The Use—and Abuse—of Rule 41(a) to Destroy Federal Question Jurisdiction Post-removal

• Publication year: 2023
• Citation: Vol. 3 No. 4

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John D. Sear and T. Michael Pangburn ^*

Abstract: Defendants in civil litigation can level the often uneven state court playing field by removing cases to federal court through federal question removal. In those cases in which the plaintiff has alleged a claim grounded in federal law, the defendant may remove the case to an often more impartial federal forum. Once removed, the plaintiff has few options for defeating removal. About the only option available to the plaintiff is to forgo the federal claim and divest the court of federal question jurisdiction, forcing remand to state court. In pursuit of a ticket back to state court, however, plaintiffs routinely misuse Fed. R. Civ. P. 41 in seeking to dismiss fewer than all claims and less than the entire action. Too frequently courts simply go along with the ruse. This article addresses the misuse and abuse of Rule 41. It provides an overview of the text and history of Rule 41, discusses how the rule should be used and applied, analyzes decisions that indulge the misuse, and explains how the misuse can and does prejudice defendants.

The Parties' Predicament

It is a poorly kept secret that defendants in civil litigation prefer federal courts to most state courts. From the defendant's perspective, federal courts have more exacting standards and procedures for pleadings, venue, expert testimony, and dispositive motions, all of which tend to benefit the defendant more than the plaintiff. It is no surprise, therefore, that a defendant will jump at the chance to remove a case to federal court.

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Knowing this poorly kept secret, a plaintiff will try to block removal. They can prevent removal on diversity of citizenship grounds by naming a nondiverse defendant or a diverse defendant who is a citizen of the forum state. ¹

When a plaintiff has taken steps to defeat diversity removal, a defendant ordinarily has only one route out of state court: federal question removal. The allure of federal question removal is that citizenship of parties has no effect on removal—nor does the one-year deadline for diversity removal. ² Just as importantly, federal question removal can promote federal interests embodied in the federal law upon which removal is grounded. ³

A plaintiff can prevent federal question removal by steering clear of federal claims. Under the well-pleaded complaint rule, "federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." ⁴ Plaintiffs often go to extreme lengths to avoid even the hint of a federal question, like explicitly stating in the complaint that they are absolutely not seeking relief under any federal authority. But occasionally, when a plaintiff wishes to take advantage of federal fee-shifting statutes, a well-pleaded complaint raising a federal question cannot be avoided. ⁵ The claim raising a federal question thus paves the way to federal court.

Once removed, a plaintiff seeking remand to state court has one last option: abandonment of the federal claim underlying the court's jurisdiction. In practice, abandonment of a federal claim usually takes two forms:

1. pleading amendment under Rule 15(a) or
2. voluntary dismissal under Rule 41(a).

These two rules govern different scenarios that are often viewed as overlapping and interchangeable. They are not.

Rule 15(a) Versus Rule 41(a)

Too often litigants conflate these rules when a plaintiff wishes to rid the case of the federal question giving the court jurisdiction. But the rules are not interchangeable, and it is improper to treat them as if they are.

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Federal Rule of Civil Procedure 15(a) governs amendment of pleadings. It permits a party to amend a pleading once within 21 days after service of the pleading or within 21 days after service of a pleading responding to it. ⁶ In all other scenarios, a party may amend a pleading only with the opposing party's written consent or leave of court. ⁷ A plaintiff hoping to divest the court of federal question jurisdiction and force a remand to state court will amend the complaint to eliminate the federal question claim that triggered removal in the first place.

