Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-16-80019/USCOURTS-ca9-16-80019-0/pdf.json

Parties Involved:
Chan Healthcare Group, PS
Respondent
Liberty Mutual Fire Insurance Co.
Petitioner
Liberty Mutual Insurance Company
Petitioner

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CHAN HEALTHCARE GROUP, PS, a 

Washington professional services 

corporation,

Plaintiff-Appellee/Respondent,

v.

LIBERTY MUTUAL FIRE INSURANCE 

CO.; LIBERTY MUTUAL INSURANCE 

COMPANY, foreign insurance 

companies,

Defendants-Appellants/Petitioners.

Nos. 16-35210

16-80019

D.C. No.

2:15-cv-01705-

RSM

OPINION

Appeal from the United States District Court

for the Western District of Washington

Ricardo S. Martinez, Chief Judge, Presiding

Argued and Submitted December 6, 2016

Seattle, Washington

Filed January 3, 2017

Before: M. Margaret McKeown, Richard C. Tallman,

and Morgan B. Christen, Circuit Judges.

Opinion by Judge McKeown

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2 CHAN HEALTHCARE V. LIBERTY MUTUAL

SUMMARY*

Removal / Remand

The panel (1) dismissed a petition for permission to 

appeal the district court’s remand order in a class action case 

founded on federal question jurisdiction and (2) vacated the 

district court’s order granting attorneys’ fees.

Joining the Fifth, Sixth, and Eighth Circuits, the panel 

held that the interlocutory review provision set forth in the 

Class Action Fairness Act, 28 U.S.C. § 1453(c)(1), is limited 

to orders granting or denying remand of diversity class 

actions brought and removed under CAFA. Therefore, 

under 28 U.S.C. § 1447(d), the panel lacked jurisdiction to 

review the district court’s order remanding the case to the 

state court from which it had been removed.

The panel vacated the district court’s award of attorneys’ 

fees to the plaintiff under 28 U.S.C. § 1447(c). The district 

court awarded attorneys’ fees on the ground that that the 

defendant lacked an objective basis for removal because the 

notice of removal was untimely under § 1446(b). The panel 

held that the notice of removal was timely filed within thirty 

days after receipt of plaintiff’s state court reply brief, which 

was the first filing that referenced a federal due process 

claim. The panel remanded the case to the district court.

 * This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.

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CHAN HEALTHCARE V. LIBERTY MUTUAL 3

COUNSEL

Joshua S. Lipshutz (argued) and Joseph C. Hansen, Gibson 

Dunn & Crutcher LLP, San Francisco, California; Russell R. 

Yager, Vinson & Elkins LLP, Dallas, Texas; John M. Silk, 

Wilson Smith Cochran Dickerson, Seattle, Washington; for 

Defendants-Appellants/Petitioners.

David Elliott Breskin (argued) and Cynthia J. Heidelberg,

Breskin Johnson & Townsend PLLC, Seattle, Washington, 

for Plaintiff-Appellee/Respondent.

OPINION

McKEOWN, Circuit Judge:

This consolidated appeal presents an issue of first 

impression in our circuit, namely the scope of appellate 

jurisdiction to review a district court’s remand order in a 

class action case founded on federal question jurisdiction. 

Remand orders are not appealable as a matter of course. 

28 U.S.C. § 1447(d). Nonetheless, as part of the Class 

Action Fairness Act of 2005 (“CAFA”), Congress created an 

exception under 28 U.S.C. § 1453(c)(1) that permits courts 

of appeals to accept appeals from remand orders in cases that 

are removed “under this section.” Joining our sister circuits, 

we conclude that this interlocutory review provision is 

limited to orders granting or denying remand of diversity 

class actions brought and removed under CAFA.

Background

This case has a long and tortured procedural history that 

spans a series of interrelated lawsuits. One player is central 

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4 CHAN HEALTHCARE V. LIBERTY MUTUAL

to the action: attorney David Breskin, who represented 

plaintiff Dr. David Kerbs in previous rounds of litigation and 

who represents Chan Healthcare Group, PS (“Chan”) in two 

ongoing disputes, including this one.

