Opinion
97-CV-38, 97-0007-C.
December 19, 2000
Sheldon H. Parker, PARKER DESTEFANO, CHARLOTTESVILLE, VA, for Plaintiff.
James Wingate Barkley, MORIN BARKLEY, CHARLOTTESVILLE, VA, for Defendant.
MEMORANDUM OPINION
Before the court is the plaintiff's October 5, 1999 modified motion to dismiss the above-captioned civil action, pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure. By order dated October 8, 1999, the entire matter was referred to the presiding United States Magistrate Judge for proposed findings of fact and a recommended disposition. See 28 U.S.C. § 636(b)(1)(B). The Magistrate Judge returned his Report and Recommendation on June 5, 2000, recommending that the court enter a dismissal order as requested by the plaintiff. The defendant filed timely objections thereto and, accordingly, the court has performed a de novo review. See 28 U.S.C. § 636(b)(1)(C).
I.
In 1997, the plaintiff brought the instant patent infringement action to enforce rights in patent 4,935,135 (`135). The plaintiff allegedly acquired rights to `135 in 1990 and the infringement action was based on those purported rights. The plaintiff's rights to `135 were challenged in the separate but related action of Filtroil, N.A., Inc. v. Maupin, et al, No. 3:97CV00007 [hereinafter Filtroil I]. The Federal Circuit Court of Appeals affirmed the determination of the presiding Magistrate in Filtroil I, acting for the court with the consent of the parties, that the plaintiff failed to demonstrate a valid assignment of patent `135. Filtroil, N.A., Inc. v. Maupin, et al., No. 98-1212, 1998 WL 851131 at *3 (Fed. Cir. Dec. 3, 1998) [hereinafter Filtroil II]. In Filtroil I, the Magistrate Judge entered a permanent injunction against Maupin, prohibiting him from "attempting to and from marketing, enforcing, licensing or seeking royalties on the `135 patent" and from " joining in any current litigation and from instituting separate proceedings against any person or entity to enforce any claim of right under the `135 patent." Filtroil I, No. 3:97CV00007, slip op. at 2-3 (W.D.Va. Jan. 30, 1998). In its opinion affirming the issuance of the injunction, the Federal Circuit noted that Maupin was "free to request a modification of the injunction if [he or his company] should obtain rights in the `135 patent in the future." Filtroil II, 1998 WL 851131 at *4. Maupin has tried unsuccessfully to have the injunction lifted but, as of this date, it remains in full effect. See Filtroil, N.A., Inc. v. Maupin, et al., Nos. 99-1361, -1387, -1418 (Fed. Cir. March 30, 2000) (affirming district court ruling denying modification or termination of the permanent injunction on grounds that Maupin failed to establish the validity of the alleged 1998 assignment to Maupin of patent `135) [hereinafter Filtroil III].
The question of Maupin's alleged rights to patent `135 having been resolved against him, Maupin moved this court for a voluntary dismissal of the instant litigation with limited prejudice, specifically requesting prejudice only as to the 1990 assignment of `135. In response, the defendant requests that the dismissal be with prejudice, and without any further limitations. The Magistrate Judge recommends a dismissal with limited prejudice and the court herein comes to the same conclusion, albeit on additional grounds to those relied on by the Magistrate Judge.
II.
There is no dispute that, because the plaintiff lacked rights in patent `135, he lacked the requisite standing to bring the instant patent infringement suit. See 35 U.S.C. § 281. It is a well settled principle of law that standing is determined by the position of the parties to the litigation at the time the litigation was initiated. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 571 (1992). As explained above, the plaintiff brought the instant action in 1997, asserting patent infringement claims based on the 1990 assignment of patent `135 to the plaintiff. However, the 1990 assignment was held to be invalid. Accordingly, the plaintiff lacked standing in 1997 to bring the instant lawsuit. The plaintiff's alleged 1998 acquisition of rights to patent `135 is not contemplated herein because the relevant time for establishing standing in this lawsuit is 1997. Thus, because no standing attached to the plaintiff's claims in 1997, the suit must be dismissed. The only remaining issue is whether such dismissal shall be ordered with, or without, prejudice.
A.
