This сase arises out of an alleged breach of a settlement agreement signed in a franchise dispute. The district court found *1274 that it had never dismissed the ease and retained jurisdiction to decide the motion to compel compliance with the settlement agreement. After careful consideration and briefing by the parties, we find that the parties dismissed the case by filing a stipulation in accordance with Federal Rule of Civil Procedure 41 (a)(1)(A)(ii) and that the district court did not rеtain jurisdiction to enforce the settlement agreement. The court was therefore without jurisdiction to consider the motion to compel. We remand this case to the district court to dismiss it for lack of jurisdiction.
I. FACTS AND PROCEDURAL HISTORY
Anago Franchising, Inc. (“Anago”), a Florida corporation, is a commercial cleaning services franchisor. Shaz, LLC (“Shaz”) was its subfranchisor in the state of Utah and was obligated under the Sub-franchise Rights Agreement to sell a certain number of unit franchises each year within its territоry. Shaz members separately own and operate Eco Building Services, LLC (“Eco”), a Utah limited liability corporation unaffiliated with Anago. In the underlying case, Anago terminated Shaz’s Subfranchise Rights Agreement for failure to meet the minimum annual performance requirement. Eco then began to service Shaz’s former clients’ cleaning needs, and Anago filed suit against both Shaz and Eco. Shaz subsequently filed counterclaims against Anago. On February 3, 2009, Shaz, Eco, and Anago resolved their dispute in mеdiation and entered into a final mediated settlement agreement (“the Settlement Agreement”) containing a confidentiality clause. 1 The next day, a managing member of both Shaz and Eco made a disclosure that Anago alleges is a material breach of the Settlement Agreement’s confidentiality clause. Despite the alleged breach, both parties continued to perform under the terms of the Settlement Agreement.
On February 27, 2009 the district court administratively closed the case and requested that the parties file “a Stipulation for Final Order of Dismissal within fifteen days.” It noted that after the stipulation was filed, it would enter an order dismissing the case with prejudice. Pursuant to the Settlement Agreement, on March 2, 2009, Anago, Shaz, and Eco filed a Stipulation for Dismissal with Prejudice in district court. The Stipulation referenced Federal Rule of Civil Procedure “41(a)(l)(A)(ii) and (2),” 2 stated that all parties agreed to dismiss the entire matter with prejudice, and asserted “that the Court shall reserve jurisdiction to enforce the settlement between the parties pursuant to the terms contained therein.” The Stipulation was signed by the attorneys representing each of the parties. That day the parties also filed a Joint Motion for Entry of Final Judgment by Consent. The district court never filed an order dismissing the case with prejudice.
*1275 On March 20, 2009 Anago sent Shaz and Eco a letter indicating that the February 4 disclosure constituted a breach of a material term of the Settlement Agrеement which allowed them to forego any obligation to make future payments.
On March 26, 2009, the district court signed the consent final judgment that had been attached to the parties’ March 2 joint motion. The final judgment did not mention the March 2 Stipulated Dismissal or the Settlement Agreement, and it did not explicitly dismiss the case.
In July 2009, after months of nonpayment, Shaz and Eco filed a motion in district court seeking to compel Anago’s compliance with the Settlement Agreement. The district court referred the case to a magistrate judge who found continuing jurisdiction to consider the motion because the district court had never dismissed the case — it had only administratively closed it. The magistrate judge’s jurisdictional analysis focused on the text of the final judgment. Because the final judgment did not order the clerk to dismiss the case, the magistrate judge concluded that the case had not been dismissed. The magistrate judge’s order does not discuss the Stipulation of Dismissal beyond noting that it was filed and that the parties agreed that the district court would retain jurisdiction to enforce the Settlement Agreement.
After an evidentiary hearing, the magistrate judge recommended that the district court deny Shaz and Eco’s Motion to Compel. The district court adopted the magistrate judge’s findings and denied the motion on the' merits, concluding that Shaz had breached the Settlement Agreement and that this discharged Anago’s obligation to perform. Shaz and Eco now appeal.
II. JURISDICTION
We have an indеpendent obligation to determine whether jurisdiction exists in each case before us, so we may consider questions of jurisdiction
sua sponte
even when, as here, the parties have not raised jurisdictional challenges.
Arbaugh v. Y&H Corp.,
Our jurisdictional inquiry requires us to determine if the case was dismissed below and whether the district court retained jurisdiction to enforce the Settlement Agreement after that dismissal. This inquiry requires us to clarify two points of law: (1) whether a stipulation of dismissal filed under Federal Rule of Civil Procedure 41(a)(l)(A)(ii) dismisses a case automatically, and (2) whether under
Kokkonen v. Guardian Life Insurance of America,
The case below could only have been dismissed through the March 2 Stipulation of Dismissal filed by the parties or through the district court’s March 26 entry of Final Judgment. Because voluntary dismissal of a case strips the court of jurisdiction and leaves it without power to make legal determinations оn the merits, we begin our inquiry by determining the nature of the document filed by the parties on March 2.
