Jurisdictional Boundaries for Voluntary Dismissals and Contractual Fee Awards Post-Rule 41(a)(1)(A)(i)

Introduction

AAA Gaming LLC and Illinois Gaming Investments, LLC (“Plaintiffs”) entered into a video-gaming terminal contract with Midwest Electronics Gaming, LLC (“Defendant”). After filing breach-of-contract suit in federal court, Plaintiffs twice saw their complaint dismissed under Rule 12(b)(6) for lack of subject-matter jurisdiction—Illinois law vested exclusive review authority in the Illinois Gaming Board. Plaintiffs then triggered a Rule 41(a)(1)(A)(i) voluntary dismissal without prejudice. Defendant moved under Rule 60(b) to convert that dismissal into one with prejudice and to recover attorney’s fees under the contract’s “prevailing party” clause. The district court held it had no power to (a) convert the dismissal or (b) award fees. On appeal, the Seventh Circuit affirmed.

Key issues:

• Can a district court modify or condition a Rule 41(a)(1)(A)(i) dismissal without prejudice?
• After a Rule 41(a)(1)(A)(i) dismissal, may a federal court award attorney’s fees under a private contract?

Summary of the Judgment

The Seventh Circuit held:

1. Under Rule 41(a)(1)(A)(i), a plaintiff’s timely notice of voluntary dismissal without prejudice is self-executing. A district court has no authority to convert it to a dismissal with prejudice or impose conditions on it. The court’s attempted use of Rule 60(b) to achieve that result was impermissible.
2. Although some post-dismissal matters (Rule 11 sanctions, § 1988 fee motions) qualify as “collateral issues,” the court lacked a clear basis to treat contractual fee-shifting as collateral once the case was terminated. Resolving fees under the contract would require merits-level contract validation and interpretation—something barred by the Rule 41(a)(1)(A)(i) dismissal.

Accordingly, the district court’s refusal to convert the dismissal or award attorney’s fees was affirmed.

Analysis

1. Precedents Cited

• J&J Ventures Gaming, LLC v. Wild, Inc. (67 N.E.3d 243, 253 (Ill. 2016)) – Illinois Gaming Board enjoys exclusive jurisdiction to decide the validity and enforceability of video-gaming contracts.
• Nelson v. Napolitano (657 F.3d 586, 587–89 (7th Cir. 2011)) – Rule 60(b) can reopen a voluntarily dismissed case only in extraordinary circumstances when the plaintiff seeks to set aside its own notice.
• Szabo Food Serv., Inc. v. Canteen Corp. (823 F.2d 1073, 1078 (7th Cir. 1987)) – A proper Rule 41(a)(1)(A)(i) notice terminates the case “all by itself.” No merits adjudication or conditional order may follow.
• Scam Instrument Corp. v. Control Data Corp. (458 F.2d 885, 889–91 (7th Cir. 1972)) – A district court cannot impose conditions (e.g., dismissal with prejudice) on a dismissal under Rule 41(a)(1)(A)(i).
• Winterland Concessions Co. v. Smith (706 F.2d 793, 794–96 (7th Cir. 1983)) – Court order converting a timely notice into a dismissal with prejudice is void.
• Waetzig v. Halliburton Energy Servs., Inc. (145 S. Ct. 690, 692–96 (2025)) – Rule 60(b) empowers courts to reopen cases but does not grant carte blanche; movant must identify independent jurisdictional basis for requested relief.
• Cooter & Gell v. Hartmarx Corp. (496 U.S. 384, 395–96 (1990)) – Voluntary dismissal under Rule 41(a)(1)(A)(i) does not strip the court of jurisdiction over “collateral issues” such as Rule 11 sanctions, contempt, or fee motions under federal statutes.
• White v. New Hampshire Dep’t of Employment Sec. (455 U.S. 445, 451–52 (1982)) – Attorney’s fees under 42 U.S.C. § 1988 are collateral and may be awarded post-judgment without amending the judgment.
• Citizens for a Better Env’t v. Steel Co. (230 F.3d 923, 925–28 (7th Cir. 2000)) – District courts retain authority to award fees under federal statutes even after dismissal for lack of subject-matter jurisdiction.

2. Legal Reasoning

The court’s analysis rested on two pillars:

1. Voluntary Dismissal Is Self-Executing: Rule 41(a)(1)(A)(i) allows a plaintiff to end its suit by filing a notice before the defendant answers or moves for summary judgment. The dismissal is automatically without prejudice unless the notice says otherwise. No Rule or case permits a district court to override that determination or impose a dismissal with prejudice. Rule 60(b) cannot be used to do indirectly what Rule 41(a)(1)(A)(i) forbids directly.
2. Contractual Fee-Shifting Is Not Clearly Collateral: Although Supreme Court precedent treats certain federal fee awards (Rule 11, § 1988) as “collateral” and therefore within post-dismissal jurisdiction, the Seventh Circuit declined to extend that principle to private contracts. Determining a “prevailing party” under a contractual clause would require validating and interpreting the underlying contract—a merits inquiry the court lost jurisdiction to conduct after dismissal. No statute or rule granted independent authority to award fees under a private agreement once the case ended.

3. Impact

This decision clarifies and cements several important propositions:

• Clear Limits on Rule 41(a)(1)(A)(i): A properly filed notice effects an immediate, unconditional dismissal without prejudice. District courts cannot manipulate or convert that outcome via Rule 60(b) or any internal order.
• Narrow Scope for Post-Dismissal Relief: Federal courts retain jurisdiction over certain fee requests when Congress or the Rules Enabling Act expressly provides that power. By contrast, private contracts confer no such independent jurisdiction; any fee award under a contract requires merits adjudication.
• Strategic Considerations for Litigants: Plaintiffs seeking to avoid fee exposure after voluntary dismissal can rely on Rule 41(a)(1)(A)(i) for a clean break. Defendants cannot salvage fee claims under private agreements once the notice is filed.

Complex Concepts Simplified

• Voluntary Dismissal Without Prejudice: A notice under Rule 41(a)(1)(A)(i) lets the plaintiff end a case on its own terms without barring refiling.
• Rule 60(b): A mechanism to reopen a case for reasons like mistake or fraud—but it cannot override the plain text of Rule 41(a)(1)(A)(i).
• Collateral Issue: A matter that does not go to the merits of the original claim (e.g., Rule 11 sanctions). Courts retain jurisdiction over these even after dismissal.
• Contractual Fee-Shifting Provision: A clause in a private contract that awards attorney’s fees to the “prevailing party.” Enforcing it typically demands deciding who prevailed and whether the contract is valid—i.e., a merits inquiry.

Conclusion

AAA Gaming LLC v. Midwest Electronics Gaming, LLC underscores two bedrock principles:

1. A timely Rule 41(a)(1)(A)(i) notice of voluntary dismissal without prejudice is self-executing and unassailable by the district court.
2. Absent an independent statutory or rule-based grant of jurisdiction, federal courts cannot award attorney’s fees under private contracts once the case has been dismissed under Rule 41(a)(1)(A)(i).

This ruling preserves the integrity of Rule 41(a)(1)(A)(i), reinforces the distinction between merits and collateral issues, and reaffirms that contractual fee-shifting stands on different footing than federal fee statutes. Going forward, litigants and courts in the Seventh Circuit must heed these jurisdictional boundaries when invoking voluntary dismissals and pursuing fee claims under private agreements.