Opinion
23-cv-00914-SI
06-28-2024
DIEN LE, Plaintiff, v. TRINH NGOC HUYNH, et al., Defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR VOLUNTARY DISMISSAL UNDER RULE 41(A)(2) WITHOUT PREJUDICE RE: DKT. NO. 58
SUSAN ILLSTON UNITED STATES DISTRICT JUDGE
Before the Court is plaintiff's motion for voluntary dismissal without prejudice and for sanctions. Dkt. No. 58. Defendants request voluntary dismissal with prejudice and sanctions. Dkt. No. 69. For the reasons set forth below, the Court GRANTS dismissal under Rule 41(a)(2) WITHOUT PREJUDICE.
BACKGROUND
This action was filed on March 1, 2023. On June 30, 2023, plaintiff filed his first amended complaint (“FAC”) against Trinh Ngoc Huynh and Huynh Dining LLC (collectively, “defendants”). Dkt. No. 19. This complaint alleged copyright infringement of the Hue Restaurant menu, trademark infringement under Lanham Act § 43(a), unfair competition under Lanham Act § 43(a), and unfair competition under California Business & Professions Code § 17200 et seq. It also listed declaratory relief and injunctive relief as causes of action. On March 14, 2014, plaintiff filed a motion for leave to file a second amended complaint, which was denied on May 2, 2024. Dkt. No. 55. The case was set for a bench trial on June 10, 2024 and pretrial paperwork was due on May 14, 2024.
On May 14, 2024, defendants filed their pretrial conference statement. Dkt. No. 57. Plaintiff did not file pretrial paperwork and instead filed a motion for voluntary dismissal and for sanctions on May 14, 2024. Dkt. No. 58. The trial date was vacated. Plaintiff now requests voluntary dismissal without prejudice under Rule 41(a)(2). Dkt. No. 58 at 1-2. Plaintiff also seeks sanctions in the amount of $35,120. Id. at 9. Defendants do not oppose dismissal under Rule 41(a)(2) but argue that dismissal should be granted with prejudice for failure to prosecute. Dkt. No. 69 at 3, 8. Defendants also contend that plaintiff should be sanctioned $100,000, the amount of defendants' attorneys' fees incurred in defending the case. Id.
DISCUSSION
I. Dismissal Under Rule 41(a)(2)
Rule 41(a)(2) “allows a plaintiff, pursuant to an order of the court, and subject to any terms and conditions the court deems proper, to dismiss an action . . . at any time.” Westlands Water Dist. v. U.S., 100 F.3d 94, 96 (9th Cir. 1996) (citing Fed.R.Civ.P. 41(a)(2)). Unless the order states otherwise, dismissal under Rule 41(a)(2) is without prejudice. Fed.R.Civ.P. 41(a)(2). A motion for voluntary dismissal under Rule 41(a)(2) “is addressed to the district court's sound discretion.” Stevedoring Servs. of Am. v. Armilla Intern. B.V., 889 F.2d 919, 921 (9th Cir. 1989). “The purpose of the rule is to permit a plaintiff to dismiss an action without prejudice so long as the defendant will not be prejudiced or unfairly affected by dismissal.” Id.
Defendants do not oppose voluntary dismissal under Rule 41(a)(2) and the Court finds it appropriate to grant voluntary dismissal. See Smith v. Lenches, 263 F.3d 972, 975 (9th Cir. 2001) (“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.”). The parties' disagreement centers on whether dismissal should be with or without prejudice.
