Court Opinion

ID: 4380336
Source: CourtListenerOpinion
Date Created: 2019-03-23 00:00:20.053974+00
Date Added: 2024-06-11T14:49:51.364115
License: Public Domain

Case: 18-50187      Document: 00514885032         Page: 1    Date Filed: 03/22/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                     United States Court of Appeals
                                                                              Fifth Circuit

                                      No. 18-50187                          FILED
                                                                      March 22, 2019
                                                                       Lyle W. Cayce
TIERRE J. PROBASCO,                                                         Clerk

              Plaintiff - Appellee

v.

WAL-MART STORES TEXAS, L.L.C.; MICHAEL GONZALEZ,

              Defendants - Appellants

                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 3:17-CV-203

Before JOLLY, DENNIS, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:*
       Tierre Probasco is a former employee of Wal-Mart Stores Texas, LLC.
Probasco alleges that he was terminated from his position at Wal-Mart after
complaining about derogatory racial comments made by the store manager,
Michael Gonzalez. In May 2017, Probasco filed suit against Wal-Mart and
Gonzalez in Texas state court. Probasco asserted state law employment
discrimination claims against Wal-Mart and state law claims of defamation,

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 18-50187    Document: 00514885032     Page: 2   Date Filed: 03/22/2019

                                 No. 18-50187
tortious interference, civil conspiracy, and assault against Gonzalez. Probasco
and Gonzalez are both citizens of Texas; Wal-Mart is a citizen of Delaware and
Arkansas.
      Wal-Mart and Gonzalez removed this matter to federal court on the basis
of diversity of citizenship. The notice of removal asserted that complete
diversity exists because Gonzalez was improperly joined to defeat diversity
jurisdiction. Specifically, Wal-Mart and Gonzalez argued that Probasco’s
tortious interference and conspiracy claims are preempted by state
antidiscrimination law, and that Probasco failed to plead sufficient facts to
state a claim against Gonzalez for defamation or assault.
      Gonzalez then moved to dismiss Probasco’s claims against him on the
basis of improper joinder. Without addressing Gonzalez’s improper joinder
arguments, the district court held that it lacked diversity jurisdiction and
remanded the case to state court. The district court also held that Probasco is
entitled to attorneys’ fees under 28 U.S.C. § 1447(c). The court later denied
Gonzalez’s motion for reconsideration, explaining that there was no improper
joinder because Probasco stated a plausible defamation claim. The district
court ordered defense counsel to pay $1,000 in reasonable attorneys’ fees. Wal-
Mart and Gonzalez now appeal the district court’s fee order. We reverse.
                                       I.
      We lack jurisdiction to review the decision to remand this case to state
court, but we may review the district court’s order awarding attorneys’ fees.
See Garcia v. Amfels, Inc., 254 F.3d 585, 588 (5th Cir. 2001). The decision to
award attorneys’ fees is reviewed for abuse of discretion. Hornbuckle v. State
Farm Lloyds, 385 F.3d 538, 541 (5th Cir. 2004). Yet, as the Supreme Court
explained, “that an award of fees under § 1447(c) is left to the district court’s
discretion, with no heavy congressional thumb on either side of the scales, does
not mean that no legal standard governs that discretion.” Martin v. Franklin
                                       2
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                                 No. 18-50187
Capital Corp., 546 U.S. 132, 139 (2005). “Absent unusual circumstances, courts
may award attorney’s fees under § 1447(c) only where the removing party
lacked an objectively reasonable basis for seeking removal.” Id. at 141; see also
Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 293 (5th Cir. 2000). Wal-Mart
and Gonzalez argue that they had an objectively reasonable basis to remove
this matter to federal court based on improper joinder.
      A court will find improper joinder if “there is no reasonable basis for the
district court to predict that the plaintiff might be able to recover against an
in-state defendant.” Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th
Cir. 2004) (en banc). To determine whether a defendant is improperly joined,
the district “court may conduct a Rule 12(b)(6)-type analysis, looking initially
at the allegations of the complaint to determine whether the complaint states
a claim under state law against the in-state defendant.” Id. If “a court
determines that a nondiverse party has been improperly joined to defeat
diversity, that party must be dismissed without prejudice.” Int’l Energy
Ventures Mgmt., LLC v. United Energy Grp., Ltd., 818 F.3d 193, 209 (5th Cir.
2016).
                                       II.
      In their notice of removal, Wal-Mart and Gonzalez addressed each of
Probasco’s claims against Gonzalez and referenced relevant law to argue that
the complaint failed to state a claim against Gonzalez. Gonzalez then moved
to dismiss the claims against him based on a lack of subject-matter jurisdiction,
reiterating the same arguments regarding improper joinder. See id. at 210
(explaining that “the only ground for dismissing any improperly joined,
nondiverse party is lack of subject matter jurisdiction”). As relevant here, the
notice of removal and the motion to dismiss cited circuit and district court
authority in support of the proposition that Probasco failed to plead sufficient
facts to state a defamation claim. See Ameen v. Merck & Co., Inc., 226 F. App’x
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                                     No. 18-50187
363, 370 (5th Cir. 2007); Gipson v. Wal-Mart Stores, Inc., No. 08-2307, 2008
WL 4844206, at *9 (S.D. Tex. Nov. 3, 2008); Garrett v. Celanese Corp., No. 02-
1485, 2003 WL 22234917, at *4–5 (N.D. Tex. Aug. 28, 2003).
      The district court denied Gonzalez’s motion to dismiss and remanded
this case to state court without discussing improper joinder. The district court
also held that Probasco was entitled to attorneys’ fees because, “[a]s Gonzalez
and Plaintiff are both citizens of the same state, it is clear that Gonzalez lacked
an ‘objectively reasonable basis’ for removal.” To the extent the district court
concluded that Wal-Mart and Gonzalez lacked an objectively reasonable basis
for removal without considering their improper joinder arguments, this was an
abuse of discretion. See Martin, 546 U.S. at 139. On Gonzalez’s motion for
reconsideration, the district court held that there was no improper joinder
because Probasco stated a plausible defamation claim against Gonzalez. The
court reaffirmed its conclusion that there was no objectively reasonable basis
for removal, reasoning that the complaint set forth more than enough facts to
survive a Rule 12(b)(6) motion to dismiss the defamation claim. 1
      Wal-Mart and Gonzalez argue that they had a reasonable basis for
removal because they relied on existing case law indicating that Probasco
failed to plead sufficient facts to state a defamation claim. Probasco’s complaint
alleges that Gonzalez made “false, malicious, and defamatory statements to
third persons,” including telling Probasco’s coworkers “that he was dishonest
and failed to perform or inadequately performed his job duties.” The complaint
further alleges that Gonzalez made false statements “with malice, and without
a legitimate business purpose[],” and that the statements “injured [Probasco’s]
reputation for honesty and his reputation in his profession and work.”

