Court Opinion

ID: 768585
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:08:26+00
Date Added: 2024-06-11T17:55:36.684204
License: Public Domain

211 F.3d 407 (7th Cir. 2000)
Craig Garbie, et al.,    Plaintiffs-Appellees,v.Daimler Chrysler Corp.,    Defendant-Appellant.
No. 99-3539
In the  United States Court of Appeals  For the Seventh Circuit
Argued April 19, 2000
Decided May 1, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 98 C 2280--Robert W. Gettleman, Judge. [Copyrighted Material Omitted]
Before Posner, Chief Judge, and Coffey and  Easterbrook, Circuit Judges.
Easterbrook, Circuit Judge.

1
Six plaintiffs filed  suit in Illinois, seeking to represent a class of  auto buyers and lessees whose vehicles had not  been painted properly. Two of the named  plaintiffs are residents of Illinois, four are  residents of Michigan. They sought damages under  both Illinois and Michigan law. Chrysler  Corporation, the defendant, removed the action to  federal court, asserting that it could have been  filed in federal court originally under the  diversity jurisdiction. 28 U.S.C. sec.1441(a).  Chrysler stated that it was incorporated in  Delaware and had its principal place of business  in Michigan. (Chrysler has since merged with  Daimler-Benz, but the citizenship of  DaimlerChrysler, the resulting entity, does not  matter to cases pending when the merger occurred.  For simplicity we refer throughout to  "Chrysler.") The presence of four plaintiffs from  Michigan, who the notice of removal identified as  "citizens" rather than just "residents" of that  state, was one obvious obstacle to federal  jurisdiction. The small stakes of each claim were  another. It is hard to see how any plaintiff's  damages could be more than a fraction of the  vehicle's price, see Gardynski-Leschuck v. Ford  Motor Co., 142 F.3d 955 (7th Cir. 1998), and  Chrysler did not allege that any of the cars cost  more than $75,000, the minimum amount in  controversy. 28 U.S.C. sec.1332(a). Unless at  least one of the representative plaintiffs could  recover more than $75,000 individually, the case  was not removable. See In re Brand Name  Prescription Drugs Antitrust Litigation, 123 F.3d 599, 607 (7th Cir. 1997). Cf. Stromberg Metal  Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928 (7th Cir. 1996).

2
The district court remanded the proceedings,  ruling that Chrysler had not established either  complete diversity of citizenship or the  jurisdictional stakes. 8 F. Supp. 2d 814 (N.D.  Ill. 1998). Chrysler asked the district court to  treat the Michigan plaintiffs as equivalent to  fraudulently joined defendants and to disregard  them for purposes of determining diversity. The  district court understood this as a request to  depart from Strawbridge v. Curtiss, 7 U.S. (3  Cranch) 267 (1806), and to replace complete  diversity with minimal diversity; the judge  declined, observing that each plaintiff had a  real, personal claim. Moreover, the judge  concluded, even with punitive damages added to  the loss caused by lousy paint, no plaintiff  could hope to recover more than $30,000 without  creating a ratio of punitive to actual damages so  high that it would become untenable. Indeed, for  any class member's share of the damages to exceed  $75,000, compensatory damages would have to be  $30,000 apiece and if (as the judge thought) the  class has about 1,000 members, the aggregate  punitive award would have to exceed $45 million,  a sum the district judge thought impossibly high  for a dispute about defective paint. Cf. BMW of  North America, Inc. v. Gore, 517 U.S. 559 (1996).  Although review of remands based on lack of  federal jurisdiction is prohibited by 28 U.S.C.  sec.1447(d), see Gravitt v. Southwestern Bell  Telephone Co., 430 U.S. 723 (1977); In re Amoco  Petroleum Additives Co., 964 F.2d 706, 708 (7th  Cir. 1992), Chrysler not only appealed but also  sought a writ of mandamus. We dismissed the  appeal and denied the petition; the case returned  to state court.

3
So what is the dispute doing here again? "An  order remanding the case may require payment of  just costs and any actual expenses, including  attorney fees, incurred as a result of the  removal." 28 U.S.C. sec.1447(c). The district  court awarded plaintiffs $7,500 as expenses  occasioned by the wrongful removal. That is an  independently appealable order, unaffected by  sec.1447(d). See LaMotte v. Roundy's, Inc., 27 F.3d 314, 315 (7th Cir. 1994). Chrysler's theme  is that because it removed the suit "in good  faith" it should not have been ordered to pay  plaintiffs' legal expenses, even if removal was  improper. Chrysler also contends that a local  rule of the district court interfered with its  opportunity to demonstrate federal jurisdiction  and it insists that the award is too high because  the district court did not require plaintiffs'  counsel to document his hours and rates. But the  foundation of Chrysler's argument--that  sec.1447(c) authorizes sanctions against  litigants that remove in "bad faith"--is unsound.  We held in Tenner v. Zurek, 168 F.3d 328, 329-30  (7th Cir. 1999), that sec.1447(c) is not a  sanctions rule; it is a fee-shifting statute,  entitling the district court to make whole the  victorious party. An opponent's bad faith may  strengthen the position of a party that obtained  a remand, but it is not essential to an award,  any more than under the multitude of other fee-  shifting statutes.

4
Chrysler contends that we should exercise de  novo review; this argument is incompatible with  many decisions requiring deferential review of  awards under both fee-shifting and sanctions  statutes. See, e.g., Cooter & Gell v. Hartmarx  Corp., 496 U.S. 384 (1990); Pierce v. Underwood,  487 U.S. 552 (1988); Mars Steel Corp. v.  Continental Bank N.A., 880 F.2d 928 (7th Cir.  1989) (en banc); Tenner, 168 F.3d at 329. Nothing  in the district court's approach smacks of an  abuse of discretion; to the contrary, the judge  would have abused his discretion had he denied  the plaintiffs' request for fees, because  Chrysler has behaved absurdly--not only  throughout this case, but also in other similar  suits, all of which Chrysler removed and all of  which have been remanded by federal judges across  the nation.

