Youssif Kamal v. Eden Creamery, LLC

                   FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

YOUSSIF KAMAL; GILLIAN                      No. 21-56260
NEELY; RICHARD LICHTEN;
SUSAN COX; NICK TOVAR;                         D.C. No.
MICHELE KINMAN; TERI                        3:18-cv-01298-
BROWN, on their own behalf and on             TWR-AGS
behalf of all others similarly situated,
                Plaintiffs-Appellants,
                                              OPINION
  v.

EDEN CREAMERY, LLC, DBA Halo
Top Creamery; JUSTIN T.
WOOLVERTON,
             Defendants-Appellees.

        Appeal from the United States District Court
           for the Southern District of California
        Todd W. Robinson, District Judge, Presiding

         Argued and Submitted December 5, 2022
                  Pasadena, California

                  Filed December 21, 2023

Before: Marsha S. Berzon, Ryan D. Nelson, and Bridget S.
                 Bade, Circuit Judges.
2                 KAMAL V. EDEN CREAMERY, LLC


                 Opinion by Judge Bade;
Partial Concurrence and Partial Dissent by Judge R. Nelson


                          SUMMARY *


             Jurisdiction / Amended Complaint

    The panel affirmed in part and reversed in part the
district court’s dismissal of plaintiffs’ complaint alleging
that Eden Creamery, LLC underfilled its pints of ice cream.
     The district court denied plaintiffs’ motion for leave to
file a second amended complaint in order to add a new theory
of liability (fraud by omission) and a new defendant (Wells
Enterprises), and their subsequent motion to voluntarily
dismiss their putative class action complaint without
prejudice. After denying plaintiffs’ motions, the district
court dismissed plaintiffs’ individual claims with prejudice
and the class claims without prejudice.
    As an initial matter, the panel rejected defendants’
contention that there was no jurisdiction to review the
district court’s order denying plaintiffs leave to file a second
amended complaint. After the district court entered its final
order of dismissal with prejudice and plaintiffs appealed, the
earlier, non-final order denying plaintiffs’ motion for leave
to file a second amended complaint merged with the
judgment and became appealable.



*
 This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                 KAMAL V. EDEN CREAMERY, LLC                   3


    Turning to the merits, the panel held that plaintiffs failed
to show good cause, as required by Fed. R. Civ. P. 16(b), to
amend their complaint to add Wells Enterprises as a
defendant and a new theory of fraud by omission. However,
the district court abused its discretion by denying plaintiff’s
motion to dismiss without prejudice, and instead dismissing
with prejudice, because defendants failed to demonstrate that
they would suffer legal prejudice if the case were dismissed
without prejudice.
    Accordingly, the panel remanded with instructions to
dismiss the action without prejudice. Because a district
court can award costs and attorney’s fees as a condition of
dismissal without prejudice under Fed. R. Civ. P. 41(a)(2),
the panel directed the district court to consider whether any
terms should be imposed as a condition of dismissal, such as
an appropriate amount of costs and fees.
    Concurring in part and dissenting in part, Judge R.
Nelson concurred in Section IV of the majority opinion
(affirming the district court’s holding that plaintiffs failed to
show good cause to amend their complaint) and Section V.E
(holding that fees and costs may be awarded as conditions of
a Rule 41 voluntary dismissal). He dissented from Sections
V.A-D because he would hold that defendants have shown a
proper legal interest to warrant dismissal with prejudice.
4                KAMAL V. EDEN CREAMERY, LLC


                         COUNSEL

Andrew J. Brown (argued) and Brian J. Ellsworth, Law
Offices of Andrew J. Brown, San Diego, California, for
Plaintiffs-Appellants.
Dale J. Giali (argued), Keri E. Borders, King and Spalding
LLP, Los Angeles, California; Daniel D. Queen, Mayer
Brown LLP, Los Angeles, California; Kevin S. Ranlett,
Mayer Brown LLP, Washington, D.C.; for Defendants-
Appellees.



                          OPINION

BADE, Circuit Judge:

     Plaintiffs-Appellants Youssif Kamal, Gillian Neely,
Richard Lichten, Susan Cox, Nick Tovar, Michele Kinman,
and Teri Brown (collectively, Plaintiffs) appeal the district
court’s orders denying their motion for leave to file a second
amended complaint and their subsequent motion to
voluntarily dismiss their putative class action complaint
without prejudice. After denying Plaintiffs’ motions, the
district court dismissed Plaintiffs’ individual claims with
prejudice and the class claims without prejudice. On appeal,
Plaintiffs argue that the district court abused its discretion by
finding that they were not diligent and therefore denying
their motion to file a second amended complaint, and by
denying their motion for voluntary dismissal without
prejudice when Defendants-Appellants, Eden Creamery,
LLC and Justin Woolverton (collectively, Defendants),
failed to demonstrate that they would suffer legal prejudice
if the case were dismissed without prejudice. We conclude
                KAMAL V. EDEN CREAMERY, LLC                  5


that the district court did not abuse its discretion by denying
the motion to file a second amended complaint, but because
Defendants did not show legal prejudice as our case law
requires, the district court abused its discretion by denying
Plaintiffs’ motion for dismissal without prejudice.
Accordingly, we affirm in part, reverse in part, and remand.
                               I
    At the time Plaintiffs filed their initial complaint, Eden
Creamery owned and manufactured Halo Top, a low-calorie
ice cream sold by the pint. This case arises from complaints
that the pints were not completely full when purchased.
Several of the named plaintiffs—before filing this lawsuit—
complained directly to Defendants about this problem, and
Defendants explained that “at some point in the supply
chain, the ice cream slightly melts and then refreezes,”
causing “the ice cream [to] condense[] down, leaving space
inside the pint.” Defendants maintained this explanation
throughout this case and on appeal, asserting that “a pint of
Halo Top might appear less than full when opened [because]
of a latent chemical reaction known as ‘shrinkage’ that
impacts all ice cream.”
    Apparently unsatisfied with this explanation, Plaintiffs
filed their initial class action complaint against Eden
Creamery in June 2018. The theory behind Plaintiffs’
complaint was that Eden Creamery “underfills” its pints of
Halo Top, so while Plaintiffs “paid for a full pint,” they “did
not receive a full pint.”
    After Eden Creamery moved to dismiss, Plaintiffs filed
their first amended complaint “as a matter of course” in
September 2018, asserting various state law fraud, consumer
protection, and unfair business practice claims. See Fed. R.
Civ. P. 15(a)(1). The first amended complaint included
6               KAMAL V. EDEN CREAMERY, LLC


additional factual details, added several causes of action, and
named Justin Woolverton, Halo Top’s CEO, as a defendant,
but its key allegations remained the same, reiterating the
“underfilled” theory advanced in the initial complaint.
    Defendants again moved to dismiss, arguing, among
other things, that Plaintiffs’ underfilling theory was factually
unsound. Defendants argued that their pints were “filled to
maximum capacity” and “the alleged, random product
shrinkage, if any, resulted from alleged handling by third
parties, such as distributors, retailers, or consumers.”
    The district court largely denied the motion to dismiss,
concluding that Plaintiffs plausibly alleged their underfilling
theory. However, the court dismissed any “fraud by
omission claim,” finding that although Plaintiffs’ fraud
claim “nominally refer[red] to alleged omissions,” Plaintiffs
failed to describe any omissions. Shortly thereafter, the
court, with input from the parties, entered a scheduling order
setting November 1, 2019, as the deadline “to join other
parties [or] to amend the pleadings.”
    During discovery, Plaintiffs’ theory of liability changed.
Plaintiffs shifted from the “underfilled” theory to a “fraud by
omission” theory. Under this new theory, the problem with
the ice cream was not that the pints were underfilled at the
time of manufacturing, but that Halo Top was “inherently
defective.” According to Plaintiffs, Halo Top’s ingredients
and production methods render the product extremely
vulnerable “to changes in temperature and altitude,” such
that it cannot “withstand the ordinary distribution and retail
practices within the ice cream industry.” Under Plaintiffs’
new theory, Defendants intentionally concealed this defect
and failed to inform their customers “that there was a
                KAMAL V. EDEN CREAMERY, LLC                  7


