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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-10048
____________________
EMERGENCY RECOVERY, INC., et al.,
Plaintiff-Appellants,
versus
BRYAN HUFNAGLE, et al.,
Defendant-Appellees.
____________________
Appeal from the United States District Court
for the Middle District of Florida
D.C. Docket No. 8:19-cv-00329-SCB-JSS
____________________
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2 Opinion of the Court 22-10048
Before BRANCH, BRASHER, and ED CARNES, Circuit Judges.
ED CARNES, Circuit Judge:
Two companies filed a lawsuit in federal court against two
of their former employees, who had served in executive positions.
The former executives responded by suing the companies in
Florida state court. They later moved for summary judgment in
the federal action. While that motion was pending, the companies
moved for a voluntary dismissal without prejudice of their federal
action, which the executives opposed.
The district court granted the companies’ motion for
voluntary dismissal, and it denied the executives’ request for
attorney’s fees and costs incurred in defending the federal lawsuit
to that point. It did so because it thought that the work their
attorneys had done in the federal case would be useful in the
parallel state court case, which was ongoing. The executives
appealed that order, and we vacated it and remanded for the district
court to: “address what portion of the work performed by the
executives’ attorneys in the federal litigation will be useful in the
state court litigation, explaining the basis for its decision.”
Emergency Recovery, Inc. v. Hufnagle, 861 F. App’x 355, 361 (11th Cir.
2021). We also asked the district court to then “weigh the equities
and decide whether to condition the dismissal on the companies’
payment of these expenses.” Id.
On remand, the district court again granted the voluntary
dismissal, stating that the executives could move for fees and costs
again if the companies refiled their federal lawsuit against them.
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The executives moved to alter or amend that judgment and be
awarded fees and costs immediately, which the court denied. This
is the executives’ appeal. They contend that the district court failed
to follow our mandate and abused its discretion when it failed to
award them costs and fees immediately. We are not persuaded.
I. Background
Emergency Recovery, Inc. (ERI) is a company owned by
Bobbie Celler. The company offers medical billing services for
healthcare providers. In 2017 ERI hired Bryan Hufnagle as its chief
operating officer and Joseph King as its senior vice president of
operations. They both signed employment agreements with ERI.
Those agreements provided that they would work for ERI as
executives for two years, they could be terminated only for just
cause, and they would not disclose any of ERI’s trade secrets or
confidential materials.
In February 2018 ERI agreed to sell its assets to Solatium
Healthcare, another company owned by Celler. A few months
later, the executives signed new employment agreements with
Solatium. The new agreements provided them with higher base
salaries and a larger share of the profits than they had received at
ERI. The new agreements also included restrictive covenants that
barred the executives from working in the field of “third-party
insurance billing and third-party insurance collection” for twelve
months after their employment with Solatium ended. Although
they entered those agreements with Solatium, they never officially
worked for that company, and ERI never transferred any assets to
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it. ERI continued to pay the executives’ salaries, but it paid them
based on the more generous terms of their contractual agreements
with Solatium.
In January 2019 the executives were fired. ERI and Solatium
then sued the executives in federal district court, alleging that they
had failed to maintain relationships with clients and grow the
business and that they disclosed the companies’ trade secrets. The
companies asserted claims under federal and Florida law for
misappropriation of trade secrets, and they asserted Florida law
claims for breach of contract and tortious interference with
business relationships.
A few days later, the executives sued the companies in
Florida state court. They requested (1) an accounting from the
companies to determine the share of profits they should receive,
(2) a declaration that the restrictive covenants in their employment
agreements were unenforceable, and (3) a declaration that they had
been terminated without just cause and as a result were owed
compensation and benefits.
The parties conducted extensive discovery in the federal
case. During the discovery period, the executives moved to compel
the companies to identify the trade secrets that had allegedly been
shared and to justify their damages calculations. The district court
granted those motions. Based on the restrictive covenants in the
executives’ employment agreements with both companies,
Solatium sought a preliminary injunction barring them from
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5 Opinion of the Court 22-10048
working for a competitor. An evidentiary hearing was held but no
ruling was issued.
Following discovery, the executives moved for summary
judgment on all of the companies’ claims. The companies
eventually responded with a motion for voluntary dismissal of
their lawsuit without prejudice. The executives opposed that
motion. They argued, alternatively, that if the court did grant a
dismissal without prejudice, the dismissal should be conditioned on
payment of their costs and attorney’s fees.
