Thank you for sharing!

Your article was successfully shared with the contacts you provided.
As corporate defendants reflexively remove all state class actions into federal court, their attorneys might pause to reflect that unsuccessful attempts to remove under the federal Class Action Fairness Act might result in an award of plaintiffs’ costs and attorney fees, or worse. Since CAFA was enacted on Feb. 18, 2005 (Pub. L. No. 109-2, 119 Stat. 4 (2005)), defendants now routinely invoke CAFA’s removal provisions to move state class actions into federal courts. See 28 U.S.C. 1453. Such removal efforts may be fraught with unperceived peril. As defendants now routinely utilize CAFA removal strategy, plaintiffs in many CAFA removal cases have begun to seek attorney fees when a federal court grants a remand to state court. See e.g., Nelsen v. PeoplePC Inc., 2007 U.S. Dist. Lexis 41641 (N.D. Calif. May 30, 2007); Reibstein v. Continental Tire North America Inc., 2007 U.S. Dist. Lexis 24755 (E.D. Pa. April 2, 2007). This is especially true if the plaintiff believes that the CAFA removal is frivolous or vexatious. The 7th U.S. Circuit Court of Appeals recently addressed the question of the availability of attorney fee awards in CAFA remand cases. Lott v. Pfizer Inc., 2007 U.S. Lexis 15092 (7th Cir. June 25, 2007). As a decision of first impression on attorney fee awards in remanded CAFA cases, this 7th Circuit decision supplies some standards for consideration of attorney fee requests on remand. No attorney fee in CAFA for improper removal CAFA does not provide for an award of attorney fees as a consequence of an improper CAFA removal. Instead, the provision for attorney fees on federal remand is found among the general removal provisions. See 28 U.S.C. 1447(c). Section 1447(c) provides: “An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” In addition to � 1447(c), other plaintiffs have sought attorney fees under 28 U.S.C. 1927, which provides that “Any attorney or other person admitted to conduct any cases in any court of the United states or any territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” See Reibstein, 2007 U.S. Dist. Lexis 24755, *10. The U.S. Supreme Court, in 2005, clarified the standard for the award of attorney fees on remand pursuant to � 1447(c). Martin v. Franklin Capital Corp., 546 U.S. 132 (2005). This decision resolved a conflict among federal circuit courts concerning the proper standard for the award of costs and fees after a federal court remands a case to state court. The high court held that plaintiffs are entitled to attorney fees under � 1447(c) only if the defendant “lacked an objectively reasonable basis for seeking removal.” Martin, 546 U.S. at ___. However, the court did not define what constitutes an “objectively reasonable” basis for removal. The 7th Circuit attempts to fill in a doctrinal gap In Lott, the 7th Circuit announced that the Supreme Court’s “objectively reasonable” standard applies to attempted CAFA removal cases that are remanded to state courts. Lott, 2007 U.S. App. Lexis 15092, *6. In an attempt to fill the doctrinal gap left by the Supreme Court, the 7th Circuit suggested that the “objectively reasonable” standard may be evaluated by examining the clarity of the law at the time a defendant files a removal notice. Given the current lack of clarity with regard to many CAFA removal problems, the 7th Circuit’s formulation of the objectively reasonable standard should give some comfort to defendants attempting CAFA removals. The 7th Circuit also looked to the qualified immunity doctrine for guidance in determining whether a defendant has an objectively reasonable basis for a CAFA removal. Lott, 2007 U.S. App. Lexis 15092, *7-*8. The qualified immunity doctrine assumes that state officials are aware of existing case law and holds officials liable only if they violate clearly established and particularized rights. Id. Applying the qualified immunity jurisprudence to the removal context, the 7th Circuit announced that “As a general rule, if, at the time the defendant filed his notice in federal court, clearly established law demonstrated that he had no basis for removal, then a district court should award a plaintiff his attorneys’ fees. “By contrast, if clearly established law did not foreclose defendant’s basis for removal, then a district court should not award attorneys’ fees.” Lott, 2007 U.S. App. Lexis 15092, *8-*9. The 7th Circuit, applying the standard it announced in Lott, reversed the district court’s award of attorney fees against the defendant Pfizer Inc. on a remand to state court after a CAFA removal. In 2005, Pfizer had removed an