Davis v. USX Corp.

Decision Date03 June 1987
Docket NumberNo. 86-3705,86-3705
Citation819 F.2d 1270
Parties43 Fair Empl.Prac.Cas. 1685, 43 Empl. Prac. Dec. P 37,163, 8 Fed.R.Serv.3d 74, 2 Indiv.Empl.Rts.Cas. 1774 Nannette B. DAVIS, Plaintiff-Appellant, v. USX CORPORATION, Defendant-Appellee.
CourtU.S. Court of Appeals — Fourth Circuit

Wilmot Brown Irvin (R.W. Dibble, Jr., McNair Law Firm, P.A., Columbia, S.C., on brief), for plaintiff-appellant.

Richard Fleming Lerach, for defendant-appellee.

Before WINTER, Chief Judge, PHILLIPS, Circuit Judge and BUTZNER, Senior Circuit Judge.

HARRISON L. WINTER, Chief Judge:

Plaintiff Nannette B. Davis sued her employer USX Corporation (formerly United States Steel Corp.) asserting claims under the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e-5 et seq., (title VII) and several pendent state law causes of action, including assault and battery and intentional infliction of emotional distress. Davis alleges that she was sexually harassed by her boss, Jim Bryan, while she was employed by USX at a facility in Bamberg, South Carolina. We heard one previous appeal of this action in which we reversed the district court's order of summary judgment for USX. Davis v. United States Steel Corp., 779 F.2d 209 (4 Cir.1985). Upon remand to the district court following that decision, Davis filed a motion for voluntary dismissal without prejudice pursuant to F.R.Civ.P. 41(a)(2). After Davis refused to accept certain conditions imposed by the district court on her motion for voluntary dismissal, the motion was denied. The district court subsequently dismissed the plaintiff's action with prejudice in July of 1986. The plaintiff appeals, challenging, among other things, the district court's order denying the motion for voluntary dismissal. We reverse.

I.

After the plaintiff filed her suit against USX, the case progressed until the district court granted summary judgment in favor of USX on the plaintiff's state common law claims. The district court ruled that South Carolina law does not recognize a theory which imputes liability to USX for the actions of its employee Bryan. Davis then dismissed her title VII claim in order to appeal the district court's decision on her state law claims. At the same time, Davis filed suit against USX and Bryan in South Carolina state court alleging claims of assault and battery, intentional infliction of emotional distress, and invasion of privacy. Davis sought recovery against USX on these claims in her state court action based on a respondeat superior theory which would impute Bryan's actions to USX for the purposes of determining USX's liability to Davis.

On appeal of the district court's summary judgment order, a divided panel of this court reversed. Davis had alleged that sometime during July of 1981, Bryan's superviser, Jim Stoutz, knew or should have known that Davis was the victim of offensive sexual conduct on the part of Bryan. In August of 1981, Stoutz, on behalf of USX, conducted an investigation of the allegations of Bryan's misconduct in response to complaints by Davis, but took no action against Bryan. Based on these allegations, we reversed and remanded to the district court to allow Davis to pursue her state law claims against USX for Bryan's actions after the date that USX's supervisory employee, Stoutz, became aware of those actions.

In that decision, Judge Murnaghan, with Judge Butzner concurring and Judge Phillips dissenting, held that Davis could present a case permitting the factfinder to establish that the observations and inaction of United States Steel's supervisory employee, Stoutz, should be imputed to the company. Id. at 211. Judge Murnaghan, this time with Judge Phillips concurring and Judge Butzner dissenting, also concluded that under South Carolina law, USX was not liable for Bryan's actions which occurred prior to the date when Stoutz first observed Bryan's reprehensible behavior. Id. Judge Butzner filed a separate opinion, concurring in part and dissenting in part. He expressed the view that USX could be held liable under South Carolina law for Bryan's acts that occurred before and after the date that Stoutz observed them. Id. at 212-13. Judge Phillips also wrote a separate opinion, concurring in part and dissenting in part, to state his view that under South Carolina law, the plaintiff's allegations were insufficient to impute liability for Bryan's actions to USX at any time. Id. at 213-15.

