Papera v. Pennsylvania Quarried Bluestone Co., 948 F.3d 607 (3d Cir. 2020). Plaintiffs and defendants reached what was believed to be a settlement of their case. At plaintiffs’ request, the District Court entered a dismissal order. That order said that he case was dismissed and gave the parties 60 days to provide a settlement agreement for court approval or move to reopen the case. A minute entry, though not the order, stated that the dismissal was “without prejudice.” When the parties neither submitted a settlement agreement nor moved to reopen, the District Court closed the case.
Plaintiffs then refiled almost the same Complaint as before, marking it as related to the prior action. The same judge granted summary judgment dismissing the new case, based on claim preclusion arising from the dismissal of the prior case. Plaintiffs appealed, and the Third Circuit reversed.
Writing for the panel, Judge Bibas proceeded in orderly fashion. The first question, he said, was whether the prior dismissal was voluntary or involuntary. Then, it was necessary to determine if the dismissal was with or with prejudice, since “the prejudicial effect of a dismissal guides our clsim-preclusion analysis.”
“For voluntary dismissals, the default rule is that a plaintiff’s first dismissal is without prejudice” (emphasis by Judge Bibas), unless the dismissal order says otherwise. But “involuntary dismissals are presumptively with prejudice,” unless otherwise stated. Both of those principles come from Federal Rule of Civil Procedure 41. Dismissal without prejudice generally is not on the merits and does not have preclusive effect. The opposite is generally true of involuntary dismissals.
Dismissal with prejudice is “a severe and disfavored remedy,” Judge Bibas said. Therefore, the Third Circuit construes “unclear dismissal orders as voluntary rather than involuntary …. [and] first voluntary dismissals as without prejudice.” Only a “clear and explicit statement” in a dismissal order overcomes those general rules. Judge Bibas cited cases from other Circuits that agreed.
The order dismissing the first case did not contain a clear, explicit statement that it was an involuntary dismissal or a dismissal with prejudice. That made it a voluntary dismissal without prejudice and could not preclude the renewed lawsuit. Defendants had the burden of proving all elements of claim preclusion and failed to do so. The panel reversed and remanded for further proceedings.