The companies replied that they should not have to pay costs
and fees because the work done by the executives’ attorneys in the
federal case “is useful towards the resolution of ” the state court
case. The district court granted the companies’ motion for
voluntary dismissal without prejudice and without conditions
under Rule 41(a)(2). The court concluded that the work the
executives’ attorneys had performed in the federal case would be
useful in the Florida state court case.
The executives moved under Federal Rule of Civil
Procedure 59(e) to alter or amend that dismissal order. They
contended that not all of their attorneys’ work in the federal
litigation would be useful in the state court case and that they
should therefore receive costs and fees for that work. The district
court denied their motion for reconsideration, and the executives
appealed.
A panel of our Court vacated the district court’s order that
imposed no conditions on the dismissal and remanded the case for
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further proceedings. Hufnagle, 861 F. App’x at 361. The panel did
hold that the district court acted within its discretion by granting
the voluntary dismissal without prejudice. Id. at 359–60. But the
panel vacated that order anyway and remanded because the district
court had adopted the companies’ conclusory statement that the
work done by the executives’ attorneys was useful toward the
resolution of the state court case; the court had given no
explanation beyond that conclusory statement for not requiring the
companies to pay the executives’ costs and attorney’s fees. Id. at
360–61.
The previous panel explained that: “a single-sentence
minute entry that relied on the companies’ response to the motion
[for reconsideration] to find, once again, that the work performed
by the executives’ attorneys would be useful in the state court
litigation” was not enough. Id. at 360. And that without further
explanation this Court would be “unable to engage in meaningful
appellate review of the district court’s decision and [we] must
remand for the district court to explain [its ruling].” Id. (citing
Friends of the Everglades v. S. Fla. Water Mgmt. Dist., 678 F.3d 1199,
1201 (11th Cir. 2012)). We went on to say:
Sometimes when a district court fails to explain its
reasoning, we nevertheless are able to engage in
meaningful review because we can infer from the
record the basis for the court’s decision. See United
States v. $242,484.00, 389 F.3d 1149, 1154 (11th Cir.
2004). But we cannot do so in this case because the
record did not include evidence from which the
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district court could determine that all the work
performed in the federal litigation would be useful in
the state court litigation. Indeed, the record contains
only minimal information about the state court
proceedings. And it contains no time records or other
information from the executives’ attorneys detailing
the work they performed in defending the federal
lawsuit. In the absence of a developed record, we
cannot discern the basis for the district court's
decision that all the work the executives’ attorneys
performed to defend this action would be useful in
the state court litigation.
Id. at 360–61.
While the record did contain enough to find that some of
the work of the executives’ attorneys in the federal case would be
useful in the state court case, there was not enough overlap to
affirm the district court’s decision. The problem was that the
federal action included some claims the state court action did not.
The overlap was not complete. And that prevented “discern[ing]
the basis for the district court’s determination that work the
executives’ attorneys undertook to defend against [some of the
claims in the federal action] or oppose the motion for preliminary
injunction would be useful in the state court action.” Id. at 361.
The earlier panel vacated the district court’s order imposing
no conditions on the dismissal and remanded for further
proceedings with these instructions:
We therefore vacate the order imposing no conditions
on the dismissal and remand for further proceedings.
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8 Opinion of the Court 22-10048
On remand, the district court should address what
portion of the work performed by the executives’
attorneys in the federal litigation will be useful in the
state court litigation, explaining the basis for its
decision. After deciding this question, the district
court should weigh the equities and decide whether
to condition the dismissal on the companies’ payment
of these expenses.
Id. (citing McCants v. Ford Motor Co., 781 F.2d 855, 860–61 (11th Cir.
1986)).
On remand, the district court followed those instructions. It
ordered the parties to submit additional briefing on what portion
of the work performed by the executives’ attorneys in the federal
action would be useful in the state court litigation. The companies,
of course, contended that all of the work would be useful in the
state court case, but they were forced to admit that their “ability to
specifically discuss the work done by [the executives’] counsel [was]
limited” because the record lacked evidence of the fees they had
incurred. The companies argued that if the court were “inclined
to impose the payment of some attorney’s fees as a condition for
dismissal, the Court should require the payment only upon the
refiling of the [federal] action.”
