1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 COUPA SOFTWARE INCORPORATED, Case No. 16-cv-07244-EMC

8 Plaintiff,

ORDER CONDITIONALLY

9 v. GRANTING PLAINTIFF’S MOTION

FOR VOLUNTARY DISMISSAL

10 DCR WORKFORCE, INC., Docket No. 43 11 Defendant.

12 13 14 In the instant case, Coupa Software, Inc. has filed suit against DCR Workforce, Inc. This 15 case is related to an earlier case filed by DCR against Coupa. See DCR Workforce, Inc. v. Coupa 16 Software Inc., No. C-21-6066 EMC (N.D. Cal.). That case shall hereinafter be referred to as DCR 17 I. 18 DCR I reached a final resolution in May 2023 following a voluntary dismissal by DCR. 19 DCR then filed a new suit – hereinafter referred to as DCR II – in state court, pursuing in part 20 claims that it had voluntarily dismissed in DCR I. This led Coupa to file the pending action in 21 which it seeks to enjoin the state court proceedings in DCR II. This Court held a hearing on a 22 motion for a preliminary injunction filed by Coupa. At the hearing, the Court indicated that it was 23 not inclined to grant the motion. The Court also noted that the state court could address the merits 24 of Coupa’s position that DCR was barred from litigating DCR II based on DCR I (i.e., due to res 25 judicata). 26 Now pending before the Court is Coupa’s motion for voluntary dismissal of this suit. 27 Coupa seeks a dismissal without prejudice. DCR opposes the motion, essentially indicating that 1 prejudice should be conditioned on Coupa paying DCR its attorneys’ fees for litigating this case. 2 Having considered the parties’ briefs and accompanying submissions, as well as all other 3 evidence of record, the Court finds this matter suitable for resolution without oral argument and 4 thus VACATES the hearing on Coupa’s motion. Coupa’s motion for voluntary dismissal is 5 hereby CONDITIONALLY GRANTED. The granting of the motion is conditioned on Coupa’s 6 dismissal of this case with prejudice. 7 I. FACTUAL & PROCEDURAL BACKGROUND 8 A. Relevant Cases 9 As indicated above, in addition to the pending case, there are two other cases are relevant 10 for purposes of adjudicating the pending motion for voluntary dismissal. 11 DCR I. DCR filed this suit against Coupa in 2021. In its complaint, DCR alleged that it 12 had entered into a contract with Coupa in 2018. Under the contract, known as the Asset Purchase 13 Agreement, DCR sold, transferred, and assigned certain products to Coupa. In exchange, DCR 14 was given certain compensation; furthermore, it was entitled to additional compensation if certain 15 benchmarks were achieved. DCR initiated the suit claiming that Coupa had violated the terms of 16 the Asset Purchase Agreement – e.g., by failing to issue the additional compensation that DCR 17 was owed. See generally DCR I (Docket No. 68) (Order at 1-4). This Court granted Coupa’s 18 motion to dismiss and did not permit amendment because of futility. See DCR I (Docket No. 68) 19 (Order at 21). 20 DCR appealed the dismissal in DCR I. Not all dismissed claims were appealed. See 21 Compl. ¶ 5. The Ninth Circuit granted in part and reversed in part. The appellate court upheld 22 dismissal of certain claims but held that, for other claims, this Court should have allowed DCR the 23 opportunity to amend. See DCR I (Docket No. 97) (order). After the Ninth Circuit’s mandate 24 issued, DCR voluntarily dismissed DCR I without prejudice. See DCR I (Docket No. 99) (notice 25 of dismissal); see also Fed. R. Civ. P. 41(a)(1)(A)(i) (providing that a “plaintiff may dismiss an 26 action without a court order by filing . . . a notice of dismissal before the opposing party serves 27 either an answer or a motion for summary judgment”). 1 – DCR II – in state court. According to Coupa, “DCR II seeks to relitigate the same primary right 2 that [this] Court considered – and dismissed – in DCR I.” Compl. ¶ 6. 3 Pending suit. The pending suit filed by Coupa followed. Coupa alleges that

