The opinion of the court was delivered by: Laura Taylor Swain, United States District Judge
Plaintiffs Comunidad Autónoma del Pais Vasco, Diputación Foral de Biskaia, Diputación Foral de Gipuzkoa, and Ayuntamiento de Donostia-San Sebastian (the "Basque Plaintiffs") move this Court pursuant to Federal Rule of Civil Procedure 41(a)(2) for an order dismissing the instant action without prejudice. Defendants American Bureau of Shipping, and ABSG Consulting, Inc. f/k/a ABS Group, Inc. and ABS Marine Services, Inc. ("Defendants" or "ABS"), cross-move for dismissal with prejudice. The Court has jurisdiction of this action pursuant to 28 U.S.C. Sections 1332 and 1333. The Court has considered thoroughly the parties' submissions relating to the instant motion and, for the following reasons, denies the Basque Plaintiffs' motion to dismiss the action without prejudice and grants Defendants' cross-motion to dismiss the action with prejudice.
The following facts are relevant to the disposition of the instant motion and are undisputed unless characterized otherwise. The Basque Plaintiffs commenced this action by the filing of a Complaint in the United States District Court for the Southern District of Texas, on May 8, 2003, seeking $50 million in damages for Defendants' alleged negligence in connection with the sinking of the oil tanker Prestige off the coast of Spain. (See Affirmation of Jeffrey R. Coleman ("Coleman Affirmation") Ex. A.) The Basque Plaintiffs also simultaneously filed a Complaint against Defendant ABS in Texas State Court. (See id. Ex. B.) Four days later, the Basque Plaintiffs moved to dismiss the action against Defendant ABS in Texas State Court. (Coleman Affirmation ¶ 5.) That Court issued an order dismissing the action without prejudice on May 22, 2003. (Id. Ex. D.)*fn1
In June 2003, Defendants filed "nullity actions in Spain, which seek a ruling from the Spanish courts that the Basque Plaintiffs have impermissibly sued Defendants in the United States, and that, under Spanish law, they have no standing to bring the U.S. actions against Defendants (`Nullity Actions')." (1d. 15.) The current procedural postures of the Nullity Actions are disputed. If they are ultimately successful in the Nullity Actions, Defendants may be able to recover the costs and fees Defendants incurred in the United States in defending the Basque Plaintiffs' U.S. actions. (Id. ¶ 16.)
Defendants next moved to have the case transferred to the Southern District of New York, as related to a case filed before this Court on May 16, 2003, Reino de Espana v. American Bureau of Shipping, Inc., et al., No. 03 Civ. 3573 (the "Spain Action"). (See id. Ex. E.) The Defendants' motion to transfer was granted and the undersigned accepted the case as related to the Spain Action on February 17, 2004. The Court referred this matter to Magistrate Judge Ellis for general pretrial management, and Judge Ellis coordinated the discovery schedules of the two actions on February 17, 2005. The Basque Plaintiffs filed an Amended Complaint on May 26, 2005, naming ABSG Consulting, Inc. f/k/a ABS Group, Inc. and ABS Marine Services, Inc., as an additional defendant.
On September 29, 2005, Reino de Espana ("Spain") and the Basque Plaintiffs entered into an agreement ("Compensation Agreement") pursuant to Article 1 of Spain's Royal Decree 4/June 20, 2003, and Article 7 of the Royal Decree 1053/August 1, 2003 (id.Exs.N-0),whereby Spain would compensate the Basque Plaintiffs in the amount of E45,603,721.09,for "damages sustained" following the Prestige casualty.(Id.Ex.M.)The Basque Plaintiffs assert that thepayment under the Compensation Agreement covers only their "direct" damages, leaving unresolved any claims for "indirect" damages such as environmental or economic injury. Under the Compensation Agreement, the Basque Plaintiffs stipulated that they would "separate and remove [themselves] from the litigation [they] initiated against ASS (sic) and its affiliates in the United States." (Id. Ex. M ¶ 2; see also Decl. of Manuel R. Llorca in Supp. of Mot. ("Llorca Decl.") ¶ 6 ("In exchange for . . . payment, Basque Plaintiffs agreed to withdraw their lawsuit against ABS and its affiliate.").)
The Basque Plaintiffs filed the instant motion to dismiss on January 23, 2006, and Defendants cross-moved on February 3, 2006.
Federal Rule of Civil Procedure 41(a)(2) provides that, where parties cannot stipulate to the ultimate disposition of a case, "an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper" and, "[u]nless otherwise specified in the order, [such] a dismissal . . . is without prejudice." Fed. R. Civ. P. 41(a)(2). "It is within the district court's sound discretion to deny a Rule 41(a)(2) motion to dismiss." Catanzano v. Wing, 277 F.3d 99, 109 (2d Cir. 2001) (citation omitted). "Voluntary dismissal without prejudice is thus not a matter of right." Zagano v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990).
The Second Circuit recently clarified the two rules for determining the propriety of granting a dismissal without prejudice. First, "such a dismissal would be improper if 'the defendant would suffer some plain legal prejudice other than the mere prospect of a second lawsuit.'" Camilli v. Grimes, 436 F.3d 120, 123 (2d Cir. 2006) (citing Cone v. W. Virgina Pulp & Paper Co., 330 U.S. 212, 217 (1947); Jones v. SEC, 298 U.S. 1, 19 (1936)); see also The GAP, Inc. v. Stone Intl Trading, Inc., 169 F.R.D. 584, 588 (S.D.N.Y. 1997) ("[T]he presumption in this circuit is that a court should grant a dismissal pursuant to Rule 41(a)(2) absent a showing that defendants will suffer substantial prejudice as a result."). Second, "the test for dismissal without prejudice involves consideration of various factors, known as the Zagano Factors." Id. The Zagano Factors are: (1) "the plaintiff's diligence in bringing the motion" for dismissal without prejudice; (2) "any 'undue vexatiousness' on plaintiff's part;" (3) "the extent to which the suit has progressed including the defendant's effort and expense in preparation for trial;" (4) "the duplicative expense of relitigation; and" (5) "the adequacy of plaintiff's explanation for the need to dismiss." Zagano, 900 F.2d at 14 (citations omitted).
The Basque Plaintiffs' Diligence
The Court finds that the Basque Plaintiffs were diligent in bringing the instant motion for dismissal. While Defendants are correct that Spain officially acknowledged its plan to provide compensation to certain entities in connection with the Prestige casualty in 2003, the Basque Plaintiffs can hardly be faulted for waiting until after the actual execution of the Compensation Agreement, ...