Clarence A. Heckethorn, Trustee of the Clarence A. Heckethorn Living Trust, and Lionel, Sawyer & Collins v. Sunan Corp., a Nevada Corporation

Lionel, Sawyer & Collins (LSC), former counsel for plaintiffs, challenges the district court’s conditions to a voluntary dismissal order entered pursuant to Fed.R.Civ.P. 41(a)(2). Plaintiffs accepted the conditions.

The first condition required that LSC pay $12,000 in attorney’s fees to Sunan Corporation (Sunan). LSC contends that the district court can neither condition a voluntary dismissal on former counsel’s payment of attorney’s fees when there is no independent stat utory basis, nor impose such condition when the voluntary dismissal was with prejudice. LSC contends the district court abused its discretion in imposing this condition on these facts, when the filing of the complaint was not frivolous and the factual allegations were confirmed by discovery.

LSC also challenges the district court’s second condition which required LSC to submit to depositions to determine the factual basis for the suit.

We determine that both conditions were improperly imposed and we reverse.

I

LSC’s clients were minority shareholders of Las Vegas Sun, Inc. Sunan Corporation owned the majority of the outstanding Las Vegas Sun, Inc., shares. Sunan initiated a short-form merger of the Las Vegas…