The executives again insisted that they should immediately
receive attorney’s fees and costs arising from the federal action
because not all of their attorneys’ work would be useful in the state
court action. They compared the state and federal cases and
asserted that much of the work performed in the federal one would
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not be useful in the state one. Finally, the executives argued that
because it was unlikely the companies would refile their federal
action, payment should not be conditioned on refiling. They
asserted that the companies must have moved for voluntary
dismissal “out of fear that they would lose on summary judgment,”
so “[t]here is never going to be a refiled case.”
The district court entered an order directing the executives
to explain “with specificity how the work done by their attorneys
in the instant case that is not useful in the ongoing state court
lawsuit would also not be useful if [the companies] decide to refile
this [federal] action.” The executives answered that much of their
attorneys’ work was specific to this case, such as the case
management report, preparation of and responses to motions in
discovery, and time spent in hearings. They again insisted that the
district court should require the companies to pay some of their
attorney’s fees because there would never be a refiled federal case.
On November 1, 2021, the district court entered an amended
order on the companies’ motion for voluntary dismissal. It
reasoned that the executives would not clearly suffer prejudice if
the case were dismissed without prejudice “given that at least some
of the work done in this case,” namely, the work related to the
breach of contract claim, “will be of use in the state court lawsuit.”
The court determined, with the benefit of the additional briefing,
that “the breach of contract claims are the extent of the overlap
between the federal and state lawsuits.”
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It concluded that the work the executives’ attorneys did for
the tortious interference with business relations and
misappropriation of trade secrets claims would not be useful in the
state court action. And that the same was true of the work done
to oppose the companies’ motion for a preliminary injunction
barring the executives from working for competitors. Given these
findings, the district court dismissed the case without prejudice
“with the condition that should [the companies] refile this action,
[the executives] may move for fees and costs, pursuant to Rule
41(d).”
On November 29, 2021, the executives sought to alter or
amend that order of dismissal under Rule 59(e). They asserted that
by allowing the executives to move for costs and fees only in the
event of a refiled federal action, the court had exceeded the scope
of this Court’s mandate and imposed an “illusory condition.” The
condition based on refiling was illusory, the executives argued,
because it was so unlikely the companies would ever refile their
lawsuit in federal court. The executives asserted that the
companies had f led from the federal case in order to avoid an
adverse summary judgment ruling, and they pointed out that the
statute of limitations was set to run soon (in only 39 days) on the
federal trade secrets claims. 1
1
The statute of limitations on the companies’ federal trade secrets claim is
three years. 18 U.S.C. § 1836(d). The alleged misuse of a trade secret occurred
on January 7, 2019. The companies had 67 days to refile after the district court
entered its amended order of dismissal on November 1, 2021.
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The companies responded that the executives’ motion was
procedurally defective. They contended that a Rule 59(e) motion
cannot be used to challenge a Rule 41(a)(2) order of voluntary
dismissal without prejudice because the order was not a decision
on the merits. They added that the court did not violate the
mandate rule or abuse its discretion in denying the executives an
award of costs and fees.
On December 9, 2021, the district court denied the
executives’ motion to alter or amend the order of dismissal. The
court agreed with the companies that a Rule 59(e) motion could
not be used to challenge the order of voluntary dismissal under
Rule 41(a)(2) because that order of dismissal was not a decision on
the merits. On January 5, 2022, the executives appealed.
II. Standard of Review
We review de novo our appellate jurisdiction. Thomas v.
Phoebe Putney Health Sys., Inc., 972 F.3d 1195, 1200 (11th Cir. 2020).
We also review de novo the district court’s interpretation and
application of our mandate in a previous appeal. Winn-Dixie Stores,
Inc. v. Dolgencorp, LLC, 881 F.3d 835, 843 (11th Cir. 2018).
We review only for an abuse of discretion an order
permitting voluntary dismissal under Rule 41(a)(2) and the denial
of a motion for attorney’s fees and costs arising from it. United
States v. $70,670.00 in U.S. Currency, 929 F.3d 1293, 1300 (11th Cir.
2019). “A district court abuses its discretion when it applies an
incorrect legal standard, relies on clearly erroneous factual
findings, or commits a clear error of judgment.” Id.
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III. Discussion
A. Jurisdiction
Jurisdiction is a threshold issue, so we take it up at the
threshold of our discussion. See Haney v. City of Cumming, 69 F.3d
1098, 1101 (11th Cir. 1995). The companies say we lack jurisdiction
because the appeal was not timely filed. Their argument is that the
executives’ motion to alter or amend was not a true Rule 59(e)
motion, so it did not toll the time for filing an appeal.