4 DCR should be barred from relitigating this same primary right. The federal All Writs Act, 28 U.S.C. § 1651, authorizes federal 5 district courts to “issue all writs . . . in aid of” a federal court’s jurisdiction. The Anti-Injunction Act, 28 U.S.C. § 2283, authorizes 6 federal district courts to enjoin state court proceedings “to protect or effectuate” a federal court’s judgment. Equitable relief to enjoin 7 DCR II is proper here because DCR’s decision to split and relitigate its claims contravenes principles of res judicata and claim 8 preclusion. DCR had the opportunity in DCR I to litigate all of the issues relating to the APA’s earnout and Holdback Cash provisions 9 and, further, to re-plead some of the allegations the District Court dismissed with prejudice. DCR squandered that opportunity when it 10 voluntarily dismissed DCR I. In addition to prejudicing Coupa, DCR’s tactics implicate important public interests because they 11 threaten to waste precious judicial resources. Coupa therefore requests that this Court preliminarily and permanently enjoin DCR 12 from pursuing DCR II. 13 Compl. ¶ 7. 14 B. Motions Filed in this Suit 15 Shortly after it filed the complaint in this suit, Coupa filed a motion for preliminary 16 injunction. In the motion, Coupa asked the Court to issue a preliminary injunction barring DCR 17 from pursuing its claims against Coupa in DCR II. Coupa argued that “[f]ederal courts have 18 authority under the All Writs Act to ‘enjoin state court proceedings in order to protect the res 19 judicata effect of their own judgments.’” Docket No. 18 (Mot. at 1). In other words, Coupa took 20 the position that, in light of what took place in DCR I, DCR II was barred by the doctrine of claim 21 preclusion. 22 DCR opposed the preliminary injunction motion. In its opposition, it underscored that

23 an injunction of state-court proceedings pursuant to the relitigation exception of the Anti-Injunction Act (28 U.S.C. § 2283), in 24 particular, is rare indeed because “[d]eciding whether and how prior litigation has preclusive effect is usually the bailiwick of the second 25 court” (Smith v. Bayer Corp., 564 U.S. 299, 307 (2011)). Accordingly, the Ninth Circuit, noting that “the use of injunctions 26 against [state court] relitigation poses a disturbing problem for our system of justice,” has held that there is a “strong presumption” 27 against such injunctions. Sonner v. Premier Nutrition Corp., 49 enjoining a state- court action, Plaintiff Coupa Software 1 Incorporated (“Coupa”) must show that it is “clear beyond peradventure” that the state-court case filed by Defendant DCR 2 Workforce, Inc. (“DCR”) is barred by res judicata. 3 Docket No. 24 (Opp’n at 1) (emphasis added). DCR also went to address the merits of the res 4 judicata issue. 5 Briefing on the preliminary injunction motion was completed in late July 2023. See 6 Docket No. 26 (reply, filed on 7/24/2023). About a week later, DCR filed a motion for judgment 7 on the pleadings in which it made the same basic arguments that it had made in opposition to the 8 preliminary injunction motion. See Docket No. 32 (motion, filed on 8/3/2023). A week after 9 DCR filed its motion for judgment on the pleadings, the Court held a hearing on Coupa’s 10 preliminary injunction motion. See Docket No. 35 (minutes for 8/10/2023 hearing). Both the 11 transcript of the hearing and the minutes for the hearing reflect that the Court intended to deny the 12 motion for a preliminary injunction because “[Coupa] has not shown that claim preclusion is clear 13 beyond per adventure.” Docket No. 35 (minutes); see also Docket No. 39 (Tr. at 5-6, 14-15) 14 (Court stating that “the question of claim preclusion or not . . . there are authorities on each side, 15 but I don’t see this as clear beyond peradventure”; “it seems to me the proper thing to do is to say 16 the standard under the Anti-Injunction Act, a very rigorous standard, is not met here, and [this] 17 Court should refrain . . . and let the state court decide the question of claim preclusion or not,” and, 18 therefore, “I’m going to deny the injunction and let the state court exercise its intellectual muscle 19 on this one”). 20 About two weeks after the preliminary injunction hearing, Coupa filed an opposition to 21 DCR’s motion for judgment on the pleadings (which, as noted above, made the same basic 22 arguments that were made in DCR’s opposition to the preliminary injunction motion). See Docket 23 No. 42 (opposition). Then, a week later, Coupa filed the pending motion for voluntary dismissal.1 24 In the motion, Coupa asks for a dismissal without prejudice. See Fed. R. Civ. P. 41(a)(2). 25 26 1 Coupa had to move for relief because, in early August 2023, DCR filed an answer to Coupa’s 27 complaint. See Docket No. 30 (answer); see also Fed. R. Civ. P. 41(a)(1)(A)(i) (providing that a 1 II. DISCUSSION 2 A. Legal Standard 3 Federal Rule of Civil Procedure 41 provides in relevant part as follows: “Except as 4 provided in Rule 41(a)(1), an action may be dismissed at the plaintiff’s request only by court 5 order, on terms that the court considers proper. . . . Unless the order states otherwise, a dismissal 6 under this paragraph (2) is without prejudice.” Fed. R. Civ. P. 41(a)(2). “The purpose of Rule 7 41(a)(2) is to permit the plaintiff to dismiss the action while avoiding prejudice to the defendant 8 through the imposition of curative conditions.” Moore’s Fed. Prac. – Civ. § 41.40[1]; see also 9 Stevedoring Serv. of Am. v. Armilla Int’l B.V., 889 F.2d 919, 921 (9th Cir. 1989) (“The purpose of 10 the rule is to permit a plaintiff to dismiss an action without prejudice so long as the defendant will 11 not be prejudiced.”). “A dismissal without prejudice should be denied when the defendant will 12 suffer ‘plain legal prejudice,’ but should normally be granted in absence of such prejudice.” 13 Moore’s § 41.40[5][a]; see also Smith v. Lenches, 263 F.3d 972, 975 (9th Cir. 2001) (“A district 14 court should grant a motion for voluntary dismissal under Rule 41(a)(2) unless a defendant can 15 show that it will suffer some plain legal prejudice as a result.”).