Illinois state class action that was filed before CAFA was enacted, but was in effect at the time of removal. On the plaintiff’s petition for remand, Pfizer contended that CAFA removal was proper because the case was commenced for CAFA purposes when the case was removed. The district court remanded the case, and imposed attorney fees on Pfizer for the improper removal. On appeal of the CAFA remand order, the 7th Circuit subsequently ruled that “commenced” for CAFA purposes means the time a complaint is filed, not removed. Pfizer Inc. v. Lott, 417 F.3d 725, 727 (7th Cir. 2005), relying on Knudsen v. Liberty Mutual Ins. Co., 411 F.3d 805 (7th Cir. 2005). Examining the context in which Pfizer removed the case, the 7th Circuit held that the district court erred in awarding the plaintiffs’ attorney fees because Pfizer’s attempt to remove the case under CAFA was objectively reasonable at the time Pfizer made the removal. Lott, 2007 U.S. App. Lexis 15092, *10. The court reasoned that when Pfizer filed its notice of removal, the case law relating to when an action commenced for CAFA purposes was immature and there was conflict among the federal district courts. In addition, no circuit court at that time had then rejected Pfizer’s interpretation of when an action “commenced” for CAFA purposes. The court held that “District court decisions, let alone conflicting district court decisions, do not render the law clearly established.” Id. In addition, the 7th Circuit also rejected the plaintiffs’ argument that because Pfizer had lobbied for the enactment of CAFA, Pfizer knew that the legislative history suggested that a CAFA action commenced when it was filed. Instead, the court held that the test is whether the relevant case law “clearly foreclosed the defendant’s basis for removal, not whether the defendant had some special insight into the legislative process.” Lott, 2007 U.S. App. Lexis 15092, *11. The uncertain state of much CAFA jurisprudence may provide some solace to defense attorneys who may seek to find refuge in the “objectively reasonable” standard for a CAFA removal. However, it is possible for a defendant attempting a CAFA removal to tax the patience of a federal district court with its removal theories, and to come close to suffering a � 1447(c) fee award. A defendant recently inspired just such ire of the U.S. District Court for the Southern District of Illinois on a CAFA removal. Roche v. Country Mutual Ins. Co., 2007 U.S. Dist. Lexis 48921 (S.D. Ill. July 6, 2007). In this case, the defendant, Country Mutual Insurance Co., attempted a CAFA removal, arguing minimal CAFA diversity jurisdiction could be satisfied because an absent joint tortfeasor defendant was needed to be joined for a just adjudication under Fed. R. Civ. P. 19. The defendant asked the court to order joinder of the joint tortfeasor under Rule 19, and to find minimal diversity jurisdiction to satisfy CAFA jurisdictional requirements. The district court extensively analyzed whether the absent party was subject to joinder under Rule 19. Concluding that Rule 19 did not mandate joinder of the missing party, the court further held that minimal diversity did not exist and therefore the court did not have proper CAFA removal jurisdiction. Roche, 2007 U.S. Dist. Lexis 48921, *8, *18. The district court ordered a remand of the case to state court. Court ends its discussion with excoriation of defense The district court, however, did not end its discussion by issuing a remand order. Instead, the court excoriated the defense attorneys, stating that “the Court regards Country’s arguments for the existence of federal subject matter fairly frivolous, in light of the settled principles concerning joinder of joint tortfeasors under Rule 19.” “In fact, the Court is strongly inclined to hold that the removal in this instance was objectively unreasonable so as to warrant an award of costs and expenses, including attorney fees.” Id. Although the court was tempted to impose attorney fees, the court instead acknowledged the 7th Circuit’s recent pronouncements in Lott. The district court noted that it was unable to find controlling authority on the issue whether mandatory joinder could be used to create minimal diversity for purposes of CAFA removal. Applying Lott‘s guidance, the court found that the removal was objectively reasonable and declined its discretion to impose costs and expenses under � 1447(c). Roche, 2007 U.S. Dist. Lexis 48921, *33. Linda S. Mullenix holds the Morris and Rita Atlas Chair in Advocacy at the University of Texas School of Law. She can be reached at [email protected].

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.