Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_16-cv-01006/USCOURTS-casd-3_16-cv-01006-1/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
Cause of Action: 28:1332ss Diversity - Stockholders Suits

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ARTHUR FISCHMAN, derivatively

on behalf of SEMPRA ENERGY and

SOUTHERN CALIFORNIA GAS

COMPANY,

Plaintiff,

CASE NO. 16-cv-1006-WQH-AGS

ORDER

v.

DEBRA L. REED; JOSEPH A.

HOUSEHOLDER; STEVEN D.

DAVIS; JUSTIN C. BIRD; WILLIAM

C. RUSNACK, WILLIAM D. JONES;

WILLIAM G. OUCHI; JAMES G.

BROCKSMITH, JR.; WILLIAM P.

RUTLEDGE; LYNN SCHENK,

ALAN L. BOECKMANN; JACK T.

TAYLOR; JAMES C. YARDLEY;

KATHLEEN L. BROWN; PABLO A.

FERRERO; LUIS M. TELLEZ;

DENNIS V. ARRIOLA; JIMMIE I.

CHO; MICHAEL M. SCHNEIDER;

DOUG SCHNEIDER; SCOTT

FURGERSON; GEORGE MINTER; J.

BRET LANE; MARTHA B.

WYRSCH; JESSE J. KNIGHT, JR;

and DOES 1-25, Inclusive,

Defendants,

and

SEMPRA ENERGY; and

SOUTHERN CALIFORNIA GAS

COMPANY

Nominal Defendants.

HAYES, Judge:

The matter before the Court is the motion for voluntary dismissal of this action

- 1 - 16cv1006-WQH-AGS

Case 3:16-cv-01006-WQH-AGS Document 67 Filed 08/04/17 PageID.<pageID> Page 1 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

without prejudice. (ECF No. 62).

I. Background

On April 25, 2016, Plaintiff Arthur Fischman, derivatively on behalf of Sempra

Energy (“Sempra”) and Southern California Gas Company (“SoCalGas”), initiated this

action by filing a shareholder derivative complaint against members of the Board of

Directors of both companies for their actions relating to a natural gas leak at the Aliso

Canyon natural gas storage facility. (ECF No. 1). On August 1, 2016, the Nominal

Defendants Sempra and SoCalGas filed a motion to dismiss with prejudice on the

grounds that Plaintiff failed to adequately plead facts to demonstrate demand futility

pursuant to Federal Rule of Civil Procedure 23.1. (ECF No. 34).

On March 3, 2017, the Court granted Nominal Defendants’ motion to dismiss and

dismissed the complaint without prejudice. (ECF No. 61). The Court directed Plaintiff

to file any motion for leave to amend his complaint within thirty days of the court order

being issued. Id. at 25. On April 28, 2017, Plaintiff moved for voluntary dismissal

without prejudice pursuant to Federal Rule of Civil Procedure 42(a)(2). (ECF No. 62). 

In support of Plaintiff’s motion, Plaintiff attached a declaration of Plaintiff’s counsel,

Francis A. Bottini, Jr. (ECF No. 62-1). 

May 22, 2017, Defendants jointly responded in opposition to Plaintiff’s motion

for voluntary dismissal without prejudice. (ECF No. 63). On May 36, 2017, Plaintiff

replied to Defendants’ joint response in opposition. (ECF No. 64). On June 9, 2017,

Defendants filed a supplemental brief in support of their response in opposition. (ECF

No. 65). On June 12, 2017, Plaintiff responded to Defendants’ supplemental brief. 

(ECF No. 66).

II. Contentions of the Parties

In Plaintiff’s counsel’s declaration, Mr. Bottini states that “Plaintiff has decided

that, instead of seeking leave to amend his complaint, he would exercise his right under

Rule 41(a)(2) to voluntarily dismiss his action without prejudice.” (ECF No. 62-1 at

1; Bottini Decl. ¶ 5). Plaintiff contends that Defendants bear the burden of showing a

- 2 - 16cv1006-WQH-AGS

Case 3:16-cv-01006-WQH-AGS Document 67 Filed 08/04/17 PageID.<pageID> Page 2 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

“prejudice to some legal interest, some legal claim, some legal argument.” (ECF No.

64 at 11 (quoting Westlands Water Dist. v. United States, 100 F.3d 94, 97 (9th Cir.

