Freeny et al v Apple Inc
Filing
128
MEMORANDUM OPINION AND ORDER. Signed by Judge William C. Bryson on 10/1/2014. (ch, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
CHARLES C. FREENY III, BRYAN E.
FREENY, and JAMES P. FREENY,
Plaintiffs,
v.
APPLE INC.,
Defendant.
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CASE NO. 2:13-CV-00361-WCB
MEMORANDUM OPINION AND ORDER
Before the Court is the Plaintiffs’ Motion to Dismiss Vizio, Inc. Without Prejudice (Dkt.
No. 120). The Court DENIES the motion.
Defendant Vizio, Inc., opposes the motion to dismiss on the ground that it proposes that
the dismissal be without prejudice. In Vizio’s view, any dismissal should be conditioned on the
dismissal being with prejudice or upon the plaintiffs’ payment of Vizio’s fees and expenses in
this litigation.
Rule 41(a)(2) of the Federal Rules of Civil Procedure provides that after the defendant
has filed an answer or a summary judgment motion, a plaintiff may dismiss an action only “by
court order, on terms that the court considers proper.” The question whether to permit dismissal
and under what terms is subject to the discretion of the district court. See Elbaor v. Tripath
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Imaging, Inc., 279 F.3d 314, 318 (5th Cir. 2002); Manshack v. Sw. Electric Power Co., 915 F.2d
172, 174 (5th Cir. 1990).
Courts, including the Fifth Circuit, have generally taken the position that the plaintiff’s
request to dismiss an action without prejudice “should be allowed unless the defendant will
suffer some plain legal prejudice other than the mere presence of a second lawsuit.” 9 Charles
Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2364, at 475-76 (2008); see
Manshack, 915 F.2d at 174. The Fifth Circuit has recognized that such prejudice occurs, inter
alia, “when a party proposes to dismiss the case at a late stage of pretrial proceedings.” In re
FEMA Trailer Formaldahyde Prods. Liability Litig., 628 F.3d 157, 162 (5th Cir. 2010). In such
a case, “[w]here the plaintiff does not seek dismissal until a late stage and the defendants have
exerted significant time and effort, the district court may, in its discretion, refuse to grant a
voluntary dismissal.” Hartford Accident & Indemnity Co. v. Costa Lines Cargo Servs., Inc., 903
F.2d 352, 360 (5th Cir. 1990) (citing cases); see also United States ex rel. Doe v. Dow Chem.
Co., 343 F.3d 325, 330 (5th Cir. 2003); Davis v. Huskipower Outdoor Equip. Corp., 936 F.2d
193, 199 (5th Cir. 1991).
In cases involving late-stage voluntary dismissals, the Fifth Circuit has repeatedly held
that the district court did not abuse its discretion in denying leave to dismiss without prejudice in
various situations roughly comparable to the situation in this case. In Dow Chemical, for
example, the case had been pending for nine months when the plaintiff sought to dismiss without
prejudice. Both sides, the court noted, “had filed responsive pleadings in addition to motions to
compel” and other motions in the case. 343 F.3d at 330. In Davis, the court upheld the district
court’s denial of a voluntary dismissal when the case had been pending before the district court
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for more than a year, and the parties had filed pleadings, attended conferences, and submitted
memoranda. 936 F.2d at 199. In Hartford Accident & Indemnity, the court again upheld the
district court refusal to grant the plaintiff’s motion to dismiss without prejudice, where the
plaintiff moved to dismiss the action nearly ten months after the case had been pending in the
district court, and where hearings had been held on various issues and significant discovery had
been conducted. 903 F.2d at 361. And in the three cases cited by the court in Hartford Accident
& Indemnity, the appellate courts held that dismissal without prejudice was inappropriate where
the cases had been pending for between a year and a year and a half when the motion to dismiss
was made. Id. at 360-61. Indeed, in one of the cases, the appellate court held that the district
court abused its discretion by granting the plaintiff’s motion to dismiss without prejudice where
the action had been pending for 18 months and extensive litigation had been conducted. Id. at
361, citing Williams v. Ford Motor Credit Co., 627 F.2d 158, 159-60 (8th Cir. 1980).
The instant case is comparable to those. It has been pending for approximately a year
and a half, and substantial pretrial proceedings have taken place, including discovery, the
briefing and argument of disputes over discovery, and the briefing and preparation for a hearing
on claim construction. While this case was not on the verge of trial at the time the plaintiffs filed
their motion to dismiss, neither was it at the early stages of pretrial proceedings. Vizio contends
that it has expended significant resources in defending this case to date, and based on the Court’s
observations, the Court has no reason to doubt that representation. In light of the caselaw
characterizing voluntary dismissals as prejudicial to the defendant when they occur after the
defendant has invested significant time and effort in the case, the Court concludes that it would
be prejudicial to Vizio to grant the plaintiffs’ motion to dismiss without prejudice.
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Significantly, the plaintiffs have not offered any explanation of why they wish the
dismissal to be without prejudice. They offer no reason to believe that there is any likelihood
that they will refile this action at some time in the future; all parties seem to agree that Vizio no
longer sells the product that was the subject of this lawsuit, and the plaintiffs have acknowledged
that the number of sales Vizio made was not sufficient to justify the expense of continuing to
pursue this action.
The absence of a satisfactory explanation for why a dismissal should be without prejudice
has been identified in numerous cases as an important factor bearing on the court’s decision
whether to grant a motion to dismiss. See, e.g., Phillips USA, Inc. v. Allflex USA, Inc., 77 F.3d
354, 358 (10th Cir. 1996); Grover v. Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir. 1994); Zagano v.
Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990); Paulucci v. City of Duluth, 826 F.2d 780, 783
(8th Cir. 1987); Pace v. S. Express Co., 409 F.2d 331, 334 (7th Cir. 1969); see generally Federal
Practice & Procedure § 2364, at 505-12 (collecting additional cases). In accordance with those
cited authorities, the Court considers that factor to weigh against granting the plaintiffs’ motion
to dismiss the action without prejudice.
Although the plaintiffs claim that Vizio has insisted on a royalty-free license to the patent
in suit as a condition of settlement, that assertion is irrelevant to the question whether the
dismissal should be with prejudice. A with-prejudice dismissal would not have the same effect
as a royalty-free license, since even if there should ultimately be a with-prejudice dismissal of
this action, that dismissal order would not prevent the plaintiffs from bringing a new suit against
any future infringing sales or activities by Vizio. An action based on post-judgment activity,
would not be barred by the res judicata effect of a with-prejudice dismissal in this case.
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Accordingly, the Court agrees with Vizio that a without-prejudice dismissal would be
unfair to Vizio, at least absent a proviso under which the plaintiffs would agree to pay Vizio’s
attorney fees and expenses in this action.
No such offer has been forthcoming from the
plaintiffs. The Court therefore DENIES the plaintiffs’ motion to dismiss the action without
prejudice.
It is so ORDERED.
SIGNED this 1st day of October, 2014.
__________________________________________
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE
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