After the case was remanded to the district court for further proceedings, Davis filed a motion for voluntary dismissal without prejudice pursuant to F.R.Civ.P. 41(a)(2) because she planned to pursue her common law claims in the action which she had filed in state court. 1 In considering the motion, the district court was primarily concerned that Davis should not be allowed to pursue her common law claims against USX other than on a theory of negligent supervision. The district court's view in this regard was based on its reading of our previous opinion in this case which it felt limited the plaintiff to a cause of action for negligent supervision. The district court imposed four conditions to which Davis was to agree before the motion would be granted:

(1) Payment of a reasonable portion of USX's costs and attorneys' fees for the litigation Davis pursued in federal court.

(2) Agreement that the discovery material developed in federal court could be used in the state court proceeding.

(3) Agreement not to pursue the state law claims against USX on a theory of respondeat superior in state court.

(4) Agreement that the only cause of action that Davis would pursue against USX in the state court action would be the negligent failure of USX to supervise Bryan after the date Stoutz observed Bryan's improper behavior against the plaintiff.

Because Davis refused to agree to meet these conditions, her motion for voluntary dismissal was denied.

Subsequently, Davis renewed a previous motion to amend her federal complaint to assert a cause of action for invasion of privacy. The district court denied the motion on April 10, 1986, on the ground that USX was not liable for the plaintiff's common law claims under the doctrine of respondeat superior. At a hearing on June 23, the district court issued a ruling excluding all evidence that Bryan harassed Davis prior to the date that Stoutz first became aware of this harassment.

In another pretrial ruling, the district court also ordered that the plaintiff could proceed to trial solely on a cause of action against USX for its negligent supervision of Bryan after the date that Stoutz became aware of Bryan's harassment of Davis. The initial effect of this ruling was to limit the damages which the plaintiff was entitled to recover at trial because, under South Carolina law, a plaintiff may not recover damages for mental anguish or emotional distress based on a cause of action for negligent supervision. Dooley v. Richland Memorial Hospital, 283 S.C. 372, 322 S.E.2d 669 (1984); Padgett v. Colonial Wholesale Distributing Co., 232 S.C. 593, 103 S.E.2d 265 (1958). Then, on July 3, 1986, Davis informed the district court that she had no evidence that she was physically injured by Bryan's misconduct. The parties thus stipulated to dismissal with prejudice of the plaintiff's cause of action against USX for negligent supervision. With no claim left for the plaintiff to bring to trial, the district court dismissed the plaintiff's action against USX on July 9, 1986. This appeal followed.

II.

Rule 41(a)(2) allows a plaintiff, with the approval of the court, to dismiss voluntarily an action without prejudice at any time. Rule 41(a)(2) provides in pertinent part:

Except as provided in paragraph (1) of this subdivision of this rule [dismissal before service or answer or dismissal by stipulation], an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper.... Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice.

The decision to grant a voluntary dismissal under Rule 41(a)(2) is a matter for the discretion of the district court, and its order will ordinarily not be reversed except for an abuse of discretion. McCants v. Ford Motor Co., 781 F.2d 855, 857 (11 Cir.1986); Kenrose Mfg. Co. v. Fred Whitaker Co., 512 F.2d 890, 895 (4 Cir.1972).

The purpose of Rule 41(a)(2) is freely to allow voluntary dismissals unless the parties will be unfairly prejudiced. McCants, supra, 781 F.2d at 856; Alamance Industries Inc. v. Filene's, 291 F.2d 142, 146 (1 Cir.1961), cert. denied, 368 U.S. 831, 82 S.Ct. 53, 7 L.Ed.2d 33 (1961). To fulfill this purpose, Rule 41(a)(2) requires a court order as a prerequisite to dismissal and permits the district court to impose conditions on voluntary dismissal to obviate any prejudice to the defendants which may otherwise result from dismissal without prejudice. In considering a motion for voluntary dismissal, the district court must focus primarily on protecting the interests of the defendant. McCants, supra, 781 F.2d at 856; Hoffman v. Alside, Inc., 596 F.2d 822, 823 (8 Cir.1979); LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 604 (5 Cir.1976).

The district court in this case considered two types of prejudice faced by USX in the event of dismissal: the fact that the plaintiff would pursue her state law claims against USX under a theory of respondeat superior in state court, and the significant resources expended by the defendant during the litigation of the plaintiff's claim in federal court. We will address both of these issues seriatim.

A.

The district court concluded that pursuit of the plaintiff's common law claims in state court would unfairly prejudice USX because USX's liability under a theory of respondeat superior was foreclosed by our previous opinion in this case. We did not in that opinion, nor do we today, intend to address the issue of the appropriate cause of action...

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