5
Removal was unjustified under settled law. None  of the plaintiffs is apt to recover anything  close to $75,000, and Chrysler's contention that  punitive damages should be aggregated for  purposes of determining the amount in controversy  clashes with established rules. Four of the named  plaintiffs hale from Michigan, so the litigants  are not completely diverse. Even if the  Michiganders were added to prevent removal, that  is their privilege; plaintiffs as masters of the  complaint may include (or omit) claims or parties  in order to determine the forum. Caterpillar Inc.  v. Williams, 482 U.S. 386, 392 (1987). Neither  sec.1332 nor any case of which we are aware  provides that defendants may discard plaintiffs  in order to make controversies removable. It is  enough that the claims be real, that the parties  not be nominal. See Howell v. Tribune  Entertainment Co., 106 F.3d 215, 218-19 (7th Cir.  1997); Poulos v. Naas Foods, Inc., 959 F.2d 69  (7th Cir. 1992); Matchett v. Wold, 818 F.2d 574  (7th Cir. 1987). The Michigan plaintiffs' claims  are every bit as real as the Illinois plaintiffs'  claims--and no rule of law bars a class action  that includes representatives from other states.  Phillips Petroleum Co. v. Shutts, 472 U.S. 797  (1985).

6
After the district court remanded the case,  Chrysler filed a frivolous appeal and a frivolous  petition for mandamus. On this appeal, which is  at least within our jurisdiction, Chrysler argued  for de novo review in the teeth of contrary  decisions by the Supreme Court and this court  (including one, Tenner, that deals directly with  sec.1447(c)), contended that a district court  local rule concerning the conduct of discovery  violates the tenth amendment (we're not fooling,  Chrysler actually advances this argument), and  proceeded as if "bad faith" were vital. As we  have said, it is not essential--but almost every  step of Chrysler's conduct throughout this  litigation has been in bad faith (objectively  understood to mean frivolous tactics and  arguments, see Lee v. Clinton, No. 99-3250 (7th  Cir. Apr. 10, 2000); In re TCI Ltd., 769 F.2d 441  (7th Cir. 1985)). None of Chrysler's other  substantive arguments requires separate comment.

7
According to Chrysler, an award of $7,500 is  too high, because not adequately documented. We  would have been inclined to hold the award too  low, had the plaintiffs filed a cross appeal, but  they did not. True enough, the plaintiffs did not  file the elaborate documentation required for  substantial awards calculated under the lodestar  method, but $7,500 is not a particularly large  sum in commercial litigation (we're willing to  bet that it is much less than what Chrysler's  lawyers charged their client for services in  connection with removal, which included extensive  briefing, interrogatories, and two requests for  appellate review). District judges have  discretion to tailor the documentation  requirement so that it is appropriate in light of  the stakes; otherwise the aggrieved parties might  spend more detailing their entitlements than they  receive under sec.1447(c). See Henry v.  Webermeier, 738 F.2d 188, 193 (7th Cir. 1984).  Whether or not a local rule of the Northern  District of Illinois calls for more documentation  as a norm, each judge may decide when strict  application of the local rules makes sense.  Chrysler points to cases in which the Northern  District of Illinois has demanded additional  documentation, and others in which we have  sustained district courts' right to enforce their  local rules to the letter, but none in which we  have held that every district court must do this  on every occasion.

8
Because sec.1447(c) is a fee-shifting statute,  the plaintiffs as prevailing parties are  presumptively entitled to recover the attorneys'  fees incurred in defending their award.  Commissioner of INS v. Jean, 496 U.S. 154 (1990).  It works much like the provisions in the Rules of  Civil Procedure requiring the party that  unsuccessfully opposes a discovery request to pay  the other side's legal expenses. Rickels v. South  Bend, 33 F.3d 785 (7th Cir. 1994), holds that  Fed. R. Civ. P. 37(a)(4) is a fee-shifting rule,  and that the victor therefore is entitled to  recover fees on appeal. "The rationale of fee-  shifting rules is that the victor should be made  whole--should be as well off as if the opponent  had respected his legal rights in the first  place. This cannot be accomplished if the victor  must pay for the appeal out of his own pocket." 33 F.3d at 787 (emphasis in original). Section  1447(c) entitles plaintiffs to "just costs and  any actual expenses, including attorney fees,  incurred as a result of the removal"--and  plaintiffs' expenses on appeal, no less than  their expenses in the district court, were  "incurred as a result of the removal."  Unjustified removal complicates and extends  litigation; the American Rule requires parties to  bear their expenses in one set of courts, but  when their adversary wrongfully drags them into  a second judicial system the loser must expect to  cover the incremental costs. Wisconsin v. Glick,  782 F.2d 670 (7th Cir. 1986). Cf. Continental Can  Co. v. Chicago Truck Drivers Pension Fund, 921 F.2d 126 (7th Cir. 1990). This is the second  appeal (plus a petition for mandamus) in  Chrysler's never-say-die campaign, which appears  designed to increase its adversary's expenses  (and thus discourage litigation) without regard  to the merits of plaintiffs' position. An award  of fees for work on appeal will reduce the  effectiveness of that tactic. Any more in the  same vein from Chrysler will lead to punitive  sanctions on top of the fees.

9
The judgment is affirmed, with appellees to  recover costs and other expenses (including  attorneys' fees). Plaintiffs have 14 days to file  a statement of the reasonable costs, expenses,  and fees incurred on this appeal.