Dismissal for lack of jurisdiction must be without prejudice says 5th Circuit Court of Appeals.

Cox, et al  v. Sasol North America, Inc. No. 12-31123, slip op (5th Cir. May 24, 2013)

While this is not a municipal case, the holding can have a significant impact on municipal litigators. Essentially the U.S. Court of Appeals for the Fifth Circuit held that when a district court dismisses a claim for lack of jurisdiction (under Rule 12(b)(1)), such a dismissal must be without prejudice.

Plaintiff (“Cox”) sued defendants in Louisiana State Court, alleging violations of the Louisiana Racketeering Act. Defendants removed to federal court. There they moved, among other things, to dismiss Cox’s suit under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The district court found that Cox lacked “standing” and dismissed “with prejudice” under Rule 12(b)(1). Cox appealed.

The Fifth Circuit held that challenges to jurisdiction cannot be waived so it is irrelevant whether Cox raised the “with prejudice” issue prior to appeal.  Second the court held since the court lacked jurisdiction over the action, it had no power to render a judgment on the merits which is what a dismissal with prejudice amounts to. But instead of rewriting the district court’s order, the court vacated and remanded for further processing.

So the moral of this case for litigators is that a Rule 12(b)(1) challenge to jurisdiction may result in a dismissal but it will be without prejudice which gives the Plaintiff the opportunity to come back if they feel they can cure or circumvent the jurisdictional problems.

If you would like to read this opinion click here.