Opinion ID: 516457
Heading Depth: 2
Heading Rank: 2

Heading: Dismissal or Stay

Text: 51 Given that the district judge properly concluded that abstention under Colorado River was appropriate, we now turn to the question of whether it was proper for him to dismiss the federal case instead of staying it. The standard of review is whether he abused his discretion in doing so. Lumen, 780 F.2d at 695. We conclude that he did abuse his discretion, and that he should have stayed Rosser's federal case instead of dismissing it. 52 Lumen is directly applicable here. In Lumen, we addressed the issue of whether a district court properly exercised its discretion to abstain in deference to a parallel state court proceeding. Discussing the differences between a stay and a dismissal, we wrote: 53 This Court, however, has consistently held that the proper procedure is to stay. A dismissal, even without prejudice, creates a risk that the federal plaintiff will be time-barred from reinstating his federal suit if the state proceeding does not result in a final decision on the merits. Bosworth, 713 F.2d at 1322; Evans Transp. Co. v. Scullin Steel Co., 693 F.2d 715, 717-18 (7th Cir.1982). A stay, by contrast, permits the federal court to retain jurisdiction in case the state court action does not meet its anticipated end. A stay has the additional advantage of bringing the case back before the same federal judge if a determination is needed as to the preclusive effects of the state judgment or decisions. 54 Lumen, 780 F.2d at 698. The wisdom of the analysis in Lumen which acknowledged that federal jurisdiction should be retained in case the state court action does not meet its anticipated end is borne out by conduct which occurred in this case. In the hearing before Judge Norgle on June 25, 1987, counsel for Chrysler agreed that this case should be litigated in state court. However, once free of the federal case, Chrysler and Babcock sought dismissal from the state court action under a statute of limitations theory. 8 55 We reaffirm that a stay, not a dismissal, is the appropriate procedural mechanism for a district court to employ in deferring to a parallel state court proceeding under the Colorado River doctrine. As we have said above, deferring to the state court proceeding in this case avoids piecemeal litigation. That is, the state case may result in the disposition of many of the issues in the federal case. The practical effect of a stay in this case, therefore, will be identical, at least as to Chrysler and Babcock, to a dismissal. Ohio River, 754 F.2d at 238. As for any remaining issues (particularly as to Koepele, who is not a party to the state court action), they can be litigated at that time without the fear that the statute of limitations will have run. Id. 56 As we noted above, the district judge remarked that a stay ordinarily would be preferred, yet dismissed this case because of plaintiff's failure to respond to Chrysler's motion, which he saw as indicative of Rosser's intent to prosecute in state court. We find that this does not justify dismissal. Rosser continued to actively prosecute his claim, albeit in state court. In such a case, dismissal is inappropriate. Id. at 238 n. 5.