Court Opinion

ID: 3037183
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:55:50.533649+00
Date Added: 2024-06-11T11:48:45.241861
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

JAGDISHBHAI and HANSABEN PATEL,                Nos. 04-16208
              Plaintiffs-Appellants,                  04-16604
                v.
                                                  D.C. No.
                                               CV-04-05385-REC-
DEL TACO, INC.,
              Defendant-Appellee.                    SMS

                                                  OPINION

         Appeal from the United States District Court
            for the Eastern District of California
          Robert E. Coyle, District Judge, Presiding

                   Argued and Submitted
        February 14, 2006—San Francisco, California

                        Filed May 2, 2006

   Before: Arthur L. Alarcón and M. Margaret McKeown,
          Circuit Judges, and H. Russel Holland,*
                    Senior District Judge.

                    Opinion by Judge Holland

   *The Honorable H. Russel Holland, Senior District Judge for the Dis-
trict of Alaska, sitting by designation.

                                4999
5002               PATEL v. DEL TACO, INC.

                        COUNSEL

Frank A. Weiser, Law Offices of Frank A. Weiser, Los Ange-
les, California, for the plaintiffs-appellants.

Adam Pines, Michael M. Berger, and Benjamin G. Shatz,
Manatt, Phelps, & Phillips, LLP, Los Angeles, California, for
the defendant-appellee.
                   PATEL v. DEL TACO, INC.                5003
                         OPINION

HOLLAND, District Judge:

   In this consolidated appeal, Jagdishbhai and Hansaben
Patel (“the Patels”) seek review of two orders issued by the
district court: 1) an order granting Del Taco’s motion to
remand and awarding attorney’s fees and 2) an order staying
the Patels’ federal claims and compelling arbitration of those
claims. We dismiss the appeal from the remand order based
on 28 U.S.C. § 1441 for lack of jurisdiction. We affirm as to
the remand order based on 28 U.S.C. § 1443 and as to the
award of attorney’s fees. We also dismiss the appeal from the
order staying the federal claims and compelling arbitration of
those claims for lack of jurisdiction.

                        Background

   The Patels entered into a franchise agreement with Del
Taco, Inc. under which the Patels were to operate a Del Taco
restaurant in Hanford, California. The franchise agreement
contained an arbitration clause that provided that “any contro-
versy or claim arising out of or relating to this Agreement,
whether such [a] controversy is one of law, fact or both, shall
be submitted to arbitration” before the American Arbitration
Association (“AAA”) in Orange County, California. In 2003,
Del Taco accused the Patels of breaching the franchise agree-
ment and initiated arbitration proceedings. Both Del Taco and
the AAA served the Patels with a demand for arbitration.
Although the Patels’ attorney was aware of the hearing, nei-
ther the Patels nor their attorney appeared at the arbitration
hearing. The arbitrators issued an unanimous award in favor
of Del Taco, terminating the franchise agreement and award-
ing Del Taco over $20,000 in damages.

   On February 10, 2004, Del Taco filed a petition to confirm
the arbitration award in Orange County Superior Court.
Shortly thereafter, Del Taco filed a motion to confirm the
5004                         PATEL v. DEL TACO, INC.
award, and a hearing on the motion was set for March 9,
2004.

   On March 5, 2004, the Patels filed a complaint in federal
district court against Del Taco, alleging fraud and civil rights
violations under 42 U.S.C. §§ 1981, 1983, and 1985(3). In the
fourth claim for relief in their federal complaint, the Patels
sought to remove to federal court Del Taco’s pending state
court petition to confirm the arbitration award. In other words,
they did not file a separate removal petition but rather joined
their removal petition to their federal civil rights complaint.
The Patels alleged that the state court arbitration petition was
removable under 28 U.S.C. § 1443(1).1

   Del Taco moved to remand the arbitration petition to state
court. The district court granted the motion to remand and
awarded Del Taco $9,767 in attorney’s fees. Del Taco then
moved to stay the Patels’ federal action and to compel them
to arbitrate their federal claims. The district court granted Del
Taco’s motion to stay the Patels’ federal claims and to compel
arbitration of those claims. This consolidated appeal followed.

                                      Analysis

I.       Motion to Remand

  [1] The district court determined that removal was not
proper under either 28 U.S.C. § 1441 or § 1443(1). We lack
     1
      28 U.S.C. § 1443(1) provides:
         Any of the following civil actions or criminal prosecutions, com-
         menced in a State court may be removed by the defendant to the
         district court of the United States for the district and division
         embracing the place wherein it is pending:
            (1) Against any person who is denied or cannot enforce in
         the courts of such State a right under any law providing for the
         equal civil rights of citizens of the United States, or of all persons
         within the jurisdiction thereof.
                    PATEL v. DEL TACO, INC.                 5005
jurisdiction to review the remand order based on § 1441. See
28 U.S.C. § 1447(d) (“order remanding a case to the State
court from which it was removed is not reviewable on
appeal”). Accordingly, the Patels’ appeal from the remand
order based on § 1441 is dismissed.

  [2] We do, however, have jurisdiction to review the remand
order based on 28 U.S.C. § 1443(1). See 28 U.S.C. § 1447(d)
(“order remanding a case to the State court from which it was
removed pursuant to section 1443 of this title shall be review-
able by appeal”). “A district court’s decision to remand a
removed case is . . . reviewed de novo.” State of Neb. ex rel.
Dep’t of Social Services v. Bentson, 146 F.3d 676, 678 (9th
Cir. 1998).

