Court Opinion

ID: 4424849
Source: CourtListenerOpinion
Date Created: 2019-08-12 20:00:27.242688+00
Date Added: 2024-06-11T14:23:30.416038
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       AUG 12 2019
                                                                     MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

STAN SCHIFF, M.D., Ph. D., on behalf of         No.   18-35116
himself and a class of similarly situated
providers,                                      D.C. No. 2:17-cv-00914-MJP

                Plaintiff-Appellee,
                                                MEMORANDUM*
 v.

LIBERTY MUTUAL FIRE INSURANCE
COMPANY and LIBERTY MUTUAL
INSURANCE COMPANY,

                Defendants-Appellants.

                   Appeal from the United States District Court
                     for the Western District of Washington
                   Marsha J. Pechman, District Judge, Presiding

                       Argued and Submitted July 12, 2019
                              Seattle, Washington

Before: BOGGS,** BERZON, and WATFORD, Circuit Judges.

      Appellants Liberty Mutual Fire Insurance Company and Liberty Mutual

Insurance Company (Liberty), appeal from the district court’s award of attorney’s

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
            The Honorable Danny J. Boggs, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
fees to Appellee Stan Schiff (Schiff), pursuant to 28 U.S.C. § 1447(c). Section

1447(c) permits a district court that remands a case from federal court for lack of

subject-matter jurisdiction to award attorney’s fees incurred as a result of the

removal. For the reasons set forth below, we reverse the district court’s award.

      The parties are familiar with the facts, and we have set out most of the “long

and tortured procedural history” in Chan Healthcare Grp., PS v. Liberty Mut. Fire

Ins. Co., 844 F.3d 1133, 1135–36 (9th Cir. 2017). There is no need to repeat it here.

It is sufficient to understand that Liberty removed Schiff’s state-court complaint to

federal court, and the district court granted Schiff’s motion to remand because it

concluded that federal jurisdiction did not exist. See Schiff v. Liberty Mut. Fire Ins.

Co., No. C17-914 MJP 2017 WL 4838094, at *3 (W.D. Wash. Oct. 26, 2017). It

awarded Schiff “reasonable costs and fees” associated with the removal. Ibid. In a

separate order, the district court explained that, because “[t]his is the third time that

this case has been removed from state court and remanded back,” it found “‘unusual

circumstances’ in the pattern of unsuccessful removals (and sanctions entered

thereupon) . . . .” The district court did not conclude that Liberty’s arguments in

favor of removal were “objectively unreasonable.”

      We have jurisdiction under 28 U.S.C. § 1291 and review an award of

attorney’s fees under 28 U.S.C. § 1447(c) for an abuse of discretion. We will

overturn the award “if it is based on clearly erroneous findings of fact, or an

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erroneous determination of law.” Jordan v. Nationstar Mortg. LLC, 781 F.3d 1178,

1181 (9th Cir. 2015).

      “[A]bsent unusual circumstances, attorney’s fees should not be awarded

[under 28 U.S.C. § 1447(c)] when the removing party has an objectively reasonable

basis for removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 136 (2005).

The purpose of such an award is “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.” Id. at 140. We adhere to

this purpose when assessing whether “unusual circumstances” justify an award

under 28 U.S.C. § 1447(c). See Gardner v. UICI, 508 F.3d 559, 561–63 (9th Cir.

2007). Circumstances that are external to the case before the court do not justify a

fee award under 28 U.S.C. § 1447(c).

      The district court was incorrect that the case before it had been removed twice

before. Its award was based on removals in two other cases: Chan, and Kerbs v.

Safeco Ins. Co. of Ill., Inc., No. C11-1642 MJP, 2011 WL 6012497 (W.D. Wash.

Dec. 1, 2011). But the record does not support the district court’s finding that there

is a “pattern and practice” of improper removals of identical state-court class actions

sufficient to justify a fee award under the “unusual circumstances” portion of the

Martin test.

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      In Kerbs, the district court awarded fees under 28 U.S.C. § 1447(c) and Fed.

R. Civ. P. 11 because it concluded that Safeco removed the case “on the eve of trial

after a series of adverse rulings” to “caus[e] delay that unnecessarily increased the

costs of litigation.” 2011 WL 6012497, at *5. But Liberty was not a party in Kerbs.

See id. at *1. Other than the facts that Safeco is a subsidiary of Liberty, and they

were both represented by the same attorney in both sets of proceedings, Schiff has

not offered a legal reason why we should impute Safeco’s conduct in Kerbs to

Liberty in this case. Imposing a sanction on Liberty for a potentially improper

removal by Safeco on different grounds in a different case seven years earlier would

not deter improper removals and is inconsistent with the objectives undergirding 28

U.S.C. § 1447(c). See Martin, 546 U.S. at 140–41.

      In Chan, this court reversed the fee award the district court imposed on

Liberty. 844 F.3d at 1142. Although the remand order in that case stands, it does

so only because we lacked jurisdiction over the question of whether Chan’s remand

motion was properly granted. Id. at 1140–41. On remand, the district court held

that Liberty’s arguments in favor of federal-court jurisdiction were not objectively

unreasonable. See Chan Healthcare Grp., PS v. Liberty Mut. Fire Ins. Co., No. C15-

1705 RSM, 2018 WL 2387836, at *2 (W.D. Wash. May 25, 2018). Further

undermining Schiff’s claim of a “pattern” of improper removals, other cases

associated with this litigation have been removed to federal court and have not been

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remanded.

      The district court did not find that Liberty’s arguments in favor of removal

were objectively unreasonable. Accordingly, we do not reach that issue. On remand,

the district court should consider the objective reasonableness of those arguments,

as well as whether the fact that Schiff’s class is not certified affects the analyses.1

      The district court’s award of attorney’s fees under 28 U.S.C. § 1447(c) is

REVERSED and REMANDED for proceedings consistent with this disposition.

      1
         The district court may wish to reconsider Schiff’s arguments that Liberty
had to show to a “legal certainty” that the amount in controversy would be met by
Schiff’s likely legal fees. See 28 U.S.C. § 1446(c); Singer v. State Farm Mut. Auto
Ins. Co., 116 F.3d 373, 376 (9th Cir. 1997); 14AA Wright & Miller, Federal Practice
& Procedure § 3702.2 (4th ed. 2013, Apr. 2019 update); see also Fritsch v. Swift
Transp. Co., 899 F.3d 785, 794–96 (9th Cir. 2018) (concluding that future attorney’s
fees may be included in the amount in controversy and the defendant may attempt
to prove that amount by a preponderance of the evidence).

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