HelloFilters, Inc. et al v. Hoover et al

Filing 145

ORDER DISMISSING CASE: Plaintiffs' motion to voluntarily dismiss this action 136 is GRANTED, subject to the conditions set out in the Court's Order. All other pending motions are terminated. Signed by Magistrate Judge Alistair Newbern on March 31, 2021. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(AN)

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION

HELLOFILTERS, INC. et al.,
Plaintiffs,

Case No. 3:17-cv-01569

v.
Magistrate Judge Alistair E. Newbern
HARRY E. HOOVER, III et al.,
Defendants.

MEMORANDUM ORDER
Plaintiffs HelloFilters, Inc., and Mid-South Maintenance of Tennessee, Inc., have filed a
motion to dismiss this action without prejudice under Federal Rule of Civil Procedure 41(a)(2).
(Doc. No. 136.) Plaintiffs state that Defendants Amy Williams and Corey Sery are willing to
stipulate to dismissal without prejudice. (Id.) Defendants FilterX, LLC; Harry Hoover; Nanette
Hoover; and Austin Adams (the Hoover Defendants) have responded in opposition (Doc. No. 140)
and Plaintiffs have replied (Doc. No. 144). The undersigned Magistrate Judge has jurisdiction over
dispositive motions in this action by the parties’ consent under 28 U.S.C. § 636(c) and Federal
Rule of Civil Procedure 73. (Doc. No. 55.) For the reasons that follow, Plaintiffs’ motion will be
granted subject to certain conditions.
I.

Relevant Background
Plaintiffs initiated this action by filing a complaint on December 15, 2017, alleging that

former Mid-South Maintenance employees Williams and Harry Hoover, sub-contractors Adams
and Sery, and Harry Hoover’s wife, Nanette Hoover, conspired to harm Plaintiffs’ businesses after
Harry Hoover left Mid-South Maintenance and formed a competing business, FilterX. (Doc.
No. 1.) Plaintiffs claim that the defendants misappropriated Plaintiffs’ trade secrets in violation of

the Defend Trade Secrets Act, 18 U.S.C. § 1836, et seq., trespassed on Plaintiffs’ property,
converted Plaintiffs’ personal property, and diverted Plaintiffs’ clients to FilterX. (Id.) Plaintiffs
allege that these actions constituted unfair competition and tortious interference with Plaintiffs’
businesses by all defendants, as well as breaches of fiduciary duty by former employees Harry
Hoover and Williams. (Id.)
In the three years since this case was filed, the discovery period has been extended
numerous times (Doc. Nos. 38, 57, 66, 71, 112, 115, 117, 119) and has now closed. The parties
have engaged in multiple discovery dispute conferences with the Court. (Doc. No. 54, 71, 78, 84,
86, 112.) At the parties’ request, the Court has held two judicial settlement conferences, neither of
which resulted in settlement. (Doc. Nos. 43, 50, 75. 79, 87.) On June 29, 2020, Williams and Sery
filed motions for summary judgment (Doc. Nos. 120, 121), to which Plaintiffs responded (Doc.
Nos. 124, 125). On July 23, 2020, Plaintiffs moved to substitute Wilson Templet in the place of
Mid-South Maintenance under Rule 25(c) (Doc. No. 126), which the Hoover Defendants opposed
(Doc. No. 139). This matter was scheduled for a bench trial on November 17, 2020, (Doc.
No. 119), but the trial date was continued (Doc. No. 137) at the parties’ request.
On October 20, 2020, Plaintiffs moved to voluntarily dismiss the action without prejudice
under Rule 41(a)(2). (Doc. No. 136.) Plaintiffs state that Sery and Williams are willing to stipulate
to dismissal without prejudice. (Id.)
The Hoover Defendants oppose an unconditional dismissal without prejudice on grounds
that they have spent a significant amount on legal fees to defend this action, “Filter[X] has suffered
millions of dollars in lost business opportunity[,]” and they are concerned that, if Plaintiffs “refile
another suit and relitigate this case from square one[,]” the defendants will be subjected to “more
years of high cost litigation[.]” (Doc. No. 140, PageID# 1971.) The Hoover Defendants ask the

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Court to condition any dismissal without prejudice to require “that, if Plaintiffs refile this action,
or a substantially similar action or set of claims[:]” (1) “the new action be merged with this action
and that the new action commence at the procedural posture as this action at the time of
dismissal[;]” (2) “Plaintiffs be required [to] supplement all responses to every defendant’s
discovery requests in this action immediately upon refiling this action or any substantially similar
action or set of claims[;]” (3) “Plaintiffs be required to preserve all evidence in their possession
that is relevant to any claim or defense stated in this action, whether or not such evidence is subject
to a discovery request, and continue to preserve such evidence until the expiration of all statutes
of limitations or repose that apply to the claims stated in this action[;]” and (4) “Plaintiffs be
required to pay all court costs of this action before refiling any new action against the Hoover
Defendants.” (Id. at PageID# 1971–72.) Plaintiffs reply that they have been diligent in prosecuting
this case and that the Hoover Defendants have been responsible for all delays. (Doc. No. 144.)
Plaintiffs also argue that the Hoover Defendants’ requested conditions are not warranted because
the Hoover Defendants have not shown that an unconditional dismissal without prejudice would
cause the Hoover Defendants unfair treatment or plain legal prejudice. (Id.)
II.

