Rule 41 Case Analysis

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As a result of the decision, plaintiffs should be very leery of dismissing a federal action to pursue an action based on the same conduct in state court.

This is particularly true, because Wisconsin has an identical counterpart to Rule 41(d), which authorizes a court to stay a second action after a plaintiff has dismissed a previous one, until the costs are paid — Wis. Stats. sec. 805.04(4).

In a case such as this, where costs are apparently over $100,000, that could pose a substantial burden on a plaintiff for switching forums.

Furthermore, the court’s discussion of the powers of the state court after conclusion of the subsequent case is of questionable legality. The court stated, “Should M&F prevail on any of their state-law claims, however, they are free to ask the state court to award costs that include whatever sums they had to pay to the City in this litigation.”

	Links Seventh Circuit Court of Appeals Related Article Costs can’t ‘travel’ from fed to state court

Certainly, they are “free to ask the state court,” for those costs, but the question is whether the state court is free to award them.

In Kleinke v. Farmers Coop. Supply & Shipping, 202 Wis.2d 138, 549 N.W.2d 714 (1996), the Wisconsin Supreme Court held it was unlawful for a trial court to award as costs, pretrial mediation fees, and photocopying medical records, appraisals, and exhibits.

The court held, “any award of a ‘cost’ which is not specifically authorized by a Wisconsin statute constitutes an error of law,” and quoted State v. Foster, 100 Wis.2d 103, 106, 301 N.W.2d 192 (1981), as follows: “The terms ‘ allowable costs’ or ‘taxable costs’ have a special meaning in the context of litigation. The right to recover costs is not synonymous with the right to recover the expense of litigation. This right is statutory in nature, and to the extent that a statute does not authorize the recovery of specific costs, they are not recoverable … Many expenses of litigation are not allowable or taxable costs even though they are costs of litigation.” Kleinke, 202 Wis.2d at 146-147.

Obviously, there is no statute which specifically authorizes recovery of costs incurred in a previous lawsuit. As such, the Seventh Circuit’s suggestion that a plaintiff ordered to pay the defendant’s costs in a federal suit could get that money back, or get back its own costs in the federal action, if it prevails in the state court action, is highly questionable.

– David Ziemer

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David Ziemer can be reached by email.