Procedurally, the motion before the court is one for voluntary dismissal, pursuant to Fed.R.Civ.P. 41(a)(2). However, the court notes that, due to the uncontroverted lack of standing, the suit would have been dismissed regardless of the plaintiff's motion for voluntary dismissal because, pursuant to the United States Constitution, a federal court only has jurisdiction over justiciable cases or controversies. U.S. Const., Art. III, § 2. The Supreme Court has referred to the doctrine of standing as a landmark in determining what sort of disputes are justiciable "cases" or "controversies." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) ("the core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III"); see also Allen v. Wright, 468 U.S. 737, 751 (1984) (standing is a necessary core component of subject matter jurisdiction). If a party lacks standing to bring a claim, then there is no justiciable case or controversy and a federal court lacks authority to exercise jurisdiction over the dispute. Such is the case in the instant litigation: the plaintiff lacks standing; thus, the court lacks jurisdiction over the lawsuit and it shall be dismissed.
B.
Voluntary dismissals requested pursuant to Rule 41(a)(2) may be granted subject to terms and conditions as imposed by the court so as to "obviate any prejudice to the defendants which may otherwise result from dismissal without prejudice." Davis v. USX Corporation, 819 F.2d 1270, 1273 (4th Cir. 1987). Accordingly, in considering the plaintiff's motion, the court must focus primarily on the interests of the defendant. See id.
The defendant contends that a dismissal based on lack of standing constitutes a dismissal with prejudice, and solicits the court to rule accordingly. See Textile Productions Inc. v. Mead Corporation, 134 F.3d 1481, 1483 (Fed. Cir. 1998). Although Textile Productions affirmed a district court's dismissal of a patent infringement action with prejudice for lack of standing, that issue was before the court on a summary judgment motion, which is procedurally distinct from the instant motion for voluntary dismissal. Furthermore, the Textile Productions opinion summarily declares approval of prejudicial dismissal for lack of standing, but does not inform the reader as to how such conclusion was made. See Textile Productions, 134 F.3d at 1483. In addition to Textile Productions, the defendant relies heavily on Gaia Technologies, Inc. v. Reconversion Technologies, Inc., 93 F.3d 774 (Fed. Cir. 1996), amended by 104 F.3d 1296 (Fed. Cir. 1996). However, although the court in Gaia found that the plaintiff lacked standing and ordered dismissal, it did not instruct whether such dismissal was to be with or without prejudice. See id. at 780, 781.
Although the defendant argues that principles of law require a dismissal with prejudice based on the plaintiff's lack of standing, the defendant cites to weak precedential support for his claim. Furthermore, the defendant fails to allege any harm that may result from a dismissal without prejudice. The inconvenience of a second lawsuit does not constitute prejudice for purposes of a Rule 41(a)(2) motion. See Davis, 819 F.2d at 1274-75. The rights of the defendant would not be compromised by a dismissal without prejudice because the defendant did not have to defend this suit on the merits, as there was a jurisdictional bar to addressing the merits. The defendant has not incurred the costs of litigating the merits of the action thus, should the merits of the plaintiff's patent infringement claim ever come to light in a federal court, it will be for the first time. Furthermore, the permanent injunction against Maupin, issued in Filtroil I, will prevent prejudice to the defendant in the form of future litigation by Maupin absent a new and valid showing of Maupin's rights to the `135 patent.
In addition to the defendant's position, the court has considered the plaintiff's presentation of a host of options ranging from dismissal of the entire action with prejudice to dismissal of the entire action without prejudice, and several complex options in-between. The parties' positions naturally reflect the defendant's desire not to be the subject of multiple lawsuits brought by the defendant on the same issues, and the plaintiff's desire to not be precluded from enforcing alleged patent rights should he ever acquire valid rights to the patent in question so as to confer standing. Ample precedent has balanced these concerns and leads the court to the conclusion that the requisite dismissal of the instant action shall not be considered an adjudication on the merits of the substantive underlying issues.
C.
