Thorp v. John Scarne and Simon & Schuster, Inc., 599 F.2d 1169 (2d Cir. 1979)

MESKILL, Circuit Judge:

Rule 41 of the Federal Rules of Civil Procedure permits a plaintiff, under certain conditions, to dismiss an action without prejudice and without the consent of either the court or the defendant. This appeal presents for our consideration two issues: (1) our jurisdiction to entertain an appeal from a district court order purporting to vacate a plaintiff’s notice of dismissal filed in apparent conformance with Rule 41(a)(l)(i), and (2) the proper interpretation of the conditions specified in Rule 41(a)(l)(i) under which the right to voluntary dismissal may be exercised.

The circumstances that prompted plaintiff-appellant to initiate and subsequently attempt to dismiss the lawsuit providing the backdrop for this appeal may be briefly set out. Edward O. Thorp, Professor of Mathematics at the University of California at Irvine and holder of a Ph.D. in mathematics, is a consultant and author whose major fields of interest include games of chance and gambling. Using his knowledge

of probability and game theory, Thorp has devised a system for the playing of the card game known as “21” or “blackjack.” Thorp’s system, which purportedly helps its adherents to improve their chances of winning the game and thus to lower their chances of losing money, is explained in detail in Thorp’s book, “Beat the Dealer; A Winning Strategy for the Game of 21,” a “best-seller” first published in 1962. John Scarne, also a consultant and author on the subject of gambling, has dismissed Thorp’s system as unworkable and has rejected as inaccurate Thorp’s claims concerning the system’s efficacy in his own recently released book, “Scarne’s Guide to Casino Gambling.”

In September of 1978, after seeing portions of Scarne’s book in the form of printer’s galleys, Thorp sued Scarne and his publisher, Simon & Schuster, Inc., in an effort to halt distribution of “Scarne’s Guide to Casino Gambling.” Thorp’s complaint alleged that publication of Scarne’s book would constitute unfair competition under the Lanham Act, 15 U.S.C. § 1125(a); copyright infringement, 17 U.S.C. § 101 et seq.; common law unfair competition; injury to his business under New York’s General Business Law §§ 279-n and 368-d; violation of his right to privacy and publicity under the common law and under New York’s Civil Rights Law §§ 50 and 51; trade disparagement or trade libel under the common law; and defamation under the common law. In addition, Thorp alleged that he had no adequate remedy at law and that he would be irreparably harmed by distribution of defendants’ book.

Relying solely on his statutory and common law unfair competition claims, Thorp requested a temporary restraining order prohibiting Simon & Schuster from releasing copies of Scarne’s book to retail stores. A hearing on the application for a temporary restraining order was begun on October 13, 1978, and was continued on October 18, 1978. On October 18, Judge Motley denied Thorp’s application for a temporary restraining order and set October 27 as the date for a hearing on Thorp’s application for a preliminary injunction. On October 19, the day after the application for a temporary restraining order was denied, Thorp, apparently feeling that the cards were stacked against him, filed a notice of voluntary dismissal under Ped.R. Civ.P. 41(a)(l)(i). A few hours later, defendants filed a motion for summary judgment on two of plaintiff’s causes of action: the Lanham Act unfair competition claim and the copyright infringement claim. On October 23 Judge Motley, apparently inadvertently, “so ordered” plaintiff’s notice of dismissal.1 By letter dated October 25, defendant^ moved to vacate the notice of dismissal and requested that the action go forward; by letter dated October 26, Thorp opposed this motion. On October 27 Judge Motley, ruling from the bench, vacated her dismissal order and Thorp’s notice of dismissal. Plaintiff’s requests for reargument of the vacatur decision, and in the alternative, for certification of the decision under 28 U.S.C. § 1292(b), were denied. Thorp filed a notice of appeal. By stipulation of the parties and order of the district court, the due date for Thorp’s response to defendants’ motion for summary judgment has been extended until ten days after final disposition of Thorp’s appeal.

