Court Opinion

ID: 48292
Source: CourtListenerOpinion
Date Created: 2010-04-25 23:38:19+00
Date Added: 2024-06-11T08:17:49.140517
License: Public Domain

United States Court of Appeals
                                                                  Fifth Circuit
                                                                 F I L E D
                    REVISED FEBRUARY 15, 2007
              IN THE UNITED STATES COURT OF APPEALS              January 30, 2007

                       FOR THE FIFTH CIRCUIT                 Charles R. Fulbruge III
                                                                     Clerk

                            No. 06-20893

IN RE HOT-HED INC.,

                                                 Plaintiff - Petitioner

  Petition for Writ of Mandamus from the United States District
             Court for the Southern District of Texas
                        (No. 4:06-CV-01509)

Before SMITH, WIENER, & OWEN Circuit Judges.

PER CURIAM:

     Petitioner   Hot-Hed   Inc.   (“Hot-Hed”)    requests   a    writ    of

mandamus (1) vacating the district court’s order denying Hot-Hed’s

motion for remand to state court for lack of federal jurisdiction,

and (2) ordering the district court to remand to state court.             As

we hold that Hot-Hed’s request for attorneys’ fees in its complaint

in state court does not have the legal effect of presenting a

federal question, we grant the petition in part, vacating the order

of the district court to the extent that it found the existence of

federal question jurisdiction and remanding to the district court

with instructions to address whether diversity jurisdiction exists.

                       I. PRIOR PROCEEDINGS
       In May 2006, Hot-Hed filed a complaint against Safe House

Habitats, Ltd. (“SafeHouse”) in the 215th Judicial District Court

of Harris County, Texas, asserting claims of trademark dilution

under the Texas Business and Commerce Code, trademark infringement

under Texas common law, and unfair competition under Texas common

law.      Hot-Hed   sought      the   following       relief:       (1)    a    temporary

restraining      order    and    injunction;         (2)     recovery      of     actual,

compensatory, and statutory damages, or any one or more such

remedies, as allowed by law; (3) recovery of attorneys’ fees and

costs   as    allowed    by    law;   (4)       pre-judgment    and       post-judgment

interest as allowed by law; and (5) such other relief to which it

might be justly entitled.

       The next day, SafeHouse removed this case to the district

court, contending that removal was proper because (1) Hot-Hed’s

request for attorneys’ fees made its trademark claims present a

federal      question,   but    not   a     state    cause     of    action      because

attorneys’ fees are not available for such claims under Texas law,

and (2) diversity jurisdiction existed.                    Hot-Hed moved to remand

the action to state court, asserting that attorneys’ fees were

authorized under Texas law and that the amount in controversy did

not exceed the minimum $75,000 required for diversity jurisdiction.

SafeHouse opposed the motion.

       In October 2006, the district court denied the motion to

remand.      The court rejected Hot-Hed’s contention that attorneys’

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fees were authorized by Texas law, ruling instead that Hot-Hed’s

request for attorneys’ fees was authorized, if at all, only by

federal law.    Citing Medina v. Ramsey Steel, in which we held that

a plaintiff’s request for liquidated damages and back pay under the

Age Discrimination in Employment Act (“ADEA”) presented a federal

question,1    the   district   court   concluded   that   the   demand   for

attorneys’ fees presented a federal question; it therefore declined

to consider whether diversity jurisdiction existed as well.

     Hot-Hed petitioned this court for a writ of mandamus.

                               II. ANALYSIS

     “The Supreme Court and all courts established by Act of

Congress may issue all writs necessary or appropriate in aid of

their respective jurisdictions and agreeable to the usages and

principles of law.”2     In this case, a writ is an appropriate means

by which we may review the denial of the motion to remand: “When

the writ of mandamus is sought from an appellate court to confine

a trial court to a lawful exercise of its prescribed authority, the

court should issue the writ almost as a matter of course.”3

     The denial of a motion to remand an action removed from the

state courts to the federal courts is a question of law, which we

     1
             238 F.3d 674, 680 (5th Cir. 2001).
     2
             28 U.S.C. § 1651(a).
     3
          In re Reyes, 814 F.2d 168, 170 (5th Cir. 1987) (quoting
Schlazenhauf v. Holder, 379 U.S. 104 (1964)).

                                       3
review de novo.4   Under 28 U.S.C. § 1441(b), a defendant may remove

to the federal courts “[a]ny civil action of which the district

courts have original jurisdiction founded on a claim or right

arising under the Constitution, treaties or laws of the United

States,”5 i.e., those actions presenting a federal question.    The

defendant bears the burden of demonstrating that a federal question

exists.6    A federal question exists “if there appears on the face

of the complaint some substantial, disputed question of federal

law.”7

     As “the effect of removal is to deprive the state court of an

action properly before it, removal raises significant federalism

concerns . . . .”8   The removal statute is therefore to be strictly

construed and any doubt as to the propriety of removal should be

resolved in favor of remand.9      Applying these principles to the

facts of this case, we conclude that it does not present a federal

question.

