Background

• Michigan Surgery Investment, LLC and affiliates sued Oakwood and 36 physicians in state and federal proceedings alleging breach of contract, fiduciary breaches, oppression, and federal anti-kickback concerns affecting a Dearborn Surgery Center agreement.
• Plaintiffs sought federal question jurisdiction based on the theory that the invalidity of the Oakwood-physician agreement depended on federal law.
• A parallel state-court action was filed by the physicians in Wayne County Circuit Court, with Michigan Surgery seeking consolidation for efficiency.
• Michigan Surgery moved for voluntary dismissal without prejudice under Rule 41(a)(2); physicians urged dismissal with prejudice.
• A separate judge later dismissed the case with prejudice for lack of subject matter jurisdiction, after a hearing on various motions, and the district court subsequently amended orders.
• The Seventh Circuit court of appeals reversed, holding that dismissal with prejudice requires notice of the intention to dismiss with prejudice and an opportunity to withdraw the motion.

Issues

Key Cases Cited

• One Tract of Real Property, 95 F.3d 422 (6th Cir. 1996) (three-factor test for dismissals with prejudice; notice and withdrawal opportunity required)
• GAF Corp. v. Transamerica Ins. Co., 665 F.2d 364 (D.C. Cir. 1981) (distinguished from dismissal with prejudice; fees vs. merits dismissal)
• Marlow v. Winston & Straum, 19 F.3d 300 (7th Cir. 1994) (recognizes notice/withdrawal need in dismissals with prejudice)
• Andes v. Versant Corp., 788 F.2d 1033 (4th Cir. 1986) (notice/withdrawal considerations in dismissal practice)
• Beard v. Sheet Metal Workers Union, 908 F.2d 474 (9th Cir. 1990) (withdrawal option discussion; policy context for notice)