16 “[L]egal prejudice” means “prejudice to some legal interest, some legal claim, some legal argument.” . . . “[U]ncertainty because a 17 dispute remains unresolved” or because “the threat of future litigation . . . causes uncertainty” does not result in plain legal 18 prejudice. Also, plain legal prejudice does not result merely because the defendant will be inconvenienced by having to defend in another 19 forum or where a plaintiff would gain a tactical advantage by that dismissal. 20 21 Id. at 976.

22 [C]ourts have enumerated a number of factors relevant to the consideration of whether the defendant will be prejudiced by the 23 grant of a voluntary dismissal without prejudice. No one set of factors has been adopted in any particular circuit . . . . 24 Nevertheless, the factors most commonly considered on a motion 25 for a voluntary dismissal are: (1) the extent to which the suit has progressed, including the defendant’s effort and expense in 26 preparing for trial, (2) the plaintiff’s diligence in prosecuting the action or in bringing the motion, (3) the duplicative expense of 27 relitigation, and (4) the adequacy of plaintiff’s explanation for the motion or at some other critical juncture in the case and any 1 vexatious conduct or bad faith on plaintiff’s part. 2 Moore’s § 41.40[6]. Another factor particularly pertinent here is “‘whether the plaintiff is 3 requesting a voluntary dismissal only to avoid a near-certain adverse ruling.’” Telegram 4 Messenger Inc. v. Lantah, LLC, No. 18-cv-02811-CRB, 2020 U.S. Dist. LEXIS 153614, at *10 5 (N.D. Cal. Aug. 24, 2020) (quoting Maxum Indem. Ins. Co. v. A-1 All Am. Roofing Co., 299 F. 6 App’x 664, 666 (9th Cir. 2008)); see also Moore’s § 41.40[7][b][v] (“District courts have broad 7 discretion to deny a motion for voluntary dismissal when the purpose is to avoid an adverse 8 determination on the merits of the action.”). 9 B. Legal Prejudice 10 DCR argues that it would suffer plain legal prejudice if the Court were to dismiss without 11 prejudice for two reasons: (1) Coupa is moving to dismiss without prejudice in order to avoid a 12 near-certain adverse ruling (which would be a dismissal with prejudice); and (2) a dismissal 13 without prejudice would mean that DCR could not assert prevailing party status, a predicate to 14 attorneys’ fees. DCR’s first argument is persuasive. 15 At the time that Coupa filed its motion for voluntary dismissal, two things had already 16 occurred: (1) the Court had held its hearing on Coupa’s motion for preliminary injunction at which 17 time it indicated that it would be denying the motion because it was not clear beyond peradventure 18 that res judicata barred DCR II (and that therefore Coupa should take up the issue with the state 19 court) and (2) DCR had filed a motion for judgment on the pleadings making the same basic 20 argument that the Court should not enjoin DCR II since it was not clear beyond peradventure that 21 res judicata was a bar. Since the Court indicated that it would be ruling against Coupa on the 22 preliminary injunction motion (i.e., it would not enjoin DCR II), there is no reason why Coupa 23 would expect to successfully oppose DCR’s motion for judgment on the pleadings. 24 In its reply brief, Coupa argues that “there is no rule that a pending dispositive motion bars 25 voluntary dismissal.” Reply at 3. This is true. However, Coupa ignores that the writing on the 26 wall was clear as to how the motion for judgment on the pleadings would be resolved – i.e., 27 against it and in DCR’s favor. The case on which Coupa relies is distinguishable for this very 1 Haw. Aug. 27, 2014) (noting that in a decision cited by the defendant, “the district court had 2 indicated prior to the motion for voluntary dismissal how it intended to rule on the underlying 3 claims,” but, “[i]n this case, the court has given no such indication”); see also Hepp v. Conoco, 4 Inc., 97 Fed. Appx. 124, 125 (9th Cir. 2004) (stating that defendant’s “loss of an opportunity to 5 raise a legal argument” was “not an injury to an actual legal right,” and therefore was not legal 6 prejudice; “[b]ecause there is nothing in the record establishing that [the defendant] was entitled to 7 have [its] motion granted in its favor, the district court did not abuse its discretion in granting the 8 [plaintiffs’] motion for voluntary dismissal”). 9 Likewise, even if, as Coupa argues, some other factors commonly considered for Rule 41 10 motions weigh in Coupa’s favor, that is not dispositive. For instance, even though this case has 11 not progressed much and Coupa has acted fairly quickly in seeking dismissal, those considerations 12 do not outweigh Coupa’s attempt to avoid a near-certain adverse judgment.2 13 C. Remedy 14 Because DCR has established legal prejudice, Coupa’s request for a voluntary dismissal 15 without prejudice may be denied. The Court, however, has the authority to grant the motion for 16 voluntary dismissal conditioned on a dismissal with prejudice. See, e.g., Moore’s § 17 41.40[10][d][vii] (“The district court may impose a condition on a voluntary dismissal requiring 18