Breskin got things going in 2010. On May 13 of that 

year, he filed a putative class action on behalf of Dr. Kerbs 

in Washington state court against defendants Safeco 

Insurance Company of Illinois, Inc. and Safeco Insurance 

Company of America (collectively “Safeco”). Dr. Kerbs 

alleged that Safeco violated Washington law by using a 

computerized bill-review system that automatically reduced 

the amounts paid to medical providers pursuant to Personal 

Injury Protection coverage in automobile insurance 

contracts. The superior court certified a class of 

“Washington health care providers who, from May 13, 2006, 

through March 31, 2011, submitted [claims] to Safeco for 

payment” under their patients’ Personal Injury Protection 

policies and received “less than the amount billed based 

solely on a [computerized] reduction.”

In May 2012, Dr. Kerbs and Safeco reached a class-wide 

settlement agreement in which Safeco agreed to pay the class 

members for Safeco’s past conduct. As to future claims, 

Safeco agreed, among other things, to stop using the 

computerized bill-review system and start using the “FAIR 

Health database” to determine the proper amount of 

reimbursement. In approving the settlement, the superior 

court explained that the use of the FAIR Health database 

“does not, in and of itself, breach any duty or obligation 

under any applicable law or contract requiring Safeco to pay 

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CHAN HEALTHCARE V. LIBERTY MUTUAL 5

or reimburse ‘usual and customary’ or ‘reasonable’ charges 

for Covered Treatments.”1

In 2014, the drama continued in another state: Lebanon 

Chiropractic Clinic, P.C. (“Lebanon”) commenced a 

separate class action lawsuit—based on the same allegedly 

improper reductions of reimbursements to medical 

providers—in Illinois state court against Safeco and its 

parent, Liberty Mutual Fire Insurance Company and Liberty 

Mutual Insurance Company (collectively, “Liberty”). 

Lebanon Chiropractic Clinic, P.C. v. Liberty Mut. Ins. Co., 

No. 5-15-0111, 2016 WL 546909, at *1 (Ill. App. Ct. Feb. 9, 

2016). This new case—filed without Breskin’s 

involvement—was not limited to one state, but instead 

challenged Safeco’s and Liberty’s review and payment 

practices in multiple states, including both Illinois and 

Washington. See id. at *2.

In October 2014, Lebanon, Safeco, and Liberty reached 

a settlement agreement eerily similar to the one reached in 

the earlier Washington state case. Like the settlement in the 

Kerbs case, “with regard to future claims, Liberty agreed to 

implement certain measures, such as the continued use of the 

FAIR Health database.” Id. at *3. After preliminary 

approval of the settlement agreement, Breskin reentered the 

scene.

 1 Breskin brought two separate class action lawsuits in Washington 

state court against other insurers, both of which resulted in settlements 

that allowed use of the FAIR Health database. The courts there similarly 

determined that the “use of FAIR Health data in the payment of [Personal 

Injury Protection] claims does not, in and of itself, breach any applicable 

duty or law.”

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6 CHAN HEALTHCARE V. LIBERTY MUTUAL

Breskin, on behalf of Dr. Kerbs, objected to the 

settlement, contending that the proposed settlement 

conflicted with the Kerbs settlement in the earlier 

Washington case (as well as that the proposed settlement 

was generally unfair to Washington providers and the 

Illinois court did not have jurisdiction). Simultaneously, 

Breskin unsuccessfully petitioned the Washington state 

court to reopen the Kerbs case and enjoin the proposed 

settlement in Illinois. Id. at *4. Although the Illinois court 

concluded that there was no conflict between the proposed 

settlement and the earlier Kerbs settlement, it ordered that 

the proposed settlement “include[] specific language that the 

Lebanon settlement would not conflict in any way with the 

Kerbs settlement.” Id. at *5. Dr. Kerbs did not prevail in his 

appeal regarding the Illinois settlement. See id. at *15.

