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In the formal legal world, a court case that is dismissed with prejudice means that it is dismissed permanently. A case dismissed with prejudice is over and done with, once and for all, and can't be brought back to court. A case dismissed without prejudice means the opposite. It's not dismissed forever.
?With prejudice? means that you cannot re-file your case ever. ?Without prejudice? means that you can re-file your case at a later date (as long as you are still within the statute of limitations).
A court may allow a plaintiff to voluntarily withdraw from the suit through a Rule 41(a) dismissal without prejudice if the plaintiff would suffer hardship from continuing the suit. Also, under Rule 37(b)(2), a court may dismiss without prejudice to sanction a party acting in bad faith.
Dismissal without prejudice means that the judge dismissed the plaintiff's or prosecutor's case without damaging their right to have their matter heard in court later. A prosecutor may ask to withdraw the case against a person to have more time to make a case stronger, find more evidence or question other witnesses.
For example, if someone was subject to an illegal search or arrested without probable cause, that could be considered a violation of the defendant's constitutional rights. Another situation that can lead to dismissal with prejudice is if the person charged with the crime successfully completes a diversion program.