The basic law is that the “timely filing of a notice of appeal
in a civil case is a jurisdictional requirement.” Green v. Drug Enf ’t
Admin., 606 F.3d 1296, 1300 (11th Cir. 2010) (quotation marks
omitted). To be timely, a party generally has 30 days from the
district court’s entry of the order or judgment being challenged to
file the notice of appeal. Fed. R. App. P. 4(a)(1)(A). But if a party
files a timely motion to alter or amend a judgment under Rule 59,
“the time to file an appeal runs for all parties from the entry of the
order disposing” of that motion. Fed. R. App. P. 4(a)(4)(A)(iv).
Here are the dates. On November 1, 2021, the district court
entered its amended Rule 41(a)(2) order granting the companies’
motion for voluntary dismissal. On November 29 the executives
filed a motion to alter or amend that order, styled under Rule 59(e).
On December 9 the district court denied that motion, stating that
it couldn’t be considered a Rule 59(e) motion because a motion
under that rule can be used only to challenge a decision on the
merits. According to the district court, the November 29 motion,
however styled, challenged only the court’s order granting a
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motion for dismissal without prejudice under Rule 41(a)(2), which
is not a decision on the merits.
The executives appealed on January 5, 2022. That was more
than 30 days after the November 1 amended order granting the
companies’ motion for voluntary dismissal. But it was fewer than
30 days after the December 9 order disposing of the executives’
November 29 motion, which they had styled as a Rule 59(e) motion
to alter or amend. Whether the executives’ notice of appeal was
timely filed depends on whether their November 29 motion was
truly a Rule 59(e) motion; if so, it tolled the time to file an appeal;
if not, then it did not.
Under Rule 59(e), a party may move to “alter or amend a
judgment.” Fed. R. Civ. P. 59(e). “Rule 59 applies to motions for
reconsideration of matters encompassed in a decision on the merits
of the dispute, and not matters collateral to the merits.” Finch v. City
of Vernon, 845 F.2d 256, 258 (11th Cir. 1988) (emphasis added);
Osterneck v. Ernst & Whinney, 489 U.S. 169, 174 (1989) (“[A]
postjudgment motion will be considered a Rule 59(e) motion
where it involves reconsideration of matters properly encompassed
in a decision on the merits.”) (quotation marks omitted) (emphasis
added). The companies contend that the district court’s Rule
41(a)(2) order entering a voluntary dismissal without prejudice was
not a decision on the merits, so the executives’ motion could not
have been a Rule 59(e) motion. And if it was not a proper motion
to alter or amend under Rule 59(e), the filing of it did not toll the
time for filing an appeal under Federal Rule of Appellate Procedure
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4(a)(4)(A)(iv), which extends the time for filing a notice of appeal
until a timely filed Rule 59 motion to alter or amend is ruled on.
That is a good tight syllogism, but the major premise is not
true, so the conclusion is not valid. The better syllogism is this: a
motion to alter or amend will lie against any order from which an
appeal may be filed; an appeal may be filed from a ruling granting
a voluntary dismissal without prejudice; therefore, a motion to
alter or amend will lie against an order granting a voluntary
dismissal without prejudice.
The word “judgment” as used in Rule 59(e) includes “any
order from which an appeal lies.” See Fed. R. Civ. P. 54(a)
(“‘Judgment’ as used in these rules includes . . . any order from
which an appeal lies.”). And the Rule 41(a)(2) order of voluntary
dismissal without prejudice was a final, appealable order. See Corley
v. Long-Lewis, Inc., 965 F.3d 1222, 1229 (11th Cir. 2020) (“[A]n order
granting voluntary dismissal without prejudice under Rule 41(a)(2)
is final and appealable by a defendant who had opposed the
plaintiff ’s motion for voluntary dismissal.”) (quotation marks
omitted); McGregor v. Bd. of Comm’rs of Palm Beach Cnty., 956 F.2d
1017, 1020 (11th Cir. 1992) (“An order granting a plaintiff ’s motion
for voluntary dismissal pursuant to Rule 41(a)(2) qualifies as a final
judgment for purposes of appeal.”) (quotation marks omitted).
Because the order of dismissal without prejudice under Rule
41(a)(2) is a final and appealable order, Rule 59 provides an
appropriate way to challenge that order. See Fed. R. Civ. P. 54(a).