This history provides the necessary backdrop to 

understanding the appeal before us. While the Lebanon

appeal in Illinois was still pending, Breskin filed two new 

offensive class action lawsuits in Washington state court. 

The first, filed in August 2015, was filed on behalf of Chan 

against Safeco (the Safeco case). The second, filed in early 

September 2015, was filed on behalf of Chan against Liberty 

and is the case on appeal to us (the Liberty case). The 

complaints make similar allegations that Safeco’s and 

Liberty’s use of the FAIR Health database to set 

reimbursement amounts violates various Washington 

statutes. All parties agree that, on the face of the complaint 

in the Liberty case, there was no basis for federal 

jurisdiction.

Liberty asserts that things changed when Chan filed its 

reply brief on its motion for declaratory relief. In the initial 

motion, filed on October 2, 2015, Chan sought a declaratory 

judgment that the Illinois settlement was unenforceable in 

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CHAN HEALTHCARE V. LIBERTY MUTUAL 7

Washington. After Liberty responded that it “might elect 

simply to forego raising Lebanon as a defense in this case,” 

Chan argued in its October 26, 2015 reply that “the Lebanon

agreement could not be applied to bar Chan’s Washington 

[state law] claim against [Liberty] consistent with Chan’s 

due process rights.”

On the basis of Chan’s reply brief, Liberty removed the 

case to federal court two days later, on October 28, 2015. 

Liberty explained that Chan’s reply brief revealed that Chan 

was raising a standalone federal due process claim, thus 

creating federal question jurisdiction under 28 U.S.C. 

§ 1331. Because Liberty contended that Chan first raised the 

federal question in the litigation in its reply brief, Liberty 

argued that its removal fell “within thirty days after receipt 

by the defendant, through service or otherwise, of a copy of 

an amended pleading, motion, order or other paper from 

which it may first be ascertained that the case is one which 

is or has become removable.” 28 U.S.C. § 1446(b)(3).

Based on various papers received and filings made in this 

case and other cases more than thirty days before Liberty 

removed, Chan challenged the timeliness of Liberty’s 

removal. Chan also argued that there was no federal 

question jurisdiction because its federal due process claim 

was not raised as an affirmative claim, but instead in 

response to Liberty’s assertion of the Illinois settlement as a 

defense.

The district court granted Chan’s motion to remand the 

case to state court based solely on the ground that removal 

was untimely. The court explicitly declined to reach whether 

federal question jurisdiction was present. The court also 

awarded fees to Chan, in the amount of $18,330.00, after 

finding that Liberty “had no objectively reasonable basis for 

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8 CHAN HEALTHCARE V. LIBERTY MUTUAL

removal, particularly given defense counsel’s involvement 

with the related cases and their acknowledgments about the 

Chan motions made to the court in the Illinois appeal.”

Liberty petitions for review of the district court’s remand 

order and appeals the fee award.

Analysis

I. Jurisdiction to Review the Merits of the Remand 

Order

The default rule on remand orders is that “[a]n order 

remanding a case to the State court from which it was 

removed is not reviewable on appeal or otherwise.” 

28 U.S.C. § 1447(d); see Kircher v. Putnam Funds Trust, 

547 U.S. 633, 641 (2006) (explaining that § 1447(d) usually 

“stands in the way” of reviewing a district court’s remand 

order); Watkins v. Vital Pharm., Inc., 720 F.3d 1179, 1181 

(9th Cir. 2013) (per curiam) (“District court remand orders 

generally are not reviewable on appeal.”).

At issue here is a congressional carve-out of appellate 

jurisdiction that was adopted for class action cases as part of 

CAFA. Section 1453(c)(1), entitled Review of Remand 

Orders, provides that, when a case is removed “under this 

section,” “a court of appeals may accept an appeal from an 

order of a district court granting or denying a motion to 

remand a class action.” 28 U.S.C. § 1453(c)(1). The 

question we consider is whether we have jurisdiction to 

review the district court’s order remanding this class action 

when the asserted basis for jurisdiction is a federal question 

rather than traditional diversity or CAFA minimal diversity 

jurisdiction. Chan argues that § 1453(c)(1) is limited to 

diversity actions under CAFA. Liberty takes a more 

expansive view, claiming that there is no CAFA-based 

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CHAN HEALTHCARE V. LIBERTY MUTUAL 9

limitation and that all class actions are covered by this grant 

of jurisdiction.