substantial risk that the Halo Top ice cream pint would be
underfilled” at the time of purchase.
    On June 25, 2020, approximately six weeks before the
deadline to complete discovery and eight months after the
deadline to amend the pleadings, Plaintiffs moved to amend
their complaint to incorporate this new theory and to add
Wells Enterprises, the company that purchased Halo Top
from Eden Creamery, as a defendant. The district court
denied the motion in December 2020, concluding that
(1) Plaintiffs were not diligent in seeking leave to file their
proposed second amended complaint and therefore failed to
show “good cause” to extend the deadline to amend the
pleadings, and (2) allowing amendment would prejudice
Defendants because discovery would have to be reopened,
which would increase the cost of litigation and delay
resolution of the case.
    Shortly after the court denied the motion to file a second
amended complaint, Plaintiffs moved to voluntarily dismiss
their claims without prejudice under Federal Rule of Civil
Procedure 41(a)(2). They candidly acknowledged that they
sought dismissal to pursue their new fraud theory “in a
separate lawsuit.” Defendants did not oppose dismissal, but
they requested that the district court dismiss the case with
prejudice or impose several conditions for dismissal without
prejudice, including barring Plaintiffs from pursuing claims
in a new case based on the “underfilling” theory, requiring
Plaintiffs to pay some of Defendants’ attorney’s fees,
limiting discovery in the new case, and requiring that the
new case be assigned to the same judge.
    After a hearing and supplemental briefing, the district
court denied the motion for voluntary dismissal without
prejudice. The court concluded that dismissing the action
8               KAMAL V. EDEN CREAMERY, LLC


without prejudice “would result in legal prejudice to
Defendants.” In the court’s view, Plaintiffs’ motion for
dismissal without prejudice was “intended to negate” the
court’s prior denial of leave to amend, and the court reasoned
that “[i]f allowing Plaintiffs to file the Proposed Second
Amended Complaint in this action would be prejudicial to
Defendants, then permitting Plaintiffs to file the Proposed
Second Amended Complaint as a new lawsuit would be
similarly prejudicial.” The court also concluded that
Plaintiffs had essentially asked the court “to employ the
discretion granted in Rule 41(a)(2) to accomplish indirectly”
what the court “held cannot be accomplished directly under
Rule 16(b)”—extend the scheduling order’s deadline to
amend the pleadings without a showing of good cause.
    The district court advised Plaintiffs that they could either
accept dismissal with prejudice or continue litigating the
action in the district court based on the first amended
complaint. Plaintiffs informed the court that they did “not
intend to continue litigating” the action in the district court,
and the court dismissed Plaintiffs’ individual claims with
prejudice and the putative class claims without prejudice.
Plaintiffs timely appealed.
                               II
    We review for an abuse of discretion a district court’s
denial of leave to amend pleadings, Branch Banking & Tr.
Co. v. D.M.S.I., LLC, 

 (9th Cir. 2017), and
its decision on a motion for voluntary dismissal, Westlands
Water Dist. v. United States, 

, 96 (9th Cir. 1996).
                              III
   As an initial matter, we must address Defendants’
contention that we lack jurisdiction to review the district
                   KAMAL V. EDEN CREAMERY, LLC                            9


court’s order denying Plaintiffs’ motion for leave to file a
second amended complaint. Defendants agree that we have
jurisdiction to review the district court’s order denying
Plaintiffs’ motion for dismissal without prejudice, but they
argue that Plaintiffs “cannot also appeal the earlier
interlocutory denial of leave to amend.” Defendants argue
that allowing such an appeal would circumvent the
discretionary certification process for interlocutory appeals
under 

(b). 1
    This argument fails because Plaintiffs are not appealing
from an interlocutory order. Instead, Plaintiffs are appealing
the district court’s final order dismissing their claims with
prejudice. See 

 (courts of appeals “have
jurisdiction of appeals from all final decisions of the district
courts”). And while “[a]n order denying leave to amend a
complaint is not appealable,” Hall v. City of Los Angeles,

 (9th Cir. 2012), that is because “[s]uch
orders, as a class, contemplate further proceedings in the
district court,” and “review is available after the final
judgment, into which they merge,” 

 (quoting Bradshaw v.
Zoological Soc’y of San Diego, 

 (9th
Cir. 1981)). Here, after the district court entered its final
order of dismissal with prejudice and Plaintiffs appealed, the


1
  Section 1292(b) provides a mechanism for a discretionary appeal of an
interlocutory order. The statute provides that if a district judge concludes
that an order entered in a civil case, which is not otherwise appealable,
“involves a controlling question of law as to which there is substantial
ground for difference of opinion and that an immediate appeal from the
order may materially advance the ultimate termination of the litigation,”
the judge “shall so state” in that order. 

(b). The court
of appeals “may . . . in its discretion, permit an appeal to be taken from
such order, if application is made to it within ten days after the entry of
the order.” 

10                 KAMAL V. EDEN CREAMERY, LLC


earlier, non-final order denying Plaintiffs’ motion for leave
to file a second amended complaint “merge[d] with the
judgment” and became reviewable. 

 (“An appeal from a
final judgment draws in question all earlier, non-final orders
and rulings which produced the judgment.” (quoting
Litchfield v. Spielberg, 

 (9th Cir.
1984))).
     Defendants also argue that because Plaintiffs moved for
voluntary dismissal after the district court denied leave to
file a second amended complaint, we lack jurisdiction to hear
an appeal of that order because Plaintiffs’ tactics are akin to
the “voluntary-dismissal tactic” that the Supreme Court
rejected in Microsoft Corp. v. Baker, 

 (2017).
This argument fails because, unlike in Microsoft, the
plaintiffs here did not seek a voluntary dismissal with
prejudice to generate a final judgment for the purpose of
appealing the earlier interlocutory order.
    In Microsoft, after the district court struck the plaintiffs’
class allegations from the complaint, and the court of appeals
denied a permissive interlocutory appeal of that order under
Federal Rule of Civil Procedure 23(f), the plaintiffs
voluntarily dismissed their claims with prejudice, but
reserved the right to revive their claims if the court of appeals
reversed the district court’s denial of class certification. 

, 33–35. The Court rejected this “tactic” and held
that a voluntary dismissal with prejudice, after the denial of
a permissive interlocutory appeal under Rule 23(f), is not a
final appealable decision under § 1291. 2 Id. at 37. The

2
  In 1998, the Court approved Rule 23(f), which authorizes “permissive
interlocutory appeal” of class certification orders at the discretion of the
courts of appeals. Microsoft, 

. Rule 23(f) was “[s]een as
                   KAMAL V. EDEN CREAMERY, LLC                          11


Court explained that allowing such an appeal would severely
undermine “Rule 23(f)’s careful calibration” and “Congress’
designation of rulemaking as the preferred means for
determining whether and when prejudgment orders should
be immediately appealable.” 

 (citation and internal
quotation marks omitted). Further, the Court stated that it
was of “prime significance” that the plaintiffs’ “dismissal
tactic undercuts Rule 23(f)’s discretionary regime.” 

(citation omitted). In addition, Microsoft emphasized that
this dismissal tactic “invites protracted litigation and
piecemeal appeals” by giving the plaintiff exclusive control
over “the decision whether an immediate appeal will lie.” 

; see also 

 at 41–42 (expressing concern over the
“one-sidedness” of such a tactic).
   Here, the district court dismissed the case with prejudice
over Plaintiffs’ objection. Plaintiffs never sought dismissal
with prejudice; instead, they sought dismissal without

a response to” Coopers & Lybrand v. Livesay, 

 (1978), in
which the Court rejected the “death-knell” doctrine that had allowed an
appeal as of right, in some circumstances, of an order denying class
certification. 

 at 27–28, 30. The Court recognized that after Coopers
& Lybrand, “a party seeking immediate review of an adverse class-
certification order had no easy recourse.” Id. at 30. The Federal Rules
of Civil Procedure did not provide for appeals of interlocutory orders in
class actions, so parties were limited to seeking a discretionary appeal
under § 1292(b) or a writ of mandamus. Id. Therefore, pursuant to
§ 1292(e), which authorizes the Court to promulgate rules for appeals
from interlocutory orders “not otherwise provided for” in § 1292, the
Court approved Rule 23(f). Id. at 30–31 (quoting 

(e)).
The Court further explained that Rule 23(f) “was the product of careful
calibration” that sought to provide “greater protection against
improvident certification decisions than § 1292(b)” offered, while
avoiding the possible abuse and increased delay and expense of allowing
an appeal as of right from interlocutory class certification orders. Id. at
31–32 (citation omitted).
12              KAMAL V. EDEN CREAMERY, LLC


prejudice, which would not have resulted in a final
appealable order. See Wakefield v. Thompson, 

 (9th Cir. 1999) (“[D]ismissals with prejudice
generally constitute final orders, while dismissals without
prejudice generally do not.”). Plaintiffs thus never sought to
employ the dismissal tactic at issue in Microsoft.
Considering their appeal of the denial of the motion to
amend alongside their appeal from the dismissal with
prejudice does not raise the concerns articulated in Microsoft
relating to the use of voluntary dismissals as an end-run
around the rules against interlocutory appeals. Therefore,
we have jurisdiction to review the district court’s denial of
Plaintiffs’ motion for leave to file a second amended
complaint.
                              IV
    Having confirmed our jurisdiction, we consider whether
the district court abused its discretion by denying Plaintiffs’
motion to file a second amended complaint. When a district
court enters a pretrial scheduling order establishing a
deadline for amending the pleadings, as the court did here, a
motion to amend is governed by Rule 16(b). Johnson v.
Mammoth Recreations, Inc., 