Defendants contend that a “number of cases have granted dismissal with prejudice when the plaintiff has failed to prosecute.” Dkt. No. 69 at 7. In Henderson v. Duncan, one of the cases defendants cite, the district court dismissed a suit with prejudice under Rule 41(b) sua sponte for failure to prosecute after “several explicit warnings” and “upon the failure to plaintiff's counsel to submit a pretrial order . . . on or before the fourth extended due date.” 779 F.2d 1421, 1422-23 (9th Cir. 1986). The plaintiff challenged the district court's dismissal for failure to prosecute. Id. at 1424. The Ninth Circuit reasoned that the district court explicitly warned of the consequences of plaintiff's counsel's dilatory behavior, imposed a schedule for discovery and the filing of a pretrial order, and counsel continued to disregard deadlines, warnings, and schedules set by the district court. Id. at 1425. The record in the case “clearly” reflected that “inordinate delay in the expeditious resolution of litigation, and prejudice to the court's need to manage its docket were being exacerbated by counsel's actions.” Id. On such a record, the Ninth Circuit found no abuse of discretion in the district court's dismissal with prejudice. Id. In Thompson v. Housing Authority, the plaintiff appealed an order of dismissal with prejudice for failure to comply with the Local Rules, Rule 16, and the district court's order extending the discovery cut-off and continuing the pretrial conference. 782 F.2d 829, 831 (9th Cir. 1986). The Ninth Circuit concluded that it was clear from the record that the district judge gave the plaintiff “abundant opportunity and incentive to prepare for the pretrial conference and trial.” Id. at 832. The district court's “patience in granting continuances” indicated that it weighed the factors required by Henderson before “imposing the sanction of dismissal.” Id. Neither of these cases provides guidance to the Court about whether dismissal with or without prejudice under Rule 41(a)(2) is the proper resolution here.
“Whether to allow dismissal with or without prejudice is discretionary with the court, and it may order the dismissal to be with prejudice where it would be inequitable or prejudicial to defendant to allow plaintiff to refile the action.” Burnette v. Godshall, 828 F.Supp. 1439, 1443 (N.D. Cal. 1993), aff'd, 72 F.3d 766 (9th Cir. 1995). “Factors that may be considered in determining whether a dismissal should be with or without prejudice include: (1) the defendant's effort and expense in preparing for trial, (2) excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action, [and] (3) insufficient explanation of the need to take a dismissal.” Williams v. Peralta Community College Dist., 227 F.R.D. 538, 540 (N.D. Cal. 2005). Here, defendants' counsel's billing records submitted as part of their request for sanctions do not reflect that pretrial preparation work was done in this case apart from the filing of the pretrial statement. See Dkt. No. 69-1, Ex. B at ECF 40-41. Plaintiff did delay in seeking discovery from defendants in this case but also moved for voluntary dismissal less than two weeks after the Court denied plaintiff leave to amend the complaint, and plaintiff sought leave to amend the complaint on March 14, 2024, a little more than two weeks after defendants produced their lease on February 27, 2024, which the Court ordered defendants to produce. See Dkt. No. 47-1, Ex. 12. Plaintiff has explained his need for dismissal. The Court does not find that plaintiff's failure to file pretrial paperwork justifies dismissal with prejudice under these circumstances, and the parties have not cited cases in their briefing that persuade the Court otherwise. However, the Court urges plaintiff to carefully evaluate his claims before refiling if he chooses to refile.
II. Sanctions
Plaintiff requests sanctions for the amount plaintiff spent preparing a second amended complaint, moving for leave to file the second amended complaint, replying to defendants' opposition, and moving to dismiss the case on the basis that defendants never disclosed Phu Tran per Rule 26(a). Dkt. No. 58 at 9. Phu Tran is a signatory to defendants' lease, which the Court ordered defendants to produce on February 26, 2024. See Dkt. No. 44. Defendants' responses to plaintiff's first request for production of documents stated that defendants do not have a lease. Dkt. No. 47-1, Ex. 7 at RFP No. 4. In her January 12, 2024 deposition testimony, defendant Huynh testified that there is a written agreement to rent the space for Huynh Dining. Id., Ex. 8 at 87-89. Plaintiff became aware of the existence of Phu Tran after receiving the lease the Court ordered defendants to produce. Dkt. No. 58 at 9. Plaintiff contends that Phu Tran is a critical witness because he was the “lease signatory, presumably responsible for restaurant location selection, paying the lease, and potentially other finances.” Dkt. No. 70 at 2. Plaintiff contends that he “simply wants to litigate the case on the merits, with the correct parties, and with complete claims.” Dkt. No. 70 at 2. The lease is not mentioned in the first amended complaint or in defendants' answer. See Dkt. Nos. 19, 24.