19 2 Because DCR’s first argument on legal prejudice has merit, the Court need not entertain DCR’s second argument. The Court notes, however, that the second argument appears problematic. Even 20 if the unpublished authority cited by DCR were binding, see United States v. Ito, 472 Fed. Appx. 841, 842 (9th Cir. 2012) (vacating dismissal without prejudice because “dismissal without 21 prejudice precludes prevailing party status,” and “[w]ithout prevailing party status, the Itos were unable to bring their attorney’s fees motion under the Civil Asset Forfeiture Reform Act[;] [t]he 22 Itos suffered plain legal prejudice in losing their ability to move for attorney’s fees”), DCR’s claim that it would be entitled to fees incurred in this suit under the Asset Purchase Agreement is 23 questionable. The Asset Purchase Agreement fee-shifting provision applies where a party prevails on a suit brought to enforce or interpret the agreement. DCR’s claim that Coupa brought this case 24 to enforce or interpret the Asset Purchase Agreement is dubious: Coupa filed this case to prevent what it considers relitigation, not to enforce the Agreement, and comparing the claims in DCR I 25 and DCR II involves at most a “look to” or “reference to” the Asset Purchase Agreement. Cf. Ramirez v. Fox Tel. Station, 998 F.2d 743, 749 (9th Cir. 1993) (in evaluating preemption under § 26 301 of the LMRA, stating that “reference to or consideration of the terms of a collective- bargaining agreement is not the equivalent of interpreting the meaning of the terms”; “[a]lthough 27 the line between reference to and interpretation of an agreement may be somewhat hazy, merely 1 that the dismissal be with prejudice. The factors considered in determining whether the dismissal 2 should be with prejudice are essentially the same as those considered in determining whether the 3 dismissal should be permitted at all . . . . The court may also consider whether the action or claim 4 sought to be voluntarily dismissed is meritorious.”). This approach makes sense from an 5 efficiency standpoint. Moreover, this approach does not materially affect Coupa as Coupa states 6 outright that it “has no plans to refile in another court” and that “it has never suggested that it 7 intends to do so.” Reply at 3. To be sure, Coupa argues that there should be a dismissal without 8 prejudice to “avoid a situation in which DCR may attempt to argue that dismissal of this action has 9 a res judicata effect on the state court action. While such an argument would undoubtedly be 10 meritless, it would unnecessarily complicate an already complicated issue for the state court 11 judge.” Reply at 3 n.1. This Court does not see how a dismissal of this action with prejudice 12 would affect the res judicata analysis in which the state court would engage. Dismissal here is 13 based on the reluctance of a federal court to interfere with a matter pending before a state court. 14 To be clear, the Court is not ruling or otherwise expressing any opinion on the issue of res judicata 15 as that is an issue entirely within the province of the state court. 16 III. CONCLUSION 17 For the foregoing reasons, the Court hereby GRANTS Coupa’s motion for voluntary 18 dismissal but CONDITIONED on Coupa agreeing to a dismissal with prejudice. Within a week 19 of the date of this order, Coupa shall file a statement as to whether it agrees to a dismissal with 20 prejudice. If Coupa does not agree, then its motion for voluntary dismissal shall be withdrawn, 21 and the Court shall issue its ruling on the motion for a preliminary injunction and proceed with 22 DCR’s motion for judgment on the pleadings. See Beard v. Sheet Metal Workers Union, Local 23 150, 908 F.2d 474, 475-77 (9th Cir. 1990) (noting that Rule 41(a)(2) language effectively provides 24 /// 25 /// 26 /// 27 /// 1 “a reasonable period of time within which [either] to refuse the conditional voluntary dismissal by 2 withdrawing [the] motion for dismissal or to accept the dismissal despite the imposition of 3 conditions”) (internal quotation marks omitted). 4 This order disposes of Docket No. 43. 5 6 IT IS SO ORDERED. 7 8 Dated: September 22, 2023 9 10 ______________________________________

EDWARD M. CHEN

11 United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27