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Sultan Hameed, Individually and On Behalf of Those Similarly Situated v. Ihop Franchising

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA


March 31, 2011

SULTAN HAMEED, INDIVIDUALLY AND ON BEHALF OF THOSE SIMILARLY SITUATED, PLAINTIFFS,
v.
IHOP FRANCHISING, LLC; ET AL., DEFENDANTS.

The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

ORDER

This Court dismissed Plaintiff's First Amended Complaint (ECF No. 18) and granted Plaintiff twenty days to amend his complaint in accordance with the Memorandum and Order. (ECF No. 32.) Plaintiff instead filed a Declination to Amend First Amended Complaint and Request for Judgment Pursuant to the Federal Rules of Civil Procedure 54(b).*fn1 (ECF No. 33.)

Defendants have filed a Proposed Final Judgment (ECF No. 35) in response, requesting dismissal of Plaintiff's first, third, fourth, and fifth claims with prejudice for failure to file an amended complaint within twenty days, and dismissal of the second claim with prejudice pursuant to Rule 41(a)(1)(A)(i). For the reasons set forth below, this Court declines to dismiss under Rule 54(b), and instead dismisses Plaintiff's first, third, fourth, and fifth claims pursuant to Rule 41(b), and Plaintiff's second claim pursuant to Rule 41(a)(2).

Rule 54(b) allows a district court to direct an entry of final judgment on one or more claims, and certify an immediate appeal of those claims. Federal Rules of Civil Procedure, Rules and Commentary Rule 54(b). The original intent behind Rule 54(b) was to promote judicial efficiency by permitting an appeal of adjudicated claims that are separate and distinct from the remaining unresolved claims. Id. Under Rule 54(b), Plaintiff need not wait for a final decision on unrelated claims before proceeding with an appeal. Id. A judge may not grant dismissal pursuant to Rule 54(b) unless three requirements are met: (1) the case must include multiple claims; (2) the trial judge must render a final decision on at least one, but not all, of those claims; and (3) the trial judge must determine that there is no just reason to delay the appeal of the adjudicated claims. Id.

Plaintiff's claims easily meet the first two requirements for Rule 54(b) dismissal. The present action consists of five claims, which satisfies the first requirement for multiple claims.

Because Plaintiff has declined to amend his complaint, this Court will render a final judgment on the dismissed claims in satisfaction of the second requirement. As to the third requirement however, this Court cannot find that there is no just reason to delay the appeal of the adjudicated claims.

A determination that there is no just reason to delay turns on "separateness." Id. While no bright-line rule defines "separate" for the purposes of Rule 54(b), in general, courts look to practical factors such as whether the claims involve common legal issues, common facts, or overlapping relief. Id. Claims representing only alternate legal theories based on a common set of facts do not constitute separate claims for which certification under Rule 54(b) is appropriate. Hasbrouck v.

Sheet Metal Workers Local 232, 586 F.2d 691, 694 (9th Cir. 1978). While some overlap of facts is permitted between the claims, "[a] similarity of legal or factual issues will weigh heavily against entry of judgment under [Rule 54(b)]...." Wood v. GCC Bend, LLC, 422 F.3d 873, 882 (9th Cir. 2005) (citing Morrison-Knudsen Co., Inc. v. Archer 655 F.2d 962, 965 (1981)). The Ninth Circuit has explained that it "cannot afford the luxury of reviewing the same set of facts in a routine case more than once without a seriously important reason." Id.

In balancing the interests of justice for a Rule 54(b) dismissal, a court must also consider judicial administrative interests to assure that Rule 54(b) effectively "preserves the historic federal policy against piecemeal appeals." Id. at 878.

The possibility of duplicative proceedings implicates sound judicial administration, and Rule 1 mandates that courts construe the Federal Rules "to secure the just, speedy, and inexpensive determination of every action." Id. at 882-83.

The interests of judicial administration disfavor severing claims for appeal which have interlocking facts with the remaining claims in a relatively routine breach of contract case. Plaintiff's claim for accounting cannot be resolved without deciding issues of fact which would necessarily be decided separately in the dismissed claims Plaintiff wishes to appeal to the Ninth Circuit. Plaintiff's proposed order would lead to piecemeal litigation in stark opposition to the policy of Rule 54(b). Plaintiff has not offered any "seriously important reason" to support its contention that there is no just cause to delay the appeal, or that these interwoven claims should be severed. Because the accounting claim is based entirely on the same set of facts underlying the dismissed claims, this Court finds that the claims are not separate. As such, ample "just cause" exists to delay the appeal of the first, third, fourth, and fifth claims, and dismissal pursuant to Rule 54(b) is inappropriate.

Though this Court declines to dismiss pursuant to Rule 54(b), another basis for dismissal is proper. Plaintiff was granted twenty days from the date his First Amended Complaint was dismissed on February 10, 2011 to further amend the complaint in accordance with this Court's Order. (ECF No. 32.) Plaintiff has declined the opportunity to amend, and thus, this Court considers the dismissed claims abandoned.

Pursuant to Rule 41(b), these four claims are subject to involuntary dismissal for failure to prosecute or to comply with a court order. Plaintiff has expressly stated his desire to discontinue litigation and pursue an appeal. Therefore, the first, third, fourth, and fifth claims are dismissed with prejudice. Dismissal pursuant to Rule 41(b) shall operate as an adjudication on the merits.

As to the fate of Plaintiff's second claim for accounting, though it survived Defendants' previous Motion to Dismiss (ECF No. 21), Plaintiff has requested that this Court dismiss this claim as well. Rule 41(a)(2) grants district courts the authority to dismiss an action at a plaintiff's request on terms that the court considers proper. A district court should grant a plaintiff's request for voluntary dismissal under Rule 41(a)(2) unless a defendant can show that it will suffer legal prejudice as a result. Smith v. Lenches, 263 F.3d 972, 975 (9th Cir. 2001). The court retains discretion to dismiss an action under Rule 41(a)(2) either with or without prejudice taking into consideration whether it would be inequitable or prejudicial to defendant to allow plaintiff to refile the action. Altman v. HO Sports Co., Inc., 75 Fed. R. Serv. 3d 98, *2 (E.D. Cal. 2009).

Defendants have not objected to Plaintiff's request for dismissal of the second claim for accounting, but instead propose that the dismissal be with prejudice. While dismissal under Rule 41(a)(2) is typically granted without prejudice, this Court finds that such a determination would be both inequitable and prejudicial to Defendants. Plaintiff has explicitly stated that he intends to appeal dismissal of the other four claims.

To permit Plaintiff to refile the accounting claim in the district court while appealing his other factually identical claims to the Ninth Circuit would not only allow piecemeal litigation, but it would also create an unfair prejudice to Defendants as they may be required to litigate the same matter in two separate courts. In fairness to Defendants, and to leave the present action in one piece, this Court dismisses the remaining accounting claim with prejudice pursuant to Rule 41(a)(2).

CONCLUSION

Based on the foregoing, Plaintiff's Declination to Amend First Amended Complaint and Request for Judgment Pursuant to F.R.C.P. 54(b)(ECF No. 33) is GRANTED in part. Plaintiff's First, Third, Fourth, and Fifth claims are dismissed with prejudice pursuant to Rule 41(b), and Plaintiff's Second claim is dismissed with prejudice pursuant to Rule 41(a)(2). The Clerk is ordered to close the case.

IT IS SO ORDERED.


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