, 607–08 (9th Cir.
1992). Under Rule 16(b), a plaintiff “must show good
cause” for failing to amend the complaint “before the time
specified in the scheduling order expired.” Coleman v.
Quaker Oats Co., 

 (9th Cir. 2000). The
good cause standard “primarily considers the diligence of the
party seeking the amendment.” In re W. States Wholesale
Nat. Gas Antitrust Litig., 

 (9th Cir. 2013)
(quoting Johnson, 

). “Although the existence
or degree of prejudice to the party opposing the modification
might supply additional reasons to deny a motion, the focus
of the inquiry is upon the moving party’s reasons for seeking
                KAMAL V. EDEN CREAMERY, LLC                 13


modification,” and “[i]f that party was not diligent, the
inquiry should end.” Johnson, 

.
    This issue raises two questions: (1) whether Plaintiffs
established good cause to amend their complaint to add
Wells Enterprises as a defendant, and (2) whether Plaintiffs
established good cause to amend their complaint to allege
the new theory of fraud by omission. We address each in
turn.
                              A
     Applying the Rule 16(b) good cause standard, we
conclude the district court did not abuse its discretion in
finding that Plaintiffs were not diligent in seeking to add
Wells Enterprises as a defendant. The district court correctly
observed that Plaintiffs were on notice that Defendants sold
Halo Top to Wells Enterprises eight months before Plaintiffs
moved to file a second amended complaint on June 25, 2020.
On October 8, 2019—even before the November 1, 2019,
deadline to amend the pleadings—Defendants disclosed the
sale in the parties’ joint discovery plan. And as the district
court recognized, Plaintiffs referred to the sale in their own
filings, confirming they were on notice. Nevertheless,
Plaintiffs waited until June 25, 2020, to seek leave to file a
second amended complaint adding Wells Enterprises as a
defendant.
     Although Plaintiffs argue that they needed to know
“details of the transaction” to “allege successor liability,”
and that they “alleged fraud against Wells [Enterprises] for
its own conduct after the sale of Halo Top” and “could not
have known the facts underlying that fraud” without
discovery, “[t]he burden” lies with the plaintiff “to prosecute
his case properly.” Johnson, 

. And even
assuming this information was necessary to amend the
14               KAMAL V. EDEN CREAMERY, LLC


complaint, Plaintiffs offer no explanation for why they
needed eight months to obtain it and move to amend the
complaint. Accordingly, the district court did not abuse its
discretion in concluding that Plaintiffs did not act diligently
and therefore failed to demonstrate good cause to amend the
complaint and add Wells Enterprises as a defendant after the
scheduling order’s deadline. See 

 at 606–10 (concluding
that the plaintiff, who moved to join another defendant four
months after the deadline to amend pleadings, failed to
demonstrate good cause when the original defendant
indicated in its answer and response to interrogatories—
before the amendment deadline—that it did not own the ski
resort at which the plaintiff was injured).
                               B
    Similarly, the district court did not abuse its discretion in
denying Plaintiffs leave to amend the complaint to
incorporate their new theory of fraud by omission. Plaintiffs
assert that the district court did not find that any of the facts
underlying this theory were known to Plaintiffs “at any time
before the Motion to Amend.” The district court’s order
refutes this assertion. The district court recognized that
Defendants produced the “key documents” that Plaintiffs
cited as the basis for their new fraud theory on January 31,
2020, five months before Plaintiffs sought leave to amend
their complaint. The district court observed that “twelve of
the sixteen new documents referenced” in the proposed
second amended complaint were contained in the January
31, 2020, production, “which comprised 12,224 pages.”
These documents, which, according to Plaintiffs, “prove[d]”
their new theory and prompted the filing of their motion,
included details of a study that allegedly revealed the flaws
in Halo Top’s ingredients and production methods and
emails purporting to show that Defendants knew of this
                KAMAL V. EDEN CREAMERY, LLC                 15


problem but misled their distributors, retailers, and
customers about it. In sum, these documents allegedly
established the core of Plaintiffs’ new fraud theory.
     While recognizing that “document review takes time,”
the district court concluded that Plaintiffs had not met their
burden to demonstrate good cause because they “failed to
account for the five months [that elapsed] between the
production of these key documents” and their motion to
amend the complaint. Similarly, although Plaintiffs deposed
Eden Creamery just prior to filing the motion to amend the
complaint, the court observed that Plaintiffs “fail[ed] to
articulate what new facts uncovered at the deposition were
critical to their request.” See Jackson v. Bank of Haw., 

, 1388 (9th Cir. 1990) (rejecting, under Rule 15
amendment standard, plaintiffs’ argument that “the evidence
of the [defendant’s] representations, promises, and
nondisclosures were not ‘fully flushed out’” until later in the
discovery period given that plaintiffs “cite[d] no facts or
theories gleaned from the additional discovery period to
support this contention”).
    The district court also noted that it had been “clear from
the outset” of the case that “‘shrinkage’ would be a key issue
in one way or another.” In their motion to dismiss the first
amended complaint—filed November 12, 2018—
Defendants argued that it “would be physically impossible”
to increase the fill of pints “that are already filled to
maximum capacity” and that Plaintiffs failed to allege facts
suggesting Defendants “could avoid potential melting and
refreezing of the products by third parties.” In other words,
Defendants asserted that Plaintiffs’ initial “underfilling”
theory was erroneous because the pints were full at the time
of manufacturing, but the ice cream would melt and refreeze
during the distribution process—the very theory Plaintiffs
16                 KAMAL V. EDEN CREAMERY, LLC


sought to allege almost two years later. Additionally, the
district court recognized that Defendants informed “most of
[the] named plaintiffs”—before litigation started—that
shrinkage was the reason for apparently less-than-full pints.
See Acri v. Int’l Ass’n of Machinists & Aerospace Workers,

 (9th Cir. 1986) (even under Rule 15’s
liberal standard, “late amendments to assert new theories are
not reviewed favorably when the facts and the theory have
been known to the party seeking amendment since the
inception of the cause of action”).
    Considering the district court’s findings, and in
particular its determination that Plaintiffs possessed the “key
documents” forming the basis of their new theory of fraud in
January 2020 yet “failed to account for the five months”
between receiving the documents and filing their motion to
amend in June 2020, the court’s finding that Plaintiffs were
not diligent was not “illogical, implausible, or without
support in inferences that may be drawn from the facts in the
record.” City of Los Angeles v. San Pedro Boat Works, 

 (9th Cir. 2011) (quoting United States v.
Hinkson, 

 (9th Cir. 2009) (en banc)).
Therefore, the district court did not abuse its discretion in
denying Plaintiffs leave to amend their complaint to
incorporate this new theory of liability. 3



3
  Our conclusion that the district court did not err by finding that
Plaintiffs were not diligent resolves “the focus of the inquiry” on whether
the district court abused its discretion by denying leave to file an
amended complaint and “the inquiry should end” there. Johnson, 

. Therefore, we need not address the district court’s
alternative finding that allowing Plaintiffs leave to amend would
prejudice Defendants.
                   KAMAL V. EDEN CREAMERY, LLC                          17


                                    V
    Finally, we consider whether the district court abused its
discretion by denying Plaintiffs’ motion for voluntary
dismissal without prejudice. Generally, Rule 41(a)(2) grants
a district court discretion to dismiss a case with or without
prejudice. 4 See Fed. R. Civ. P. 41(a)(2) (“Unless the order
states otherwise, a dismissal under this paragraph . . . is
without prejudice.”); Hargis v. Foster, 

(9th Cir. 2002) (“Rule 41 vests the district court with
discretion to dismiss an action at the plaintiff’s instance
‘upon such terms and conditions as the court deems proper.’
That broad grant of discretion does not contain a preference
for one kind of dismissal or another.”) (quoting Fed. R. Civ.
P. 41(a)(2)).
    But we have cabined that discretion by repeatedly
holding that “[w]here the request is to dismiss without
prejudice, ‘[a] District Court should grant a motion for
voluntary dismissal under Rule 41(a)(2) unless a defendant
can show that it will suffer some plain legal prejudice as a
result.’” 5 WPP Lux. Gamma Three Sarl v. Spot Runner, Inc.,

4
 Rule 41(a) governs a plaintiff’s ability to voluntarily dismiss an action.
Under Rule 41(a)(1), a plaintiff has “an absolute right” to voluntarily
dismiss an action “prior to service by the defendant of an answer or a
motion for summary judgment.” Wilson v. City of San Jose, 

 (9th Cir. 1997). But once the defendant serves an answer or
motion for summary judgment (and unless the parties stipulate to
dismissal), a plaintiff “must file a motion for voluntary dismissal under
Rule 41(a)(2).” 

