Commercial Space Mgmt. Co. v. Boeing Co.

Commercial Space Mgmt. Co. v. Boeing Co.

Opinion

 [*1075]  OPINION

RYMER, Circuit Judge:

This appeal involves the "two dismissal rule" of Fed. R. Civ. Proc. 41(a) ² and requires  [*1076]  us to decide whether the district court that had jurisdiction over the second action which was voluntarily dismissed may determine, at the defendant's request, if the plaintiff's notice dismissing the second action is with or without prejudice.

 [**2] Under Rule 41(a)(1), an action may voluntarily be dismissed by the plaintiff without court order by filing a notice of dismissal before the defendant has answered or moved for summary judgment, or by filing a stipulation of dismissal signed by all parties who have appeared. Such a voluntary dismissal is presumed to be "without prejudice" unless it states otherwise, but a voluntary dismissal of a second action operates as a dismissal on the merits if the plaintiff has previously dismissed an action involving the same claims. This is known as the "two dismissal rule."

Here, the plaintiff, Commercial Space Management Company, Inc. (CSMC), filed a stipulation of dismissal in the first action, then brought another action based on the same claims, then filed a notice of dismissal in the second action. The notice states that it is a "voluntary dismissal without prejudice." The Boeing Company - one of several defendants for whom Boeing speaks ³ - sought to change the "without prejudice" language in the second dismissal to "with prejudice" in order to comport with its view of the two dismissal rule. It did so through a Rule 59(e) motion to alter or amend the judgment. The district court  [**3]   denied the motion on the ground that the two dismissal rule applies only when both the first and second dismissals are by notice - not when the first dismissal is by stipulation, as it was in this case.

At argument on Boeing's appeal we questioned whether the district court had authority to condition or uncondition a notice of dismissal since a Rule 41(a)(1) dismissal, once filed, automatically terminates the action, and thus federal jurisdiction, without judicial involvement. We asked for briefing on the point, which the parties provided. We now make explicit what our cases have indicated before, that ] once a notice of voluntary dismissal is filed, the district court in which the action is pending loses jurisdiction and cannot exercise discretion with respect to the terms and conditions [**4]  of the dismissal. Nor may it rule at the defendant's request on whether the plaintiff's notice of dismissal in a second action is with prejudice or without prejudice. Since it cannot do so to begin with, it cannot do so through a Rule 59(e) motion. By the same token, it does not matter what label the plaintiff attaches to a second voluntary dismissal. Rather, Rule 41 itself prescribes the effect of Rule 41(a)(1) dismissals. Accordingly, whether the second voluntary dismissal is subject to the two dismissal rule such that it operates with prejudice as an adjudication upon the merits is an issue that becomes ripe (and can be determined) only in a third action, if and when one is filed. For this reason, we affirm the district court's order denying Boeing's Rule 59(e) motion, albeit on different grounds, and vacate its decision on the merits because it should not have reached the merits.

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