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The companies point to decisions stating that “as a general
matter, a request for attorney’s fees is not part of the merits of the
underlying action,” so “a request for attorney’s fees . . . [is] not a
Rule 59(e) motion.” Osterneck, 489 U.S. at 175. The same is true
for costs — “a motion for costs filed pursuant to Rule 54(d) does
not seek ‘to alter or amend the judgment’ within the meaning of
Rule 59(e)” because it “raises issues wholly collateral to the
judgment in the main cause of action.” Buchanan v. Stanships, Inc.,
485 U.S. 265, 268 (1988).
That is all true enough. But the executives’ motion was not
a standard post-judgment motion for costs or fees, collateral to the
merits of the appeal. Instead, the order of dismissal itself is about
whether to award costs and fees. The district court entered the
order under our mandate that it “explain[] the basis” for initially
denying costs and fees and “weigh the equities and decide whether
to condition the dismissal on the companies’ payment of these
expenses.” Unlike Osterneck and Buchanan, the judgment from
which this appeal lies is wrapped up in whether to award costs and
fees –– to borrow a phrase from another area of the law, the two
are inextricably intertwined. And the executives’ motion concerns
the merits of that judgment — the district court’s decision to deny
costs and fees — not matters “wholly collateral to the judgment”
being appealed. Cf. Buchanan, 485 U.S. at 268. So Osterneck and
Buchanan do not control here.
After all, we have previously determined that a motion was
a proper Rule 59(e) one notwithstanding that it challenged only an
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order granting attorney’s fees. In McGregor the district court
entered a voluntary dismissal without prejudice but retained
jurisdiction to award costs and fees. 956 F.2d at 1019. It later
entered an order awarding the defendant attorney’s fees. Id. The
plaintiff filed a timely Rule 59(e) motion to alter or amend the
judgment awarding attorney’s fees. Id. at 1020. We concluded that
the Rule 59(e) motion tolled the time to file an appeal. Id. at 1021.
The motion in this case is similar to the one in McGregor; if
anything, this one is even more closely related to the merits of the
dismissal order than the one there. In McGregor the order granting
attorney’s fees was separate from the order of dismissal; here it’s
all one order. We conclude that the executives’ motion was a Rule
59(e) motion to alter or amend the judgment, which means the
district court’s finding that the motion was not a Rule 59(e) one
was error. And because the executives timely appealed the denial
of their Rule 59(e) motion, we have jurisdiction.2
2
The companies also contend that the district court’s determination that the
executives’ motion to alter or amend was not a motion under Rule 59(e) is the
“law of the case.” They assert that in the executives’ opening brief to us they
did not challenge the district court’s determination, so we are bound by it.
“Under the law of the case doctrine, a legal decision made at one stage of the
litigation, unchallenged in a subsequent appeal when the opportunity existed,
becomes the law of the case for future stages of the same litigation.” United
States v. Escobar-Urrego, 110 F.3d 1556, 1560 (11th Cir. 1997) (quoting
Williamsburg Wax Museum v. Historic Figures, 810 F.2d 243, 250 (D.C. Cir.
1987)). But the executives asserted in their opening brief that their motion
was a Rule 59(e) motion. And even if they had not, the law of the case doctrine
does not force us to ignore a conclusion that is clearly incorrect as a matter of
law. Jenkins Brick Co. v. Bremer, 321 F.3d 1366, 1370 (11th Cir. 2003) (explaining
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B. Merits
Having determined that we have jurisdiction, we turn to the
merits of the executives’ appeal. They first contend that the district
court failed to follow our mandate on remand. Specifically, they
argue that the court should not have considered whether the work
performed by the executives’ attorneys would be useful if the
companies refiled the case in federal court and should not have
conditioned any possible award of costs or fees on a potential
refiling. The executives also contend that the district court abused
its discretion because it denied them an immediate award of costs
and attorney’s fees and didn’t explain how their interests would be
protected by that decision. We address each argument in turn.
1. Whether the district court followed our mandate
We first consider whether the district court properly
followed our mandate when it conditioned the possible award of
that the law of the case doctrine does not apply where “the initial decision was
clearly erroneous and would work manifest injustice”) (quotation marks
omitted). More importantly perhaps, the law of the case doctrine applies to
courts of appeals decisions, not to district court decisions, and it does not
concern itself with what is or isn’t in a brief. See Heathcoat v. Potts, 905 F.2d
367, 370 (11th Cir. 1990) (“Under the law of the case doctrine, the findings of
fact and conclusions of law by an appellate court are generally binding in all
subsequent proceedings in the same case in the trial court or on a later
appeal.”) (quotation marks omitted).