 Rule 41(a)(2), in turn, permits a plaintiff to
voluntarily dismiss an action “only by court order, on terms that the court
considers proper.” Fed. R. Civ. P. 41(a)(2).
5
 Our case law is consistent with, and indeed stems from, longstanding
Supreme Court precedent confirming that, in the absence of prejudice to
18                 KAMAL V. EDEN CREAMERY, LLC

, 1058–59 n.6 (9th Cir. 2011) (second
alteration in original) (quoting Smith v. Lenches, 

 (9th Cir. 2001)), abrogated on other grounds by
Lorenzo v. SEC, 

 (2019); Westlands Water
Dist., 100 F.3d at 96 (“When ruling on a motion to dismiss
without prejudice, the district court must determine whether
the defendant will suffer some plain legal prejudice as a
result of the dismissal.”); Stevedoring Servs. of Am. v.
Armilla Int’l B.V., 

, 921 (9th Cir. 1989) (“The
purpose of [Rule 41(a)(2)] is to permit a plaintiff to dismiss
an action without prejudice so long as the defendant will not
be prejudiced or unfairly affected by dismissal.” (citation
omitted)).



the defendant, voluntary dismissal should be without prejudice. See
Cone v. W. Va. Pulp & Paper Co., 

 (1947) (stating that
“[t]raditionally,” the plaintiff had “an unqualified right, upon payment of
costs, to take a nonsuit in order to file a new action after further
preparation, unless the defendant would suffer some plain legal prejudice
other than the mere prospect of a second lawsuit,” and Rule 41
“preserves” this right); Jones v. SEC, 

 (1936) (stating it
was “very clear” that “the right of a complainant to dismiss his bill
without prejudice, on payment of costs, was of course,” except for when
“dismissal of the bill would prejudice the defendants in some other way
than by the mere prospect of being harassed and vexed by future
litigation of the same kind” (citation omitted)); In re Skinner & Eddy
Corp., 

, 93–94 (1924) (explaining that denying a plaintiff
“the right to dismiss his bill without prejudice at his own costs” was
reserved for when the defendant was in a position “to seek affirmative
relief” and “would be prejudiced by being remitted to a separate action”);
see also Home Owners’ Loan Corp. v. Huffman, 

 (8th
Cir. 1943) (explaining that “[R]ule 41 is declaratory of” and “intended
only to clarify and make definite” the longstanding rule “that a plaintiff
may dismiss his case without prejudice” upon payment of costs when the
defendant will not suffer legal prejudice).
                KAMAL V. EDEN CREAMERY, LLC                  19


    “Legal prejudice” is a term of art: it means “prejudice to
some legal interest, some legal claim, some legal argument.”
Westlands Water Dist., 100 F.3d at 97. But “[u]ncertainty
because a dispute remains unresolved is not legal prejudice,”
id., and “the threat of future litigation which causes
uncertainty is insufficient to establish plain legal prejudice,”
id. at 96. Additionally, “the mere inconvenience of
defending another lawsuit does not constitute plain legal
prejudice,” Hamilton v. Firestone Tire & Rubber Co., 

 (9th Cir. 1982), and “plain legal prejudice
does not result merely because the defendant will be
inconvenienced by having to defend in another forum or
where a plaintiff would gain a tactical advantage by that
dismissal,” Lenches, 

.
                               A
    Relying on these cases, Plaintiffs argue that the district
court abused its discretion by denying their motion for
dismissal without prejudice because Defendants failed to
show that they would suffer legal prejudice as a result.
Defendants counter that “Plaintiffs err from the outset by
misstating the test for whether a voluntary dismissal of
claims may be made with or without prejudice.” Defendants
argue that Plaintiffs “conflate” the separate determinations
the court must make when ruling on a motion for voluntary
dismissal.
     In Defendants’ view, the district court first determines
whether dismissal should be granted at all and considers
whether the defendant will suffer legal prejudice only at this
first step of the analysis. If the defendant cannot show legal
prejudice at the first step, the court must allow dismissal and
proceed to the second step of the analysis—whether
dismissal should be with or without prejudice. Defendants
20              KAMAL V. EDEN CREAMERY, LLC


further argue that at the second step, the district court can
consider factors other than “legal prejudice,” and therefore
dismissal may be with prejudice, even if the defendant would
suffer no legal prejudice from a dismissal without prejudice.
    We conclude that Plaintiffs correctly state the standard
that applies to voluntary dismissal under Rule 41(a)(2), and
we reject Defendants’ argument that dismissal may be with
prejudice, even if the defendant would suffer no legal
prejudice from a dismissal without prejudice, because it is
directly refuted by our case law. In WPP Luxembourg
Gamma Three Sarl, we stated that a district court should
grant a motion for dismissal without prejudice “unless a
defendant can show that it will suffer some plain legal
prejudice as a result.” 655 F.3d at 1058–59 n.6 (quoting
Lenches, 

). In Stevedoring Services of
America, we explained that the purpose of Rule 41(a)(2) is
“to permit a plaintiff to dismiss an action without prejudice
so long as the defendant will not be prejudiced or unfairly
affected by dismissal.” 889 F.2d at 921 (citation omitted).
And in Westlands Water District, because we concluded that
the defendants had failed to show they would suffer legal
prejudice from a dismissal without prejudice, we reversed
not only the district court’s denial of the plaintiffs’ motion
for dismissal without prejudice but also its entry of summary
judgment for defendants, and remanded “with instructions to
enter an order dismissing the action without prejudice.” 100
F.3d at 95–96.
    Similarly, Defendants misread our decision in Smith v.
Lenches. Contrary to Defendants’ assertion, that case does
not support their argument that a court may dismiss a
plaintiff’s claims with prejudice, even if the defendant would
suffer no legal prejudice from a dismissal without
                   KAMAL V. EDEN CREAMERY, LLC                           21


prejudice. 6 That argument was simply not presented in
Lenches. There, the defendants appealed the dismissal of
the plaintiffs’ federal securities claims with prejudice,
arguing that they suffered legal prejudice from dismissal
because they lost the procedural protections of the Private
Securities Litigation Reform Act (PSLRA) and because their
state law counterclaim was dismissed without prejudice.
263 F.3d at 974–75. The plaintiffs, however, did not appeal
and we did not consider whether the district court should
have dismissed their claims without prejudice.
    Instead, in rejecting the defendants’ arguments, we
observed that this was the “rare case” in which the
defendants “achiev[ed] a complete victory in federal court”
by securing dismissal with prejudice of all federal claims
against them, yet “complain[ed] that they were entitled to
more: the right to proceed with their counterclaim.” Id. at
974. We explained that the defendants would not suffer
legal prejudice from the dismissal of the plaintiffs’ federal
claims, even though they would be required to litigate the
pending state law claims in state court, and the plaintiffs
“would gain a tactical advantage.” Id. at 976. We also
explained that, even though the dismissal of the federal
securities claims meant that the defendants lost the
procedural protections of the PSLRA, “[b]ecause those

6
  In Lenches, the plaintiffs moved to voluntarily dismiss their federal
securities claims to pursue similar state law claims pending in state court.
263 F.3d at 974–75. The district court dismissed the plaintiffs’ claims
with prejudice. Id. at 974. Although it is not clear from our opinion in
Lenches, the briefing from the district court proceedings shows that the
plaintiffs sought dismissal without prejudice. We grant Defendants’
motion to take judicial notice of the district court briefing in Lenches.
See Ray v. Lara, 

, 697 n.4 (9th Cir. 2022) (granting motion
for judicial notice of court records from other cases).
22                KAMAL V. EDEN CREAMERY, LLC


claims were dismissed and are not continuing, the loss of
procedural protections relating to them is not legal
prejudice.” 

 Finally, we noted that because the district
court dismissed the plaintiffs’ claims with prejudice “so they
cannot be reasserted in another federal suit,” that “only
strengthen[ed] our conclusion that the dismissal caused no
legal prejudice and was not an abuse of discretion.” 

