The Award of Attorney Fees after Remand: Should the Court Adopt a Bright-Line Rule?

This article previews the issues and arguments in Martin v. Franklin Capital Corp., before the Supreme Court in the 2005-06 Term. In Martin, the Supreme Court is asked to determine the appropriate legal standard to award attorney fees when a federal court remands a case to state court. This case provides the Court with an opportunity to clarify the discretionary availability of an attorney fee award after Congressional amendment of the federal removal statute in 1988. The sole issue in Martin asks: what is the appropriate legal standard for the award of attorney fees, under 28 U.S.C. § 1447(c), when a federal court remands a removed case back to a state court? Is there a bright-line rule requiring the award of attorney fees to the plaintiff in all unsuccessful removals, or should courts apply a multi-factor test to determine whether the award of attorney fees is appropriate in the particular circumstances of the removal? In absence of any statutory mandate, federal courts after 1988 have taken different approaches regarding the determination whether a district court may award attorney fees upon remand. As might be expected, the federal court differ in their approaches to resolving this issue. One standard, followed by the Seventh Circuit, sets forth essentially a plaintiff-favoring interpretation of § 1447(c) that embraces a bright-line rule for the presumptive award of attorney fees in all but exceptional circumstances. Courts following this Park precedent also construe § 1447(c) as a federal fee-shifting statute, consistent with other federal fee-shifting statutes. Other federal courts, however, have eschewed such a bright-line approach and instead have urged the view that the award of attorney fees is not required in all cases, but lies within the sound discretion of the district court. These courts do not view § 1447(c) as a fee-shifting statute akin to other federal fee-shifting statutes, nor do they view the provision for a possible fee award in removal cases to serve the same purposes as other fee-shifting statutes. In exercising the discretion to award attorney fees in removal cases, several other courts have determined that the appropriate standard for an attorney fee award should be a party-neutral, multi-factor test. Although the attorney fee provision in the removal statutes, at 28 U.S.C. § 1447(c), is a somewhat obscure procedural provision, the Supreme Court’s decision in Martin could have sweeping effect on the willingness of defense attorneys to remove cases into federal court. Obviously, a bright-line presumptive rule, favoring an award of attorney fees to plaintiffs in all cases where the defendants have unsuccessfully removed a state case into federal court, will serve as a severe disincentive to defendants pursue removal. Such a bright-line rule, however, would ensure certainty and induce defendants to remove only in cases in which the attorneys were absolutely certain of the federal courts’ jurisdiction over the litigation. It will be interesting to see the extent to which the Court decides this appeal based on a narrow statutory construction of the statute, either aided or unaided by the scant legislative history and indication of legislative intent regarding the award of attorney fees. It also will be interesting to see the extent to which the Court is influenced by policy considerations bearing on removal jurisdiction, access to federal courts, federal docket congestion, and the proper relationship between federal and state courts. All these considerations are in play in this appeal.