While Rule 15(a) governs pleadings, Rule 41(a) governs actions. It allows voluntary dismissal of actions in three ways:

1. a notice of dismissal filed before the opposing party serves either an answer or a motion for summary judgment,
2. a stipulation of dismissal signed by all parties who have appeared, and
3. by court order on terms the court considers proper. ⁸

The simplicity of the language is deceiving and prone to abuse by plaintiffs bristling at the thought of litigating in federal court. Capitalizing on courts' willingness to gloss over the differences between Rule 15(a) and Rule 41(a), a plaintiff will attempt to force remand by dismissing only the jurisdiction-establishing federal claim using Rule 41(a), not Rule 15(a), without dismissing the entire action. Once the federal claim is gone, it is easy enough for the plaintiff to convince a judge to remand the case back to state court, never to return to federal court unless a new jurisdictional basis permits removal again. ⁹

A plaintiff seeking to divest the court of subject matter jurisdiction post-removal should at least comply with the requirements of the rule they have relied on. Glossing over those requirements undermines the purpose and intent of both the rule and removal statutes. The case should stay put in federal court in the absence of compliance.

History and Purpose of Rule 41

Rule 41 was promulgated in 1938. ¹⁰ And it has been amended seven times since. ¹¹ It is procedural and applies regardless of state substantive law. ¹²

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Amendments over the years have been largely insignificant, but two deserve mention. In 1946, the rule was amended to give the filing of a motion for summary judgment the same effect as an answer. ¹³ Until then only an answer could forestall unlimited dismissal. ¹⁴ In 1991, the rule was amended to clarify that it cannot be used to obtain dismissal on the merits for insufficiency of evidence in a non-jury case. ¹⁵

The purpose of voluntary dismissal under Rule 41 is uncon-troversial. It is "to freely permit the plaintiff, with court approval, to voluntarily dismiss an action so long as no other party will be prejudiced" and to allow "the plaintiff to withdraw his action from the court without prejudice to future litigation." ¹⁶ Prejudice contemplated by the rule does not include the defendant's loss of a federal forum—assuming, of course, the dismissal is procedurally proper. ¹⁷

How Rule 41(a) Is Supposed to Work

Rule 41(a) permits dismissal of actions, not claims; claims are dismissed through a timely and proper Rule 15(a) pleading amendment. Most courts agree.

In Berthold Types Ltd. v. Adobe Systems Inc., the U.S. Court of Appeals for the Seventh Circuit instructed, "Rule 41(a)(1)(i) does not speak of dismissing one claim in a suit; it speaks of dismissing 'an action,' which is to say, the whole case." ¹⁸ In Perry v. Schumacher Group of Louisiana, the Eleventh Circuit similarly pointed out, "It is clear from the text that only an 'action may be dismissed. There is no mention in the rule of the option to stipulate dismissal of a portion of a plaintiff's lawsuit—e.g., a particular claim—while leaving a different part of the lawsuit pending before the trial court." ¹⁹ Many district courts correctly distinguish "action" from "claim," as the rule requires. ²⁰

As recently as June of this year, Judge Seeger of the Northern District of Illinois colorfully explained how Rule 41 is supposed to work, and how it is not. In Interfocus Inc. v. Hibobi Tech. Ltd., ²¹ the plaintiff settled with one of several defendants. The plaintiff and three of the remaining defendants filed a motion "for entry of a stipulation to voluntarily dismiss" the settled defendant under Rule 41(a). Apart from the plain impropriety of a motion seeking

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entry of a stipulation, Judge Seeger wrote, Rule 41(a) is not "a set of shears for trimming a case, and leaving the rest." ²² Judge Seeger pointed out that Rule 41 itself recognizes the difference between an action and a claim, noting

Rule 41(a) speaks of an "action," but Rule 41(b) addresses "the action or any claim." So, when Rule 41(a) uses the term 'action,' it means what it says. An action and a claim are not the same thing. ²³

In disallowing the use of Rule 41(a) as a vehicle for dismissal of some but not all parties or claims, Judge Seeger explained, the "Seventh Circuit's approach shows fidelity to the text of the Federal Rules, which is the way to go." ²⁴

Still, Judge Seeger acknowledged the "dirty little not-so-secret is that district courts often disregard Rule 41(a) and dismiss part of the case," but asserts that fixing the language of Rule 41(a) is the remedy for the misuse of the rule, not the disregard of its plain language. ²⁵ While recognizing the differing views of what Rule 41(a) allows, Judge Seeger offered some his own solution: "When courts widely abandon the test of the Federal...