     4
          Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d
362, 365 (5th Cir. 1995).
     5
            28 U.S.C. § 1441(b).
     6
            Carpenter, 44 F.3d at 365.
     7
          Id. at 366 (citing Franchise Tax Bd. v. Constr.
Laborers Vacation Trust, 463 U.S. 1, 12 (1983)).
     8
            Id. at 365-66 (citations omitted).
     9
          Id. at 366; Acuna v. Brown & Root Inc., 200 F.3d 335,
339 (5th Cir. 2000).

                                   4
       First,   it   is   far   from   clear   that   Hot-Hed’s    request   for

attorneys’ fees “as allowed by law” was not authorized under Texas

law.    In Horseshoe Bay Resort Sales Co. v. Lake Lyndon B. Johnson

Improvement Corp.,10 the Texas Court of Appeals found                   that a

plaintiff could recover attorneys’ fees for common law trademark

infringement and dilution under the Texas Declaratory Judgments

Act,11 which permits recovery of “reasonable and necessary fees as

are equitable and just.”12       The court so held even though the action

was brought under the Texas Anti-Dilution Statute rather than the

Declaratory Judgments Act.

       Here, Hot-Hed did not explicitly seek declaratory relief or

cite the Declaratory Judgments Act in its complaint.              Based on this

lacuna, the district court found that Hot-Hed had not presented a

state law statutory basis for attorneys’ fees.            To require Hot-Hed

expressly to identify a statutory basis for attorneys’ fees in its

complaint, however, would conflict with the Texas courts’ liberal

treatment of pleadings seeking attorneys’ fees.               In Bullock v.

Regular Veterans Association of U.S. Post No. 76,13 for example, the

defendant appealed the trial court’s award of attorneys’ fees,

because the plaintiff had not alleged the statutory authority for

       10
            53 S.W.3d 799 (Tex. App. 2001).
       11
            Id. at 813.
       12
Tex. Civ. Prac. & Rem. Code § 37.009.
       13
            806 S.W.2d 311 (Tex. App. 1991).

                                        5
such an award.       The state appellate court rejected the defendant’s

challenge to the award, holding that the “general allegation

[seeking attorneys’ fees] has put the [defendant] on notice that

[the plaintiff] was seeking attorneys’ fees . . . .”14                       The court

went    on   to    conclude    that    the       court   was    authorized   to    award

attorneys’ fees under Section 37.009 of the Declaratory Judgments

Act even though no allegation referred to that section.15                     There is

therefore     at    least     room    to   doubt     that      Hot-Hed’s   prayer    for

attorneys’ fees was not authorized under state law.

       Even assuming arguendo, however, that Hot-Hed failed properly

to allege a basis for attorneys’ fees under state law, such a

failure would not require that the claim be read as a request for

relief available under federal law.                 The Lanham Act, relied on by

the district court to bootstrap a federal question through a

virtually standard plea for attorneys’ fees, permits recovery of

reasonable        attorneys’     fees      in      “exceptional      cases”       only.16

Obviously, Hot-Hed never stated that it was seeking attorneys’ fees

under the Lanham Act, as it took care to plead only state law

       14
             Id. at 315.
       15
          Of course, Bullock involved an action explicitly
seeking a declaratory judgment. This request, however, does not
appear to have been determinative. Additionally, the complaint
here contained a catch-all request for such other relief as to
which it might justly be entitled. Under this request, the court
could have issued a declaratory judgment.
       16
             15 U.S.C. § 1117(a).

                                             6
causes of action.    Neither did Hot-Hed specifically allege that

this case presented the sort of “exceptional” conduct required to

warrant attorneys’ fees under the Lanham Act.   As multiple courts

have clarified, removal of a trademark infringement action is

improper “when a plaintiff does not clearly state he is seeking

relief under the Lanham Act.”17 It is at least incongruous to hold,

as did the district court, that Hot-Hed’s plea for attorneys’ fees

“as allowed by law” —— an allegation that fails to identify any

statutory basis for attorneys’ fees, either state or federal ——

impliedly rests on the Lanham Act, which was not cited, while

holding that the plea does not impliedly rest on the Declaratory

Judgments Act because Hot-Hed failed to cite it.

       As any doubt about the propriety of removal must be resolved

in favor of remand, we cannot say that Hot-Hed’s request for

“attorneys’ fees as allowed by law” is authorized only by federal

law.    To decide otherwise under these facts would be the ultimate

“gotcha.”

       Second, even if we were to determine that Hot-Hed pleaded

relief that is available only under federal law, we would hold that

such a boiler-plate request for attorneys’ fees “as allowed by law”

       17
          Johnson v. Tuff-N-Rumble Mgmt., Inc., 2002 WL 31819167,
at *5 (E.D. La. Dec. 13, 2002); see also Vitarroz Corp. v.
Borden, Inc., 644 F.2d 960, 964 (2d Cir. 1981); La Chemise
Lacoste v. Alligator Co., 506 F.2d 339, 346 n.9 (3d Cir. 1974)
(collecting cases in which federal courts have been unwilling to
find a federal question by implication).

