Opinion ID: 769408
Heading Depth: 3
Heading Rank: 1

Heading: Appealability of the District Court's Orders

Text: 9 Ford argues that the district court's orders granting the Duffys' voluntary-dismissal motion are not immediately appealable, because they are not adverse, involuntary judgments. The Duffys, by contrast, argue that this court has appellate jurisdiction, because the terms and conditions imposed on their voluntary dismissal by the district court caused them legal prejudice. 10 The general rule is that a plaintiff who requests and is granted a voluntary dismissal without prejudice under Federal Rule of Civil Procedure 41(a)(2) cannot appeal that dismissal, because it is not an involuntary adverse judgment 1 . See Schollv. Felmont Oil Corp., 327 F.2d 697, 700 (6th Cir. 1964); 9 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2376, at 93 (Supp. 1999). Several circuits have recognized an exception to this rule of nonappealability, however, when the plaintiff has suffered legal prejudice from the conditions imposed by the district court and has not acquiesced in those conditions. See Belle-Midwest, Inc. v. Missouri Property & Cas. Ins. Guar. Ass'n, 56 F.3d 977, 978 (8th Cir. 1995); McGregor v. Board of Comm'rs, 956 F.2d 1017, 1021 (11th Cir. 1992); Unioil, Inc. v. E.F. Hutton & Co., 809 F.2d 548, 556 (9th Cir. 1986), cert. denied, 484 U.S. 822 (1987); Yoffe v. Keller Indus., Inc., 580 F.2d 126, 129-30 (5th Cir. 1978), cert. denied, 440 U.S. 915 (1979); 9 Wright & Miller, supra, § 2376, at 93. The case law in this circuit suggests that this court would recognize a similar exception. See Management Investors v. United Mine Workers, 610 F.2d 384, 394-95 (6th Cir. 1979); Scholl, 327 F.2d at 700. 11 Nonetheless, the standard for obtaining review of a voluntary dismissal without prejudice is a fairly stringent one, and the plaintiffs have not met it in this case. In Scholl, this court suggested that the terms and conditions imposed by the district court under Rule 41(a) 2 would be appealable only if they were unreasonable. See 327 F.2d at 700. In Management Investors, we stated that an appeal from a voluntary dismissal without prejudice does not lie to review rulings which do not have the effect of determining the case against plaintiff. 610 F.2d at 394. In that case, the district court had declined to exercise supplemental jurisdiction over the plaintiff's state law claims, and the plaintiff subsequently dismissed its federal claim voluntarily. Because the plaintiff had voluntarily dismissed the case, this court held that the plaintiff could not appeal the prior ruling dismissing the state-law claims, because that ruling did not prevent the plaintiff from bringing suit again. See id. at 395 ([W]hile the dismissal of the state claims precluded their adjudication on the merits in this lawsuit, it did not preclude their adjudication in a state court.). The court also pointed out that the dismissal had no res judicata effect, even in federal court, because it was without prejudice.(2) See id.; see also LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 604 (5th Cir. 1976) (describing legal prejudice as a ruling that severely circumscribe[s] a plaintiff's ability to bring another suit); see also Boland v. Engle, 113 F.3d 706, 714 (7th Cir. 1997); Belle-Midwest, 56 F.3d at 978. 12 The Duffys argue that the terms and conditions imposed by the district court are unreasonable and severely circumscribe their ability to bring suit again. With respect to the attorney-fees condition, the Duffys argue that they are unable to pay those fees and are therefore effectively barred from re-filing their suit. The Duffys' argument is supported by the fact that some courts have hesitated to make categorical statements about what kinds of conditions amount to legal prejudice, stating that it is the effect, rather than the formal language of the dismissal, that determines whether legal prejudice results. See LeCompte, 528 F.2d at 603. Ford responds by pointing out that courts have found similar fee conditions not to constitute legal prejudice: in Unioil, Inc. v. E.F. Hutton & Co., 809 F.2d 548 (9th Cir. 1986),the total costs imposed on the plaintiff were $165,774.84, see id. at 554, and in Yoffe v. Keller Indus., Inc., 580 F.2d 126 (5th Cir. 1978), more than two decades ago, the total cost was $44,523.20, see id. at 128. The key question, then, is whether the reasonableness standard for imposing attorney fees under Rule 41(a)(2) is a subjective or objective one --- that is, whether the unique circumstances of the individual parties are relevant to the reasonableness of the fees and to the finding of legal prejudice. Although there is no binding precedent on this issue in the Sixth Circuit, this court is extremely reluctant to announce a rule that makes its appellate jurisdiction depend upon the financial wherewithal of the parties. To do so would mean that parties without the means to pay a cost condition could immediately appeal that condition, whereas a wealthier party faced with an identical condition could not; we believe that such a result would be anomalous, and we know of no other area of appellate jurisdiction in which the means of the parties, rather than the nature of the decision, determines appealability. Furthermore, appellate courts are not well positioned to make the predicate factual determination whether a party truly cannot afford to pay costs, which would be required by the rule that the Duffys appear to advocate. Therefore, we conclude that an appealing party must show that a cost condition is objectively unreasonable, without regard to that party's financial means, in order to demonstrate legal prejudice. 