1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 KEVIN DOUGAN, as an individual and Case No.: 22-CV-1496 JLS (SBC) on behalf of all others similarly situated, 12 ORDER DISMISSING ENTIRE Plaintiff, 13 ACTION WITHOUT PREJUDICE v. PURSUANT TO FED. R. CIV. P. 14 41(a)(1)(A)(ii). CENTERPLATE, INC., a corporation; 15 SODEXO, INC., a corporation; (ECF No. 15) 16 CENTERPLATE OF DELAWARE, INC., a corporation; and DOES 1 through 50, 17 inclusive, 18 Defendants. 19 20 Presently before the Court is the Parties’ Joint Stipulation to Dismiss Entire Action 21 Without Prejudice (“Stip.,” ECF No. 15). For the reasons set forth below, the Court 22 APPROVES the Parties’ Stipulation. 23 BACKGROUND 24 This case began as a wage-and-hour putative class action filed in state court on 25 August 2, 2022. See Notice Removal (“Notice”) at 2, ECF No. 1; Siegel Decl. Ex. A 26 / / / 27 / / / 28 / / / 1 (“Compl.”) at 10, ECF No. 1-2. Plaintiff Kevin Dougan alleged that Defendants 2 Centerplate, Inc., Sodexo, Inc., and Centerplate of Delaware, Inc. (collectively, 3 “Defendants”) have violated multiple sections of California’s Labor Code, the “IWC Wage 4 Orders,” and California’s Unfair Competition Law. Id. at 18–22. Plaintiff sought to 5 represent a class of “[a]ll individuals currently or formerly employed by Defendants in the 6 State of California as hourly non-exempt employees at any time from four years preceding 7 the filing of this action through the time of trial.” Id. ¶ 5. 8 Defendants removed the case to this Court on October 3, 2022. See generally Notice. 9 Shortly thereafter, Plaintiff filed a separate action (the “State Court Action”) in state court, 10 pursuant to California’s Private Attorneys General Act. Stip. at 2. In the State Court 11 Action, Plaintiff alleged the same violations of California’s Labor Code that he asserts in 12 his Complaint here. Id. Defendants were unable to remove the State Court Action to 13 federal court, and it remains pending in the Superior Court of California, County of San 14 Diego. See id. 15 In April of 2023, the Court stayed this action through September 11, 2023, to allow 16 the Parties to attend private mediation. See ECF No. 10, at 2. After the Parties completed 17 mediation, they notified this Court that they were “presently negotiating and finalizing” a 18 class-action settlement that would “entirely resolve” both this action and the State Court 19 Action. Joint Status Report and Notice Settlement (“JSR”) at 2, ECF No. 12. Per the 20 Parties, their agreement “call[s] for the global settlement approval process to proceed in 21 the San Diego Superior Court.” Id. If the superior court approves the Parties’ settlement, 22 the agreement then calls for the Parties to move to dismiss this action in its entirety. Id. 23 The Parties therefore asked the Court to stay this action for a second time so that the Parties 24 could complete the state court settlement process. See Joint Mot. Stay Case (“JMS”) at 2, 25 ECF No. 13. 26 27 28 1 All page-number citations to the Complaint refer to the blue page numbers appended to the top-right 1 The Court issued an Order (“Order,” ECF No. 14) again staying the case on October 2 3, 2023. The Court cautioned the Parties, however, that many courts in the Ninth Circuit 3 review settlements in putative class actions pursuant to Diaz v. Trust Territory of the 4 Pacific Islands,

(9th Cir. 1989), and directed the Parties to address Diaz 5 should they file a joint motion to dismiss. Order at 3. 6 On November 28, 2023, the Parties filed the instant Stipulation pursuant to Federal 7 Rule of Civil Procedure 41(a)(1)(A)(ii). Stip. at 2. The Parties indicate that they have 8 stipulated to amend the State Court Action to “include the class claims at issue in this 9 [a]ction” and report that they will seek “settlement approval and certification” in the State 10 Court Action.

