Hyde v. Hoffmann-La Roche, Inc.

• Decision Date: 20 December 2007
• Docket Number: No. 05-10203.,05-10203.
• Citation: 511 F.3d 506
• Parties: George W. HYDE, Plaintiff-Appellee, v. HOFFMANN-LA ROCHE, INC.; Roche Laboratories, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

511 F.3d 506

George W. HYDE, Plaintiff-Appellee, v. HOFFMANN-LA ROCHE, INC.; Roche Laboratories, Inc., Defendants-Appellants.

No. 05-10203.

United States Court of Appeals, Fifth Circuit.

December 20, 2007.

Todd Harlin Ramsey, John William Arnold (argued), Bailey, Crowe & Kugler, Dallas, TX, for Hyde.

Christopher Bert Bradford (argued), Susan Elizabeth Burnett, Clark, Thomas & Winters, Austin, TX, for Defendants-Appellants.

Appeal from the United States District Court for the Northern District of Texas.

Before HIGGINBOTHAM, DeMOSS and OWEN, Circuit Judges.

OWEN, Circuit Judge:

The issue in this diversity case is whether the district court abused its discretion in granting the plaintiff's motion to dismiss voluntarily all his claims without prejudice. Because the defendants would potentially be stripped of a defense based on a Texas statute of repose,¹ we vacate and remand for further proceedings.

I

George W. Hyde, a Texas citizen, sued Hoffman-La Roche Inc. and Roche Laboratories Inc., claiming he suffered physical and psychological injuries from ingesting the prescription drug Accutane during the early 1980s. The defendants are, respectively, the manufacturer and distributor of Accutane in the United States. The action was originally filed in Texas state court, but was removed to federal court based on diversity jurisdiction.

Shortly after removal, the Roche defendants filed a motion for summary judgment asserting that Hyde's claims are barred by a Texas statute of repose that provides a fifteen-year period for filing a "products liability action," beginning on "the date of the sale of the product by the defendant."² The term "products liability action" is broadly defined to include

any action against a manufacturer or seller for recovery of damages or other relief for harm allegedly caused by a defective product, whether the action is based in strict tort liability, strict products liability, negligence, misrepresentation, breach of express or implied warranty, or any other theory or combination of theories, and whether the relief sought is recovery of damages or any other legal or equitable relief, including a suit for: (A) injury or damage to or loss of real or personal property; (B) personal injury; (C) wrongful death; (D) economic loss; or (E) declaratory, injunctive, or other equitable relief.³

Hyde admits that he last took Accutane almost 20 years before he filed suit, but he asserted in his response to the motion for summary judgment that the statute of repose would violate the Texas Constitution's "open courts" provision⁴ if applied to his claims. He additionally asserted that his claims fall within an exception to the statute of repose for latent diseases.⁵ Hyde did not produce any evidence that he has actually satisfied the conditions of the latent disease exception; he argued that it is sufficient under the statute's provisions that he "alleges" facts that meet the elements of the exception.⁶

Before responding to the summary judgment motion, however, Hyde filed a motion to dismiss all his claims without prejudice pursuant to FED.R.CIV.P. 41(a)(2),⁷ stating that he "no longer desire[d] to prosecute th[e] action." The Roche defendants opposed dismissal and urged the court to rule on the pending motion for summary judgment, arguing that Roche would be prejudiced if Hyde refiled the lawsuit in a state without an applicable statute of repose.

At some point, Hyde filed a virtually identical suit against the Roche defendants in New Jersey state court, and the Roche defendants brought this to the attention of the federal district court in Texas. They advised the court that New Jersey does not have an applicable statute of repose and asserted it was unlikely that New Jersey's choice-of-law rules would result in that court applying the Texas statute of repose, citing Gantes v. Kason Corp., in which the New Jersey Supreme Court refused to apply Georgia's statute of repose in a products-liability action arising from an industrial accident that occurred in Georgia.⁸

After the summary judgment motion and motion to dismiss had been pending for several months, Hyde requested a continuance of the summary judgment proceedings to allow additional time for discovery as to whether the law of a forum other than Texas should apply in this case, "possibly" New Jersey.⁹ In the same motion, Hyde urged the court to (1) grant his motion for dismissal without prejudice, (2) deny the motion for summary judgment on the merits, or (3) defer ruling on the summary judgment motion pending a decision on whether the case would be transferred to a Florida multi-district litigation panel for Accutane cases.