13 The Duffys have not made any claim or showing that the costs imposed by the district court are objectively unreasonable: for example, they do not claim that those costs are arbitrary or disproportionate to the effort Ford has expended. Indeed, Ford submitted detailed affidavits itemizing its expenses, which the Duffys do not contest. Rather, they argue that those fees are unreasonable because they result in the Duffys' inability to bring a second suit. We therefore hold that the district court's order with respect to costs does not result in legal prejudice to the Duffys. 14 The Duffys also contend that they were legally prejudiced by the district court's decision to impose on the refiled action the law of the case from the original action. They argue that the district court's evidentiary rulings from the original action prevent the Duffys from introducing the evidence necessary to prevail in the refiled action. As Ford points out, however, the Duffys have not pointed to any specific evidence that they need to introduce in order to prevail, nor have they explained what showings they will be unable to make with the considerable evidence they had amassed for the original trial. Furthermore, the district court's order permitted the Duffys to name one additional expert in the refiled action. 15 The Court of Appeals for the Seventh Circuit dealt with a situation very similar to this one in Parker v. Freightliner Corp., 940 F.2d 1019 (7th Cir. 1991). In that case, the district court had granted the plaintiff a voluntary dismissal under Rule 41(a)(2) on the condition that the court's order barring the plaintiff's use of expert testimony would remain in effect in any subsequent action. The court of appeals determined that this condition did not amount to legal prejudice, because the plaintiff would have been able, under state law, to make out a prima facie case without the use of expert testimony. See id. at 1023-24 & n.3. In the instant case, although the Duffys' counsel described Feaheny as a critical witness, J.A. at 400 (Tr.), and stated that the exclusion of his testimony was the impetus for requesting a voluntary dismissal, the Duffys have not shown that they would be unable to make out a prima facie case with the evidence they already have or with the addition of one expert witness to replace Feaheny. Indeed, it seems particularly implausible that Feaheny could be so central to the Duffys' case, when, in fact, he admitted that he had not examined the vehicle involved in the accident and that he did not have specificknowledge about the engineering of the particular Bronco model that William Duffy was driving when he was killed. Therefore, the Duffys have not shown that the district court's imposition of the rulings from the original action on the refiled action constituted legal prejudice. 16 We nonetheless hold that we have jurisdiction to review the district court's dismissal of the refiled case. Although the district court's dismissal of the initial case was not an involuntary, adverse judgment, and therefore was not immediately appealable, the dismissal of the refiled case clearly was such a judgment, and the Duffys are allowed to appeal it. See, e.g., Herring v. City of Whitehall, 804 F.2d 464, 466 & n.2 (8th Cir. 1986) (allowing an appeal from the district court's dismissal with prejudice of the plaintiffs' refiled suit when the plaintiffs failed to pay the defendants' attorney fees as required by the district court's order granting the plaintiffs' request for a voluntary dismissal). The Fifth Circuit has suggested that a plaintiff can obtain review of a conditional voluntary dismissal by accepting those conditions, but then refusing to comply with them and suffering a dismissal with prejudice as a result. See Mortgage Guar. Ins. Corp. v. Richard Carlyon Co., 904 F.2d 298, 301 n.5 (5th Cir. 1990); Yoffe, 580 F.2d at 131 n.13. That is what the Duffys did in this case. Although the district court technically dismissed the refiled case without prejudice, that dismissal was involuntary and, as the Duffys point out in their brief, operated as a dismissal with prejudice, because the statute of limitations had run on the Duffys' claims at that point 3 . Cf. LeCompte, 528 F.2d at 603 (stating that it is the effect, rather than the formal language of the dismissal, that determines whether legal prejudice results). Of course, the dicta of the Fifth Circuit in Yoffe and Mortgage Guaranty are not binding on this court, but the logic of those cases is persuasive. Therefore, we hold that this court can hear the Duffys' appeal of the dismissal of the refiled case. 17