To understand the genesis of the appeal provision and its 

place in the statutory structure, it is important to review the 

multiple provisions adopted as part of CAFA, particularly 

28 U.S.C. § 1453. In broad terms, CAFA significantly 

expanded federal diversity jurisdiction over class and mass 

actions. Congress added a number of statutory provisions to 

the United States Code to ensure “[f]ederal court 

consideration of interstate cases of national importance.” 

Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 1350 

(2013) (emphasis added) (citation omitted). One of the most 

notable additions is § 1332(d)(2), which was added as a new 

subsection in the diversity statute and allows a class action 

to be brought in federal court if “the matter in controversy 

exceeds the sum or value of $5,000,000” and “any member 

of a class of plaintiffs is a citizen of a State different from 

any defendant.” This provision is noteworthy because it 

expands the jurisdiction of federal courts: unlike traditional 

diversity cases under § 1332(a), which require complete 

diversity (i.e., each plaintiff is a citizen of a different state 

than each defendant), Strawbridge v. Curtiss, 7 U.S. 267, 

267 (1806), § 1332(d)(2) supports jurisdiction when there is 

minimal diversity (i.e., one plaintiff is a citizen of a different 

state than one defendant).

To pave the way for class action cases to get into federal 

court, Congress also enacted a new removal provision, 

§ 1453, as part of CAFA.2

 Section 1453(b) governs the 

general procedure for removing a case and eliminates some 

of the obstacles that apply in ordinary diversity cases. 

 2 In addition to §§ 1332(d) and 1453, CAFA also includes §§ 1711–

1715, which relate to approval of settlements in class actions.

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10 CHAN HEALTHCARE V. LIBERTY MUTUAL

Section 1453(c) is designed to provide a limited means, 

subject to strict timing controls on both the parties and the 

court, for appellate review of remand orders in cases 

removed under § 1453(b).

In examining the scope of appellate jurisdiction under 

§ 1453, we look to the text, structure, and purpose behind the 

statute. See Abramski v. United States, 134 S. Ct. 2259, 2267 

(2014) (explaining that statutory interpretation involves 

interpreting the words in light of the statutory context, which 

includes the “structure, history, and purpose” of the statute). 

Having done so, those considerations convince us that 

§ 1453 is limited to CAFA-based diversity cases and does 

not expand interlocutory appellate review to remand orders 

where removal is predicated on federal question jurisdiction.

We start with § 1453(a), the definitional section. Here, 

“the terms ‘class’, ‘class action’, ‘class certification order’, 

and ‘class member’ shall have the meanings given such 

terms under section 1332(d)(1).” Significantly, subsection 

(a) cross-references a second CAFA provision, as § 1332(d) 

was added in its entirety pursuant to CAFA. Section 

1332(d)(1)’s definitions also apply to the new minimal 

diversity provision, § 1332(d)(2).

Subsection (b) of § 1453 then addresses removal of class 

actions:

A class action may be removed to a district 

court of the United States in accordance with 

section 1446 (except that the 1-year 

limitation under section 1446(c)(1) shall not 

apply), without regard to whether any 

defendant is a citizen of the State in which 

this action is brought, except that such action 

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CHAN HEALTHCARE V. LIBERTY MUTUAL 11

may be removed by any defendant without 

the consent of all defendants.3

Finally, in subsection (c), the statute spells out 

particularized requirements for appellate review:

Section 1447 shall apply to any removal of a 

case under this section, except that 

notwithstanding section 1447(d), a court of 

appeals may accept an appeal from an order 

of a district court granting or denying a 

motion to remand a class action to the State 

court from which it was removed if 

application is made to the court of appeals not 

more than 10 days after entry of the order.

