D.C. Healthcare Systems, Inc. v. District of Columbia ( 2017 )

UNITED sTATES DISTRICT coURT
FoR THE DISTRICT oF CoLUMBIA F I |_ E D
JUL 2 8 2017
C|srk, U.S. D|str|ct & Bank
ru
Courts fortna D|str|ct of Co|u?nt:¥a
D.C. HEALTHCARE SYSTEMS, INC.,
Plaintiff,
v. Civil Case No. 16-1644 (RJL)
DISTRICT OF COLUMBIA, et al.,
71
MEMoRANI)UM oPINIoN & oRDER
(Juiy 112 , 2017) [Dkrs. ##45, 46]
Defendants.
On December 27, 2016, plaintiff filed an amended complaint. Among the
amendments to the complaint Was the removal of AmeriHealth Caritas Health Partnership
(“the Partnership”) as a defendant, and the addition of language designed to meet the
pleading requirements for a derivative action. On January 9, 2017, plaintiff filed a Notice
of Voluntary Dismissal “to remove any perceived ambiguity regarding [the] Partnership’s
status as a party” and confirm “that [the] Partnership is voluntarily dismissed.” [Dkt. #44].
Later that day, the Partnership moved for dismissal With prejudice, arguing that plaintiff’s
Notice Was ineffective because plaintiff “cannot voluntarily dismiss its claims against the
Partnership Without leave of court.” Def. AmeriHealth Caritas P’ship’s Mem. in Supp. of
its Mot. to Dismiss With Prejudice l (“P’ship’s Mem.”)[Dkt. #45-1]. The Partnership also
moved, by separate motion, for attorney’s fees. Def. AmeriHealth Caritas P’ship’s Mot.
for Attorney’s Fees [Dkt. #46]. Upon consideration of the pleadings, relevant law, and the
entire record herein, the Court Will DENY the Partnership’s motions.
Federal Rule of Civil Procedure 4l(a)(l)(A)(i) permits a plaintiff to “dismiss an
action without a court order by filing . . . a notice of dismissal before the opposing party
serves either an answer or a motion for summary judginent.” Such notice takes immediate
and final effect. “[O]nce the plaintiff has filed a notice of voluntary dismissal pursuant to
Rule 4l(a)(l)(A)(i), ‘there is nothing the defendant can do to fan the ashes of that action
into life and the court has no role to play.”’ Mz``m'ter v. Sun Myung Moon, 736 F. Supp. 2d
4l, 45 n.7 (D.D.C. 201()) (quoting Am. Cyanamid Co. v. McGhee, 3l7 F.2d 295, 297 (5th
Cir. 1963) (alteration omitted)); see also 9 Charles Alan Wright & Arthur R. Miller,
Federal Pmctz``ce and Procedure § 2363 (3d ed. 2008) (“[T]he notice is effective at the
moment it is filed with the clerk.”). ln this case, plaintiff filed an amended complaint
omitting the Partnership as a defendant, and later a notice of dismissal clarifying its intent
to dismiss the Partnership through the amended complaint. The Partnership has not filed
an answer or a motion for summary judgment Thus, unless an exception applies, plaintiff
has properly dismissed the Partnership and the Partnership’s motions must be denied.
The Partnership counters that plaintiff’s suit is a derivative action that “may be . . .
voluntarily dismissed . . . only with the court’s approval.” Fed. R. Civ. P. 23.l(c). But this
suit was not a derivative action at the time the Partnership was voluntarily dismissed;
plaintiff added the derivative aspect through its amended complaintl Compare Am.
l The Partnership now asserts that the original complaint was, under a “walks-like-a-ducl<” test ofits
own design, the functional equivalent ofa derivative Suit. Def. AmeriHealth Caritas P’ship’s Reply 2 [Dkt.