Legal Standard
Federal Rule of Civil Procedure 41 provides that “an action may be dismissed at the
plaintiff’s request only by court order, on terms that the court considers proper.” Fed. R. Civ.
P. 41(a)(2). Whether to grant a dismissal under Rule 41(a)(2) is within the sound discretion of the
district court. Grover by Grover v. Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir. 1994). Generally, “a
district court should grant a motion for voluntary dismissal unless a defendant can show that it will
suffer some plain legal prejudice as a result.” Waller v. Fin. Corp. of Am., 828 F.2d 579, 583 (9th
Cir. 1987). “Plain legal prejudice” does not result simply because the defendant faces the prospect
of defending a second lawsuit, see Grover, 33 F.3d at 718, nor does it result simply because the
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plaintiff may gain some tactical advantage in a future lawsuit, see Rosenthal v.
Bridgestone/Firestone, Inc., 217 F. App’x 498, 502 (6th Cir. 2007).
In Grover, the Sixth Circuit identified four factors that a court should consider in
determining whether to grant a voluntary dismissal: (1) the amount of time and effort the defendant
has incurred in preparing for trial; (2) any lack of diligence on the part of the plaintiff in
prosecuting the action; (3) the plaintiff’s failure to explain the need for dismissal; and (4) whether
the defendant has filed a motion for summary judgment. Grover, 33 F.3d at 718. Importantly, the
court may condition a Rule 41(a)(2) dismissal without prejudice on “whatever terms the district
court deems necessary to offset the prejudice the defendant may suffer from a dismissal without
prejudice. Bridgeport Music, Inc. v. Universal-MCA Music Publ’g, Inc., 583 F.3d 948, 954 (6th
Cir. 2009).
III.

Analysis
The second and fourth Grover factors counsel in favor of granting Plaintiffs’ motion for
voluntary dismissal without prejudice, as the record does not reflect a lack of diligence in
prosecuting this action and the Hoover Defendants have not filed any motions for summary

judgment. Analysis of the first and third Grover factors, however, suggests that conditions are
needed to prevent duplication of the extensive effort and resources that have already been
expended in this case. See Bridgeport, 585 F.3d at 954. This action has been pending for over three
years, during which time the parties have engaged in active—and often contentious—discovery,
as the docket reflects. (Doc Nos. 52–54, 57, 69–71, 73–74, 78, 80–82, 84, 86, 88–92, 95–96, 112,
114–115, 117–119.) All parties have represented to the Court that they have been working
diligently to prepare for trial. (Doc. No. 131.) Plaintiffs moved for voluntary dismissal less than a
month before trial was scheduled to begin. (Doc. No. 136.)

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To limit potential prejudice and duplication of the parties’ efforts in this case, dismissal
will be subject to the condition that any related action filed by Plaintiffs will be merged with this
action and will commence at the same procedural posture of this action at the time of dismissal. If
the defendants wish to seek additional discovery or repayment of costs after a related future action
is filed, they may do so at that time by filing a motion in accordance with the Federal Rules of
Civil Procedure and this Court’s Local Rules.
While the Hoover Defendants ask the Court to order Plaintiffs to preserve any relevant
evidence in their possession until the expiration of the relevant statutes of limitations or repose,
such a condition is not necessary. All parties already bear “a duty to preserve relevant
information,” because they “‘ha[ve] notice that the evidence is relevant’” to potential future
litigation. John B. v. Goetz, 531 F.3d 448, 459 (6th Cir. 2008) (quoting Fujitsu Ltd. V. Fed. Express
Corp., 247 F.3d 423, 436 (2d Cir. 2001)); see also Silvestri v. Gen. Motors Corp., 271 F.3d 583,
591 (4th Cir. 2001) (“The duty to preserve material evidence arises not only during litigation but
also extends to that period before the litigation when a party reasonably should know that the
evidence may be relevant to anticipated litigation.”). Because dismissal without prejudice enables
Plaintiffs to refile the claims in this action, all parties are on notice of potential future litigation
and thus owe a duty to preserve potential evidence in their custody and control until the opportunity
for future litigation has passed.

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IV.

Conclusion
For the foregoing reasons, Plaintiffs’ motion to dismiss this action without prejudice under
Rule 41(a)(2) (Doc. No. 136) is GRANTED, subject to the condition that any future related action
filed by Plaintiffs will be merged with this action and will commence at the same procedural
posture as this action at the time of dismissal.
This action is DISMISSED WITHOUT PREJUDICE as set out in this Order. All pending

motions (Doc. Nos. 120, 121, 126 138) are TERMINATED.
It is so ORDERED.

____________________________________
ALISTAIR E. NEWBERN
United States Magistrate Judge

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