Notably, this subsection circumscribes its applicability to a 

case removed “under this section,” presumably meaning 

§ 1453. By invoking the phrase “notwithstanding section 

1447(d),” the statute brushes aside § 1447(d)’s traditional 

bar on reviewing remand orders for a narrow subset of 

orders, namely, “order[s] of a district court granting or 

denying a motion to remand a class action to the State court 

from which it was removed if application is made to the court 

of appeals not more than 10 days after entry of the order.”

In our view, § 1453(c)(1)’s use of “removal of a case 

under this section” limits the universe of appealable orders 

to those in class action cases brought under CAFA. That 

conclusion requires a few interpretative steps. The word 

“section” is best understood to reference an entire statutory 

 3 Subsection (d) is the exception provision. It lists three categories 

of claims, not applicable here, that fall outside the scope of § 1453 when 

no other claims are raised in a case.

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12 CHAN HEALTHCARE V. LIBERTY MUTUAL

section and, because the statute uses the phrase “under this

section,” it refers to the statutory section in which the 

language appears, namely, § 1453. This approach fits with 

the way the word “section” is used in common parlance and 

the normal meaning that legal dictionaries ascribe to it. See, 

e.g., Key Tronic Corp. v. United States, 511 U.S. 809, 814 

(1994); Metro One Telecomms., Inc. v. Comm’r, 704 F.3d 

1057, 1059–60 (9th Cir. 2012); Section, Black’s Law 

Dictionary (10th ed. 2014) (defining “section” as “[a] 

distinct part or division of a writing, esp. a legal instrument” 

and explaining that it is abbreviated with a section symbol, 

§); Section, Ballentine’s Law Dictionary 1153 (3d ed. 1969) 

(defining “section” as “[a] subdivision or paragraph of a 

statute or code”). The text of § 1453(c)(1) itself uses 

“section” in the same way, stating, just before the “under this 

section” language, that “[s]ection 1447 shall apply to any 

removal of a case.” The other circuits that have addressed 

the meaning of § 1453(c)(1)’s phrase “under this section” all 

agree that it points to removal under § 1453. See Saab v. 

Home Depot U.S.A., Inc., 469 F.3d 758, 759 (8th Cir. 2006); 

Patterson v. Dean Morris, L.L.P., 448 F.3d 736, 742 (5th 

Cir. 2006).

Construing “under this section” as a reference to § 1453 

in its entirety, we also look to the other parts of the section. 

Section 1453(a), particularly when read in conjunction with 

the section as a whole, supports the reading that § 1453’s 

reach is limited to CAFA-related diversity cases. That 

subsection defines relevant terms, like “class” and “class 

action,” by reference to the diversity statute, § 1332—more 

specifically, to a provision added by CAFA, § 1332(d)(1), 

which also provides the relevant definitions for CAFA’s 

minimal diversity provision, § 1332(d)(2). See 28 U.S.C. 

§ 1453(a). On its own, the provision defines class action 

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CHAN HEALTHCARE V. LIBERTY MUTUAL 13

broadly, but it does not stand alone. Rather it fits within and 

must be read in conjunction with the entire “section.”

An even stronger textual basis for reading § 1453 as 

excluding federal question cases comes in § 1453(b), which 

states that “[a] class action may be removed to a district court 

of the United States in accordance with section 1446 (except 

that the 1-year limitation under section 1446(c)(1) shall not 

apply), without regard to whether any defendant is a citizen 

of the State in which the action is brought, except that such 

action may be removed by any defendant without the 

consent of all defendants.” While the text could be 

interpreted to cover both diversity and federal question cases 

(as both types of cases “may be removed . . . in accordance 

with section 1446”), it is most naturally read to cover only 

the former because the exceptions are directed to diversity 

cases.

