4705298204_11ff96590c_zOne or more claims are dismissed on the merits. Subsequently, the plaintiff takes a voluntary dismissal without prejudice on the remaining claims. Does res judicata bar any attempt by the plaintiff to later reinstate the dismissed claims? The Illinois Supreme Court debated that question during its January term, hearing oral argument in Richter v. Prairie Farms Dairy, Inc., a case from the Fourth District. Based upon its questioning of the plaintiffs, the Court appeared skeptical of the idea that a plaintiff can deprive a ruling on the merits of res judicata effect by disregarding an offer of time to replead and instead taking a voluntary dismissal. Our detailed summary of the facts and underlying court decisions in Richter is here.

Richter began in 2005, when the defendant terminated the plaintiff farmers’ membership in an agricultural cooperative intended to market their milk. The plaintiffs filed a three-count complaint against the cooperative, seeking shareholder remedies and damages for statutory and common-law fraud. The trial court granted defendant’s motion to dismiss the fraud claims with leave to replead. However, the plaintiff never took the Court up on its offer, proceeding solely on the shareholder claims. After five years of litigation on those claims, when the Court denied the plaintiffs’ request for a continuance, they took a voluntary dismissal without prejudice. A year later, the plaintiffs refiled both the shareholder and fraud claims. The defendants moved to dismiss based on res judicata, the trial court granted the motion, and the Fourth District Appellate Court reversed.

Counsel for the defendant began the argument, explaining that the issue before the Court was whether the refiled claims were barred by either res judicata or the statute of limitations. Justice Theis asked what the record reflected about the first lawsuit. Counsel answered that the Appellate Court had declined to apply res judicata based on its view that the defendant had lacked diligence in the first case. Justice Theis asked whether the record reflected what had happened in the first case for the five years of litigation following the first dismissal. Counsel answered that the time had been taken with discovery on the shareholder remedies claims. Justice Theis asked why that had taken five years. Counsel explained that the plaintiff had been unable to provide documentation at times, and the parties were involved in investigating the claims. Justice Theis asked whether the plaintiff had complied with court orders regarding discovery, and counsel said no. Justice Theis asked what the defense had done to pursue its claim. Counsel answered that the sole reason for the voluntary dismissal in 2013 was because the defendant had opposed the plaintiffs’ request for yet another delay. Chief Justice Garman asked whether the defendant had pursued any consequences for the alleged delay. Counsel said that there was no provision for a dismissal on such grounds. Justice Burke asked whether there was a difference between an involuntary dismissal with leave to amend for a short time after and dismissal without prejudice. Counsel said yes, and suggested that plaintiffs wanted to add the words “without prejudice” to any dismissal giving plaintiffs a brief window to replead. However, there should be some consequence for failing to pursue a claim in the time allowed by the trial court. Justice Theis asked whether the trial judge had enforced any deadlines in the case management order, and counsel said after several years, yes. Defendants brought a number of motions seeking definitive dates for one step or another, seeking to move the case along, and ultimately, the Court had agreed.

When counsel for the plaintiff began, Justice Thomas asked what the difference was between dismissal with leave to replead and dismissal without prejudice. Counsel said none. Judge Thomas asked counsel whether the trial judge would have any recourse if a dismissal permitted repleading in sixty days, but the plaintiff tried to file an amended complaint in 75 days. Counsel answered that a judge would have discretion as to whether to permit the amendment. Rather, the plaintiff’s res judicata argument was because there had simply never been a final order or judgment on the merits. Justice Thomas asked what the Court should do with Smith v. Central Illinois Regional Airport, which seemed to indicate that a dismissal with a short time to replead became dismissal with prejudice once the time runs. Counsel answered that the Court had said in Smith that the lower court could also give additional time. Prejudice did not arise automatically. Justice Thomas suggested that if the trial court granted a further sixty days, and plaintiff still didn’t appear, and finally, 180 days after the original dismissal, there hadn’t been either an amendment or a motion for extension – didn’t Smith mean that the dismissal was now with prejudice? Counsel answered no, defendant had to file a motion to make the original dismissal a final order. Justice Thomas asked whether plaintiffs wanted Smith overruled, and counsel answered that Smith should be followed. Justice Theis asked counsel whether he was arguing that the burden was on the defendant to bring to the court’s attention the plaintiff’s disregarding its time limitation. Counsel said that in order to invoke the harsh result of res judicata, that was correct. Justice Thomas asked whether plaintiff was saying that the dismissal was without prejudice essentially forever absent action by the defendant, and counsel said yes. Justice Thomas pointed out that Smith said that dismissals were “considered” to be with prejudice – it didn’t seem to presuppose another motion. Counsel said that Smith, read as a whole, was not that strict. Justice Karmeier asked whether a plaintiff could file an amended complaint after the time period given by the Court without seeking leave, and counsel answered no. Justice Karmeier asked whether it was relevant that the parties had done five years’ worth of discovery after the dismissal as if only one count was left in the case. Counsel said that many deadlines were extended during that period, and besides, none of the discovery would have been different if all claims had remained. Justice Theis asked whether any new facts were pled in the second complaint – comparing the two they seemed almost exactly the same. Counsel conceded that they were similar. Chief Justice Garman asked whether plaintiff’s view as that res judicata could only apply if the plaintiff affirmatively stated that it was standing on the complaint. Counsel agreed that that made a final order – there was nothing like that in the first case. Justice Theis pointed out that the dismissal was on the grounds that the dispute was contractual rather that fraud, so it seemed to be a substantive finding. Counsel argued that the gist of the motion to dismiss was failure to plead fraud with specificity. Justice Thomas asked whether there was something odd about a rule of law allowing the plaintiff time to replead after a dismissal, the plaintiff not taking advantage of that offer, and yet the defendant has to come back to Court and say “this time we really mean it.” Counsel said it was not an onerous burden when it came to res judicata. Justice Thomas asked whether the court was cutting off the plaintiff’s rights, or the plaintiff had done so. Counsel answered by once again suggesting that the decisive fact was there had never been a final order. Counsel concluded by briefly arguing that the statute of limitations defense failed because the cases involved similar theories, and therefore related back for purposes of the statute of limitations.

Counsel for the defendants concluded in rebuttal by noting that the plaintiffs had affirmatively asked for time to replead – and then failed to take advantage of it. The plaintiffs’ burden-shifting argument should never be allowed, according to counsel. Counsel noted that plaintiffs had said the only way to trigger finality should be for plaintiffs to affirmatively state that they were standing on the complaint – but why would they ever do that if they can remain silent for years and then start over? Counsel also denied that the scope of discovery would have been the same if the fraud claims had remained in the case. Counsel argued that the plaintiffs should have known from Smith that their voluntary dismissal would make the merits order final, and if they wanted to avoid the harshness of res judicata, they shouldn’t have ignored the Court’s order.

We expect Richter to be decided in three to four months.

Image courtesy of Flickr by Kate Sheets (no changes).