    But the issue of whether dismissal of the plaintiffs’
claims should have been with or without prejudice was not
before us because the issue was not presented on appeal, see
id. at 974, and therefore our decision in Lenches does not
support Defendants’ argument.
     Undeterred by these cases, Defendants argue that when
deciding whether dismissal should be with or without
prejudice, the district court may consider other factors “not
rising to the level of legal prejudice,” such as “the
defendant’s effort and expense involved in preparing for
trial” and “excessive delay and lack of diligence on the part
of the plaintiff in prosecuting the action,” and may dismiss
with prejudice if warranted by these considerations. But we
have already rejected similar arguments. See Westlands
Water Dist., 100 F.3d at 97 (“We have explicitly stated that
the expense incurred in defending against a lawsuit does not
amount to legal prejudice.”); see also Hamilton, 679 F.2d at
145–46 (rejecting argument that the plaintiff’s claims should
have been dismissed with prejudice because defendant “had
begun trial preparations” and “was put to significant expense
in preparing and filing its pleadings”). 7


7
 As our subsequent discussion reflects, a district court may condition a
dismissal without prejudice on “on terms that the court considers
                   KAMAL V. EDEN CREAMERY, LLC                         23


    In sum, we have never held that the legal prejudice
inquiry applies only when determining whether voluntary
dismissal should be allowed at all, with or without prejudice;
nor have we held that dismissal under Rule 41(a)(2) may be
with prejudice, even when no legal prejudice would result
from a dismissal without prejudice. We decline to do so
now. Instead, as our case law makes clear, the district court
must determine whether granting a motion for dismissal
without prejudice would result in legal prejudice to the
defendant and, if not, the motion should be granted. WPP
Lux. Gamma Three Sarl, 655 F.3d at 1058–59 n.6;
Westlands Water Dist., 100 F.3d at 96; Stevedoring Servs. of
Am., 889 F.2d at 921.
                                   B
    Alternatively, Defendants argue that “even if Plaintiffs
were correct that the district court needed to find [that] some
‘legal prejudice’” would result from a dismissal without
prejudice, “such prejudice is present here.” Specifically,
Defendants argue that a dismissal without prejudice would
cause them prejudice because Plaintiffs acknowledged that
they intended to refile their claims in a subsequent lawsuit or
lawsuits. Defendants further argue that the district court
correctly concluded that dismissing Plaintiffs’ claims
without prejudice would allow Plaintiffs to circumvent the
prior denial of leave to file a second amended complaint and
would prejudice Defendants for the same reasons as
allowing the second amended complaint: litigation would
continue, preventing resolution of the case.


proper,” Fed. R. Civ. P. 41(a)(2), and in setting such conditions may take
into account considerations that fall short of legal prejudice. See infra,
Part V.E.
24                 KAMAL V. EDEN CREAMERY, LLC


    But legal prejudice does not result when a plaintiff
“merely gains some tactical advantage” from dismissal,
Hamilton, 

, or when the defendant faces “the
threat of future litigation which causes uncertainty,”
Westlands Water Dist., 100 F.3d at 96, or when “the
defendant will be inconvenienced by having to defend in
another forum,” Lenches, 

. Legal prejudice
requires something more. In Westlands Water District, we
surveyed cases from other courts for examples of legal
prejudice and observed that “courts have examined whether
a dismissal without prejudice would result in the loss of a
federal forum, or the right to a jury trial, or a statute-of-
limitations defense.” 100 F.3d at 97 (collecting cases). 8 We


8
  Although we did not state whether a dismissal without prejudice in
these circumstances would amount to legal prejudice, the cases we cited
all concluded that there was no such prejudice. See Westlands Water
Dist., 100 F.3d at 97 (citing Am. Nat’l Bank & Tr. Co. of Sapulpa v. Bic
Corp., 

 (10th Cir. 1991) (affirming dismissal
without prejudice and concluding that the defendant, who removed the
case to federal court on diversity grounds, did not suffer legal prejudice
when the plaintiff moved for voluntary dismissal, refiled in state court,
and named additional defendants to prevent removal); Manshack v. Sw.
Elec. Power Co., 

 (5th Cir. 1990) (holding that the
defendant did not suffer legal prejudice when the plaintiffs moved for
voluntary dismissal to attempt to circumvent the district court’s ruling
that Louisiana law applied, which could limit the plaintiffs’ remedies,
and stating that the defendant “will not be stripped of an absolute
defense”); Templeton v. Nedlloyd Lines, 

 (5th Cir.
1990) (per curiam) (affirming district court’s dismissal without prejudice
and rejecting the defendant’s arguments that it would suffer legal
prejudice by facing suit in state instead of federal court and by “los[ing]
some perceived tactical advantage by trying the case to a jury rather than
to the court”); Davis v. USX Corp., 

 (4th Cir. 1987)
(holding that “the mere prospect” that the plaintiff would pursue state
law claims in state court did not amount to legal prejudice)).
                   KAMAL V. EDEN CREAMERY, LLC                           25


also noted a decision from our court affirming the district
court’s finding of legal prejudice when “the dismissal of a
party would have rendered the remaining parties unable to
conduct sufficient discovery to untangle complex fraud
claims and adequately defend themselves against charges of
fraud.” 

 (citing Hyde & Drath v. Baker, 

 (9th Cir. 1994)).
    But even if a dismissal without prejudice in these
circumstances would cause legal prejudice, none of these
circumstances is present here. Defendants do not contend
that a dismissal without prejudice would leave them unable
to secure the discovery necessary to adequately defend
themselves. See 

 They do not assert that they would lose
a statute of limitations defense, or a jury trial, or a federal
forum. 9 Instead, Defendants lose the benefit of a scheduling
order, which established the deadline to amend the
pleadings. But the loss of a scheduling order is not
“prejudice to some legal interest, some legal claim, some
legal argument.” Id.; see also Durham v. Fla. E. Coast Ry.
Co., 

 (5th Cir. 1967) (when ruling on a
motion for voluntary dismissal, “[t]he crucial question to be
determined is, [w]ould the defendant lose any substantial
right by the dismissal” (emphasis added)); Manshack, 915

9
  Indeed, at least one court has suggested that even the loss of a statute
of limitations defense is not enough to show legal prejudice. See
McCants v. Ford Motor Co., 

, 857–59 (11th Cir. 1986)
(defendant did not suffer plain legal prejudice even though it lost statute
of limitations defense). But see Manshack, 

 (discussing
Phillips v. Ill. Cent. Gulf R.R., 

 (5th Cir. 1989), in which the
court concluded that “dismissal without prejudice would have legally
prejudiced the defendant” when the defendant moved for summary
judgment arguing the plaintiff’s claims were time-barred, and plaintiff
moved to dismiss because “the statute of limitations had not expired” in
other jurisdictions).
26              KAMAL V. EDEN CREAMERY, LLC


F.2d at 174 (noting the “fine line” that “sometimes exists
between imposing ‘plain legal prejudice’ and merely
subjecting the defendant to another lawsuit,” and concluding
that the district court’s ruling on choice of law issue, which
favored the defendant, “was not as definitive as, say, a
summary judgment based upon [a state law] defense,” and
therefore the defendant would not suffer legal prejudice from
a dismissal without prejudice). Moreover, Defendants do
not suffer legal prejudice merely because Plaintiffs sought
leave to amend their complaint before moving for voluntary
dismissal, rather than moving for dismissal without first
seeking leave to amend. In either circumstance, the burden
on Defendants—defending against a new or revised claim—
is the same. And to the extent Defendants incurred expenses
opposing the motion to amend, the district court can impose
costs and fees as a condition of dismissal.
    Two additional cases, in circumstances analogous to
those presented here, considered whether a dismissal without
prejudice would result in legal prejudice. First, in Hamilton,
one of our earliest cases discussing the legal prejudice
standard, we held that legal prejudice does not result “when
plaintiff merely gains some tactical advantage” as a result of
dismissal. 

. We cited Durham v. Florida
East Coast Railway Co., to support that proposition, and that
case is instructive here. See 

 (citing Durham, 

).
    Much like this case, Durham involved the district court’s
denial of the plaintiff’s motion to amend. “When the case
was called for trial,” the plaintiff, “alleging that he had
discovered new evidence,” orally moved for leave to amend
his complaint to add a new cause of action. 

. The
district court denied the motion, and the plaintiff then moved
for voluntary dismissal without prejudice. 

 The
                KAMAL V. EDEN CREAMERY, LLC                 27


defendant objected, and the court sustained the objection and
directed the plaintiff to present his case. 

 After the
plaintiff “announced that he could not proceed with the
trial,” the district court dismissed the action with prejudice.

    The Fifth Circuit reversed, concluding “that the district
court exceeded the bounds of judicial discretion in
dismissing the complaint with prejudice.” 

. The
court stated that although the plaintiff’s attorney “may have
been negligent in failing to discover the new evidence
sooner,” his negligence “was insufficient to justify dismissal
of the complaint with prejudice.” 

