United States District Court, N.D. Illinois, Eastern Division
October 20, 2004.
CACIQUE, INC.; and CACIQUE DISTRIBUTORS, U.S., Plaintiffs,
JOSEPH A. CANNAROZZI, CANNAROZZI AND CO., MARIA J. GONZALEZ, and MARTHA SALAZAR, Defendants.
The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs, Cacique, Inc. and Cacique Distributors, filed suit
against Defendants, Joseph A. Cannarozzi, Cannarozzi and Company,
Maria J. Gonzalez, and Martha Salazar. After Defendants filed a
motion for summary judgment, Plaintiffs were granted a voluntary
dismissal without prejudice. Presently before the Court is
Defendants' Motion to Alter or Amend Order/Judgment. Defendants
seek attorneys' fees and costs for the dismissal of this action.
Under Federal Rule of Civil Procedure 59(e), a judgment may be
altered or amended to correct errors. The rule allows district
courts to correct errors, thus preventing unnecessary appeals.
Russell v. Delco Remy Div. of General Motors, 51 F.3d 746, 759
(7th Cir. 1995). BACKGROUND
The facts, for the purposes of this motion, are as follows.
After Cannarozzi stopped working for Plaintiffs, he was employed
by Plaintiffs' competitor. Cannarozzi then hired Gonzalez and
Salazar to work for him. Plaintiffs filed suit against
Defendants, all former employees of Plaintiffs. Plaintiffs
alleged that Defendants would inevitably disclose and had
threatened to misappropriate Plaintiffs' trade secrets by working
for Plaintiffs' competitor. Defendants filed counterclaims,
including a claim for interference with contractual relations.
During the course of discovery, Plaintiffs learned that Salazar
and Gonzalez were no longer employed by Cannarozzi. Thereafter,
Defendants filed a motion for summary judgment. While the motion
for summary judgment was pending, Plaintiffs completed the
deposition of Cannarozzi. At this deposition, Plaintiffs learned
that Cannarozzi was no longer employed by Plaintiffs' competitor.
Without significant delay, Plaintiffs then sought a voluntary
dismissal of the action. A voluntary dismissal without prejudice
was granted, but no terms and conditions were imposed upon
Thereafter, Defendants filed two motions. First, Defendants
filed the instant motion, which seeks to impose attorneys' fees
upon Plaintiffs as a term and condition of the voluntary
dismissal. Second, Defendants were granted leave to file an
amended counterclaim; Defendants sought to add additional claims
seeking attorneys' fees. ANALYSIS
Defendants seek to alter or amend the order granting
Plaintiffs' Motion for Voluntary Dismissal. Specifically,
Defendants seeks to impose attorneys' fees as a "term and
condition" for Plaintiffs' voluntary dismissal without prejudice,
which occurred after Defendants filed a motion for summary
Federal Rule of Civil Procedure 41(a)(2) provides that after a
defendant has filed a motion for summary judgment, "an action
shall not be dismissed at the plaintiff's insistence save upon
order of the court and upon such terms and conditions as the
court deems proper." Marlow v. Winston & Strawn, 19 F.3d 300,
303 (7th Cir. 1994) (Marlow). If a defendant will suffer "legal
prejudice" from a voluntary dismissal, then terms and conditions
may be imposed upon the plaintiff. See United States v. Outboard
Marine Corp., 789 F.2d 497, 502 (7th Cir. 1986) (Outboard
Marine). However, if a "term and condition" is imposed upon a
voluntary dismissal, a plaintiff must be afforded an opportunity
to withdraw the motion for voluntary dismissal. See Marlow,
19 F.3d at 304-05.
Four factors are used to guide the determination of whether a
defendant will suffer legal prejudice: " the defendant's
effort and expense of preparation for trial,  excessive delay
and lack of diligence on the plaintiff in prosecuting the action,
 insufficient explanation for the need to take a dismissal,
and  the fact that a motion for summary judgment has been
filed by the defendant." Outboard Marine, 789 F.2d at 502
(quoting Pace v. S. Express Co., 409 F.2d 331, 334 (7th Cir.
1969)). A defendant may have to defend the same suit if it is
refiled without protection by the doctrine of res judicata from
a prior favorable ruling on summary judgment; therefore,
attorneys' fees may be imposed as a "term and condition" for a post-summary-judgment motion for voluntary dismissal without
prejudice. Marlow, 19 F.3d at 303. Alternatively, a dismissal
with prejudice can be imposed as a "term and condition" of the
voluntary dismissal. Marlow, 19 F.3d 303. However, neither
"term and condition" is mandatory, and a district court has
discretion in making this determination. See Kovalic v. Dec
Int'l, Inc., 855 F.2d 471, 474 (7th Cir. 1988).
Here, Defendants have incurred some effort and expenses in
preparing for trial. Discovery has been completed, and
dispositive motions were filed. However, Defendants also are
prosecuting counterclaims. Thus, some of the effort and expenses
Defendants have incurred in defending the action may also be
useful in this regard.
Plaintiffs have also diligently prosecuted this action.
Although Defendants contend that Plaintiffs did not take
discovery until after the case was pending for five months,
Plaintiffs filed a motion to dismiss a counterclaim during this
time period and timely responded to an amended counterclaim filed
by Defendants. Defendants have not identified any other absence
of diligence by Plaintiffs.
Plaintiffs provide a reasonable explanation for the voluntary
dismissal. Plaintiffs did not learn Cannarozzi was no longer
employed by Plaintiffs' competitor until after the motion for
summary judgment was pending and filed their motion for voluntary
dismissal without delay. However, Plaintiffs have presented no
reasons for not diligently dismissing the action against Salazar
and Gonzalez after Plaintiffs learned these two Defendants were
no longer employed by Cannarozzi.
Plaintiffs now assert that they would be willing not to object
to a dismissal with prejudice. Moreover, Defendants also have
pending counterclaims that seek attorneys' fees. Therefore, Plaintiffs' voluntary dismissal is amended to
include the condition of prejudice.
For the foregoing reasons, Defendants' Motion to Alter or Amend
the Order/Judgment is denied with respect to imposing attorneys'
fees. The order dismissing Plaintiffs' claims is amended to
reflect that the dismissal is with prejudice.
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