See SmallBizPros, Inc. v. MacDonald,
A. Dismissal under Federal Rule of Civil Procedure 41
After settlement of a case, parties may dismiss the case themselves by utilizing *1276 Federal Rule of Civil Procedure 41(a), which allows plaintiffs to voluntarily dismiss an action. Generally, a plaintiff may ask the court to dismiss an action at any time. See Fed.R.Civ.P. 41(a)(2). Under Rule 41(a)(2), the court has discretion To dismiss the case through an order and to specify the terms of that dismissal. A plaintiff may dismiss an action voluntarily without a court order in two circumstances: by filing a notice of dismissal before the opposing party serves an answer or motion for summary judgment, Fed.R.Civ.P. 41(a)(l)(A)(i), or at any time during the litigation by filing a stipulation of dismissal signed by all parties who have appeared, Fed.R.Civ.P. 41(a)(l)(A)(ii).
1. Standard of Review
Anago, Shaz, and Eco filed a document with the court entitled “Stipulation for Dismissal with Prejudice” which stated that it was filed pursuant to “Rule 41(a)(l)[ (A) ](ii) and (2).” The parties made an obvious drafting mistake by citing two different modes of dismissal — Rule 41(a)(1), which allows for dismissal without a court order, and Rule 41(a)(2), which requires the court to order the case dismissed — so to determine whether the case was dismissed, we must identify which rule the parties used to dismiss the case.
We have never specifically addressed the standard we use when reviewing a district court’s construction оf a Rule 41(a) filing. We review a district court’s decision to dismiss a case pursuant to a Rule 41(a)(2) motion for abuse of discretion,
Negron v. City of Miami Beach,
face of the filing and does not depend on facts the district court should find in the first instance. We therefore review the district court’s determination
de novo. See Cunningham v. Whitener,
A
de novo
review requires us to determine the parties’ intent when they filed the March 2 document, and the best indication of that intent is the document itself.
See generally De Leon,
2. Dismissal Pursuant to Federal Rule of Civil Procedure 41(a)(l)(A)(ii)
Because the Stipulation was filed pursuant to Rule 41 (a)(1)(A)(ii), we now examine when and how a stipulation can dismiss a case under that provision. Rule 41(a)(l)(A)(ii) allows for plaintiffs, subject to certain rules inapplicable here, to “dismiss an action without a court order by filing ... a stipulation of dismissal signed by all parties who have appeared.” “Unless the notice or stipulation states otherwise, the dismissal is without prejudice.” Fed.R.Civ.P. 41(a)(1)(B). Although we have found that a notice of dismissal under Rule 41(a)(l)(A)(i) “is effective immediately upon filing,”
Matthews v. Gaither,
Most of our sister circuits have directly or implicitly found, in published and unpublished opinions, that a stipulation filed under Rule 41(a)(l)(A)(ii) is self-executing and dismisses the case upon filing.
Gambale v. Deutsche Bank AG,
The distinctions Rule 41(a)(1) draws between stipulations and notices are based on the stage of litigation during which they may be filed. The Rules make no distinction regarding their effect on litigation.
See
Fed.R.Civ.P. 41(a)(1)(B) (discussing the effect of a “notice or stipulation”). We have found that notices of dismissal allowed for under Rule 41(a)(1)(A)® are effective upon filing, and we find no reason to require judicial approval of stipulations of dismissal filed under Rule 41 (a)(1)(A)(ii).
See In re Wolf,
Therefore, we find that the plain language of Rule 41 (a) (1) (A) (ii) requires that a stipulation filed pursuant to that subsection is self-executing and dismisses the case upon its becoming effective. The stipulation becomes effective upon filing unless it explicitly conditions its effectiveness on a subsequent occurrence. District cоurts need not and may not take action after the stipulation becomes effective because the stipulation dismisses the case and divests the district court of jurisdiction.
See SmallBizPros,
We must now determine if the Stipulation filed below was effective upon filing and if so, whether the district court properly retained jurisdiction to enforce the Settlement Agreement.
B. Retaining Jurisdiction under Kokkonen
In
Kokkonen,
the Supreme Court recognized that the enforcement of a settlement agreement falls outside of the scope of ancillary jurisdiction of the federal courts, even when the court had jurisdiction to hear the underlying case.
Underlying
Kokkonen
is the well-established proposition that jurisdiction cannot exist by mere consent of the partiеs.
See, e.g., Eagerton v. Valuations, Inc.,
C. Reconciling Rule 41(a)(l)(A)(ii) and Kokkonen
Our Circuit has not yet decided whether a district court order entered after the filing of a Rule 41(a)(l)(A)(ii) stipulation can have any effect. In Kokkonen, the Supreme Court stated that in the context of a
Rule 41(a)(l)[ (A) ](ii) [dismissal] (which does not by its terms empower a district court to attach conditions to the parties’ stipulation of dismissal) ... the court is authorized to embody the settlement contract in its dismissal order (or, what has the same effect, retain jurisdiction over the settlement contract) if the parties agree. Absent such action, however, enforcement of the settlement agreement is for state courts, unless there is some independent basis for federal jurisdiction.
