Dismissal Without Prejudice Does Not Mean A Winning Litigant “Prevails” for Purposes of the Fee Entitlement Statute.
Under the Individual with Disabilities Education Act (IDEA), a court may award reasonable attorney’s fees “to a prevailing party who is a State educational agency or local educational agency against the attorney of a parent who files a complaint or subsequent cause of action that is frivolous ….” 20 U.S.C. sec. 1415(i)(3)(B)(i)(II). In Oscar v. Alaska Dept. of Education and Early Development, Case No. 07-35795 (9th Cir. Sept. 3, 2008), the Ninth Circuit confronted the issue of whether defendant was a “prevailing party” under this section where the district judge dismissed a plaintiff’s lawsuit without prejudice because a prior administrative complaint was not signed.
The Ninth Circuit, in a 3-0 opinion authored by Circuit Judge Nelson, reversed and remanded.
Drawing upon analogies to case law in the res judicata/claim preclusion area, the circuit’s recent decision in Star Northwest Inc. v. City of Kenmore, 2008 WL 2230036, at *3 (9th Cir. May 28, 2008), and the Federal Circuit’s decision in RFR Industries, Inc. v. Century Steps, Inc., 477 F.3d 1348, 1353 (Fed. Cir. 2007), the federal appeals court determined that a dismissal without prejudice is not a judgment on the merits or one that materially alters the legal relationships of the parties. This resulted in a reversal of the $6,465 fee award to Alaska’s Department of Education and Early Development (DEED).