed.
3
The docket notes: “Date Terminated: 08/30/2006.”
7
January 24, 2007, the District Court struck the Notice as
untimely filed and entered an order dismissing the complaint.4
This appeal followed.5
II.
Fed. R. Civ. P. 41(a)(1)6 provides:
(A) Without a Court Order. Subject to Rules
4
Although the January 24, 2007, order does not state the
complaint is dismissed “with prejudice,” defendants do not
dispute the finality of that order. See Shane v. Fauver, 213 F.3d
113, 115 (3d Cir. 2000) (“Because the order did not specify that
the dismissal was without prejudice, under Fed. R. Civ. P. 41(b)
the dismissal ‘operates as an adjudication upon the merits.’”).
There is some confusion in the record as to whether the January
24, 2007, order pertained to all the parties named in the notice
of appeal. Because the order appears to have disposed of all the
consolidated cases, we find that all plaintiffs are proper parties
to this appeal. Defendants do not contend otherwise.
5
The District Court had federal question jurisdiction under 28
U.S.C. § 1331. We have jurisdiction under 28 U.S.C. § 1291 to
review the District Court’s order striking the Notice and
dismissing the complaint. Our review is plenary. Manze v.
State Farm Ins. Co., 817 F.2d 1062, 1064 (3d Cir. 1987).
6
Rule 41 received stylistic revisions, immaterial to this
appeal, effective December 1, 2007.
8
23(e), 23.1(c), 23.2, and 66 and any applicable
federal statute, the 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. But 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.
Three key aspects of Rule 41(a)(1)(A)(i) control our
analysis. First, a filing under the Rule is a notice, not a motion.
Its effect is automatic: the defendant does not file a response,
and no order of the district court is needed to end the action.7
Second, the notice results in a dismissal without prejudice
(unless it states otherwise), as long as the plaintiff has never
dismissed an action based on or including the same claim in a
prior case. Third, the defendant has only two options for cutting
off the plaintiff’s right to end the case by notice: serving on the
plaintiff an answer or a motion for summary judgment.
Here, it is undisputed that on the date plaintiffs filed the
7
When the notice is filed, the Clerk makes an appropriate
entry on the docket noting the termination of the action.
9
Notice: (1) plaintiffs had never before dismissed an action based
on or including the same claim; and (2) defendants had not
served an answer or a motion for summary judgment.
Accordingly, the parties agree a timely Notice would have
resulted in automatic dismissal without prejudice. The
timeliness of the Notice depends on whether the “action” to
which the Rule refers remained pending when the Notice was
filed.
The Rule “affixes a bright-line test to limit the right of
dismissal to the early stages of litigation,” Manze, 817 F.2d at
1065, which “simplifies the court’s task by telling it whether a
suit has reached the point of no return. If the defendant has
served either an answer or a summary judgment motion it has;
if the defendant has served neither, it has not.” Id. (quoting
Winterland Concessions Co. v. Smith, 706 F.2d 793, 795 (7th
Cir. 1983)). Up to the “point of no return,” dismissal is
automatic and immediate – the right of a plaintiff is
“unfettered,” Carter v. United States, 547 F.2d 258, 259 (5th
Cir. 1977). A timely notice of voluntary dismissal invites no
response from the district court and permits no interference by
it. See Marex Titanic, Inc. v. Wrecked & Abandoned Vessel, 2
F.3d 544, 545, 547–48 (4th Cir. 1993) (district court may not
vacate a timely filed notice of dismissal); Am. Cyanamid Co. v.
McGhee, 317 F.2d 295, 297 (5th Cir. 1963) (“[The notice] itself
closes the file. There is nothing the defendant can do to fan the
ashes of that action into life and the court has no role to play.
This is a matter of right running to the plaintiff and may not be
10
extinguished or circumscribed by adversary or court.”). A
proper notice deprives the district court of jurisdiction to decide
the merits of the case.8 See Manze, 817 F.2d at 1065–66
(district court may not decide defendant’s motion to dismiss
after plaintiff’s effective Rule 41(a)(1)(A)(i) notice); 8 James
Wm. Moore et al., Moore’s Federal Practice § 41.33[6][e] (3d
ed. 2008) (“A defendant’s motion for entry of a final judgment
under Rule 54(b) should be denied if the action has already been
dismissed by notice.”); 9 Charles Alan Wright & Arthur R.
Miller, Federal Practice & Procedure: Civ. 3d § 2367, at 559–61
(3d ed. 2008) (“After the dismissal, the action no longer is
pending in the district court and no further proceedings in the
action are proper.”).
Because a motion to dismiss under Fed. R. Civ. P.
12(b)(6) is neither an answer nor a motion for summary
judgment, its filing generally does not cut off a plaintiff’s right
to dismiss by notice. Manze, 817 F.2d at 1066. Only when a
motion filed under Fed. R. Civ. P. 12(b)(6) is converted by the
district court into a motion for summary judgment does it bar
8
A district court retains jurisdiction to decide “collateral”
issues – such as sanctions, costs, and attorneys’ fees – after a
plaintiff dismisses an action by notice. See Cooter & Gell v.