Four days after Hyde requested a continuance, the district court granted Hyde's motion for voluntary dismissal without prejudice. Although dismissal of the case could have been subject to "terms that the court considers proper,"¹⁰ the district court's dismissal order was unconditional.

The Roche defendants appeal the dismissal order, seeking remand to the district court for consideration of its summary judgment motion. They argue that dismissal has deprived them of a favorable judgment on the merits and stripped them of an affirmative defense that is not available in the New Jersey litigation. Hyde's principal counter-argument is that his pursuit of the case in New Jersey would not prejudice the Roche defendants because New Jersey law might apply even if the case proceeded in Texas federal court.

II

As an initial matter, Hyde contends that we "should not view the instant appeal as one strictly involving the issue of whether the district court abused its discretion under Rule 41(a)(2)" because, Hyde asserts, the district court's ruling is also referable to Hyde's motion for continuance and therefore the district court was entitled to enter any order that was just pursuant to Rule 56(f).¹¹ We reject this argument. The district court's order specifically referenced Hyde's voluntary motion to dismiss without prejudice. The court did not rule on Hyde's motion for continuance.

Rule 41(a)(2) of the Federal Rules of Civil Procedure precludes a plaintiff from dismissing a lawsuit without the court's permission if either an answer or a motion for summary judgment has been served on the plaintiff and the defendant does not consent to dismissal.¹² A district court's decision to dismiss a lawsuit under Rule 41(a)(2) is reviewed for abuse of discretion.¹³ Dismissal without prejudice will generally be affirmed "unless the defendant will suffer some plain legal prejudice other than the mere prospect of a second lawsuit."¹⁴ A defendant may be substantially prejudiced by dismissal of a lawsuit if dismissal "effectively strips him of a defense that would otherwise be available. That [the] plaintiff may obtain some tactical advantage over the defendant in future litigation is not ordinarily a bar to dismissal."¹⁵

In determining whether Roche will suffer plain legal prejudice as a consequence of the dismissal, we are guided by prior decisions of this court including Ikospentakis,¹⁶ and Elbaor v. Tripath Imaging, Inc.¹⁷ In Ikospentakis, the defendants argued that the voluntary dismissal of Jones Act claims stripped the defendants of a forum non conveniens defense that was available in federal court but unavailable in Louisiana state court.¹⁸ We agreed there was prejudice because the courts of that state had "unequivocally rejected" the forum non conveniens doctrine in Jones Act and maritime cases.¹⁹ In analyzing what constitutes legal prejudice, we emphasized that the availability of a defense need not be established to a certainty:

[W]hether [the defendants] can sustain this defense beyond the shadow of a doubt in federal court is not the point of the inquiry concerning legal prejudice, although that circumstance made the decision in Phillips [v. Illinois Central Gulf Railroad]²⁰ relatively easy. The point of the inquiry, rather is that appellants' invocation of forum non conveniens is far from frivolous, and that if appellants are relegated to litigating in the Louisiana state courts, they will not even have the opportunity to pursue a forum non conveniens dismissal.²¹

Because the forum non conveniens defense was not frivolous and because it was virtually certain that the defense would be unavailable in state court, we vacated the dismissal order and remanded the case to the district court with instructions to consider the merits of the defense before proceeding further.²²

In Elbaor we further clarified that legal prejudice may exist even if it is not legally certain that the defense would be lost if the case were dismissed.²³ In Elbaor, we agreed with the district court that "dismissal would potentially strip [the defendant] of a viable statute of limitations defense"²⁴ under Texas law, even though the plaintiffs asserted that the discovery rule applied and even though it was not known whether limitations would be unavailable as a defense in a forum in which the suit might be refiled. With regard to the merits of the limitations defense, we held that the plaintiffs' "potential ability to plead around the statute of limitations is irrelevant" in light of the holding in Ikospentakis that "whether the defense will ultimately be successful is not the appropriate inquiry."²⁵ Nor did the fact that it was unknown where the suit might be refiled and thus whether the limitations defense would be lost negate legal prejudice because it was the plaintiffs who failed to disclose the jurisdiction in which they intended to refile, a fact peculiarly within their knowledge.²⁶

III

Applying these principles, our first inquiry is whether the Roche defendants have a viable (non-frivolous) defense under Texas law. In diversity cases, a federal court must apply federal procedural rules and the substantive law of the forum state, including its conflict-of-law rules.²⁷ Although the parties disagree about whether Texas or New Jersey substantive law...