1996))). Plaintiff contends that “[n]o law or facts supports Defendants’ claim of ‘legal

prejudice.’” Id. 

Defendants contend that the Court should dismiss the action with prejudice for

three separate reasons. (ECF No. 63). First, Defendants contend that “dismissal

without prejudice is not appropriate when it would result in plain legal prejudice to the

defendant[s].” Id. at 2. Second, Defendants contend that “[a] derivative action should

be dismissed with prejudice when a plaintiff fails to sufficiently plead satisfaction of

the demand requirement and has made no showing an amendment would cure the

deficiency.” Id. at 3. Third, Defendants contend that Plaintiff’s motion for voluntary

“dismissal without prejudice is invalid because . . . it [is] an attempt to avoid the

imminent dismissal of his claims with prejudice for failure to meet the standing

requirement for his derivative action.” Id. at 5. 

III. Ruling of the Court

Rule 41(a)(2) of the Federal Rules of Civil Procedure states:

(2) By Court Order; Effect. Except as provided in Rule 41(a)(1), an action may be dismissed at the plaintiff’s request only by court order, on terms that the court considers proper. If a defendant has pleaded a counterclaim before being served with the plaintiff’s motion to dismiss, the action may be dismissed over the defendant’s objection only if the counterclaim can remain pending for independent adjudication. Unless the order states

otherwise, a dismissal under this paragraph (2) is without prejudice.

 Fed. R. Civ. P. 41(a)(2). 

“Rule 41 vests the district court with discretion to dismiss an action at the

plaintiff’s instance upon such terms and conditions as the court deems proper. That

broad grant of discretion does not contain a preference for one kind of dismissal or

another.” Hargis v. Foster, 312 F.3d 404, 412 (9th Cir. 2002). If a court determines

that dismissal should be conditioned upon certain terms, the plaintiff requesting

dismissal “has the choice between accepting the conditions and obtaining dismissal and,

if he feels that the conditions are too burdensome, withdrawing his dismissal motion

- 3 - 16cv1006-WQH-AGS

Case 3:16-cv-01006-WQH-AGS Document 67 Filed 08/04/17 PageID.<pageID> Page 3 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

and proceeding with the case on the merits.” Lau v. Glendora Unified School Dist., 792

F.2d 929, 930-31 (9th Cir. 1986). The court must allow the plaintiff a “reasonable

period of time within which to refuse the conditional voluntary dismissal by

withdrawing her motion for dismissal or to accept the dismissal despite the imposition

of conditions.” Id. at 931. 

“A district court should grant a motion for voluntary dismissal under Rule

41(a)(2) unless a defendant can show that it will suffer some plain legal prejudice as a

result.” Smith v. Lenches, 263 F.3d 972, 975 (9th Cir. 2001). Plain legal prejudice is

defined in the Ninth Circuit as “prejudice to some legal interest, some legal claim, some

legal argument.” Westlands Water Dist. v. United States, 100 F.3d 94, 97 (9th Cir.

1996). “Plain legal prejudice, however, does not result simply when defendant faces

the prospect of a second lawsuit or when plaintiff merely gains some tactical

advantage.” Hamilton v. Firestone Tires & Rubber Co., 679 F.2d 143, 145 (9th Cir.

1982). 

Defendants bear the burden of showing a “prejudice to some legal interest, some

legal claim, some legal argument.” Westlands, 100 F.3d at 97; Lenches, 263 F.3d at

975. Defendants have not shown that a dismissal without prejudice would result in

legal prejudice. The inconvenience of another lawsuit does not constitute legal

prejudice. Hamilton, 679 F.2d at 145. The Court concludes that Defendants would not

suffer a legal prejudice if this action is dismissed without prejudice. Plaintiff’s motion

for voluntary dismissal of this action without prejudice is granted. (ECF No. 62).

V. Conclusion

IT IS ORDERED that Plaintiff’s motion to voluntary dismiss this action without

prejudice is GRANTED. (ECF No. 62).

DATED: August 4, 2017

WILLIAM Q. HAYES

United States District Judge

- 4 - 16cv1006-WQH-AGS

Case 3:16-cv-01006-WQH-AGS Document 67 Filed 08/04/17 PageID.<pageID> Page 4 of 4