## Facts

- Lake at Las Vegas Investors Group, Inc. sued over alleged interference with and inducement of breach of an agreement tied to a Lake Las Vegas, Nevada development project.
- Investors first filed suit in Nevada state court against Pacific Malibu Development Corp., Barry Silverton, and Transcontinental Corporation.
- Six days later, Investors filed a notice of voluntary dismissal of the state action and immediately refiled essentially the same case, which was removed to federal court.
- In the removed federal case, Investors filed a voluntary dismissal as to Transcontinental.
- Months later, Investors amended to add Transcontinental again and to join Transneva Corporation and Transneva Limited Partnership, entities closely affiliated with Transcontinental.
- Transcontinental moved to dismiss under Federal Rule of Civil Procedure 41(a)(1)(B), arguing that Investors had twice voluntarily dismissed actions based on the same claim, triggering an adjudication on the merits.
- The district court dismissed the claims against Transcontinental and also dismissed the claims against the Transneva entities; Investors appealed.

## Issues

1. Whether Investors’ state-court filing counted as a first “action” for Rule 41(a)(1)(B) purposes despite an asserted lack of capacity to sue under Nevada’s foreign-corporation qualification statute.
2. Whether the first dismissal was “voluntary” where Investors claimed state law effectively compelled dismissal.
3. Whether Rule 41(a)(1)(B) requires proof of intent to harass.
4. Whether a notice of dismissal directed to fewer than all defendants can qualify as dismissal of an “action” under the two-dismissal rule.
5. Whether the Rule 41 adjudication on the merits as to Transcontinental barred claims against Transneva Corporation and Transneva Limited Partnership.
6. Whether denial of requested oral argument under a local rule required reversal.

## Decision

- The Ninth Circuit affirmed dismissal of the claims against Transcontinental under Rule 41(a)(1)(B).
- The court held the first Nevada filing was an “action” for Rule 41 purposes, notwithstanding Nevada’s qualification statute.
- The court treated the first dismissal as voluntary because Investors used a voluntary-dismissal notice, regardless of perceived pressure to dismiss.
- The court held Rule 41(a)(1)(B) applies without any showing of intent to harass.
- The court held a voluntary dismissal as to a single defendant in a multi-party case can count as a dismissal of an “action” as to that defendant for two-dismissal purposes.
- The court affirmed dismissal of the Transneva entities, concluding claim preclusion applied given their close affiliation and the derivative nature of the asserted liability.
- The court found no prejudice from the lack of oral argument and therefore no reversible error.

## Legal Principles

- Under Rule 41(a)(1)(B), a plaintiff’s second voluntary notice dismissal of an action based on or including the same claim operates as an adjudication on the merits and bars refiling against that defendant.
- State-law limitations on a plaintiff’s capacity to “maintain” an action do not necessarily render the initial filing a nullity for federal two-dismissal purposes.
- “Voluntary” in Rule 41 turns on the plaintiff’s chosen procedural act (filing a notice of voluntary dismissal), not on the plaintiff’s reasons for doing so.
- The two-dismissal rule is objective; it does not require proof of bad faith or intent to harass.
- For Rule 41(a)(1)(B), dismissal of claims against a single defendant may qualify as dismissal of an “action” as to that defendant, even if the broader case proceeds against others.
- An adjudication on the merits produced by Rule 41(a)(1)(B) can preclude claims against closely related entities where the later claims are based on the same operative facts and liability is derivative of the originally dismissed party.
- A district court’s failure to provide oral argument required by local rule warrants reversal only upon a showing of prejudice.

## Conclusion

The Ninth Circuit held that Investors’ two voluntary dismissals triggered Rule 41(a)(1)(B)’s two-dismissal rule, creating an adjudication on the merits that barred renewed claims against Transcontinental and, through claim-preclusion principles, also barred closely affiliated Transneva entities; denial of oral argument was harmless absent prejudice.


Lake at Las Vegas Invs. Grp., Inc. v. Pac. Malibu Dev. Corp., 933 F.2d 724 (9th Cir. 1991)