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Ninth Circuit:
No Abuse in Judge Imposing Two Conditions to Voluntary Dismissal of Putative Class Action
Opinion Says There’s No Abuse of Discretion, in Case Accusing Ice Cream Company of Selling Underfilled Pints
By Kimber Cooley, associate editor
The Ninth U.S. Circuit Court of Appeals yesterday denied a petition for a writ of mandamus challenging an order granting the plaintiffs’ motion for voluntary dismissal of their complaint, without prejudice, on two conditions—that the petitioner pays the defendant, the maker of popular Halo Top ice cream, $235,240.67 in attorney fees and must file any new case arising out of the same allegations in the same venue and before the same judge.
In a memorandum opinion signed Circuit Judge Morgan Christen and by Senior Circuit Judges Richard C. Tallman and Richard R. Clifton, the court declared that District Court Judge Todd W. Robinson of the Southern District of California did not abuse his discretion in granting the conditional relief, saying that the venue limitation was justified to prevent “gamesmanship” and that the fees were properly tailored.
Requesting that the court vacate the order, and remand with instructions to grant the motion without the fee and venue conditions, were seven plaintiffs in a June 2018 putative class action against Eden Creamery LLC, the then-manufacturer of Halo Top products, and its CEO Justin Woolverton.
In the complaint, they allege:
“Halo Top underfills its ‘pints’ of ice cream. Dramatically so at times, and as a course of business. Purchasers of the premium-priced ice cream simply have no idea how much ice cream they will get each and every time they buy a Halo Top ‘pint.’ And Halo Top has been doing this for years.”
Saying that the company has “successfully marketed itself as a ‘guilt-free’ ice cream,” they assert that the company charges higher prices and “short-chang[es]” its customers.
Change in Theory
After extensive discovery, the plaintiffs’ theory of liability changed from the “underfilled” theory to one of fraud by omission. They now assert that the problem is not that the pints were shorted at the time of manufacturing but that the product is “inherently defective” due to an alleged tendency to shrink during distribution in response to normal changes in temperature and altitude.
In June 2020, approximately six weeks before the deadline to complete discovery had passed, plaintiffs sought to amend their pleadings to assert that the defendants intentionally concealed this alleged defect from consumers. They also sought to add Wells Enterprises as a defendant, as the company purchased the Halo Top brand from Eden Creamery in late 2019.
Robinson denied the request. The plaintiffs then moved to voluntarily dismiss their claims, without prejudice, under Federal Rule of Civil Procedure 41(a)(2), which applies after an answer or motion for summary judgment has been served and provides:
“[A]n action may be dismissed at the plaintiff’s request only by court order, on terms that the court considers proper….Unless the order states otherwise, a dismissal under this paragraph…is without prejudice.”
Robinson denied the plaintiffs’ request. The Ninth Circuit last Dec. 21 reversed, saying the defendants had failed to demonstrate that they would suffer if the matter was dismissed without prejudice, and remanded with instructions to grant the motion and determine whether any terms should be imposed as conditions.
Conditions Imposed
On remand, Robinson granted the motion conditionally. As to venue, he pointed out in a footnote that:
“[T]he Court is deeply troubled that Plaintiffs’ counsel made unequivocal representations that he would refile in this District until he realized that Defendants might be awarded their attorneys’ fees and costs….As Plaintiffs’ counsel freely admitted…, after discussing this turn of events with his clients, they no longer wished to litigate in this District. As defense counsel noted, this is the very definition of forum shopping. The Court cannot countenance such gamesmanship.”
Under these circumstances, he wrote in the order:
“[S]o long as Defendants are amenable to litigation in this District, it is of no consequence that venue may be ‘improper’ in any Refiled Action under 28 U.S.C. § 1406(a). In the interests of judicial economy and equity, the Court therefore CONDITIONS Plaintiffs’ voluntary dismissal on the refiling of any Related Action in this District.”
Turning to fees, he ordered that the plaintiff must reimburse the defendant for costs associated with opposing two motions, the one seeking leave to amend the complaint and the request seeking class certification, finding that such work would not be useful in any continuing litigation between the parties based on the new theory of liability.
Ninth Circuit’s View
Tallman, Clifton, and Christen noted that “[w]e can only grant mandamus relief if the District Court’s actions were “clearly erroneous as a matter of law” and concluded that “[t]he District Court did not abuse its discretion on this record.”
As to the condition that any related action must be filed in the “same district in front of the same judge,” they wrote:
“The District Court included this condition after finding that Petitioners had repeatedly represented to the District Court that they intended to refile in the same district ‘until [they] realized that Defendants might be awarded their attorneys’ fees and costs as a condition of remand.’ The District Court reasonably found the Petitioners’ decision to stop litigating in that district to be ‘gamesmanship’…, justifying its decision to impose the venue restriction. Under these narrow circumstances, it was not an abuse of discretion to include a venue condition to prevent forum shopping by Petitioners. Here, it was not clearly erroneous as a matter of law.”
The panel pointed out that the matter had been remanded to the District Court with instructions that Robinson consider whether to impose costs and fees as a condition for voluntary dismissal and found that he “properly determined what costs and fees Defendants had incurred for work that would not be useful in continuing litigation between the parties and conditioning dismissal on their payment.”
The case is Kamal v. U.S. District Court for the Southern District of California, 24-5958.
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