#50]. As even school children know, however, not everything that at first appears to move like a duck is,
in fact, a duck. See Hans Christian Andersen, The Ugly Duckll'ng, in Hans Andersen’s Fairy Tales 42 (Eric
Vredenburg ed., 1898) (“‘Oh,’ said the mother [duck], ‘that is not a turkey; how well he uses his legs, and
how upright he holds himself! He is my own child[.]”’). Here, although the original complaint does assert
claims on behalf of an entity in which the plaintiff owns shares, it is clear on the face of the complaint that
2
Compl., at 53 [Dkt. #41] with Compl., at 45 [Dkt. #1]. That document also omitted the
Partnership as a defendant, and as the Partnership acknowledges, “[c]ourts have treated
dropping a defendant from an amended complaint as a voluntary dismissal pursuant to Rule
41.” P’ship’s Mem. 2; see also, e.g., Webb v. Green Tree Servicing, LLC, No. 11-2105,
2011 WL 6141464,at*12(D.1\/1d.Dec. 9, 2011) (“[T]o be effective, withdrawal ofa claim
need not take the particular form of a document captioned ‘Notice of Voluntary
Dismissal.”’). This sequencing_dropping the Partnership when the derivative action was
brought#means that no derivative action was ever brought against the Partnership. Thus,
Rule 23.1(c) does not require plaintiff to obtain the Court’s permission to dismiss the
Partnership from this suit.
Nor does Rule 66 require plaintiff to obtain an order from the Court. That Rule
applies to “[a]n action in which a receiver has been appointed.” Fed. R. Civ. P. 66.
Although the Partnership claims that Rule 66 is triggered by plaintiff’ s naming as a
defendant a receiver appointed by Superior Court of the District of Columbia, federal
courts have long understood that this Rule is “not at all appropriate to an appointment by a
state court.” Bicknell v. Lloya’-Smith, 109 F.2d 527, 528-29 (2d Cir. 1940) (Hand, J.); See
also 12 Charles Alan Wright & Arthur R. l\/liller, Fecleral Practice ana’ Procedure § 2982
(2d ed. 1997) (“Rule 66 applies exclusively to equity receivers and only to those that are
appointed by federal courts.”). No receiver has been appointed by this Court or any other
the plaintiff sought to join that entity as an involuntary plaintiff under Rule 19, and not as a nominal
defendant in a derivative action under Rule 23.1. l\/loreover, as the Partnership itself previously argued
when it seemed advantageous, the original complaint failed to comply with the pleading requirements of
Rule 23.l(b) in that it was not a verified complaint See l\/lem. in Supp. of Defs. AmeriHealth Caritas D.C.,
Inc., AmeriHealth Caritas P’ship, and AmeriHealth Caritas Health Plan’s l\/lot. to Dismiss 37 [Dkt. #35].
3
federal court. Thus, Rule 66 does not require plaintiff to obtain the Court’s permission to
dismiss the Partnership from this suit.
Because plaintiff properly dismissed the Partnership, the Partnership’s motion to
recover attorney’s fees pursuant to 42 U.S.C. § 1988(b) must also be denied. Section
l988(b) allows only a “prevailing party” to obtain attorney’s fees. Because plaintiff
voluntarily dismissed the Partnership, the Partnership is not a prevailing party. See, e.g.,
Gutz‘enberg v. Emery, 68 F. Supp. 3d 184, 191 (D.D.C. 2014) (holding voluntarily
dismissed party not a prevailing party entitled to attorney’s fees). The dismissal “leaves
the parties as if the action had never been brought.” Estate of Grant v. Armour Pharm.
Co., No. 04-1680, 2007 WL 172316, at *3 (D.D.C. Jan. 23, 2007); accord 9 Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure § 2367 (3d ed. 2008). Thus,
the Partnership cannot obtain attorney’s fees, and counsel, frankly, should have known
better than to try and shoehorn this case into Rule 23.1(c) or Rule 66 in order to do so.
Acoordingly, it is hereby
ORDERED that Defendant AmeriHealth Caritas Partnership’s Motion to Dismiss
with Prejudice [Dkt. #45] is DENIED; and it is further
ORDERED that Defendant AmeriHealth Caritas Partnership’s Motion for
Attorney’s Fees [Dkt. #46] is DENIED.
SO ORDERED. v _ _, A
l U Uml lt.twt_h
Rl``CHARD Jz LEoN
United States District Judge