Federal Rule of Civil Procedure 41(b), which contemplates involuntary dismissals of actions for failure to prosecute or failure to abide by court orders, etc., directs that such dismissals be with prejudice, barring limited exceptions, including dismissals for lack of jurisdiction. Although, technically, the court is deciding a motion for voluntary dismissal under 41(a)(2), the rationale of subsection (b) for deeming dismissals for lack of jurisdiction to be without prejudice is compelling. That a dismissal for want of standing shall be considered a dismissal for lack of jurisdiction as contemplated by Rule 41(b) was made clear by the Supreme Court in Costello v. United States, 365 U.S. 265, 285 (1961). In Costello, the Court held that jurisdiction was not to be narrowly construed as personal or subject matter jurisdiction, but rather held, "We regard the dismissals for lack of jurisdiction] as encompassing those dismissals which are based on a plaintiff's failure to comply with a precondition requisite to the Court's going forward to determine the merits of his substantive claim." Costello, 365 U.S. at 285. Standing is clearly a prerequisite to the court's proceeding to the merits of a substantive claim. See, e.g., Marshall v. Meadows, 105 F.3d 904, 906 (4th Cir. 1997) ("The doctrine of standing has always been an essential component of this case or controversy requirement of federal jurisdiction"). Thus, under the Court's analysis in Costello, dismissal for lack of standing would be considered under the broader rubric of dismissals for lack of jurisdiction, which shall be deemed without prejudice because failure to show standing prevents the court from going forward to determine the merits of the substantive claim.
Because a dismissal for lack of standing is a jurisdictional dismissal, it shall not be considered an adjudication on the merits of the substantive claim. As the Fourth Circuit held in Shoup v. Bell Howell Co., 872 F.2d 1178, 1181 (4th Cir. 1989), "[D]ismissals for want of jurisdiction are paradigms of non-merits adjudication. In such a dismissal the court does not regard the merits of an action. It merely classif[ies] [an] action, whatever its merits, as one on which the court concerned cannot speak." (Internal citations and quotations omitted). In this case, the court cannot speak to the merits of the action because the plaintiff has no standing to bring this suit. Thus the entire action shall be dismissed without prejudice as to the merits of the action, but with prejudice as to relitigation of the same justiciability issue. See DiGiore v. Ryan, 172 F.3d 454, 466 (7th Cir. 1999) ("dismissals based on justiciability issues should preclude only relitigation of the same justiciability issue, but not future suits based on the merits of the same claim" (citing McCarney v. Ford Motor Co., 657 F.2d 230, 233 (8th Cir. 1981) (holding that a dismissal based on justiciability grounds does not have a res judicata effect on claims on the merits); Payne v. Panama Canal Co., 607 F.2d 155, 158 (5th Cir. 1979) (same)); Cutler v. Hayes, 818 F.2d 879, 888 (D.C. Cir. 1987) ("Standing ranks amongst those questions of jurisdiction and justiciability not involving an adjudication on the merits, whose disposition will not bar relitigation of the cause of action originally asserted, but may preclude, or collaterally estop, relitigation of the precise issues of jurisdiction adjudicated" (footnotes omitted)).
III.
For the foregoing reasons, the Report and Recommendation of the Magistrate Judge is adopted and the plaintiff's motion for voluntary dismissal shall be granted, with limited prejudice as detailed above. An appropriate order shall this day enter.
FINAL ORDER
Before the court is the plaintiff's September 3, 1999 motion for voluntary dismissal, as amended on October 5, 1999. By order dated October 8, 1999, the above-captioned civil action was referred to the presiding United States Magistrate Judge, B. Waugh Crigler, for proposed findings of fact and a recommended disposition. See 28 U.S.C. § 636(b)(1)(B). On June 5, 2000, the Magistrate returned his Report and Recommendation, to which the defendant timely objected. Accordingly, the court has performed a de novo review. See 28 U.S.C. § 636(b)(1)(C). Upon thorough consideration of the Report and Recommendation, the entire record, and pertinent case law, it is accordingly this day.
ADJUDGED ORDERED AND DECREED
as follows:
(1) The June 5, 2000 Report and Recommendation shall be, and hereby is ADOPTED, based on additional grounds as detailed in the accompanying memorandum opinion.
(2) The plaintiff's motion for voluntary dismissal shall be, and hereby is GRANTED with limited prejudice as to the same question of justiciability, as further detailed in the accompanying memorandum opinion.
(3) The above-captioned civil action shall be STRICKEN from the active docket of the court.
The Clerk of the Court hereby is directed to send a certified copy of this order and the accompanying memorandum opinion to all counsel of record and to Magistrate Judge Crigler.