In particular, § 1453(b) includes two references that are 

linked exclusively to diversity and fails to include similar 

provisions specific to federal question jurisdiction. First, 

subsection (b) excepts “the 1-year limitation under section 

1446(c)(1).” Section 1446(c)(1) is titled “Requirements; 

Removal Based on Diversity of Citizenship,” and its oneyear limitation for removal applies to diversity cases alone. 

28 U.S.C. § 1446(c)(1). Second, subsection (b) permits 

removal “without regard to whether any defendant is a 

citizen of the State in which the action is brought.” The 

statutory basis for that prohibition is contained in 

§ 1441(b)(2), a provision aptly titled “Removal Based on 

Diversity of Citizenship” that also applies only to diversity 

cases. It would be strange for subsection (b) to embrace a 

class of cases—namely, federal question cases—to which 

two of its exceptions never apply.

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That the final proviso in § 1453(b)—“such action may 

be removed by any defendant without the consent of all 

defendants”—is not specifically pegged to diversity, see

28 U.S.C. § 1446(b)(2)(A), does not change our conclusion. 

Although this final exception is not unique to CAFA cases, 

it is consistent with them and fills out the litany of applicable 

exceptions. The general focus on diversity cases and failure 

to carve out exceptions applicable only to federal question 

cases underscores that § 1453(b) is directed to the former 

type of case.

Finally, § 1453(d) further solidifies the targeted nature 

of § 1453. That subsection says that § 1453 “shall not apply 

to any class action that solely involves” three enumerated 

classes of state- and federal-law claims involving securities 

and corporate governance. Subsection (d) exactly mirrors a 

CAFA provision, § 1332(d)(9), which places those same 

three categories of claims outside of CAFA’s minimal 

diversity provision. The overlapping scope of those two 

provisions buttresses the conclusion that the statutes both 

operate in the CAFA diversity sphere.

CAFA’s legislative history supports our conclusion that 

the limited grant of appellate review is tied to CAFA’s 

minimal diversity provisions. See Exxon Mobil Corp. v. 

Allapattah Servs., Inc., 545 U.S. 546, 568 (2005) (explaining 

that the potential for unreliability of legislative history 

means that it cannot override statutory text, but noting that it 

may still inform the analysis). The Senate Report indicates 

that “[t]he purpose of [§ 1453(c)] is to develop a body of 

appellate law interpreting the legislation without unduly 

delaying the litigation of class actions.” S. Rep. No. 109-14, 

at 49 (2005); see also id. (encouraging appellate courts to 

“create a . . . body of clear and consistent guidance for 

district courts that will be interpreting this legislation” by 

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CHAN HEALTHCARE V. LIBERTY MUTUAL 15

“review[ing] cases that raise jurisdictional issues likely to 

arise in future cases”). References to “this legislation” are 

clearly directed to the CAFA legislation, whose additions 

relate almost entirely to the minimal diversity class actions. 

Our reading accords with what the Supreme Court has 

characterized as CAFA’s “primary objective”: “[f]ederal 

court consideration of interstate cases of national 

importance.” Knowles, 133 S. Ct. at 1350 (emphasis added) 

(citation omitted). Indeed, the particular concerns 

motivating CAFA were not attendant to class actions 

pleading a federal question because those cases could 

already be removed to federal court under § 1441(a).

Although our court has not previously addressed the 

precise issue here, we have confronted the question whether 

there is appellate jurisdiction over a non-CAFA issue that 

was decided in an order independently appealable under 

§ 1453(c)(1). See Nevada v. Bank of Am. Corp., 672 F.3d 

661 (9th Cir. 2012). We said that the answer is yes, 

analogizing to a court’s ability to review any issue fairly 

included within an order certified for interlocutory review 

under 28 U.S.C. § 1292(b). Nevada, 672 F.3d at 672–73. 

We acknowledge that Nevada does not dictate the outcome 

in this case, but note that its analysis would have been wholly 

unnecessary if § 1453(c)(1) could already sustain an appeal 

from a grant or denial of remand of any class action. Thus, 

our precedent counsels in favor of the determination that 

jurisdiction is lacking here.

