Opinion ID: 208576
Heading Depth: 2
Heading Rank: 3

Heading: Dismissal with Prejudice as a Sanction

Text: As a second reason for dismissing the action with prejudice, the district court explained that Pitt's belated attempts to join Carnegie Mellon were untimely and unfair to Varian. However, the district court cited no authority indicating why dismissal with prejudice is a proper consequence for an untimely and unfair attempt to join a party. Varian argues the with prejudice nature of the dismissal was an appropriate sanction based on Pitt's failure to follow the court's scheduling order and Pitt's undue delay during the litigation. To support its argument, Varian refers specifically to the district court's statements that Plaintiff obviously knew of CMU's existence and its residual rights in the patents-in-suit, and chose not to join CMU, that Pitt's decision not to join Carnegie Mellon appeared to be for tactical reasons, and that Pitt's attempt to join Carnegie Mellon was untimely and unfair to Varian. Pitt I, 2008 WL 1909208, at -3. The determination of whether dismissal with prejudice is an appropriate sanction for such actions is a procedural issue not unique to patent law, and thus, we apply the law of the regional circuit. See, e.g., Bowling v. Hasbro, Inc., 403 F.3d 1373, 1375 (Fed.Cir.2005); L.E.A. Dynatech, Inc. v. Allina, 49 F.3d 1527, 1531 (Fed.Cir.1995). Under Third Circuit law, dismissal with prejudice may be, although it rarely is, a proper sanction. See, e.g., Venuto v. Witco Corp., 117 F.3d 754, 759 (3d Cir.1997) ([I]f a district court concludes that a litigant has unduly delayed, it can  and, presumably, ordinarily will  deny a motion to amend `with prejudice.'). However, the law makes clear that dismissal with prejudice should rarely be used as a sanction. See Alvin, 227 F.3d at 122 (noting that dismissal with prejudice is a severe and disfavored remedy); Blasband v. Rales, 971 F.2d 1034, 1055 (3d Cir.1992) (stating, while considering the propriety of a dismissal with prejudice, that [o]ur case law manifests a strong preference that plaintiffs be given leave to amend where amendment is likely to cure the defects resulting in dismissal); Harris v. Cuyler, 664 F.2d 388, 390 (3d Cir. 1981) (stating that a party should not be denied the right to assert or defend against claims as a `mere punishment' and expressing the Third Circuit's reluctance to sustain dismissal with prejudice); see also Dyotherm Corp. v. Turbo Mach. Co., 392 F.2d 146, 148-49 (3d Cir.1968) (Dismissal is a harsh sanction which should be resorted to only in extreme cases. The power of the court to prevent undue delays and to control its calendars must be weighed against the policy of law which favors disposition of litigation on its merits.). In other words, dismissal [with prejudice] is a drastic sanction and should be reserved for those cases where there is a clear record of delay or contumacious conduct by the plaintiff. Donnelly v. Johns-Manville Sales Corp., 677 F.2d 339, 342 (3d Cir.1982). Relying on Donnelly, the Third Circuit has explicitly instructed: [F]our factors which, while not exclusive, are relevant to a determination whether a dismissal with prejudice is appropriate: (1) the degree of the plaintiff's personal responsibility for the delay; (2) prejudice to the defendant occasioned by the delay; (3) any history that the plaintiff proceeded in a dilatory manner; and (4) the effectiveness of sanctions other than dismissal. Madesky v. Campbell, 705 F.2d 703, 704 (3d Cir.1983). The Third Circuit has interpreted the fourth factor to require that the district court indicate on the record that it has considered sanctions less severe than dismissal. Id. In the present case, the district court's opinion simply fails to discuss any of the relevant factors. Although the opinion states that it finds dismissal to be more appropriate than adding Carnegie Mellon to the action, Pitt I, 2008 WL 1909208, at , that alone does not explain why the dismissal should be with prejudice. Of more relevance, the district court's opinion states that Pitt knew of Carnegie Mellon's residual rights in the patents and indicates that Pitt chose not to join Carnegie Mellon for tactical reasons. See id. Varian relies heavily on those statements to support its assertion that the district court properly dismissed the action with prejudice as a sanction. We disagree with Varian because those statements are not sufficient to support a dismissal with prejudice. Although the district court's statements do relate to three of the Donnelly factors  namely Pitt's responsibility for the delay, prejudice to Varian, and Pitt's history of delay  the district court provided no explanation or citations to the record to support its statements. The district court likewise provided no explanation when it initially denied Pitt's motion to join Carnegie Mellon. See Order Denying Joinder. On occasion, we may affirm the district court's judgment in the absence of a recitation of its reasons for entering the judgment because [w]e sit to review judgments, not opinions. See Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1540 (Fed.Cir.1983). However, we cannot affirm here; the judgment is not supported by the record. First, the record does not support the district court's statements that Pitt knew it must join Carnegie Mellon but declined to do so. Whether Carnegie Mellon is a necessary party to Pitt's infringement action is a complex question; it presents novel facts that we have not previously considered in the standing context, and Pitt could have reasonably determined that Carnegie Mellon need not be joined. Second, we have considered all of the evidence cited by Varian, but it falls short of demonstrating that any of the Donnelly factors were met here. Any doubts regarding the use of dismissal as a sanction should be resolved in favor of reaching a decision on the merits. Scarborough v. Eubanks, 747 F.2d 871, 878 (3d Cir.1984). Because dismissal with prejudice is a harsh sanction that is disfavored under Third Circuit law and is not justified on this record, the dismissal should have been without prejudice. We have considered the parties' remaining arguments, including Varian's arguments in support of its cross appeal, and we find them unpersuasive.