Before considering whether the district court erred in denying Thorp the opportunity voluntarily to dismiss his action without prejudice under Rule 41(a)(l)(i), we must determine whether the district court’s vaca-tur of Thorp’s notice of dismissal is an appealable order, as the second question goes to our jurisdiction to decide the first question.

I. APPEALABILITY

The appealability of an order vacating a notice of dismissal under Rule

41(a)(1)(i) has been squarely upheld in this Circuit. In Littman v. Bache & Co., 246 F.2d 490 (2d Cir. 1957), defendant-appellee moved to dismiss plaintiff’s appeal on the ground that the vacatur order was interlocutory. The Court held that although such an order is “not a final disposition of the action, but reopens the case for consideration upon the merits . . . it is settled that ... if the lower court had altogether lost jurisdiction over the action when the order was entered, an appeal from it will not be dismissed, but will be decided on the merits.”2 246 F.2d at 492 (footnote omitted), appeal decided on the merits in Littman v. Bache & Co., 252 F.2d 479 (2d Cir. 1958). See also Kilpatrick v. Texas & P. Ry. Co., 166 F.2d 788 (2d Cir.), cert. denied, 335 U.S. 814, 69 S.Ct. 32, 93 L.Ed. 369 (1948) (L. Hand, J.) (reversing on appeal district court order vacating plaintiff’s notice of dismissal).3 Because, under the Littman formula, the question of our jurisdiction is thus dependent on our determination of the validity of the district court’s action, we must of course assert jurisdiction in order to make that determination. Cf. Phillips v. Negley, 117 U.S. 665, 671-72, 6 S.Ct. 901, 903, 29 L.Ed. 1013 (1886) (if an order “was made without jurisdiction on the part of the court making it, then it is a proceeding which must be the subject of review by an appellate court”; “the question of our jurisdiction is necessarily included in the question of the validity of the proceeding [below]”). See also Larsen v. Wright & Cobb Lighterage Co., 167 F.2d 320, 322 (2d Cir. 1948). Compare 5 Moore’s Federal Practice ¶41.02[6], at 41-43, and 9 Wright & Miller, Federal Practice and Procedure: Civil § 2376, at 246, citing Ex Parte Skinner & Eddy Corp., 265 U.S. 86, 44 S.Ct. 446, 68 L.Ed. 912 (1924), and suggesting application for a prerogative writ as the appropriate path for review of an interlocutory order subverting a plaintiff’s right to dismissal under Rule 41(a)(1)(i).

II. RULE 41(a)(l)(i)

Although there is no transcript of the hearing held on appellant’s application for temporary relief, it appears that the court indicated an inclination to grant a motion by defendants for partial summary judgment if such a motion were to be made and that the defense indicated an inclination to make such a motion. However, the district court’s account of the hearing reveals that the defense was “directed” by the court to file a “formal” motion for summary judgment.4 It appears, then, that the court and

the litigants were well aware that no such motion had been filed or served, although the probable ruling on such a motion, if forthcoming, was clear to all. The trial court subsequently found that defendants’ “formal” notice of motion for partial summary judgment was not filed (and presumably was not served) until several hours after Thorp filed his Rule 41(a)(1)(i) notice.5 Defendants concede that to date no answer has been served.

Under the circumstances the unambiguous wording of the rule would appear to dictate that Thorp’s notice of dismissal be given effect.

Fed.R.Civ.P. 41(a)(1).6 In vacating plaintiff’s notice of dismissal, however, the district court stated that defendants’ brief in opposition to Thorp’s application for a temporary restraining order would be treated as the “equivalent” of a motion for summary judgment. The district court then concluded that service of this “equivalent” by defendants had terminated Thorp’s right unilaterally to dismiss his action under Rule 41(a)(1)(i). We disagree.

