Finality After Rule 41 Dismissals of Claims & Actions

In In re Esteva, the Eleventh Circuit dismissed an appeal after concluding that a Rule 41(a)(1)(A) voluntary dismissal was ineffective. The stipulated dismissal purported to dismiss all unresolved claims. But according to the Eleventh Circuit, that’s not allowed—Rule 41(a)(1)(A) permits the voluntary dismissal of only entire actions, not individual claims. With the voluntary dismissal ineffective, the unresolved claims were still pending in the district court.

Most (if not all) courts of appeals hold that litigants cannot dismiss individual claims via Rule 41(a)(1)(A) dismissals. But I’m not so sure about that reading of the rule.

The Esteva Dismissal

Simplifying a fair bit, Esteva stemmed from adversarial claims filed in a bankruptcy. The bankruptcy court resolved nearly all of the parties claims, leaving only a single unjust-enrichment claim pending.

Despite that pending claim, the defendant appealed to the district court, which affirmed the bankruptcy court’s decision. The defendant then sought further review in the Eleventh Circuit. But seeing as the bankruptcy court had not resolved all of the parties’ claims, the court of appeals sent a notice to the parties questioning appellate jurisdiction.

In response, and on the eve oral argument, the parties stipulated to dismiss the pending unjust-enrichment claim with prejudice via Federal Rule of Bankruptcy Procedure 7041 (which applies Federal Rule of Civil Procedure 41(a)(1)(A)(ii) to adversary proceedings in bankruptcy).

Some Jurisdictional Brush Clearing

The Eleventh Circuit initially waded through several possible grounds for appellate jurisdiction. The court first concluded that the resolution of all but one claims was not the final resolution of a discrete dispute in bankruptcy. The court then went on to explain that the decision was not a traditional final decision under 28 U.S.C. § 1291, a “marginally final” decision (in which the appealed issues are “fundamental to further conduct of the case”), or a “practical finality” appeal under Forgay v. Conrad. Finally, the court determined that the decision might be final under the cumulative finality doctrine. But that doctrine would apply only if the bankruptcy court had subsequently entered a final decision.

That last point led to the focus of Esteva: did the voluntary dismissal result in a final decision, such that the earlier notice of appeal could relate forward to that decision?

Limiting Rule 41(a)(1)(A) to Dismissals of Actions

The Eleventh Circuit concluded that the voluntary dismissal had not resulted in a final decision. The dismissal purported to dismiss certain claims and not the entire action. But Rule 41(a)(1)(A) permits the voluntary dismissal of only entire actions—not discrete claims.

Rule 41(a)(1)(A) governs voluntary dismissals by plaintiffs. It says:

Without a Court Order. Subject to Rules 23(e), 23.1(c), 23.2, and 66 and any applicable federal statute, the plaintiff may dismiss an action without a court order by filing:

(i) a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment; or

(ii) a stipulation of dismissal signed by all parties who have appeared.

The Eleventh Circuit pointed out that this provision says nothing about dismissing particular claims. Instead, it requires that plaintiffs dismiss the entire action.

The court went on to note that the choice of wording seems purposeful, as other parts of Rule 41 distinguish between claims and actions. Rule 41(b)—which governs involuntary dismissals—says that “a defendant may move to dismiss the action or any claim against it” if the plaintiff fails to prosecute. And Rule 41(d) permits defendants to recover the costs of litigating an action if “a plaintiff who previously dismissed an action in any court files an action based on or including the same claim against the same defendant.” “Had the Rule’s drafters intended to allow for the voluntary dismissal of an ‘action’ or a ‘claim’ under Rule 41(a)(1)(A), they would have said so; instead, they only chose to allow for the dismissal of ‘an action.’”

Finally, the Eleventh Circuit has already held that Rule 41(a) allows the dismissal of only entire actions, not particular claims. The court added that all circuits that have squarely addressed this issue have reached the same conclusion.

The parties’ stipulated dismissal was thus ineffective. So the unjust-enrichment claim was still pending in the bankruptcy court. Once that claim was resolved, any aggrieved party could appeal.

Rule 41, Claims & Actions

The Eleventh Circuit is hardly alone in holding that Rule 41(a)(1)(A) permits the dismissal of only entire actions. But I’m not entirely convinced. I have four thoughts.

The first concerns the text. To be sure, the rule speaks of dismissing an action, not claims. But when the parties voluntarily dismiss all unresolved claims, they are effectively dismissing the action. Once all claims are resolved—by the district court or via voluntary dismissal—there’s nothing left to do; the action is over. So Rule 41 might be read to permit the dismissal of claims so long as that dismissal ends the action. And frankly, I imagine that this is the main (perhaps only) scenario in which parties would want to dismiss particular claims via Rule 41(a)(1)(A).

My second thought concerns the exception for all claims against a single defendant. As the Eleventh Circuit acknowledged in Esteva, courts have recognized an exception to the “actions only” rule in multi-defendant suits:

We have recognized an exception to this rule, allowing plaintiffs to voluntarily dismiss less than the entire action so long as they dismiss a defendant in its entirety (i.e., they dismiss all of the claims brought against that defendant).

But what is the basis for this exception? The text still says “action.” And a multi-defendant action is still a single action. That’s why the resolution of all claims against one defendant is not appealable when claims against other defendants remain pending. Perhaps this is all an argument to do away with the multi-defendant exception. (That was one of the dissent’s arguments in Williams v. Taylor Seidenbach Co.). But it at least shows some inconsistency in courts’ treatment of Rule 41.

Third and similarly is the treatment of Rule 41(a)(2). It says that “[e]xcept as provided in Rule 41(a)(1), an action may be dismissed at the plaintiff’s request only by court order, on terms that the court considers proper.” Despite Rule 41(a)(2)’s use of the term “action,” courts have used this paragraph to dismiss unresolved claims. Perhaps a distinction can be drawn with the paragraph’s provision for “terms that the [district] court considers proper.” But if “action” as used in Rule 41 means only the entire “action,” then Rule 41(a)(2) probably shouldn’t be used to dismiss all unresolved claims.

Fourth and finally, courts sometimes cite to the Seventh Circuit’s decision in Berthold Types Ltd v. Adobe Systems Inc. for the proposition that Rule 41(a)(1) permits the voluntary dismissal only of entire actions. But that reliance is misplaced. To be sure, Berthold Types said that “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.” But Berthold Types said this in a different context. The case concerned whether a summary-judgment motion cut off the plaintiff’s right to unilaterally dismiss under Rule 41. The plaintiff had argued that the defendant’s motion was directed only to particular claims, meaning that the plaintiff retained the right to unilaterally dismiss other claims. The Seventh Circuit disagreed, holding that this right ended once the defendant filed its motion in the action, regardless of what claims it addressed.

This is not to say that I ultimately disagree with the predominant reading of Rule 41(a)(1)(A). But I have my doubts.

One final note: the Advisory Committee on Civil Rules is considering whether Rule 41 should be amended to address this issue.

In re Esteva, 2023 WL 2033361 (11th Cir. Feb. 16, 2023), available at the Eleventh Circuit and Westlaw