. The court
emphasized the “traditional principle” that “dismissal should
be allowed unless the defendant will suffer some plain legal
prejudice other than the mere prospect of a second law suit.
It is no bar to dismissal that plaintiff may obtain some
tactical advantage thereby.”        

 (quotation omitted).
Because “[t]he record [did] not disclose any prejudice to the
defendant, had a voluntary dismissal been granted, other
than the annoyance of a second litigation upon the same
subject matter,” the court “reverse[d] and remand[ed] with
instructions that the case be reinstated.” 

.
    In Durham, as here, the plaintiff stood to gain a “tactical
advantage” by voluntarily dismissing his case: he could
circumvent the district court’s denial of leave to amend and
proceed with his case in a new lawsuit. But even if the
plaintiff will gain some edge, that is “no bar to dismissal.”

; see also Hamilton, 

. Although
dismissal without prejudice means Defendants may have to
defend against Plaintiffs’ revised fraud theory in another
case, just as the defendant in Durham had to face the
plaintiff’s new cause of action in a subsequent suit, that does
not mean Defendants will suffer legal prejudice.
28               KAMAL V. EDEN CREAMERY, LLC


    Second, in Pontenberg v. Boston Scientific Corp., the
Eleventh Circuit affirmed the district court’s dismissal
without prejudice, even though the plaintiff moved for
dismissal “after the discovery period had expired and after
her expert reports had been excluded from the record as a
result of her attorney’s failure to timely comply with the
expert disclosure requirements of Rule 26.” 

 (11th Cir. 2001) (per curiam). The defendant argued
that dismissal was inappropriate because it “had invested
considerable resources, financial and otherwise, in
defending the action,” and the plaintiff had failed to
diligently prosecute the action. 

    The court rejected this argument, explaining that
“[n]either the fact that the litigation has proceeded to the
summary judgment stage nor the fact that the plaintiff’s
attorney has been negligent in prosecuting the case, alone or
together, conclusively or per se establishes plain legal
prejudice requiring the denial of a motion to dismiss.” 

The court further noted that the district court had stated that
costs should be assessed against the plaintiff if she refiled.

. The court concluded that “[w]here the ‘practical
prejudice’ of expenses incurred in defending the action can
be ‘alleviated by the imposition of costs or other conditions,’
the district court does not abuse its ‘broad equitable
discretion’ by dismissing the action without prejudice.” 

(quoting McCants, 

).
    Similarly, here, Plaintiffs moved for dismissal after the
district court rejected their revised fraud claim “as a result of
[their] attorney’s failure to timely comply with the
[scheduling order established under] Rule [16],” but that
does not “establish[] plain legal prejudice requiring the
denial of a motion to dismiss.” See id. at 1256. Ultimately,
Defendants’ argument amounts to a complaint that they
                KAMAL V. EDEN CREAMERY, LLC               29


should not have to defend against a new theory when
Plaintiffs were “negligent in prosecuting the case” and
should have amended their complaint sooner. Id. But just
as in Pontenberg, any “practical prejudice” resulting from
Plaintiffs’ belated amendment can be alleviated by curative
conditions, including an award of costs and attorney’s fees.
                             C
    Defendants also argue, for the first time on appeal, that
if Plaintiffs’ claims were dismissed without prejudice, they
would suffer legal prejudice “in future litigation” because
Plaintiffs “defaulted on their shrinkage-based and
[California Legal Remedies Act] claims . . . through the
district court’s denial of their motion for leave to amend.”
Defendants are apparently arguing that a dismissal without
prejudice would deprive them of a res judicata defense “in
any future case.” But we have held that “[g]enerally,
arguments not raised in the district court will not be
considered for the first time on appeal.” In re Mortg. Elec.
Registration Sys., Inc., 

 (9th Cir. 2014).
And even if we were to exercise our discretion to consider
this argument, see Exxon Shipping Co. v. Baker, 

 (2008), it would still fail.
    Defendants’ asserted prejudice from a dismissal without
prejudice—that they would lose their “legal interest” in
avoiding Plaintiffs’ claims or, in other words, that they
would lose a res judicata defense—does not amount to legal
prejudice. Instead, a dismissal without prejudice under Rule
41(a)(2) anticipates the loss of a potential res judicata
defense; that is the nature of a voluntary dismissal without
prejudice. See Concha v. London, 

 (9th
Cir. 1995) (voluntary dismissal without prejudice leaves the
plaintiff “free to seek an adjudication of the same issue at
30              KAMAL V. EDEN CREAMERY, LLC


another time”). But this is not “prejudice to . . . some legal
argument.” Westlands Water Dist., 100 F.3d at 97. Instead,
Defendants’ argument that they will be prejudiced by the
loss of a res judicata defense is merely another form of their
unavailing argument that they will suffer legal prejudice
because they may have to face future suit on these claims.
See, e.g., Hamilton, 

 (“[T]he mere
inconvenience of defending another lawsuit does not
constitute plain legal prejudice.”); 8 Moore’s Federal
Practice – Civil § 41.40[5][c] (2023) (“One of the central
purposes of Rule 41(a) is to permit the plaintiff to dismiss an
action and start over again . . . . Accordingly, it has been
frequently held that the mere prospect of a second lawsuit
following a voluntary dismissal without prejudice does not
constitute plain legal prejudice.”).
                              D
    We also reject Defendants’ argument that the district
court properly relied on Russ v. Standard Insurance Co., 

 (9th Cir. 1997), to deny dismissal without
prejudice. In Russ, the district court granted the plaintiff’s
motion for voluntary dismissal without prejudice to allow
the plaintiff to refile her claims and thus have a second
opportunity to make a timely demand for a jury trial, and we
reversed. 

. Under our case law, the district court
was prohibited from ordering a jury trial under Federal Rule
of Civil Procedure 39(b) because the plaintiff’s attorney
admitted that the reason for the untimely jury demand was
inadvertence. Id.; see, e.g., Craig v. Atl. Richfield Co., 

 (9th Cir. 1994) (stating that although Rule
39(b) allows the court to order a jury trial on a motion by a
party who has not filed a timely demand for one, the court
cannot do so “when the failure to make a timely demand
results from an oversight or inadvertence” (quotation
                KAMAL V. EDEN CREAMERY, LLC                 31


omitted)). We held that the court could not “accomplish
under Rule 41(a)(2)” what it was “specifically prohibit[ed]”
from doing under Rule 39(b). Russ, 

.
    But we have never extended Russ beyond the context of
Rule 39(b) and jury trial demands, and Defendants offer no
persuasive reason for us to do so now. While the district
court there was expressly prohibited from excusing the
untimely jury demand, there is no equivalent prohibition on
allowing leave to amend the pleadings. To the contrary, the
parties agree that the court could have permitted Plaintiffs to
amend their complaint under Rule 16.                 Russ is
distinguishable on this basis. For these reasons, we conclude
that the district court abused its discretion by denying
Plaintiffs’ motion for voluntary dismissal without prejudice.
                              E
    Finally, we note that Rule 41(a)(2) permits the district
court to dismiss a case “on terms that the court considers
proper.” Fed. R. Civ. P. 41(a)(2). Here, Defendants
requested various conditions if the court granted dismissal
without prejudice, including an award of partial attorney’s
fees and costs, but because the district court dismissed
Plaintiffs’ claims with prejudice, it did not address
Defendants’ request for conditions.
    The district court appeared to believe that, if it granted
dismissal without prejudice, it lacked authority to award
Defendants some portion of their costs and attorney’s fees.
But we have repeatedly stated that a district court can award
costs and attorney’s fees as a condition of dismissal without
prejudice under Rule 41(a)(2). See, e.g., Stevedoring Servs.
of Am., 889 F.2d at 921 (noting that costs and attorney’s fees
are “often” imposed upon a plaintiff granted dismissal under
Rule 41(a)(2)). Indeed, we have recognized that although
32              KAMAL V. EDEN CREAMERY, LLC


“the expense incurred in defending against a lawsuit does not
amount to legal prejudice,” a defendant’s interest “can be
protected by conditioning the dismissal without prejudice
upon the payment of appropriate costs and attorney fees.”
Westlands Water Dist., 100 F.3d at 97. “Imposition of costs
and fees as a condition for dismissing without prejudice is
not mandatory,” however, id., and “a defendant is entitled
only to recover, as a condition of dismissal,” attorney’s fees
or costs for work that “is not useful in continuing litigation
between the parties,” Koch v. Hankins, 

 (9th
Cir. 1993).
    In reaching the opposite conclusion, the district court
relied, in part, on Heckethorn v. Sunan Corp., 

(9th Cir. 1993). But that case does not support a conclusion
that fees may not be awarded as a condition of dismissal
under Rule 41(a)(2).
    In Heckethorn, the “issue [was] whether [Rule] 41(a)(2)
provides an independent base of authority for sanctioning
lawyers.” 