The defense brief to which the district court referred advanced a number of arguments against the granting of Thorp’s request for temporary and preliminary relief. Among these arguments was the contention that Thorp had alleged no conduct on the part of defendants cognizable under Section 43(a) of the Lanham Act. In concluding this section of their brief, defendants urged:

Defendants’ Memorandum of Law In Opposition to Plaintiff’s Motion for Temporary and Preliminary Injunctive Relief at 17 (emphasis added). Defendants correctly point out that Fed.R.Civ.P. 12(b) provides that if on a motion to dismiss for failure to state a claim upon which relief can be granted “matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment . . . It is not disputed that both sides submitted affidavits to the court. Assuming for the moment that the affidavits submitted presented “matters outside the pleading,” compare Terry v. Pearlman, 42 F.R.D. 335 (D.Mass.1967), defendants have failed to show that any motion to dismiss had been filed or served7 Defendants, not surprisingly, have cited no authority for the proposition that arguments advanced in a party’s memorandum of law may be considered the equivalent of motions properly filed and served.

Far from being hurdles set up to trip unwary litigants, the filing and service requirements of the Federal Rules ensure that the parties to a proceeding have notice of all outstanding pleadings or motions which may call for a response before the court with jurisdiction over that proceeding makes its ruling. Defendants offer no reason why they should be exempted from conforming their conduct to these easy to

follow guidelines. On the other hand, there are many advantages to enforcing the rules as written. We conclude therefore that because defendants filed and served no motion to dismiss plaintiff’s complaint (or any part thereof) for failure to state a claim, no Rule 12(b) transformation of such a motion into a motion for summary judgment could have taken place.

It follows that we have no occasion to decide whether such a motion to dismiss, if accompanied by matter outside the pleading, would qualify as a motion for summary judgment for Rule 41(a)(1)(i) purposes. See 5 Moore’s Federal Practice ¶ 41.02[3], at 41-32; compare Tele-Views News Company v. S.R.B. TV Publishing Co., 28 F.R.D. 303, 304 (E.D.Pa.1961) (viewing 12(b)(6) motion as equivalent to motion for summary judgment for Rule 41(a)(1)(i) purposes whether or not accompanied by matter outside pleadings) with Scam Instrument Corp. v. Control Data Corp., 458 F.2d 885 (7th Cir. 1972) (motion purportedly seeking partial summary judgment held to be merely motion to dismiss; plaintiff’s right to voluntary dismissal not terminated). See also the following cases declining to equate various motions with motion for summary judgment: Merit Ins. Co. v. Leatherby Ins. Co., 581 F.2d 137 (7th Cir. 1978); Plains Growers, Inc. v. Ickes-Braun Glasshouses, Inc., 474 F.2d 250 (5th Cir. 1973); Nix v. Fulton Lodge No. 2 of International Association of Machinists & Aerospace Workers, 452 F.2d 794, 797-98 (5th Cir. 1971), cert. denied, 406 U.S. 946, 92 S.Ct. 2044, 32 L.Ed.2d 332 (1972).

Although the possibility of partial summary judgment was discussed at the hearing and was no doubt eagerly contemplated by defendants, summary judgment “in the air” simply does not satisfy the explicit Rule 41 requirement that a defendant follow one of two specified courses of action in order to terminate plaintiff’s right to dismiss his action without prejudice. Because a motion for partial summary judgment was only contemplated rather than actually served, we may also leave for another day the question whether a motion for partial summary judgment qualifies as a motion for summary judgment under Rule 41(a)(1)(i).

As an alternative to their “equivalency” argument, appellees contend that even in the absence of service of an answer or a motion for summary judgment, plaintiff’s right voluntarily to dismiss the action had been foreclosed before he filed his notice of dismissal because the merits of the controversy had been raised before the district court.