As this action, per the Parties, is now superfluous, they ask the Court to 11 “issue a minute order dismissing the action without prejudice and directing the Clerk to 12 close the case.” Id. at 3. The Parties argue that because Rule 23(e) has been amended post- 13 Diaz to require courts to approve voluntary dismissals only after a class has been certified, 14 the Court should not subject the Parties’ pre-certification stipulation of dismissal to Diaz 15 review. Id. 16 DISCUSSION 17 The central question raised by the Parties’ Stipulation is whether this Court should 18 review and approve a pre-certification, voluntary dismissal in a class-action suit. The 19 answer to this question hinges on the interaction between Federal Rules of Civil Procedure 20 41(a)(1) (governing voluntary dismissals) and 23(e) (governing court approval of 21 settlements in class actions). For the below reasons, the Court concludes that the 2003 22 amendment to Rule 23(e) was intended to take courts out of the business of reviewing pre- 23 certification voluntary dismissals. The Court therefore approves the Stipulation without 24 further inquiry into the circumstances surrounding the Parties’ proposed settlement. 25 In most cases, a voluntary dismissal filed pursuant to Rule 41(a)(1) “leaves no role 26 for the court to play.” See Am. Soccer Co. v. Score First Enters.,

(9th 27 Cir. 1999). Rule 41(a)(1) allows a plaintiff to “dismiss an action without a court order by 28 filing: (i) a notice of dismissal before the opposing party serves either an answer or a motion 1 for summary judgment; or (ii) a stipulation of dismissal signed by all parties who have 2 appeared.” Fed. R. Civ. P. 41(a)(1)(A). The Ninth Circuit has interpreted Rule 3 41(a)(1)(A)(i) to confer upon plaintiffs an “‘absolute right’ . . . to dismiss an action.” Am. 4 Soccer Co.,

. Indeed, “once a notice of voluntary dismissal is filed, the 5 district court in which the action is pending loses jurisdiction and cannot exercise discretion 6 with respect to the terms and conditions of the dismissal.” Com. Space Mgmt. Co. v. Boeing 7 Co.,

, 1076 (9th Cir. 1999).2 The same is true with respect to a stipulation 8 of voluntary dismissal pursuant to Rule 41(a)(1)(A)(ii). Black Rock City, LLC v. Pershing 9 Cnty. Bd. of Comm’rs,

(9th Cir. 2016) (applying Commercial Space 10 Management to a stipulation of voluntary dismissal); see also Anago Franchising, Inc. v. 11 Shaz, LLC,

(11th Cir. 2012); Adams v. USAA Cas. Ins. Co.,

(8th Cir. 2017). 13 Rule 41(a)(1), however, is “subject to Rule[] 23(e).” Fed. R. Civ. P. 41(a)(1)(A). 14 Prior to 2003, the Ninth Circuit interpreted then-Rule 23(e) to mandate court review of pre- 15 certification voluntary dismissals in class action suits. Diaz, 876 F.2d at 1408–11. Under 16 Diaz, a district court must hold a hearing and “inquire into the terms and circumstances of 17 any dismissal or compromise to ensure that it is not collusive or prejudicial” before 18 accepting a joint stipulation dismissing putative class claims. Id. at 1408. The district 19 court should not “perform the kind of substantive oversight required when reviewing a 20 settlement binding upon the class,” but instead need only determine whether “notice to the 21 class and an opportunity to intervene” is necessary. Id. Notice is necessary if: (1) there is 22 evidence that the named plaintiffs “appended class allegations in an attempt to get 23 favorable individual settlements”; (2) notice would “protect[] the class from objectionable 24 structural relief, trade-offs between compensatory and structural relief, or depletion of 25 limited funds available to pay the class claims”; or (3) there is a need to “protect[] the class 26