Plaintiff incorrectly asserts that the Court found that plaintiff pursued this action in good faith in its order denying plaintiff leave to file a second amended complaint. See Dkt. No. 70 at 3. The Court “agree[d] with plaintiff that defendants ha[d] introduced no evidence of bad faith,” but that is not the same as finding that plaintiff acted in good faith.
Defendants contend that evidence does not exist to support plaintiff's claims, plaintiff failed to exercise due diligence in researching his claims, and plaintiff failed to prosecute his claims effectively during the timeframe laid out in the Court's scheduling order. Dkt. No. 69 at 3. Defendants further contend that plaintiff failed to complete discovery by the discovery cut-off, failed to timely file any discovery motions, and failed to file his pretrial conference statement. Id. at 8. The Court has not ruled on the merits of this case, nor on whether plaintiff has evidence to support his claims.
The Court denied plaintiff's ex parte motion for a temporary restraining order on March 13, 2023. Dkt. No. 10. The Court noted that it was “skeptical of the necessity of injunctive relief based on the arguments before it,” and noted that the names of plaintiff and defendants' restaurants are distinct, the design of the logos is not similar, and that plaintiff's copyright arguments were not persuasive. Id. at 3. Finding a lack of evidence that a plaintiff is likely to succeed on the merits when considering a request for a temporary restraining order does not constitute a ruling on the merits of a plaintiff's claims.
“Three primary sources of authority enable courts to sanction parties or their lawyers for improper conduct”: Rule 11, 28 U.S.C. § 1927, and the court's inherent power. Fink v. Gomez, 239 F.3d 989, 991 (9th Cir. 2001). Courts have inherent power to “assess attorneys' fees for the willful disobedience of a court order . . . or when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Roadway Exp., Inc. v. Piper, 447 U.S. 752, 766 (1980) (citations and internal quotation marks omitted). Courts may also assess expenses “against counsel who willfully abuse judicial processes.” Id. “Like other sanctions, attorney's fees certainly should not be assessed lightly or without fair notice and an opportunity for a hearing on the record.” Id. at 767. Ninth Circuit precedent “makes clear that district courts have ‘broad fact-finding powers' to grant or decline sanctions.” Smith, 263 F.3d at 978 (citation omitted).
The Court does not find sanctions against either party or their counsel appropriate in this case. Each side accuses the other of bad-faith conduct. However, neither party's counsel has persuaded the Court that the actions of the other or that the actions of the parties were taken in bad faith sufficient to warrant the imposition of sanctions.
Defendants alternatively request attorneys' fees and costs if the Court dismisses the case without prejudice. Dkt. No. 69 at 8. “Although costs and attorney fees are often imposed upon a plaintiff who is granted voluntary dismissal under Rule 41(a)(2), no circuit court has held that payment of the defendant's costs and attorney fees is a prerequisite to an order granting voluntary dismissal” and “several courts have specifically held that such payment is not required.” Stevedoring Servs. of America, 889 F.2d at 921. In determining whether to award costs to a defendant after a voluntary dismissal without prejudice, “courts generally consider the following factors: (1) any excessive and duplicative expense of a second litigation; (2) the effort and expense incurred by a defendant in preparing for trial; (3) the extent to which the litigation has progressed; and (4) the plaintiff's diligence in moving to dismiss.” Williams, 227 F.R.D. at 540.
Here, defendants have not incurred significant expenses in preparing for trial. See Dkt. No. 69-1, Ex. B. This litigation had progressed almost to trial, but plaintiff was diligent in moving to dismiss after the Court denied plaintiff leave to amend his complaint. A second litigation would be duplicative but would also build on the discovery and work already done in this case. Considering the factors on balance, the Court finds it appropriate to award some, but not all costs to defendants. The Court is considering awarding defendants their costs associated with preparing the pretrial statement and responding to this motion for voluntary dismissal. Defendants are instructed to submit billing records reflecting these costs on or before July 10, 2024.
CONCLUSION
For the foregoing reasons and for good cause shown, the Court hereby GRANTS plaintiff's motion for voluntary dismissal under Rule 41(a)(2) WITHOUT PREJUDICE and DENIES both parties' requests for sanctions. An order awarding defendants some costs will be forthcoming.
IT IS SO ORDERED.