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the executives’ costs and fees on the companies’ refiling of the
federal lawsuit. The court did.
“The law of the case doctrine and the mandate rule ban
courts from revisiting matters decided expressly or by necessary
implication in an earlier appeal of the same case.” Winn-Dixie
Stores, 881 F.3d at 843 (“The mandate rule is a specific application
of the ‘law of the case’ doctrine which provides that subsequent
courts are bound by any findings of fact or conclusions of law
made by the court of appeals.”) (quotation marks omitted).
District courts must follow our “clear and precise” instructions. See
id. They “cannot amend, alter, or refuse to apply an appellate
court’s mandate simply because an attorney persuades the court
that the decision giving rise to the mandate is wrong, misguided,
or unjust.” Id. at 844.
Although “a mandate is completely controlling as to all
matters within its compass,” a district court remains “free to pass
upon any issue which was not expressly or impliedly disposed of
on appeal.” Gulf Coast Bldg. & Supply Co. v. Int’l Bhd. of Elec.
Workers, 460 F.2d 105, 107 (5th Cir. 1972). 3 The mandate rule does
not apply “when the issue in question was outside the scope of the
prior appeal.” Transamerica Leasing, Inc. v. Inst. of London
Underwriters, 430 F.3d 1326, 1332 (11th Cir. 2005). So a district court
3
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc),
we adopted as binding precedent all decisions of the former Fifth Circuit
handed down before October 1, 1981.
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on remand is “free to address, as a matter of first impression, those
issues not disposed of on appeal.” Id. at 1331.
Here the district court properly followed our mandate. To
reiterate, the mandate instructed the district court to:
[A]ddress what portion of the work performed by the
executives’ attorneys in the federal litigation will be
useful in the state court litigation, explaining the basis
for its decision. After deciding this question, the
district court should weigh the equities and decide
whether to condition the dismissal on the companies’
payment of these expenses.
Hufnagle, 861 F. App’x at 361. On remand, the district court did
address “what portion of the work performed by the executives’
attorneys in the federal litigation will be useful in the state court
litigation.” The court found that the only work that would be
useful in the state court litigation was the work that the executives’
attorneys had done on the breach of contract issue. But after
weighing the equities, the court decided not to condition the
dismissal on the immediate payment of the costs and fees incurred
in any work. Instead, the court chose a different approach: it
explained that if the companies refiled the federal lawsuit, the
executives “may move for fees and costs, pursuant to Rule 41(d).”
Our mandate gave the district court every right to condition the
dismissal that way.
That’s because the issue of whether to award costs and fees
in a future refiled case was not before us in the first appeal, so it
wasn’t the subject of our mandate. We neither expressly nor
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implicitly decided whether an award of the executives’ costs and
fees should be granted if the companies refiled this federal lawsuit.
Our mandate did not forbid the district court from awarding costs
and fees — either immediately or upon a future motion after
refiling — nor did it require the court to award costs and fees.
In fact, the district court would not have violated our
mandate even if it had denied costs and fees altogether, regardless
of whether the federal case was refiled, so long as the court had (1)
identified the portion of the executives’ attorneys’ work on the
federal litigation that would not be useful in the state court case,
and (2) weighed the equities to determine whether to condition the
dismissal on the companies’ payment of that portion of the
executives’ costs and fees. Its decision might or might not have
been subject to attack as an abuse of discretion, but it would not
have been a violation of our mandate.
Our remand instructions did not preclude the court from
doing exactly what it did: conditioning the voluntary dismissal
without prejudice on the executives being able to move for costs
and fees if the companies refiled. Because our remand instructions
were broad enough to encompass the condition the district court
chose to impose, the court did not exceed the scope of our
mandate. See AIG Baker Sterling Heights, LLC v. Am. Multi-Cinema,
Inc., 579 F.3d 1268, 1271 (11th Cir. 2009) (noting that the district
court did not exceed the mandate where this Court had “decided
nothing expressly or by necessary implication about the district
court’s power to grant” other relief ).
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2. Whether the district court abused its discretion
The next issue is whether the court, even though it did not
violate the remand mandate, abused its discretion by allowing the
dismissal to be without prejudice subject only to the condition
imposed. It didn’t.