Only once since the adoption of Rule 41 has this Court relied on this “merits of the controversy” rationale to reach a result not authorized by the plain language of the rule. In Harvey Aluminum v. American Cyanamid Co., 203 F.2d 105 (2d Cir.), cert. denied, 345 U.S. 964, 73 S.Ct. 949, 97 L.Ed. 1383 (1953), plaintiffs moved for, and obtained, an ex parte temporary restraining order pending the hearing and determination of their motion for a preliminary injunction against the transfer of certain assets by defendant. After an evidentiary hearing lasting several days and generating a record of over 400 pages, the district court dissolved the temporary stay and denied a preliminary injunction, finding inter alia that plaintiffs’ chances of success on the merits were “remote, if not completely nil.” 203 F.2d at 107. Plaintiffs then amended their complaint, filed a notice of appeal from the denial of a preliminary injunction and applied for a stay pending the appeal. Defendants in turn obtained an ex parte order staying plaintiffs and directing them to show cause why they should not be enjoined from commencing legal proceedings in any other jurisdiction involving the same subject matter. In response, plaintiffs filed a notice of dismissal. Defendants appealed to this Court from the district judge’s denial of their motion to vacate the notice of dismissal. Reasoning that the purpose of Rule 41 was to facilitate voluntary dismissals but to limit them to an early stage of the proceedings before issue is joined, and noting that the merits of the controversy had been “squarely raised” in the course of the extended proceedings below, this Court

held that a literal application of Rule 41(a)(1) to the case at hand “would not be in accord with its essential purpose of preventing arbitrary dismissals after an advanced stage of a suit has been reached.” 203 F.2d at 108.

Harvey Aluminum has not been well received. Although its rationale is occasionally reiterated in dictum, subsequent cases have almost uniformly either distinguished Harvey Aluminum, limiting the case to its particular factual setting, or forthrightly rejected it as poorly reasoned. See, e. g., distinguishing Harvey Aluminum: Pilot Freight Carriers, Inc. v. International Brotherhood of Teamsters, 506 F.2d 914, 916 (5th Cir.), cert. denied, 422 U.S. 1048, 95 S.Ct. 2665, 45 L.Ed.2d 700 (1975) (Harvey Aluminum distinguished as motivated by “exceptional equitable considerations”); Littman v. Bache & Co., supra, 252 F.2d 479; Toulmin v. Industrial Metal Protectives, Inc., 135 F.Supp. 925 (D.Del.1955); Progressive Steelworkers Union v. International Harvester Corp., 70 F.R.D. 691 (N.D.Ill.1976); Sheldon v. Amperex Electronic Corporation, 52 F.R.D. 1, 8-9 (S.D.N.Y.), aff’d, 449 F.2d 146 (2d Cir. 1971); Gianis & Co. v. Ostrau, 43 F.R.D. 405 (S.D.N.Y.1967) (Mansfield, J.); Tele-Views News Company v. S.R.B. TV Publishing Co., supra, 28 F.R.D. at 304 (“we are not free to rewrite the provisions of Rule 41”). See, e. g., rejecting Harvey Aluminum: D. C. Electronics v. Nartron Corp., 511 F.2d 294 (6th Cir. 1975); Pilot Freight Carriers, Inc. v. International Brotherhood of Teamsters, supra, 506 F.2d at 916 (“necessity of deciding in every case ‘How much preparation is too much?’ in itself demonstrates the relative undesirability of the subjective approach endorsed in Harvey as opposed to the objective standards embodied in the Rule”). See also Carter v. United States, 547 F.2d 258, 259 (5th Cir. 1977) (“Rule 41 sanctions no case-by-case analysis of the amount of effort expended by defendants. . . We have consistently held that rule 41(a)(1) means what it says.”); 5 Moore’s Federal Practice ¶41.02[3], at 41-33 to 41-34; 9 Wright & Miller, Federal Practice and Procedure: Civil § 2363, at 157-58. Indeed, four years after the decision in Harvey Aluminum, in Littman v. Bache & Co., supra, 246 F.2d at 493, our own Court declined to agree or disagree with the Harvey Aluminum view “that the rule is not to be construed as it reads.”

