VS PR, LLC v. ORC Miramar Corporation, 34 F.4th 67

VS PR filed a state-court collection and foreclosure action (Aug 2019) and withdrew that suit without prejudice (Sept 2019; judgment Nov 2019).
VS PR filed a substantially similar federal diversity action soon after (Sept 11, 2019); defendants moved to dismiss for lack of diversity because VS PR is an LLC and had not pleaded the citizenship of all members.
The district court allowed jurisdictional discovery, denied the defendants' motion to dismiss without prejudice, and the defendants answered; discovery followed.
After discovery the defendants asserted evidence showed lack of diversity and sought sanctions; VS PR moved to voluntarily dismiss under Fed. R. Civ. P. 41(a)(2) (after an answer had been served).
The district court granted the Rule 41(a)(2) motion and dismissed the action without prejudice; defendants appealed arguing Rule 41(a)(1)(B) requires dismissal with prejudice when the same claim was previously dismissed in state court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule 41(a)(1)(B)'s bar (prior dismissal operating as adjudication on the merits) applies to a voluntary, court-ordered dismissal under Rule 41(a)(2).	Rule 41(a)(2) governs court-ordered voluntary dismissals and, unless the court orders otherwise, such dismissals are without prejudice; the "except as provided in Rule 41(a)(1)" phrase resolves only the procedural conflict about when a court order is required and does not import (1)(B)'s preclusive effect into (2).	The "except as provided in Rule 41(a)(1)" language incorporates the (1)(B) effect into (2); because VS PR previously dismissed the same claim in state court, the federal dismissal must be with prejudice.	Rejected defendants' reading. The court held (1)(B)'s adjudication-on-the-merits rule applies to (1) notice dismissals, not to court-ordered dismissals under (2); dismissal under 41(a)(2) is without prejudice unless the court states otherwise.
Whether the First Circuit had jurisdiction to decide the appeal given the asserted lack of diversity.	The court may assume hypothetical federal-question jurisdiction to resolve the clear-cut procedural rule presented.	Appellants contend lack of diversity strips appellate jurisdiction.	The panel proceeded on assumed federal-question jurisdiction (hypothetical jurisdiction) and reached the merits; the judgment was affirmed.

Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, 138 S. Ct. 1061 (2018) (explains the ordinary effect of "except as provided in" cross-references)
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) (discusses Rule 41(a)(1) purpose and repeated suits dictum)
Crowley v. L.L. Bean, Inc., 361 F.3d 22 (1st Cir. 2004) (standards for de novo review of procedural-rule interpretation)
Royal Siam Corp. v. Chertoff, 484 F.3d 139 (1st Cir. 2007) (discusses limits on collateral-effect arguments)
Dvorak v. Granite Creek GP Flexcap I, LLC, 908 F.3d 248 (7th Cir. 2018) (cited by defendants but does not control the Rule 41(a)(2) issue)