      1 The district court did not address whether Probasco’s other claims against Gonzalez
could survive a Rule 12(b)(6) motion to dismiss.
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                                      No. 18-50187
       Federal courts apply federal rather than state pleading standards to
determine whether a complaint states a claim against a nondiverse party. See
Int’l Energy Ventures Mgmt., 818 F.3d at 208. Wal-Mart and Gonzalez contend
that Probasco failed to state a defamation claim because he did not identify the
specific statements allegedly made by Gonzalez. See Ameen, 226 F. App’x at
370. Further, Wal-Mart and Gonzalez assert that federal district courts in
Texas consistently require defamation plaintiffs to identify the time and place
of the alleged defamatory statements and the identity of the third party to
whom the statements were made. See Gipson, 2008 WL 4844206, at *9;
Garrett, 2003 WL 22234917, at *4–5; Jackson v. Dallas Indep. Sch. Dist., No.
398-1079, 1998 WL 386158, at *5 (N.D. Tex. July 2, 1998).
       A fee award is inappropriate if the removing party “could conclude from
[existing] case law that its position was not an unreasonable one.” Valdes, 199
F.3d at 293; see also Omega Hosp., LLC v. La. Health Serv. & Indem. Co., 592
F. App’x 268, 271 (5th Cir. 2014) (reversing an award of attorneys’ fees “in light
of authority from sister circuits arguably supporting” removal). The district
court did not discuss the cases cited by Gonzalez and Wal-Mart in the notice of
removal and the motion to dismiss. Nor did the district court explain why it
would be unreasonable for the defendants to rely on this case law. After
reviewing the complaint and the cases cited, we find that Wal-Mart and
Gonzalez had an objectively reasonable basis for seeking removal and the
district court abused its discretion in awarding attorneys’ fees to Probasco. 2
       The district court’s fee order is REVERSED.

       2Because we consider only the reasonableness of removal, we need not decide whether
Probasco pleaded sufficient facts to state a defamation claim. Moreover, contrary to
Probasco’s arguments, Wal-Mart and Gonzalez are not required to demonstrate that it would
be impossible for him to amend his complaint to plead a plausible defamation claim. See Int’l
Energy Ventures Mgmt., 818 F.3d at 206–08; Cavallini v. State Farm Mut. Auto Ins. Co., 44
F.3d 256, 264–65 (5th Cir. 1995).
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                                 No. 18-50187
JAMES L. DENNIS, Circuit Judge, dissenting:
      I respectfully dissent. We are required to review the district court’s
decision only for an abuse of discretion. See Martin v. Franklin Capital Corp.,
546 U.S. 132, 141 (2005) (“[A]n award of fees under § 1447(c) is left to the
district court's discretion, with no heavy congressional thumb on either side of
the scales.”); Admiral Ins. Co. v. Abshire, 574 F.3d 267, 280–81 (5th Cir. 2009)
(holding, in reviewing for whether removal was objectively reasonable, that
“[a]lthough it may have been ‘objectively unreasonable’ for” the removing party
to conclude it had a basis to remove, “we cannot say that reaching the opposite
conclusion was an abuse of discretion”); see also CamSoft Data Sys., Inc. v. S.
Elecs. Supply, Inc., 638 F. App’x 255, 260 (5th Cir. 2015) (“Abshire establishes
that although we must determine the state of the law at the time of removal to
assess whether an ‘objectively reasonable basis’ existed for removal, objective
reasonableness is not a question of law reviewed de novo.”).
      The district court applied our circuit precedent in Smallwood v. Ill. Cent.
R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) to conduct a Rule 12(b)(6)-type
analysis, looking initially at the allegations in the complaint to determine
whether it states a claim under state law against the in-state defendant. The
district court determined the complaint did state a claim against Gonzalez, the
in-state defendant here. Thus, the district court found that “Plaintiff has
plainly stated a sufficient cause of action to survive a Rule 12(b)(6) analysis”
and “Gonzalez’s counsel fell far short of demonstrating that Plaintiff failed to
state a claim against Gonzalez.” In my view, the district court did not abuse
its discretion; we are not called upon to review de novo whether Wal-Mart and
Gonzalez had an objectively reasonable basis for seeking removal.

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