27 2 A district court may retain jurisdiction, however, to impose Rule 11 sanctions or otherwise adjudicate 28 collateral issues (e.g., “whether the attorney has abused the judicial process, and, if so, what sanction 1 from prejudice it would otherwise suffer if class members have refrained from filing suit 2 because of knowledge of the pending class action.” Id. at 1409–10. 3 The 2003 amendment to Rule 23(e), however, arguably abrogated Diaz. Rule 23(e) 4 now reads as follows: “[t]he claims, issues, or defenses of a certified class—or a class 5 proposed to be certified for purposes of settlement—may be settled, voluntarily dismissed, 6 or compromised only with the court’s approval.” Fed. R. Civ. P. 23(e) (emphasis added). 7 The Rules’ drafters added this “certified class” language to “resolve[] the ambiguity in 8 former Rule 23(e)” regarding whether courts should approve pre-certification settlements. 9 See id. advisory committee’s note to 2003 amendment. Indeed, the committee note to the 10 2003 amendment nods to—and rejects—cases that read the former version of Rule 23(e) 11 “to require court approval of settlements with putative class representatives that resolved 12 only individual claims.” See id. 13 Several courts have interpreted the 2003 amendment to Rule 23(e) to establish that 14 when no class has been certified, voluntary dismissal of a putative class action is limited 15 only by Rule 41. These courts therefore approve joint stipulations in putative class actions 16 without inquiring further into collusion or prejudice. See, e.g., Sample v. Qwest Commc’ns 17 Co. LLC, No. CV 10-08106-PCT-NVW,

, at *3–4 (D. Ariz. May 22, 18 2012) (“The Court must grant the parties’ stipulation of dismissal.”); Frias v. G4S Secure 19 Sols. (USA) Inc., No. 120CV00403AWISAB,

, at *1 (E.D. Cal. July 9, 20 2021) (approving a joint stipulation of dismissal designed to enable the plaintiff to file a 21 consolidated complaint in an action proceeding in state court); Cota v. Porven, Ltd., No. 22 20-CV-1806-BAS-RBB,

, at *1 (S.D. Cal. Jan. 18, 2022); Licea v. Adidas 23 Am., Inc., No. 5:22-CV-02077-FWS-SP,

, at *1–2 (C.D. Cal. Mar. 22, 24 2023); Lee v. CVS Pharmacy, Inc., No. 320CV01923BENDEB,

, at *2 25 (S.D. Cal. Jan. 28, 2021); Hall v. W. Ref. Retail, LLC, No. 19CV00855VAPSKX, 2021

, at *1 n.1 (C.D. Cal. June 23, 2021); Ripley v. Bridgestone Retail Operations, 27 LLC, No. C09-1482 RSM,

, at *2 (W.D. Wash. Sept. 2, 2010). 28 / / / 1 Other courts—including many in the Ninth Circuit—continue to review pre- 2 certification dismissals. These courts recognize that “the procedures of Rule 23(e) do not 3 apply to . . . [j]oint [m]otion[s] to [d]ismiss,” but argue that they retain discretionary 4 authority to “consider whether to ‘require . . . giving appropriate notice to some or all class 5 members’” pursuant to Rule 23(d)(1)(B). Del Rio v. CreditAnswers, LLC, No. 10CV346- 6 WQH-BLM,

, at *2 (S.D. Cal. May 16, 2011) (sixth alteration in 7 original) (quoting Fed. R. Civ. P. 23(d)(1)(B)); see also Mahan v. Trex Co., No. 5:09-CV- 8 00670 JF PVT,

, at *3 (N.D. Cal. Nov. 22, 2010) (citing Diaz,

at 1407 n.3); Lewis v. Vision Value, LLC, No. 1:11-CV-01055-LJO,

, 10 at *3 (E.D. Cal. July 18, 2012), report and recommendation adopted, No. 11 111CV01055LJOBAM,

(E.D. Cal. Aug. 6, 2012); In re Outlaw Lab’y, 12 LP Litig., No. 18-CV-840-GPC-BGS,

, at *5 (S.D. Cal. Sept. 15, 2020).3 13 When reviewing pre-certification dismissals pursuant to Rule 23(d)(1)(B), these courts 14 engage in the same analysis that Diaz read Rule 23(e) to mandate—they determine whether 15 to “require notice” of a pre-certification settlement by investigating whether “there is 16 evidence of collusion or prejudice.” E.g., Mahan,