In reaching our conclusion, we are in good company. 

The Fifth, Sixth, and Eighth Circuits have all concluded that 

the review provisions of 28 U.S.C. § 1453(c) are limited to 

class actions brought under CAFA. As the Eighth Circuit 

put it, “we do not interpret ‘class action’ as it is employed in 

§ 1453(c) to encompass all class actions. Rather, we must 

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16 CHAN HEALTHCARE V. LIBERTY MUTUAL

limit § 1453(c)’s review provisions to those class actions 

brought under CAFA.” Saab, 469 F.3d at 759; see also In 

re UPS Supply Chain Sols., Inc., No. 08-0513, 2008 WL 

4767817, at *2 (6th Cir. Oct. 27, 2008); Patterson, 448 F.3d 

at 742; Wallace v. La. Citizens Prop. Ins. Corp., 444 F.3d 

697, 700 (5th Cir. 2006); 14C Charles Alan Wright et al., 

Federal Practice and Procedure § 3740 (4th ed. 2016) (“The 

courts of appeals thus far have been interpreting § 1453 to 

permit appeals of grants and denials of motions to remand 

only in cases ostensibly removed pursuant to CAFA.”). 

Although the analysis in these cases is a bit cursory in tracing 

the statutory provisions, we agree with their ultimate focus 

on § 1453(c)(1) as a limited means of appealing remand 

orders in diversity class actions brought and removed under 

CAFA.

Because we lack jurisdiction to review the district court’s 

remand order in this class action predicated on federal 

question jurisdiction, we dismiss Liberty’s petition for 

permission to appeal.

II. District Court’s Fee Award

We next turn to the district court’s award of fees to Chan, 

which we have jurisdiction to review under 28 U.S.C. 

§ 1291. A district court’s statutory authority to award fees 

is spelled out in 28 U.S.C. § 1447(c): “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.” As the Supreme Court has explained, “[a]bsent 

unusual circumstances, courts may award attorney’s fees 

under § 1447(c) only where the removing party lacked an 

objectively reasonable basis for seeking removal.” Martin 

v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). Here, 

the district court’s decision to remand rests entirely on the 

conclusion that Liberty’s notice of removal was untimely 

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CHAN HEALTHCARE V. LIBERTY MUTUAL 17

under the 30-day time limitation of the general removal 

statute, 28 U.S.C. § 1446(b). Because that conclusion is 

incorrect, the fee award must be vacated. See Durham v. 

Lockheed Martin Corp., 445 F.3d 1247, 1250 (9th Cir. 2006) 

(explaining that an award of fees is reviewed for abuse of 

discretion and can be overturned if it is based on an 

erroneous determination of law). We offer no judgment with 

respect to whether federal question jurisdiction provides an 

appropriate basis for removal.

It is undisputed that the initial pleading did not provide a 

basis for removal (there being no basis for federal question 

jurisdiction under § 1331 or diversity jurisdiction under 

§ 1332). However, “if the case stated by the initial pleading 

is not removable, a notice of removal may be filed within 

thirty days after receipt by the defendant, through service or 

otherwise, of a copy of an amended pleading, motion, order 

or other paper from which it may first be ascertained that the 

case is one which is or has become removable.” Id.

§ 1446(b)(3).

Chan’s October 26, 2015 reply brief was the first filing 

in the present case that referenced a due process claim. Chan 

relies on three earlier events (all of which occurred more 

than thirty days before Liberty filed its notice of removal) 

which Chan says started the clock by putting Liberty on 

notice that Chan would raise a federal due process claim. 

First, Chan points to a similar motion that was filed on 

September 8, 2015, in the Safeco case, in which Safeco has 

the same counsel as Liberty. Second, Chan points to an 

email exchange on September 17, 2015 between its counsel 

and Liberty’s counsel agreeing to hear the declaratory 

judgment motion in the Liberty case together with the similar 

motion in the Safeco case. Finally, Chan points to Dr. 