Hartmarx Corp., 496 U.S. 384, 396–98 (1990).
11
voluntary dismissal.9 Id. Here, defendants do not contend their
motion was converted to a motion for summary judgment, or
that it should be treated as an answer.
In Manze, we rejected the defendant’s argument that its
motion to dismiss under Fed. R. Civ. P. 12(b)(6) was
“equivalent” to a motion for summary judgment that should
have barred the plaintiff’s dismissal by notice. Id. We
acknowledged the defendant’s preferred approach had some
“theoretical appeal” because motions to dismiss may impose
much labor and expense on parties and judges – sometimes they
are as time-consuming as motions for summary judgment. Id.
at 1065 (citing Tele-Views News Co. v. S.R.B. TV Publ’g Co., 28
F.R.D. 303, 307–08 (E.D. Pa. 1961)). Moreover, Rule 41 may
permit a strategic advantage for a plaintiff: if prospects for
prevailing on the merits appear dim, the plaintiff can obtain a
dismissal without prejudice after imposing high costs on
defendants and judges. But the drafters of Rule 41 provided for
only two responses – answer and motion for summary judgment
– as “point[s] of no return.” Id. (quoting Winterland
Concessions, 706 F.2d at 795). It would be improper to graft a
9
See Fed. R. Civ. P. 12(d) (“If, on a motion under Rule
12(b)(6) or 12(c), matters outside the pleadings are presented to
and not excluded by the court, the motion must be treated as one
for summary judgment under Rule 56. All parties must be given
a reasonable opportunity to present all the material that is
pertinent to the motion.”).
12
new category onto the literal text of the Rule. Id.
As in Manze, we apply the literal terms of Rule 41.10
10
The consequences of following the Rule have sometimes
appeared substantially unfair or wasteful, especially when the
district court already has delved into the merits, warranting a
departure from the literal text. In Harvey Aluminum, Inc. v. Am.
Cyanamid Co., 203 F.2d 105 (2d Cir. 1953), the plaintiff sued
for specific performance of an asset purchase contract and
obtained an ex parte temporary restraining order to prevent the
defendant from selling the disputed property to a third party. Id.
at 107. The district court held an extensive hearing (420 pages
transcribed) and denied the plaintiff’s motion for a preliminary
injunction. Id. Before the defendant had filed an answer or
motion for summary judgment, the plaintiff filed a notice of
dismissal under Rule 41(a)(1). Id. The defendant moved to
strike the notice, but the district court applied the Rule by its
literal terms and found the notice effective. Id. The Court of
Appeals for the Second Circuit reversed, holding literal
compliance with the Rule’s text unwarranted on the facts. Id. at
107–08. The district court had conducted a lengthy hearing on
the merits in denying the preliminary injunction, and it had
opined that the prospects for the plaintiff to succeed on the
merits appeared “remote if not completely nil.” Id. at 107. In
these circumstances, a “literal application” of Rule 41(a)(1)
“would not be in accord with its essential purpose of preventing
arbitrary dismissals after an advanced stage of a suit has been
13
Furthermore, we reject defendants’ contention that the District
Court’s granting plaintiffs the right to amend, and an extension
of time within which to do so, limited or nullified the option of
dismissing available to plaintiffs under the Rule. Here, the
Notice was timely because defendants had filed neither an
answer nor a motion for summary judgment as of the date of the
reached.” Id. at 108.
Harvey has been criticized for blurring the Rule’s
“bright-line” timing test, and it has been distinguished when
appropriate. See Universidad Cent. Del Caribe, Inc. v. Liaison
Comm. on Med. Educ., 760 F.2d 14, 18 (1st Cir. 1985) (“Harvey
Aluminum has not been well received.”); see also Marex Titanic,
2 F.3d at 547; Hamilton v. Shearson-Lehman Am. Express, Inc.,
813 F.2d 1532, 1534 (9th Cir. 1987); Winterland Concessions,
706 F.2d at 796; Pilot Freight Carriers, Inc. v. Int’l Bhd. of
Teamsters, 506 F.2d 914, 916 (5th Cir. 1975); D.C. Elecs., Inc.
v. Nartron Corp., 511 F.2d 294, 297 (6th Cir. 1975). The
Second Circuit has itself limited Harvey Aluminum to its
“extreme” circumstances. Thorp v. Scarne, 599 F.2d 1169,
1176 (2d Cir. 1979). We distinguished Harvey Aluminum in
Manze. 817 F.2d at 1066 n.4. Whatever vitality the case
retained in the Second Circuit, “its reasoning could not be
persuasive [in Manze] since the district court proceedings had
not advanced so far” as they had in Harvey Aluminum. Id. In
Manze, as of the date the plaintiff dismissed by notice, no
extensive hearing had been held and the district court had taken
no position on the merits of the case.
14
Notice, and because the District Court’s July 19, 2006, order had
not clearly put an end to the “action” to which Rule 41 refers.
III.
For the foregoing reasons, we will vacate the January 24,
2007, order of the District Court and remand with instructions
to enter an order dismissing the complaint without prejudice.
15