This cool reception is no doubt due in large part to the realization that while Harvey Aluminum may have furthered one purpose of Rule 41(a)(l)(i), that of confining dismissals to an early stage of the proceedings, it did so at the expense of a concurrent and perhaps equally important purpose, that of establishing a bright-line test marking the termination of a plaintiff’s otherwise unfettered right voluntarily and unilaterally to dismiss an action.

D. C. Electronics, Inc. v. Nartron Corp., supra, 511 F.2d at 297. The wisdom of the bright-line test established by the rule is attested to by the relative infrequency with which the courts of appeals have been called upon to resolve disputes over interpretation of its provisions.

In addition, as the Fifth Circuit noted in Pilot Freight Carriers, Inc. v. International Brotherhood of Teamsters, supra, because the substantial likelihood of plaintiff’s success on the merits is always a factor to be weighed by the district court in ruling on an application for preliminary injunctive relief, if Harvey Aluminum is broadly read as proscribing dismissal under Rule 41(a)(1)(i) whenever the merits of a controversy have

been presented to the district court, the result would be a “flat amendment of Rule 41(a)(1) to preclude dismissal by notice in any case where preliminary injunctive relief is sought.” 506 F.2d at 916-17. We must agree with the view that “[i]f such a comprehensive modification of the Rule is desirable, the request must be addressed to the Supreme Court and to Congress . . . .” 506 F.2d at 917. To date, although Rule 41 has been amended four times, such a comprehensive modification has not been attempted. D. C. Electronics, Inc. v. Nartron Corp., supra, 511 F.2d at 296, 298.

Defendants have advanced no countervailing reason that would justify extension of the rationale of Harvey Aluminum to cover a case such as the one before us. Here plaintiff filed a notice of dismissal merely 13 days after initiating the action by filing his complaint. The district court had conducted a short untranscribed hearing, lasting less than two hours, during which no testimony was given. Only three causes of action out of the seven alleged in the complaint were addressed in either argument or memoranda of law by either side.9 Although there may be a point in legal proceedings where the purpose of Rule 41(a)(l)(i) would be better served by abandoning a literal interpretation, the instant case does not approach that point.

In contrast to other methods of dismissal contemplated by Rule 41, voluntary dismissal prior to defendant’s service of an answer or a motion for summary judgment is effective in the absence of any action by the court.

American Cyanamid Co. v. McGhee, 317 F.2d 295, 297 (5th Cir. 1963); D. C. Electronics, Inc. v. Nartron Corp., supra, 511 F.2d at 296; Miller v. Reddin, 422 F.2d 1264 (9th Cir. 1970). Obviously, Rule 41(a)(1)(i) dismissals will no longer be self-executing, as intended, if there is to be frequent judicial intervention for the purpose of determining whether the “equivalent” of an answer or a motion for summary judgment has been served or for the purpose of weighing whether the merits have been sufficiently considered by the court to warrant terminating the plaintiff’s right to dismiss the proceedings. We hold, therefore, that at least in cases falling short of the extreme exemplified by Harvey Aluminum, notices of dismissal filed in conformance with the explicit requirements of Rule 41(a)(1)(i) are not subject to vacatur.

Although application of Rule 41(a)(l)(i) as written may no doubt on occasion be a source of great frustration to a defendant whose hopes of early victory on the merits are dashed by the filing of a notice of dismissal by a plaintiff seeking to avoid defeat, it does not follow that a defendant is left

D. C. Electronics, Inc. v. Nartron Corp., supra, 511 F.2d at 298. The rule further protects defendants by providing that a plaintiff “can but once voluntarily dismiss without prejudice.” Id. (footnote omitted). See also, on two-dismissal rule, Poloron

Prod. Inc. v. Lybrand Ross Bros. & Montgomery, 534 F.2d 1012 (2d Cir. 1976).

For these reasons we decline to bend the rule by viewing as done that which was almost done.10 The order appealed from is vacated.