Kerbs’s September 25, 2015 request for an extension of time 

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18 CHAN HEALTHCARE V. LIBERTY MUTUAL

in the pending Illinois appellate court case, where he referred 

to the motions made in the Safeco and Liberty cases. The 

district court agreed with Chan and explained that “the 

September 8th, 17th and 25th documents, collectively, 

constitute ‘other’ papers from which it could be ascertained 

that the case was removable on the basis of a federal 

question.” We reject this approach to notice because it runs 

afoul of our precedent and would place a burden on 

defendants to read the tea leaves and anticipate claims where 

none have been asserted.

For starters, the September 8 motion for declaratory 

judgment in one of the Washington actions—mentioned in 

the September 25 extension of time request in the Illinois 

appeal—was filed in a different case against another 

defendant (Safeco), so there was no “receipt by the 

defendant” Liberty. It simply is not enough to say that 

Safeco and Liberty had the same counsel. They are different 

parties in different lawsuits. Nor did the September 25 filing 

make clear that a federal claim would be raised in the Liberty

case, let alone convert the threatened motion from one that 

“would be filed” to one that “had been filed.”

The September 17 email exchange from Chan to 

Liberty’s counsel discussed having a consolidated hearing 

on the nearly identical declaratory judgment motions against 

Safeco and Liberty. This communication about combining 

proceedings did not somehow import into the Liberty case 

the federal claim that was actually raised in the Safeco case.

More fundamentally, all of the documents fail to trigger 

the time limit because they are not “other paper[s] from 

which it may first be ascertained that the case is one which 

is or has become removable.” 28 U.S.C. § 1446(b)(3). The 

plain language of the statute requires a paper that shows a 

ground for removal that was previously unknowable or 

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CHAN HEALTHCARE V. LIBERTY MUTUAL 19

unavailable. See 14C Charles Alan Wright et al., Federal 

Practice and Procedure § 3731 (4th ed. 2016). Documents 

that raise federal questions, filed in cases other than the one 

at hand, did not show that Chan’s case “is or has become 

removable.”

Section 1446(b) is triggered upon “the receipt by the 

defendants of a paper in the action from which removability 

may be ascertained.” Eyak Native Vill. v. Exxon Corp., 

25 F.3d 773, 779 (9th Cir. 1994) (emphasis omitted). For 

obvious reasons, “we don’t charge defendants with notice of 

removability until they’ve received a paper that gives them 

enough information to remove.” Durham, 445 F.3d at 1251. 

Because the focus remains on whether the case “is or has 

become removable,” counsel’s clairvoyant sense of what 

actions a plaintiff might take plays no role in the analysis. 

See Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136, 

1141–42 (9th Cir. 2013). Under this approach, a defendant 

is not put to the impossible choice of subjecting itself to fees 

and sanctions by filing a premature (and baseless) notice of 

removal or losing its right to remove the case by waiting too 

long. See Durham, 445 F.3d at 1251.

In contrast to the documents referenced by the district 

court, Chan’s reply brief—which explicitly referenced due 

process—was filed in this litigation on October 26, 2015. 

We have explicitly held that a reply brief can constitute an 

“other paper” for purposes of § 1446(b). See Eyak Native 

Vill., 25 F.3d at 779. Liberty filed its notice of removal just 

two days after receiving the reply brief, falling well within 

the thirty-day time limit established by § 1446(b)(3).

Because Liberty’s notice of removal was not untimely, 

Liberty’s arguments on that score were objectively 

reasonable. Untimeliness was the sole basis for the district 

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20 CHAN HEALTHCARE V. LIBERTY MUTUAL

court’s fee award—the court did not reach the question 

whether federal question jurisdiction exists or whether 

Liberty’s arguments on that ground were objectively 

reasonable, nor do we take a position on these issues. We 

vacate the district court’s fee award and remand the case for 

proceedings consistent with this opinion.

PETITION FOR PERMISSION TO APPEAL 

DISMISSED; ORDER GRANTING FEES VACATED 

AND REMANDED.

Each party shall bear its own fees and costs on appeal.

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