   [3] A petition for removal under § 1443(1) must satisfy the
two-part test articulated by the Supreme Court in Georgia v.
Rachel, 384 U.S. 780, 788-92, 794-804 (1966) and City of
Greenwood, Miss. v. Peacock, 384 U.S. 808, 824-28 (1966).
“First, the petitioners must assert, as a defense to the prosecu-
tion, rights that are given to them by explicit statutory enact-
ment protecting equal racial civil rights.” California v.
Sandoval, 434 F.2d 635, 636 (9th Cir. 1970). “Second, peti-
tioners must assert that the state courts will not enforce that
right, and that allegation must be supported by reference to a
state statute or a constitutional provision that purports to com-
mand the state courts to ignore the federal rights.” Id.

   [4] Assuming without deciding that the Patels’ petition for
removal met the first prong of the § 1443(1) removal test, it
did not meet the second prong. The Patels point to no formal
expression of state law that prohibits them from enforcing
their civil rights in state court nor do they point to anything
that suggests that the state court would not enforce their civil
rights in the state court proceedings. The arbitration petition
was not removable pursuant to 28 U.S.C. § 1443(1), and the
district court did not err in remanding it to state court.
5006                PATEL v. DEL TACO, INC.
II.    Attorney’s Fees

   [5] The Patels also challenge the attorney’s fees awarded to
Del Taco pursuant to 28 U.S.C. § 1447(c), which provides
that “[a]n order remanding the case may require payment of
just costs and any actual expenses, including attorney fees,
incurred as a result of the removal.” “[W]e . . . have jurisdic-
tion to review the district court’s award of attorneys’ fees pur-
suant to 28 U.S.C. § 1447(c).” Dahl v. Rosenfeld, 316 F.3d
1074, 1077 (9th Cir. 2003). “We review an award of attor-
neys’ fees for an abuse of discretion and will overturn the dis-
trict court’s decision only if it is based on clearly erroneous
findings of fact or erroneous determinations of law.” Id.
“[A]bsent unusual circumstances, attorney’s fees should not
be awarded when the removing party has an objectively rea-
sonable basis for removal.” Martin v. Franklin Capital Corp.,
126 S. Ct. 704, 708 (2005).

    [6] The Patels had no objectively reasonable basis for
removal. As set forth above, there was no ground for removal
based on 28 U.S.C. § 1443(1). There was also no ground for
removal based on 28 U.S.C. § 1441(a) because Del Taco’s
petition to confirm the arbitration award did not contain any
claim over which the district court would have had original
jurisdiction; nor was there any ground for removal based on
28 U.S.C. § 1441(c). The Patels contended that, under 28
U.S.C. § 1441(c) and 28 U.S.C. § 1367, Del Taco’s state court
arbitration petition was removable because, when joined with
the Patels’ civil rights claims, the federal district court had
supplemental jurisdiction over the petition. This contention is
frivolous. Section 1367, which provides for supplemental
jurisdiction, is not a basis for removal. Section 1441(c) per-
mits the removal of an entire case where the state court plain-
tiff’s pleadings contain a federal claim that is separate and
independent from otherwise non-removable state law claims.
Boggs v. Lewis, 863 F.2d 662, 663-64 (9th Cir. 1988). Del
Taco’s state court petition to confirm the arbitration award
contained only one state law cause of action; it did not contain
                    PATEL v. DEL TACO, INC.                  5007
any federal claim that could provide the basis for a § 1441(c)
removal. Joinder of a federal claim and a claim for removal
of a state court action in a federal complaint cannot effect a
§ 1441(c) removal. There being no objectively reasonable
basis for removal, the district court did not abuse its discretion
in awarding attorney’s fees under § 1447(c) to Del Taco.

III.   Sole and Exclusive Jurisdiction over Removal Action

   [7] The Patels also object to the state court asserting juris-
diction over the removal action once it was remanded by the
district court. The Patels argue that once they filed a notice of
appeal of the remand order, this court had sole and exclusive
jurisdiction over the removal action and the state court was
divested of jurisdiction over the removal action. The Patels
cite to no authority that supports their proposition that this
court had sole and exclusive jurisdiction once the notice of
appeal was filed nor do they cite to any authority that suggests
that the state court could not assert jurisdiction over the
removal action once the district court issued its remand order.
In fact, what little authority exists on this issue suggests the
contrary. See, e.g., Fosdick v. Dunwoody, 420 F.2d 1140,
1141 n.1 (1st Cir. 1970) (“since an appeal does lie in section
1443 cases, and since, absent a supersedeas, an appeal does
not vacate orders of the district court, further state proceed-
ings are not avoidable”).

IV.    Stay Order

   [8] Lastly, the Patels appeal from the district court’s order
staying their federal claims and compelling arbitration of
those claims. This appeal is dismissed for lack of jurisdiction
because the stay order is not a final order for purposes of 28
U.S.C. § 1291. “A decision is ‘final’ within the meaning of
§ 1291 if it ‘(1) is a full adjudication of the issues, and (2)
clearly evidences the judge’s intention that it be the court’s
final act in the matter.’ ” Disabled Rights Action Comm. v.
Las Vegas Events, Inc., 375 F.3d 861, 870 (9th Cir. 2004)
5008                PATEL v. DEL TACO, INC.
(quoting Casey v. Albertson’s Inc., 362 F.3d 1254, 1258 (9th
Cir. 2004)). The stay order does not meet this definition. The
stay order is also not appealable as an interlocutory order. See
Abernathy v. S. Cal. Edison, 885 F.2d 525 (9th Cir. 1989).

                         Conclusion

  The appeal from the remand order based on § 1441 is DIS-
MISSED. The remand order based on § 1443 is AFFIRMED.
The award of attorney’s fees to Del Taco is AFFIRMED. The
appeal from the order staying the Patels’ federal claims and
compelling arbitration of those claims is DISMISSED.