The Sixth Circuit elaborated this week in Michigan Surgery Investment, et al. v. Arman, et al., Case No. 10-1612 (Dec. 14, 2010) (PDF) on the factors determining whether a court abused its discretion when it dismissed a complaint with prejudice in response to plaintiffs’ request for dismissal without prejudice. 

The factors are well-settled: “First, the district court must give the plaintiff notice of its intention to dismiss with prejudice.  Second, the plaintiff is entitled to an opportunity to be heard in opposition to dismiss with prejudice.  Third, the plaintiff must be given an opportunity to withdraw the request for voluntary dismissal and proceed with the litigation.” United States v. One Tract of Real Property, 95 F.3d 422, 425-26 (6th Cir. 1996).

The Sixth Circuit held that the trial court improperly converted plaintiffs’ motion for voluntary dismissal without prejudice into a dismissal with prejudice because the court did not give plaintiffs notice of its intention to dismiss with prejudice: The Sixth Circuit rejected defendant’s argument that the notice requirement was satisfied by plaintiffs’ knowledge that the district court was considering dismissal with prejudice since the defendant’s response to the plaintiffs’ motion specifically requested that any dismissal be with prejudice. 

Chief Judge Alice Batchelder noted in a separate concurrence that defendants had raised the “specter of gamesmanship” by labeling as a motion for summary judgment what was clearly a motion to dismiss for lack of subject matter jurisdiction and questioned the appropriateness of the  district court  treating plaintiffs’ motion for voluntary dismissal as requiring permission of the opposing party or of the court: “Prior to the filing of an answer or a motion for summary judgment, a plaintiff may voluntarily dismiss its claims without obtaining permission of the court, and that dismissal would be without prejudice….Only after an answer or motion for summary judgment has been filed does the plaintiff require the permission of the opposing party or the court to dismiss the claims.”  Judge Batchelder’s suggests that plaintiffs’ motion for voluntary dismissal should have been automatic under 41(a)(1) rather than permissive under 41(a)(2).