We agree with the Fifth Circuit that a district court cannot retain jurisdiction by issuing a postdismissal order to that effect. A district court loses all power over determinations of the merits of a case when it is voluntarily dismissed.
Id.
In the context
*1280
of a Rule 41(a)(l)(A)(ii) dismissal, we understand the Supreme Court’s statement that “the [district] court is authorized to embody the settlement contract in its dismissal order (or, what has the same effect, retain jurisdiction over the settlement contract) if the parties agree” to mean that the parties must agree to the district court’s order retaining jurisdiction, not that the district court may enter a dismissal order when it would otherwise lack jurisdiction to do so.
Kokkonen,
Similar to the Fifth Circuit, we read Kokkonen in light of the plain language of Rule 41 (a) (1) (A) (ii) and understand that it allows a district court to retain jurisdiction through an order, even if the parties dismiss the case through use of Rule 41 (a)(1)(A)(ii), so long as the parties agree to the retention of jurisdiction. Because a court has no power to enter orders after a Rule 41(a)(l)(A)(ii) stipulation becomes effective, however, thе court must enter the order retaining jurisdiction before the stipulation becomes effective. We therefore find that for a district court to retain jurisdiction over a settlement agreement where the parties dismiss the case by filing a stipulation of dismissal pursuant to Rule 41 (a)(1) (A) (ii), either (1) the district court must issue the order retaining jurisdiction under Kokkonen pri- or to the filing of the stipulation, or (2) the parties must condition the effectiveness of the stipulation on the district court’s entry of an order retaining jurisdiction. 4
This is not inconsistent with our interpretation of
Kokkonen
in
Chmielarz.
There, the parties filed a stipulation of dismissal and
“requested
the Court to retain jurisdiction to enforce the terms of the Stipulation for Settlement.”
Chmielarz,
In this case, the parties purported to retain jurisdiction by stating in their Stipulation that “[a]ll parties agree that the Supreme Court shall reserve jurisdiction to enforce the settlement between the parties pursuant to the terms contained therein.” Unlike the stipulation in
Chmielarz,
this Stipulation makes no request of the district court; the parties seek to extend jurisdiction by agreement only. It is undoubtedly true thаt all parties must consent to the retention of jurisdiction over the enforcement of a settlement agreement if the case is dismissed by stipulation of all parties, but that agreement alone is not sufficient.
See Kokkonen,
Our decision does not leave the parties without a remedy — they may seek to enforce the settlement agreement in state court.
Kokkonen,
III. CONCLUSION
The underlying lawsuit was dismissed on March 2, 2009, when the Stipulation for Dismissal with Prejudice was filed in the district court pursuant to Rule 41(a)(l)(A)(ii). 5 The Stipulation did not condition its effectiveness on the issuance of an order by the district court retaining jurisdiction, and the court did not issue such an order prior to the dismissal of the case. Therefore, the district court did not retain jurisdiction to enforce the Settlement Agreemеnt.
Rule 41(a)(1)(A) is a useful tool in settling cases because it allows parties to dismiss an action without a court order. However, it must be used precisely to reach the desired result; ancillary jurisdiction does not allow a court to enforce a filed stipulation in the same way it allows a court to enforce its orders.
Cf. Kokkonen,
“Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.”
Ex Parte McCardle,
VACATED AND REMANDED WITH INSTRUCTIONS TO DISMISS FOR LACK OF JURISDICTION.
Notes
. We note that the settlement agreement has been filed under seal. Although Shaz and Eco filed their briefs and record excerpts under seal, Anаgo did not file its brief under seal and disclosed various terms of the agreement therein. The parties also discussed specific terms of the Settlement Agreement at oral argument and did not request any part of the hearing be kept confidential. Out of abundance of caution, we refer only to facts in the unsealed record.
. The 2007 changes to the Federal Rules of Civil Procedure reorganized Rule 41(a)(1), and the provision previously found in Rule 41(a)(l)(A)(ii) is now contained in Rule 41 (a) (1 )(A) (ii). The nеw rule is substantively the same as the old, as noted in the Advisory Committee Notes to the 2007 amendments. For clarity we cite to the new rule throughout this opinion.
. In
Bonner v. City of Prichard,
. As the Fifth Circuit noted, this does not transform a Rule 41(a)(l)(A)(ii) stipulation into a Rule 41(a)(2) dismissal (requiring a court order) because the parties themselves are agreeing to the conditional effectiveness of the stipulаtion, and the court would not be empowered to impose new conditions on the parties.
SmallBizPros,
. Because we find that the March 2 stipulation dismissed the case, we do not address the magistrate judge’s conclusion that the entry of a final judgment does not dismiss a case unless it does so explicitly.
. We note that all orders issued after the filing of the stipulation of dismissal — including the consent final judgment — are vacated because the court was without power to issue them.