Opinion ID: 815692
Heading Depth: 3
Heading Rank: 1

Heading: Fees award standard in removal actions

Text: Federal law governs when a civil case brought in state court may be removed to federal court and when the district court must remand an action to state court. See 28 U.S.C. §§ 1441, 1447(c). An action may be removed only when the plaintiff could have filed suit in federal court in the first place. 28 U.S.C. § 1441. If the district court determines that the removal was improper, the action must be remanded, and the order “may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” Id. § 1447(c). The language of the remand statute “places an award of costs and attorney fees . . . squarely within the discretion of the district court, but subject to the guidance set forth by the Supreme Court in Martin v. Franklin Capital Corp., 546 U.S. 132, 136–37 (2005).” Warthman, 549 F.3d at 1059. In Martin, the Supreme Court limited a district court’s discretion to award fees, absent unusual circumstances, to those cases where “the removing party lacked an objectively reasonable basis for seeking removal.” 546 U.S. at 141 (emphasis added). “This court has similarly instructed that an award of costs, including attorney fees, is inappropriate where the defendant’s attempt to remove the action was ‘fairly supportable,’ or where there has not been at least some finding of fault with the defendant’s decision to remove.” Warthman, 549 F.3d at 1059–60 (quoting Bartholomew, 409 F.3d at 687). In holding that an “objectively reasonable” notice of removal could defeat a request for attorneys’ fees, the Supreme Court rejected a line of cases in which a plaintiff was “presumptively” 5 entitled to an award of fees whenever removal was improper. Martin, 546 U.S. at 136. According to the Court, “there is no reason to suppose Congress meant to confer a right to remove, while at the same time discouraging its exercise in all but obvious cases.” Id. at 140. The objective reasonableness standard, however, does not require a showing that the defendant’s position was “frivolous” or “without foundation.” Martin, 546 U.S. at 138–39 (rejecting the formulation applied for defendants’ recovery of fees in civil rights cases under 42 U.S.C. § 1988). Among other factors, objective reasonableness may depend on “the clarity of the law at the time the notice of removal was filed.” Lott v. Pfizer, 492 F.3d 789, 792 (7th Cir. 2007); see also Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1066 (9th Cir. 2008). Here, the reasonableness of Lexington’s decision to remove Kent State’s claim based on a fraudulent joinder theory depended on the clarity of two bodies of law—the Sixth Circuit’s standard for fraudulent joinder and Ohio state law on insurance agent liability.