In Keith Manufacturing Co. v. Butterfield, [2019-1136] (April 7, 2020), the Federal Circuit reversed the district court’s decision not to award attorneys fees Butterfield after dismissal of the action brought by Keith.

Keith Manufacturing Co. brought this lawsuit against Larry D. Butterfield in the United States District Court for the District of Oregon. Eighteen months after the litigation began, the parties filed a stipulation to dismiss all claims with prejudice under Rule 41(a)(1)(A)(ii) of the Fed-eral Rules of Civil Procedure. Shortly after, Butterfield filed a motion for attorney’s fees under Rule 54 of the Federal Rules of Civil Procedure. The district court reasoned that a voluntary dismissal with prejudice is not a “judgment” as required by Rule 54(d).

Rule 54 requires that a claim for attorney’s fees “must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages.” Fed. R. Civ. P. 54(d)(2)(A). Rule 54 motions must: “(i) be filed no later than 14 days after the entry of judgment; and specify the judgment and the statute, rule, or other grounds entitling the movant to the award.” Fed. R. Civ. P. 54(d)(2)(B)(i)–(ii). “‘Judgment’ as used in these rules includes a decree and any order from which an appeal lies.” Fed. R. Civ. P. 54(a).

The issue before the district court and on appeal was whether the stipulated dismissal with prejudice constitutes a judgment for the purposes of Rule 54. The Federal Circuit said that although Rule 54(d) “posits a relationship between a judgment and its appealability, this relationship exists for the prudential purpose of minimizing piecemeal appellate litigation, not because a shared technical construction mandates the relationship.

The Federal Circuit reasoned that treating a voluntary stipulation with prejudice as a judgment for purposes of attorney’s fees under Rule 54 will not invite parties to engage in piecemeal appellate litigation. The joint stipulation means that, except under rare circumstances, there will not be an appeal on the merits; only the attorney’s fees issue remains. Second, where the case is not a class action, it will not undermine class action procedure. And because both parties can move for attorney’s fees, permitting a Rule 54(d) motion for attorney’s fees after a stipulated dismissal will not affect the overall balance of litigation.

The Federal Circuit vacated the district court’s denial of attorneys fees, and remanded for further proceedings.