Better Watch Those Dismissals Without Prejudice!

This is a fascinating opinion from Judge Cooke and a cautionary tale regarding what can happen when a client decides to no longer pursue a case after a dismissal without prejudice.

First American may be entitled to attorneys’ fees and costs only if it is recognized as the prevailing party. In Florida, a party is the “prevailing party” where it has been awarded relief on the merits of the claims at issue or where there is a judicial imprimatur on the change in the legal relationship between the parties. Smalbein v. City of Daytona Beach, 353 F.3d 901, 905 (11th Cir. 2003). Simply stated, there must be an adjudication on the merits. Pursuant to Federal Rule of Civil Procedure 41(b), an involuntary dismissal “operates as an adjudication on the merits" unless a dismissal order states otherwise. Fed. R. Civ. P. 41(b). In this case, both the Omnibus Order Granting Defendants’ Motions to Dismiss and the Final Order of Dismissal “state otherwise” in that they expressly state that the claims against First American are dismissed without prejudice. The Eleventh Circuit has recognized, however, that a dismissal without prejudice will “become a dismissal with prejudice when no timely amendment [is] filed and no request for an extension [is] submitted.” Hertz Corp. v. Alamo Rent-A-Car, Inc., 16 F.3d 1126, 1128 n. 3 (11th Cir. 1994). Dependable Component failed to file a timely amendment and made not request for an extension of time to do so. Consistent with the Federal Rules of Civil Procedure and the law in this Circuit, and to clarify any confusion from prior orders, the Final Order of Dismissal is a dismissal with prejudice as to Dependable Component’s claims for wrongful dishonor of letter of credit, fraud and goods sold, and is indeed an adjudication on the merits.

And, because there was a UCC claim, the defendants filed a motion for attorney fees seeking over $200,000!

Judge Cooke, however, discounted the hourly rate and fee request by 65%; here is what she said about that (disagreeing with defendants' fee expert and my pal Big Ed Moss):

However, despite the fact that the parties did not engage in discovery and First American did not take a single deposition, First American’s lawyers billed at total of 570.85 hours. Assuming First American has provided an accurate total, and assuming each lawyer billed an average of eight hours per day, the billed total accounts for 71.35 days of work. That, in turn, means that it took seven lawyers approximately 1.6 days to review documents and research case law for each page submitted to the Court in a run-of-the-mill wrongful dishonor of letter of credit action that requires no specialized knowledge or training. After a review of the submitted time sheets, I find the requested billable hours excessive.

In other words, a typical billing day at BigLaw!