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Washington-The U.S. Supreme Court last week traveled the middle road in resolving a split among the federal circuits over the standard for awarding attorney fees when a federal court remands a case to state court. In his first opinion for the high court, issued just four weeks after argument, Chief Justice John G. Roberts Jr. wrote that, absent unusual circumstances, attorney fees should not be awarded when the removing party had an “objectively reasonable basis” for removal. Martin v. Franklin Capital Corp., No. 04-1140. The question of the proper standard for a fee award had arisen quite frequently in litigation: about 200 cases in the last two decades, according to some accounts. The high court case stemmed from a class action initially filed in New Mexico state court, alleging illegalities in auto financing and insurance contracts. Under 28 U.S.C. 1447(c), a remand order “may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” The federal circuits essentially had interpreted that section in three different ways. Liberal approach rejected In his unanimous opinion, Roberts rejected the most liberal approach, advanced by Gerald Martin’s counsel, Samuel Heldman of Washington’s Gardner Middlebrooks, who argued that attorney fees should be awarded automatically on remand, or that there should be a strong presumption in favor of a fee award. As he did during oral argument, Roberts noted that “may” in the statute does not mean “shall” or “should.” He also said the removal statute was unlike civil rights fee-shifting statutes under which the court has recognized a presumption in favor of fee awards to prevailing plaintiffs because they are acting as private attorneys general. But Roberts also rejected the most restrictive approaches advanced by Franklin’s counsel, Jan T. Chilton of San Francisco’s Severson & Werson, and the solicitor general of the United States. Chilton had argued that Section 1447(c) only granted courts jurisdiction to award fees and costs when other statutes, such as Federal Rule of Civil Procedure 11, warranted it. In lieu of that, Chilton said, the standard should be a multifactor one with the emphasis on reasonableness. The solicitor general argued that fees should be awarded only when the removal was “frivolous, unreasonable, or without foundation,” which is the standard for awarding fees against unsuccessful plaintiffs in civil rights cases. Roberts said the statutory language and context were “more evenly balanced” between a pro-award and anti-award position than in the civil rights context. The test for awarding fees, Roberts wrote, “should recognize the desire to deter removals sought for the purpose of prolonging litigation and imposing costs on the opposing party, while not undermining Congress’ basic decision to afford defendants a right to remove as a general matter, when the statutory criteria are satisfied.” In light of those objectives, he said, the standard should turn on the reasonableness of the removal. The court affirmed the 10th U.S. Circuit Court of Appeals.

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