When granting a voluntary dismissal, “the district court
must exercise its broad equitable discretion under Rule 41(a)(2) to
weigh the relevant equities and do justice between the parties in
each case, imposing such costs and attaching such conditions to the
dismissal as are deemed appropriate.” McCants, 781 F.2d at 857; see
also Fed. R. Civ. P. 41(a)(2) (providing that a court may enter a
voluntary dismissal “on terms that the court considers proper”).
And under Rule 41(d)(1), “[i]f a plaintiff who previously dismissed
an action in any court files an action based on or including the same
claim against the same defendant, the court . . . may order the
plaintiff to pay all or part of the costs of that previous action.” Fed.
R. Civ. P. 41(d)(1).
A court entering a voluntary dismissal without prejudice
should seek to protect the defendant’s interests, and the defendants
here are the executives. See McCants, 781 F.2d at 856 (“[A] district
court considering a motion for dismissal without prejudice should
bear in mind principally the interests of the defendant, for it is the
defendant’s position that the court should protect.”). One way to
protect a defendant’s interest is by conditioning a voluntary
dismissal on the plaintiff ’s payment of the defendant’s costs and
fees. “Where the ‘practical prejudice’ of expenses incurred in
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defending the action can be ‘alleviated by the imposition of costs
or other conditions,’ the district court does not abuse its ‘broad
equitable discretion’ by dismissing the action without prejudice.”
Pontenberg v. Bos. Sci. Corp., 252 F.3d 1253, 1260 (11th Cir. 2001)
(quoting McCants, 781 F.2d at 859). But it does not follow that a
court always abuses its discretion if it grants a dismissal without
prejudice and does not immediately impose costs and fees on the
plaintiff.
We have said that a “plaintiff ordinarily will not be permitted
to dismiss an action without prejudice under Rule 41(a)(2) after the
defendant has been put to considerable expense in preparing for
trial, except on condition that the plaintiff reimburse the defendant
for at least a portion of his expenses of litigation.” McCants, 781
F.2d at 860. But “ordinarily” is not “always,” and there is more than
one way to protect the interests of a defendant who objects to a
plaintiff being allowed to dismiss its lawsuit without prejudice.
When a later, similar lawsuit between the parties is also involved,
“expenses awarded might be limited to those incurred in
discovering information and researching and pressing legal
arguments that will not be useful in the later suit.” Id.
Delaying the payment of the defendant’s costs and fees until
the plaintiffs refile their case, if they do, can also adequately protect
defendants. See Versa Prods., Inc. v. Home Depot, USA, Inc., 387 F.3d
1325, 1328 (11th Cir. 2004) (noting that a condition that a plaintiff,
“upon refiling, pay the fees and costs incurred by” the defendant “is
plainly intended to protect [the defendant] from the unfairness of
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23 Opinion of the Court 22-10048
duplicative litigation”). For example, in Pontenberg we recognized
that conditioning a voluntary dismissal without prejudice on the
plaintiff ’s payment of the defendant’s costs if the plaintiff refiled
could “adequately address[]” any “financial prejudice” the
defendant suffered. 252 F.3d at 1260. In Pontenberg, the defendant
argued that dismissal without prejudice was inappropriate because
“it had invested considerable resources, financial and otherwise, in
defending the action, including by preparing the then pending
summary judgment motion.” Id. at 1256. We stated that the
dismissal without prejudice was within the district court’s
discretion “particularly” because the court had conditioned it on
the payment of costs if the plaintiff were to refile, which protected
the interests of the defendant. Id. at 1260.
Here, the executives argue that the district court abused its
discretion by conditioning the dismissal on the possible payment of
their fees and costs if the companies refile because it is so unlikely
that the companies will refile. The executives argue that
unlikelihood makes the condition “illusory.” They assert that
because the statute of limitations on some of the claims in the
federal litigation was set to expire “in a matter of weeks,” this case
is distinguishable from Pontenberg and Versa Products, where we
upheld conditions like the one the district court imposed here.
Not so. In Pontenberg and Versa Products, the defendants had
incurred costs defending the claims against them and were not
guaranteed any later recoupment of those costs. See Versa Prods.,
387 F.3d at 1328; Pontenberg, 252 F.3d at 1256, 1260. The same is
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true here. The district court didn’t abuse its discretion by entering
the voluntary dismissal without prejudice and denying the
executives an immediate award of costs and fees, even though they
incurred some expense while defending the federal litigation and
even though they may never be reimbursed for it.