, at *3. 17 The legislative history of the 2003 amendment to Rule 23(e) is inconsistent with the 18 approach taken by the latter group of courts. Initially, the Rule’s drafters proposed for 19 public comment a version of Rule 23(e) that would have required courts to “approve a 20 voluntary dismissal, withdrawal, or settlement made before a determination whether to 21 certify a class.” David F. Levi, Report of the Civil Rules Advisory Committee, in H.R. 22 Doc. No. 108-56, at 42, 83 (2003). This initial version codified an approach resembling 23

24 3 These courts do not address the issue of their ability to exercise jurisdiction after the parties have filed a 25 stipulation of dismissal pursuant to Rule 41(a)(1)(A)(ii). Though Rule 41(a)(1) is not textually made subject to Rule 23(d), these courts may nevertheless be able to exercise ancillary jurisdiction to determine 26 whether the parties have abused the judicial process and, if so, to order notice to putative class members as a sanction. See Cooter & Gell, 496 U.S. at 395–98; Kokkonen v. Guardian Life Ins. Co. of Am., 511

, 379–81 (1994); cf. Qureshi v. United States,

, 525–26 (5th Cir. 2010) (affirming 28 the district court’s jurisdiction to enter a pre-filing injunction after the plaintiff voluntarily dismissed his 1 Diaz; it would have required courts to consider whether prejudice to putative class 2 members potentially relying on the pending action, evidence of collusion, or the misuse of 3 class-action procedures justified the issuance of notice or the provision of an opportunity 4 to intervene. See id. at 97. After public comment, however, the drafters made an about- 5 face, concluding that “reliance by absent class members seldom occurs, if indeed it ever 6 occurs” and that “[a] court cannot effectively coerce continued litigation when all parties 7 have agreed not to litigate further.” Id. at 83. They therefore revised the proposed rule to 8 “delete the requirement that the parties must win court approval for a precertification 9 dismissal or settlement.” Id. at 78. The Advisory Committee Report demonstrates that the 10 Rules’ drafters made the express decision to reject the Diaz approach. 11 Though the Court is sympathetic to the policy concerns raised by those courts that 12 continue to apply Diaz pre-certification, see, e.g., Perez v. MEC Holding Co., No. 13 523CV00279SSSKKX,

, at *2 (C.D. Cal. July 31, 2023) (noting that 14 without Diaz review, the court could not determine whether absent class members had 15 relied on the pending action), the Court declines to join them in light of the above 16 legislative history. The Rules’ drafters determined that the burden on settlement imposed 17 by pre-certification review of joint dismissals is not justified by either the possibility of 18 abuse of class action procedures or the risk of prejudice to putative class members. See 19 Levi, supra, at 83 (“[R]eliance by absent class members seldom occurs, if indeed it ever 20 occurs.”). The drafters’ decision in this regard counsels against pre-certification review of 21 voluntary dismissals regardless of whether such review is conducted pursuant to Rule 23(e) 22 or Rule 23(d)(1)(B); either way, the reviewing court is hindering the parties’ efforts at 23 settlement by investigating whether notice should be ordered. Though reasons may exist 24 to question the drafters’ choice, it is not the Court’s place to substitute its own policy 25 judgment for that of the drafters. See Sample,

