The Court of Appeals for the Federal Circuit ruled that absent an agreement between the parties to bear their own costs, the defendant could bring a motion for attorney’s fees after the parties entered into a voluntary dismissal with prejudice. As a party dismissing claims, it is thus important to consider having any dismissal specifically address the allocation of costs and fees
In Keith Mfg. v. Butterfield, Appeal No. 2019-1136 (Fed. Cir. April 7, 2020), the plaintiff brought a lawsuit against former employee Butterfield, alleging that a patent obtained by Butterfield was based upon an invention made by Butterfield during his employment with plaintiff. Eighteen months after the litigation began, the parties filed a stipulation of dismissal with prejudice, which stipulation was silent as to costs and attorney’s fees. Twelve days later, the defendant moved for attorney’s fees under FRCP 54(d). The district court (Oregon) determined that Rule 54(d) required a “judgment”, which Rule 54(d) defines as a “decree and any order from which an appeal lies.” The district court held that a stipulation to dismiss with prejudice did not satisfy Rule 54’s judgment requirement, and thus denied defendant’s motion for fees.
The Federal Circuit disagreed, noting that under Rule 54, a “judgment” includes more than just appealable orders, and thus overturned the district court’s ruling. In reaching its conclusion, the Federal Circuit contrasted the Supreme Court’s decision in Microsoft Corp. v. Baker (137 S. Ct. 1702 (2017)), which dealt with the issue of the appealability of “final decisions” under Section 1291. The Federal Circuit noted that in Microsoft the Supreme Court reasoned that allowing a class-action plaintiff to manufacture finality using a voluntary dismissal with prejudice after a denial of class certification would allow her to circumvent § 1291 by ‘stopping and starting the district court proceedings with repeated interlocutory appeals’.” The Federal Circuit noted that no such risk existed in the present situation.