That’s because in this context protecting a defendant’s
interest is about protecting a defendant from having to defend
duplicative litigation, not about protecting a defendant from
having to pay to defend the first-filed lawsuit. See Versa Prods., 387
F.3d at 1328; Pontenberg, 252 F.3d at 1258 (explaining that Rule 41(a)
“allows the court to prevent prejudice to the defendant in such
cases by attaching conditions to the dismissal”); McCants, 781 F.2d
at 860 (noting that the court can impose monetary or “non-
monetary conditions designed to alleviate the prejudice the
defendant might otherwise suffer”); cf. Fisher v. P.R. Marine Mgmt.,
Inc., 940 F.2d 1502, 1502–03 (11th Cir. 1991) (“[W]e have said that in
most cases a voluntary dismissal should be allowed unless the
defendant will suffer some plain prejudice other than the mere
prospect of a second lawsuit . . . .”). We recognized that principle
in Versa Products when we explained that a future payment
condition helps protect the defendant against “the unfairness of
duplicative litigation.” 387 F.3d at 1328. Here, there was even
greater protection from the threat of duplicative litigation. The
statute of limitations was going to run on the federal trade secrets
claims shortly after the order of dismissal was entered. See 18
U.S.C. § 1836(d). And those claims were the sole basis the plaintiffs
asserted for federal jurisdiction.
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The executives insist that the reason the companies
abandoned their federal lawsuit was that they realized they were
going to lose it. But that argument makes the executives’ position
weaker because it means the companies were less likely to refile
the federal case, which makes it less likely that the executives would
incur additional costs and fees from federal litigation. Combine
that with the imminent running of the statute of limitations on the
sole asserted basis for federal jurisdiction, and this dismissal is like
the one in the Mickles case. See Mickles v. Country Club Inc., 887 F.3d
1270, 1280 (11th Cir. 2018). As we explained there: “Where a
dismissal without prejudice has the effect of precluding a plaintiff
from refiling his claim due to the running of the statute of
limitations, the dismissal is tantamount to a dismissal with
prejudice.” Id. (quotation marks omitted). And if the voluntary
dismissal without prejudice is in effect a dismissal with prejudice,
the executives were exposed to less “practical prejudice” than in
those cases where the plaintiffs had more time to refile before the
statute of limitations ran or where the plaintiffs were more likely
to refile than the plaintiffs in this case are.
On the same subject, the executives insist: “Now that the
statute of limitations has expired, a remand to require the district
court to explain its reasoning would be useless and moot, as there
can be no future federal case.” That is a self-destructive argument.
If, as the executives insist, there is not going to be a future federal
case, they will not have to incur any duplicative costs and fees
defending one. And that means there is no basis for ordering the
plaintiff companies to pay costs and fees as a condition of
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dismissing this litigation. The purpose of conditioning a dismissal
without prejudice on payment of costs and fees is not to punish the
dismissing plaintiff but to protect the defendants from having to
pay twice to defend against the same claims in federal court. Here
there was no need to do that because, as the defendant executives
themselves stress, there was not going to be a future federal case.
(And, as predicted, there wasn’t one.)
Finally, the executives argue that the district court abused its
discretion by failing to explain its reasoning for deferring the
possible payment of costs and fees to a hypothetical refiled federal
case. But the district court did explain the reasoning behind its
decision. It’s undisputed that the executives incurred considerable
fees and expenses litigating the federal lawsuit. With the benefit of
additional briefing on remand, the court determined that the work
their attorneys devoted to the breach of contract question is the
only work that would be useful in the state court case. It concluded
that the rest of the work would be useful only if the plaintiffs
refiled their case; the court cited Pontenberg and Versa Products for
the proposition that it was within the court’s discretion to
condition the dismissal on payment of costs and fees if the plaintiffs
refiled. The court explained that this condition “offered [the
executives] protection from unfairness and [the companies] are not
prejudiced in their right to renew their litigation.” That reasoning
is clear enough, although it was not what the executives were
hoping to hear.
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The district court sufficiently protected the executives from
the prejudice of duplicative litigation by essentially inviting them
to move for payment of their costs and fees if the companies ever
refiled their federal lawsuit. The court adequately explained its
reasoning for granting the dismissal without prejudice on that
condition. In all aspects of the decision, the court acted within its
discretion. See generally Friends of the Everglades, 678 F.3d at 1201
(“We will find an abuse of discretion only when a decision is in
clear error, the district court applied an incorrect legal standard or
followed improper procedures, or when neither the district court’s
decision nor the record provide sufficient explanation to enable
meaningful appellate review.”).
AFFIRMED.