, at *3–4. 26 Consequently, the Court will follow the drafters’ intent and approve pre-certification 27 stipulations of dismissal without a Diaz inquiry. While that conclusion largely resolves the 28 issues presented by the Parties’ Stipulation, two questions remain. First, because the 1 Parties indicate that they plan to certify and settle the same class claims in state court, the 2 Court must determine whether this case involves a “class proposed to be certified for 3 purposes of settlement” within the meaning of Rule 23(e).4 Fed. R. Civ. P. 23(e) (emphasis 4 added). Second, the Court must ascertain whether the Parties’ voluntary dismissal is 5 otherwise unlawful. Id. 41(a)(1)(A) (noting that voluntary dismissals are “[s]ubject to . . . 6 any applicable federal statute”). 7 The answer to the first question is no. The advisory committee’s notes clarify that 8 Rule 23(e)’s “proposed to be certified” language was intended to apply when a proposed 9 settlement that would bind class members is presented to a federal court for approval 10 alongside a simultaneous request that the federal court certify the class. See id. advisory 11 committee’s note to 2018 amendment; id. advisory committee’s note to 2003 amendment 12 (“Notice of a settlement binding on the class is required . . . when the decisions on 13 certification and settlement proceed simultaneously.”); Rhonda Wasserman, The New, 14 Improved Class Action Rule, 90 Pa. Bar Ass’n Q. 182, 183 (2019) (noting that the 2018 15 amendment to Rule 23(e) was intended to require “the court to preliminarily approve a 16 proposed settlement” before directing notice to class members, formally certifying the 17 class, and ultimately approving a final version of the settlement). Here, the Parties do not 18 “propose” that the Court simultaneously certify a class and approve a class-action 19 settlement; instead, they seek only to dismiss this case and continue their class litigation in 20 state court. Stip. at 2. Nothing in the text or history of Rule 23(e) suggests that its 21 “proposed to be certified” language was intended to preclude such a strategy. 22 Nor is the Court convinced that that the reasons behind the Parties’ voluntary 23 dismissal are otherwise unlawful. In Adams, the Eighth Circuit reversed a district court’s 24 imposition of sanctions on attorneys who had stipulated to dismissal of a putative class 25 action in federal court, refiled the same class action in state court, and asked the state court 26 27 28 4 As no class has been certified in this litigation, Rule 23(e)’s “certified class” language is inapposite. Fed. 1 both certify the class and approve the parties’ settlement.

. 2 || The Eighth Circuit concluded that the parties had an absolute right to dismiss the case 3 || pursuant to Rule 41(a)(1)(A)(ii), regardless of whether they did so to flee the federal court’s 4 ||jurisdiction. Jd. at 1079-81 & n.10 (citing Pedrina v. Chun,

, 610 (9th Cir. 5 || 1993)). The Eighth Circuit also held that the parties had “a colorable legal argument” that 6 || the district court’s approval was not needed under Rule 23(e) to voluntarily dismiss the 7 |{claims of the putative class. Jd. at 1083. Finally, the Eighth Circuit rejected appointed 8 ||counsel’s argument that the Class Action Fairness Act (““CAFA”’) precluded the parties’ 9 settlement strategy. Jd. at 1082. 10 The Court finds the Eighth Circuit’s analysis in Adams persuasive with respect to 11 legality of the Parties’ voluntary dismissal in this case. Here, as in Adams, Plaintiff 12 || “originally filed suit in state court, and the [P]arties [have] agreed to return to that forum.” 13 || at 1081 n.12; Stip. at 2. And, like the Adams court, this Court sees “no reason to think 14 |/the state courts will not do justice.” See

(internal quotation marks 15 || omitted) (quoting Kern v. TXO Prod. Corp.,

(8th Cir. 1984)); see also 16 || Kullar v. Foot Locker Retail, Inc.,

(Ct. App. 2008) (describing 17 review to which California courts must subject a proposed class action settlement). 18 || The Court will thus approve the Parties’ Stipulation. 19 CONCLUSION 20 For the foregoing reasons, the Court APPROVES the Parties’ Joint Stipulation to 21 ||Dismiss Entire Action Without Prejudice (ECF No. 15) and DISMISSES the above- 22 ||captioned action in its entirety WITHOUT PREJUDICE. Per the Parties’ Stipulation, 23 Party shall bear their own attorneys’ fees and costs. Stip. at 2. As this concludes the 24 || litigation in this matter, the Clerk of the Court SHALL CLOSE the file. 25 IT IS SO ORDERED 26 Dated: December 12, 2023 tt pen Janis L. Sammartino 3g United States District Judge