. We concluded that Rule 41(a)(2) does
not independently authorize a court to require the payment
of attorney’s fees as sanctions against an attorney. 

 at
242–43. Because the fee award in that case was an attorney
sanction and Rule 41(a)(2) did not authorize imposition of
sanctions, we did not need to resolve whether a district court
can impose attorney’s fees as a condition under Rule
41(a)(2) when dismissing with prejudice. 

 Nor did the
case involve the issue of whether Rule 41(a)(2) allows an
award of fees and costs against a party as a condition of
dismissal without prejudice. See 

    In sum, the district court had discretion to award
attorney’s fees as a condition of dismissal without prejudice
under Rule 41(a)(2). Therefore, we remand for the district
                     KAMAL V. EDEN CREAMERY, LLC                       33


court to consider whether to impose any conditions on the
dismissal of this action without prejudice, such as an
appropriate amount of costs and fees. 10
                                     VI
    We have jurisdiction to consider the district court’s
denial of Plaintiffs’ motion for leave to file a second
amended complaint and conclude that the district court did
not abuse its discretion by denying that motion. But because
Defendants failed to demonstrate that they would suffer legal
prejudice if the court dismissed Plaintiffs’ claims without
prejudice, the district court abused its discretion by denying
Plaintiffs’ motion to dismiss without prejudice. Therefore,
we reverse and remand with instructions to dismiss the
action without prejudice. We also direct the district court to
consider whether any terms should be imposed as a
condition of dismissal.
  AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED. 11




10
   The district court also noted that “even if fees were potentially
available, [it] would deny Defendants’ request on the basis that
Defendants have failed to adequately substantiate the reasonableness of
the amount of their claimed fees, despite being given two opportunities
to do so.” The district court on remand, in its discretion, may reconsider
or reaffirm its conclusion that Defendants failed to adequately
substantiate the reasonableness of their claimed fees.
11
     Each party shall bear its own costs on appeal.
34              KAMAL V. EDEN CREAMERY, LLC


R. NELSON, Circuit Judge, concurring in part and
dissenting in part:
    More than seven months after the scheduling-order
deadline, Plaintiffs sought to amend the First Amended
Complaint (“FAC”) to add a new defendant and a new theory
of fraud. I concur in Section IV of the majority opinion
affirming the district court’s conclusion that Plaintiffs failed
to satisfy “good cause” to amend under Federal Rule of Civil
Procedure 16(b)(4). I also concur in Section V.E, holding
that fees and costs may be awarded as conditions of a Rule
41 voluntary dismissal.
    I dissent from Sections V.A–D because Defendants have
shown a proper legal interest to warrant dismissal with
prejudice. Rule 16 creates a legal interest and a legal
argument that would be lost upon dismissal without
prejudice. The majority errs in holding that the district court
abused its discretion when it dismissed the FAC with
prejudice after Plaintiffs were denied leave to amend their
complaint. I respectfully dissent.
                               I
    I begin with the standard of review, abuse of discretion.
The bar for establishing such abuse is high: “The abuse of
discretion standard requires that we ‘not reverse a district
court’s exercise of its discretion unless we have a definite
and firm conviction that the district court committed a clear
error of judgment in the conclusion it reached.’” Nat’l
Wildlife Fed’n v. Nat’l Marine Fisheries Serv., 

 (9th Cir. 2005) (quoting SEC v. Coldicutt, 

,
941 (9th Cir. 2001)).
    Applying this deferential review, I would affirm the
district court in full. As the majority recognizes, when
                KAMAL V. EDEN CREAMERY, LLC                  35


deciding a motion to voluntarily dismiss, we require
dismissal without prejudice unless the defendants would
suffer legal prejudice, meaning “prejudice to some legal
interest, some legal claim, [or] some legal argument.”
Westlands Water Dist. v. United States, 

, 97 (9th
Cir. 1996).
    Westlands Water District did not say, as the majority
suggests (Op. 22), that a party’s failing to prosecute a case
and dilatory tactics in seeking dismissal could never
constitute legal prejudice. If we established a categorical
rule that dilatory litigation tactics failed to show prejudice,
we would have said so. But we did not. Instead, we looked
to the specific facts of the case. We explained that the
plaintiffs, who sought voluntary dismissal only a few months
after “the district court denied their motion for a preliminary
injunction” and a “month after” efforts to “obtain a
stipulated dismissal without prejudice” failed, “were not
dilatory.” Id.
    Unlike this case, the facts in Westland Water District do
not show dilatory litigation tactics. The complaint there was
filed on March 9, and the plaintiffs moved to voluntarily
dismiss on December 23. Id. at 96. The entire case therefore
lasted only nine months, two months longer than Plaintiffs’
delay here in seeking to amend after the scheduling order’s
deadline. And the FAC here was filed nearly two years
before Plaintiffs sought to amend the complaint a second
time. Westlands Water District’s holding does not preclude
a finding of prejudice based exclusively on delay on these
facts. And by failing to distinguish the significant
differences between the litigation history in that case and this
one, the majority turns Westlands Water District’s fact-
specific holding on delay into a categorical rule.
36              KAMAL V. EDEN CREAMERY, LLC


    The majority also errs in holding that legal prejudice is
absent here. And the majority’s holding is far more
dangerous than it might seem at first blush. Moving forward,
any district court that finds legal prejudice from a dismissal
following the denial of leave to amend will abuse its
discretion. The majority’s broad holding does not follow
from Westlands Water District’s definition of legal
prejudice. To the contrary, by not finding legal prejudice
here, the majority guts Westlands Water District’s
recognition that the loss of either a legal interest or a legal
argument is prejudicial. The majority abandons that
definition by interpreting it so narrowly that it becomes a
nullity. And there are compelling reasons not to.
    The district court’s denial of leave to amend the
complaint—which we unanimously affirm today—
prevented Plaintiffs from adding new parties or claims. The
majority wrongly concludes that such a decision will not
legally prejudice Defendants, who will no longer be able to
rely on a court’s scheduling order. If the federal rules are to
continue to impose meaningful limits on litigants, all
parties—defendants and plaintiffs alike—need to be able to
rely on their procedural protections.
                              II
     Rule 16(b) imposes a “good cause” standard that protects
all parties from baselessly departing from scheduling orders.
This rule, like all federal rules, must be “construed,
administered, and employed by the court . . . to secure the
just, speedy, and inexpensive determination of every action
and proceeding.” Fed. R. Civ. P. 1. Beyond that general
guiding principle, interpreting the federal rules involves
“traditional tools of statutory construction.” Republic of
Ecuador v. Mackay, 

 (9th Cir. 2014)
                KAMAL V. 

(cleaned up). One such rule requires us to “give[] effect to
every clause” if possible. 

 And “the cardinal rule of
statutory interpretation” is “that no provision should be
construed to be entirely redundant.” Kungys v. United
States, 

 (1988). Another “controlling
principle is that, when reasonably possible, a statute should
be so interpreted as to harmonize all its requirements by
giving effect to the whole.” Earle v. Carson, 

 (1903).
    We have applied such interpretive rules when faced with
perceived conflicts among the federal rules. In Russ v.
Standard Insurance Company, for example, we considered a
plaintiff’s attempt to “achieve a result prohibited” by one
rule by dismissing a case “pursuant to Rule 41(a)(2).” 

 (9th Cir. 1997). We concluded that even the
“broad discretion granted in Rule 41” could not allow a
district court to “accomplish indirectly what we have held
cannot be accomplished directly.” 

 The majority is quick
to limit Russ to “the context of Rule 39(b) and jury trial
demands.” Op. 31. It reasons that, because the district court
below had discretion to permit Plaintiffs to amend their
complaint, Russ has nothing to say about the circumstances
here. I disagree. Russ’s reasoning is directly on point if we
substitute Rule 16 for Rule 39. In Russ, we gave three
reasons for our decision, and each applies here.
    The Russ court first explained that “allowing the district
court to accomplish under Rule 41(a)(2) what we
specifically prohibit it from doing under Rule 39(b)
introduces an unnecessary conflict between these two
federal rules.” 

