Legal Question in Employment Law in New York

In Federal Court (Second Circuit) what is the effect of a voluntary dismissal by plaintiff after a default judgment but before a determination of damages?

Background and more detailed questions below. Thanks in advance.

My friend's dad (Fred) owns a corporation (company A) and it was sued, along with all the other businesses at the same address. The complaint was later amended and only two companies, A and B, remained as defendants.

A and B, alleged to have the same owner/controller (Fred), were sued under ERISA and LMRA in Federal Court in NY. Company A had no money to hire a lawyer. Company B has previously been dissolved by the state. Fred responded to the complaint himself and went to a status conference with the district judge. The judge explained that a corporation must be represented by an attorney in Federal Court and gave Fred some time to hire one to appear at a later scheduled status conference.

On advice of a lawyer, Fred did not show up to the conference and did not hire an attorney on behalf of company A. The plaintiffs motioned for entry of default judgment.

The presiding district judge referred the motion to a magistrate judge to conduct a damages inquest and issue a report and recommendation.

The magistrate judge ordered the plaintiffs to file proof of timely service of the summons, complaint, and amended complaint on company B. The plaintiffs did not do so.

The magistrate judge then ordered the plaintiffs to show cause why he should not dismiss the claims against company B for failure to prosecute pursuant to the Federal Rules of Civil Procedure 41(b).

Instead of showing cause, the plaintiffs filed notice of dismissal. “The above-captioned action [plaintiffs v. company A and company B] is hereby voluntarily dismissed by the plaintiffs pursuant to rule 41(a) of Federal Rules of Civil Procedure.”

I understand that the plaintiffs voluntarily dismissed the action to preserve their claim against company B. My question is, did the claim against company A get dismissed too? That is, the magistrate judge did not conclude the damages inquest. Nor did he issue a report and recommendation. Does the voluntary dismissal stop his work concerning company A? Does the plaintiff have to sue company A again to get a judgment?

Thanks for your help.

Asked on 10/05/13, 7:54 am

2 Answers from Attorneys

Arnold Nager Arnold H. Nager, Esquire

Based upon the fact pattern you have presented, my belief is that only the action against "B" has been dismissed. There is still a default judgement against "A", and that the Magistrate Judge will now proceed to assess damages against "A". If "A" has any assets. I suggest that Fred consult an attorney forthwith.

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Answered on 10/05/13, 8:20 am
Arnold Nager Arnold H. Nager, Esquire

I misread part of your post. The voluntary dismissal stops his work concerning company A. The plaintiff must sue company A and B again to get a judgment.

Perhaps next time he may not omit service on B.

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Answered on 10/05/13, 8:27 am

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