                                  7
is   insufficient   to    confer   subject-matter   jurisdiction   on   the

federal courts.     We agree with the Ninth Circuit’s holding in

Carter v. Health Net of California, Inc. that “[a] request for

attorney’s fees cannot be a basis for federal jurisdiction.”18            A

contrary holding would allow the proverbial tail to wag the dog.

      Our decision in Medina v. Ramsey Steel Co.,19 relied on by the

district court in its holding, does not require an opposite result.

In Medina, the plaintiff filed his original complaint in state

court in November 1994, alleging discriminatory non-promotion and

retaliatory discharge under the Texas Labor Code.          The defendant

removed the action to federal district court, claiming that it was

preempted by the ADEA.      The district court remanded the case to the

state court in February 1995.        There, the case sat idle until May

1999, when it was finally set for trial.          At that time —— almost

five years after the case had been filed —— the plaintiff amended

his complaint to assert a claim for back pay and liquidated

damages. The defendant again removed the case to federal court and

Medina again moved to remand.             The district court denied the

motion.20

      On appeal, we affirmed the denial of remand, stating:

      18
            374 F.3d 830, 834 (9th Cir. 2004).
      19
            238 F.3d 674 (5th Cir. 2001).
      20
            Id. at 679.

                                      8
     Medina’s amended pleadings seek back pay and liquidated
     damages as provided under the ADEA. Texas law caps lost
     earnings at two years and does not provide for the award
     of liquidated damages. From the face of Medina’s well-
     pleaded complaint, it is clear that Medina is not
     proceeding on the exclusive basis of state law. Instead,
     the damages he seeks are authorized only by federal law.
     Therefore, the district court’s denial of Medina’s motion
     to remand was appropriate.21

     Although Medina supports SafeHouse’s argument that a request

for some particular type of relief may present a federal question,

Medina is distinguishable from the instant case.     In Medina, the

plaintiff sought back pay and liquidated damages under the ADEA ——

substantive relief under a specified federal statute intended to

redress directly the wrong allegedly committed by the defendant.

In contrast, the collateral relief at issue here —— attorneys’ fees

—— is not intended to remedy injury caused by the alleged offense,

but is instead an incidental cost of litigation not identified in

the complaint as relief available under the Lanham Act or any other

named federal statute.   As such, whether Hot-Hed is entitled to

attorneys’ fees does not raise a “substantial, disputed question”

about an essential element of a federal right, as required for an

issue to present a federal question.22

     Finally, SafeHouse asserts in this court an argument not

presented to the district court, viz, that in addition to Hot-Hed’s

     21
          Id. at 680 (internal citations omitted).
     22
          Id. (federal right must be “essential element” of cause
of action); Carpenter, 44 F.3d at 366.

                                 9
request for attorneys’ fees, Hot-Hed’s substantive counts also

present a federal question. SafeHouse argues that “Hot-Hed has set

forth two independent causes of action for trademark infringement–

one necessarily being under the Lanham Act.” In essence, SafeHouse

is contending that Hot-Hed cannot allege separate, independent

claims for trademark infringement and unfair competition under

Texas law.    This argument, appropriately described by Hot-Hed as

convoluted,   is   plainly   without      merit.    Although    trademark

infringement actions fall within the larger umbrella of unfair

competition,23 a defendant “may be liable for unfairly competing

without having technically infringed a trademark” and intentional

trademark infringement “should be alleged as additional counts [of]

unfair competition.”24     SafeHouse has cited no cases standing for

the proposition that a plaintiff may not allege both trademark

infringement and unfair competition under Texas common law; indeed,

numerous   Texas   cases   involve    allegations   of   both   trademark

infringement and unfair competition.25       Even if we were to address

this argument that SafeHouse raises for the first time in this

court, we would reject it as unavailing.

     23
          Derrick Mfg. Corp. v. S.W. Wire Cloth, Inc., 934 F.
Supp. 796, 805 n.13 (S.D. Tex. 1996).
     24
          13 William V. Dorsaneo III, Texas Litigation Guide §§
200.24[2][c], 200.110[2][c] (2000).
     25
          See generally John Paul Mitchell Sys. v. Randalls Food
Mkts., 17 S.W.3d 721 (Tex. App. 2000).

                                     10
                         III. CONCLUSION

     As we hold that this case does not present a federal question,

we grant Hot-Hed’s petition for a writ of mandamus in part and

VACATE the district court’s order denying the motion to remand by

finding federal question jurisdiction.   We   REMAND to the district

court, however, for it to address whether SafeHouse has met its

burden of demonstrating that diversity jurisdiction exists.

WRIT GRANTED.

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