. The majority introduces just
such a conflict here. Under Rule 16, no party can depart
from a scheduling order without a showing of good cause.
By limiting Russ to its facts, the majority creates an escape
38              KAMAL V. EDEN CREAMERY, LLC


hatch from Rule 16’s good-cause standard and from any
other federal rule other than Rule 39(b). The majority
effectively eliminates Rule 16 from the federal rules in the
Rule 41 dismissal context. Following today’s opinion,
scheduling orders will no longer impose any meaningful
limitation on the way that plaintiffs—but not defendants—
litigate cases. Meanwhile, interpreting legal prejudice to
include loss of the benefit from the district court’s ruling on
the motion to amend would harmonize these rules. I would
interpret the rules to avoid this conflict. Our cases do not
require otherwise.
    My conclusion holds even if there is a conflict between
Rule 16 and Rule 41 that “cannot be reconciled.” Antonin
Scalia & Bryan A. Garner, Reading Law: The Interpretation
of Legal Texts 183 (2012) (“Scalia & Garner”). As we
explained in Russ, our cases “ordinarily . . . follow the more
specific rule over one more general, . . . and our specific
prohibition on district courts granting jury trials where the
parties have failed to comply with Rule 38 must trump the
more general discretionary powers of district courts to
permit plaintiffs to dismiss under Rule 41(a)(2).” 

. So too here. Rule 16 requires the scheduling order
to “limit the time to . . . amend the pleadings . . . and file
motions,” Fed. R. Civ. P. 16(b)(3)(A), and provides the
“good cause” standard to excuse a party’s non-compliance,
Fed. R. Civ. P. 16(b)(4). Because the specific limitations on
when a party can violate a scheduling order “come[] closer
to addressing the very problem posed by the case at hand,”
they are “more deserving of credence” and should govern
over the general requirements of Rule 41. Scalia & Garner
at 183.
    Finally, we reasoned in Russ that “to allow leave to
discontinue . . . solely [to cure an untimely demand for a jury
                KAMAL V. EDEN CREAMERY, LLC                 39


trial] would work a discrimination . . . in favor of plaintiffs
whose attorneys had been guilty of inadvertent neglect in
demanding a jury trial as against defendants similarly
situated.” 

 (cleaned up). “Only plaintiffs can
request dismissals without prejudice under Rule 41(a)(2) and
thus only plaintiffs could take advantage of this additional
avenue to excuse neglect.” 

 The majority rule likewise
favors plaintiffs who do not amend within the time limits of
the scheduling order and cannot show good cause for their
delay at the expense of defendants. I agree with the majority
(Section V.E) that district courts can impose attorney fees
and costs as conditions of dismissal without prejudice. But
that does not cure the legal prejudice to defendants who
should not have to defend against delayed claims or
amendments at all, particularly when leave to amend has
been rejected by the district court.
    In sum, because the three main reasons for rejecting
voluntary dismissal in Russ apply equally here, we should
apply them here. The majority takes a different path and
limits Russ to its facts. But this flouts the rule that
“reasoning central to a panel’s decision [i]s binding [on]
later panels.” Garcia v. Holder, 

 (9th Cir.
2010) (citation omitted). We are even bound by a prior
panel’s “[w]ell-reasoned dicta.” Enying Li v. Holder, 

, 1165 n.2 (9th Cir. 2013). For that reason,
whether or not the reasoning that guided the Russ panel was
“dicta” or “central” to Russ’s holding, it binds us. The
majority skirts that binding precedent. This is unwarranted,
particularly given the risk of abuse from voluntary
dismissals. Cf. Manshack v. Sw. Elec. Power Co., 

 (5th Cir. 1990) (“The courts must carefully monitor
Rule 41(a)(2) voluntary dismissals to insure that they do not
engender abuse.”).
40              KAMAL V. EDEN CREAMERY, LLC


                             III
     Even ignoring Russ’s binding logic here, legal prejudice
still exists. The majority concludes that the only prejudice
to Defendants is the prospect of having to defend against a
second lawsuit. But permitting a subsequent lawsuit
nullifies the district court’s denial of leave to amend by
subjecting Defendants to a claim that we unanimously agree
plaintiffs did not have good cause to add. See Kamal v. Eden
Creamery, LLC, No. 18-CV-1298 TWR (AGS), 

, at *4 (S.D. Cal. Sept. 29, 2021) (“Plaintiffs are
clear that the Motion for Voluntarily Dismissal is intended
to negate the Court’s ruling denying the Motion for Leave to
Amend. In other words, Plaintiffs seek to avoid the
consequences of their own lack of diligence and deprive
Defendants of the benefit of the Court’s Rule 16(b) ruling.”);
see also Section IV. This does not simply give plaintiffs like
Kamal “some tactical advantage” from the dismissal,
Hamilton v. Firestone Tire & Rubber Co., 

(9th Cir. 1982), or increase defendants’ “uncertainty” from
“the threat of future litigation,” Westlands Water Dist., 100
F.3d at 96. Instead, it is a deprivation of the legal interest
shared by Defendants here—and other defendants moving
forward—in the procedural protections of Rule 16(b)’s
good-cause requirement, which protects parties from
abusive procedural tactics.
    The majority wrongly countenances such a result. So
surely the majority must rely on clear precedent to reach this
conclusion. Not so. The best the majority can muster is
outdated, out-of-circuit precedent. To start, Durham v.
Florida East Coast Railway Company, 

 (5th
Cir. 1967), was decided 56 years ago when the federal rules
did not yet include the current good-cause requirement of
Rule 16(b). See Advisory Committee’s Notes on Fed. R.
                  KAMAL V. EDEN CREAMERY, LLC                     41


Civ. P. 16’s 1983 Amendment. There was thus no textual
conflict between two rules (Rule 41 and Rule 16) like the
majority creates today.
    Then, in Pontenberg v. Boston Scientific Corporation,

 (11th Cir. 2001) (per curiam), the
Eleventh Circuit considered itself bound by Durham. 1 The
Eleventh Circuit did not consider how the 1983 addition of
Rule 16 might impact the prejudice analysis; it simply held
that “circuit precedent” forbade a finding of legal prejudice
when faced with “delay alone, in the absence of bad faith.”

.
    By contrast, most courts around the country have held
that excessive delay can legally prejudice a party. See Doe
v. Urohealth Sys., Inc., 

 (1st Cir. 2000);
Zagano v. Fordham Univ., 

 (2d Cir. 1990);
Gross v. Spies, 

 (4th Cir. 1998) (unpublished);
Grover by Grover v. Eli Lilly & Co., 

 (6th
Cir. 1994); Pace v. S. Express Co., 

 (7th
Cir. 1969); Paulucci v. City of Duluth, 

(8th Cir. 1987); Ohlander v. Larson, 

(10th Cir. 1997). I would join this overwhelming weight of
authority, particularly where, as here, a contrary conclusion
creates a conflict between two rules that we should read
harmoniously.
    Nor is delay the only harm facing Defendants. A recent
decision of the Eleventh Circuit illustrates my point. Dobbs
v. Allstate Indem. Co., No. 21-13813, 

(11th Cir. May 26, 2022) (per curiam) (unpublished). There,


1
  See Bonner v. City of Prichard, 

 (11th Cir. 1981) (en
banc) (all Fifth Circuit decisions decided before September 30, 1981,
bind the Eleventh Circuit).
42               KAMAL V. EDEN CREAMERY, LLC


like in Pontenberg, the district court excluded the testimony
of the plaintiff’s expert witness after the plaintiff failed to
disclose certain aspects of the expert’s opinion as required
by Rule 26. Id. at *2. The plaintiff replied by moving to
dismiss under Rule 41(a). Id. at *6. In denying that motion,
the district court explained that the “true reason for” Dobbs’s
“wanting to dismiss his case was because he disagreed with
the district court’s adverse ruling.” Id. The Eleventh Circuit
agreed, affirming that “voluntary dismissal would not have
been proper” given the “equities in th[e] case” and the
district court’s conclusion that the plaintiff’s tactics—
seeking dismissal after an adverse procedural ruling—were
unfair. Id. Rather than allowing a plaintiff invoking Rule
41 to overcome the requirements of Rule 26, the Eleventh
Circuit took a different path—notwithstanding Pontenberg’s
conclusion that delay alone is not enough to show prejudice.
The majority dismisses this argument by holding that losing
a res judicata defense is nothing more than facing a second
litigation. Op. 29–30. Not so. We have never held that; nor
does the precedent cited by the majority support that
conclusion. If Defendants were merely facing a second
lawsuit, the majority may have a point. But losing a res
judicata defense must be a legal interest or legal argument if
Westlands Water District’s definition of legal prejudice has
any meaning.
    We should guarantee that Rule 16(b)’s good-cause
requirement continues to impose reasonable limitations on
the ability of plaintiffs and defendants alike to skirt a court’s
scheduling order. We agreed with the district court that
Plaintiffs had not shown good cause to amend their
complaint because of their lack of diligence. The majority’s
separate reversal of the dismissal with prejudice undermines
our first holding. It would legally prejudice Defendants to
                KAMAL V. EDEN CREAMERY, LLC                43


allow Plaintiffs to dismiss their suit to avoid the results of
the district court’s conclusion vis-à-vis amendment. I
respectfully dissent.