CA6 Reverses District Court Denial of Rule 59(e) Relief on the Ground that Jurisdictional Dismissal Should Have Been Without Prejudice Per Rule 41(b)

Per Intera Corp. v. Henderson, 428 F.3d 605 (6th Cir. Nov. 10, 2005):

Based upon a plain reading of fed. R. Civ. P. 41(b), and the facts of this case, we hold that the district court clearly erred when it dismissed Plaintiffs' action for lack of personal jurisdiction "with prejudice."

Our reasons in support of this conclusion are two-fold. First, our conclusion is entirely consistent with the language of Rule 41(b), which provides in relevant part, "Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction ..., operates as an adjudication upon the merits." fed. R. Civ. P. 41(b) (emphasis added). Thus, under Rule 41(b), dismissals for lack of personal jurisdiction should be made "without prejudice."

Second, in declaring that a dismissal for lack of jurisdiction does not "operate[ ] as an adjudication upon the merits," Rule 41(b) does not distinguish between subject matter and personal jurisdiction. fed. R. Civ. P. 41(b). Within the subject matter jurisdiction context, we have interpreted Rule 41(b) to mean that "a dismissal for lack of subject matter jurisdiction does not operate as an adjudication on the merits for preclusive purposes." See Pratt v. Ventas, Inc., 365 F.3d 514, 522 (6th Cir.2004) (citing *621 Holloway v. Brush, 220 F.3d 767, 778 (6th Cir.2000) (citing fed. R. Civ. P. 41(b))). This Court has explained the rationale underlying this rule: [M]erely because one court does not have jurisdiction over a dispute does not necessarily mean that another court is precluded from properly exercising jurisdiction over the matter. Moreover, if a court does not have jurisdiction over a matter, it cannot properly reach the merits of the case. Id. (quoting Wilkins v. Jakeway, 183 F.3d 528, 533 n. 6 (6th Cir.1999)).

By logical extension, our rationale in Pratt applies with equal force to the personal jurisdiction context. Although Tennessee courts lack personal jurisdiction over Defendants Henderson and Englar, this does not lead to the inexorable conclusion that no court has personal jurisdiction over these defendants. Furthermore, upon a determination that personal jurisdiction is lacking, a court should not dismiss a case on the merits, especially when it appears that another court with appropriate jurisdiction may resolve the issues between the parties. In this case, because Henderson and Englar are residents of North Carolina, and many, if not all, of the alleged deceptive actions may have occurred in that state, the courts of North Carolina may be able to address Plaintiffs' claims against Defendants.