Read Corp. v. Bibco Equipment Co.

145 F.R.D. 288, 1993 U.S. Dist. LEXIS 911, 1993 WL 17438
CourtDistrict Court, D. New Hampshire
DecidedJanuary 28, 1993
DocketCiv. No. 90-550-M
StatusPublished
Cited by4 cases

This text of 145 F.R.D. 288 (Read Corp. v. Bibco Equipment Co.) is published on Counsel Stack Legal Research, covering District Court, D. New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Read Corp. v. Bibco Equipment Co., 145 F.R.D. 288, 1993 U.S. Dist. LEXIS 911, 1993 WL 17438 (D.N.H. 1993).

Opinion

ORDER

McAULIFFE, District Judge.

Background

This federal question case began on December 7, 1990, when plaintiffs Read Corporation and F.T. Read & Sons, Inc. (“Read”) filed a complaint alleging that defendant Bibco Equipment Company, Inc. (“Bibco”) infringed upon their “Portable Screening Plant with Outfeed Conveyor” patent. Plaintiffs sought injunctive and compensatory relief.

Before the Court is plaintiffs’ motion for voluntary dismissal without prejudice, under Federal Rule of Civil Procedure 41(a)(2) (document no. 34). Defendant poses a “limited objection” to the motion, insisting upon an award of substantial attorneys’ fees and costs) or, alternatively, dismissal with prejudice.

Plaintiffs seek to voluntarily dismiss their case because defendant Bibco is no longer in business. In fact, it hasn’t been active since before January 1, 1991. While its corporate status is uncertain, defendant’s counsel represent that Bibco has no present intent or capacity to resume business, and no improvement in that outlook is reasonably likely.

Read’s counsel first learned of Bibco’s defunct status at a pretrial settlement conference in September of 1992, nearly two years into the case. Read promptly filed its Motion for Voluntary Dismissal on October 2, 1992.

Plaintiffs are naturally uninterested in pursuing expensive litigation against a defendant unable to pay a judgment, and incapable of continuing infringing activity. But curiously, the near-dead if not actually dead Bibco chooses to fight on, despite the substantial expense of litigation, rather than concede a “without prejudice” dismissal to plaintiffs. Defendant Bibco is apparently willing to compromise by agreeing to a dismissal without prejudice, if plaintiffs pay their attorneys’ fees to date, an amount in excess of $130,000.

Discussion

A. Judicial Discretion Under Rule 41(a)(2)

Voluntary dismissal under Rule 41(a)(2)1 is a matter within the sound dis[290]*290cretion of a district court, Templeton v. Nedlloyd Lines, 901 F.2d 1273, 1274 (5th Cir.1990), including whether to grant dismissal with or without prejudice. Holbrook v. Anderson Corp., 130 F.R.D. 516, 519 (D.Me.1990) (citing Alamance Industries, Inc. v. Filene’s, 291 F.2d 142, 146 (1st Cir.1961), cert. denied, 368 U.S. 831, 82 S.Ct. 53, 7 L.Ed.2d 33 (1961)). Where substantial prejudice is lacking, the district court should normally exercise its discretion by granting a motion for voluntary dismissal without prejudice. See 5 Moore’s Federal Practice ¶ 40.05 n. 53, at 41-63 (2d ed.1992) (citing cases). Similarly, whether to impose costs and attorneys’ fees as a condition of voluntary dismissal under Rule 41(a)(2) lies within the court’s discretion, Puerto Rico Maritime Shipping Authority v. Leith, 668 F.2d 46, 51 (1st Cir.1981), and is not a prerequisite to granting voluntary dismissal. Stevedoring Services of Amer. v. Armilla, 889 F.2d 919, 921 (9th Cir.1989).

B. Application of Rule 41(a)(2)

In establishing the terms of dismissal under Rule 41(a)(2), a court should consider the legitimate interests of both the plaintiff and the defendant. Nance v. Jackson, 56 F.R.D. 463, 471 (D.Ala.1972). Here, defendant Bibco’s “out of business” status has rendered it completely unable to satisfy any judgment, and precludes any risk of continuing infringement. Nonetheless, it insists on dismissal conditioned upon an award of attorneys’ fees and costs in excess of $130,000, or, alternatively, dismissal with prejudice. Counsel for Bibco also represents Powerscreen International, Pic., a Northern Ireland corporation which is apparently interested in the outcome of this litigation, but is beyond the' Court’s jurisdictional reach. (Through counsel it declined the Court’s invitation to voluntarily join this case as a named party defendant.) Counsel for Bibco candidly informed the Court during argument that despite its inoperative status, Bibco has managed the expense of litigation over the past few years through the generous donations of a “third party.”

Read, on the other hand, understandably seeks a dismissal without prejudice to future litigation, in order to preserve its right to defend its patent should Bibco experience a miraculous economic recovery and resume its alleged infringing conduct.

Since Bibco’s primary concern is an award of attorneys’ fees, the Court will first assess that claim. The purpose of the reimbursement provision in Rule 41(a)(2) is to compensate a party for legal work which is rendered unnecessary by virtue of the dismissal. Belkow v. Celotex Corp., 722 F.Supp. 1547, 1553 (N.D.Ill.1989). Costs and attorneys’ fees are awarded where necessary to protect a defendant. Puerto Rico Maritime Shipping, 668 F.2d at 51. In particular, an award of attorneys’ fees is appropriate when an action is dismissed without prejudice, and subject to relitigation, in order to “reimburse defendant for expenses incurred in preparing work product that cannot be used in defending the resurrected cause of action.” Belkow, 722 F.Supp. at 1553 (citing Cauley v. Wilson, 754 F.2d 769, 772 (7th Cir.1985)).2

Here, Bibco’s litigation expenses would present a classic case of self-inflicted wounds, had Bibco actually been paying its own expenses. A brief telephone call to opposing counsel two years ago would undoubtedly have produced the same result— a swift motion for voluntary dismissal, saving both plaintiffs and Bibco (and its benefactor) substantial sums. Perhaps if Bibco had been paying its own legal fees, it may well have informed Read of its “out of business” status at an earlier date. In any event, it soon would have become apparent.

. While the normal course is to grant dismissal without prejudice on condition that the dismissing plaintiff reimburse defen[291]*291dant for costs and reasonable attorneys’ fees, see Moore’s Federal Practice 1141.06 n. 1, at 41-74, the purpose of the reimbursement provision would hardly be served by an award in this case, since defendant Bibco could have easily saved itself most, if not all costs of this litigation, and, since Bibco never actually expended its own money on attorneys’ fees. In reality it undertook no burden heavier than that of someone else’s stalking horse. In addition, the prospect of a “resurrected cause of action” against Bibco is slight, since it declares no present intent to resume operations.3

Plaintiffs brought this action in good faith to defend their patent rights. They seek voluntary dismissal not because they believe their claims are in error, or because they plan to refile in a more convenient forum, but because half their goal has been achieved (Bibco cannot infringe if it is defunct).

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Bluebook (online)
145 F.R.D. 288, 1993 U.S. Dist. LEXIS 911, 1993 WL 17438, Counsel Stack Legal Research, https://law.counselstack.com/opinion/read-corp-v-bibco-equipment-co-nhd-1993.