Court Opinion

ID: 9554635
Source: CourtListenerOpinion
Date Created: 2023-08-09 17:00:27.180382+00
Date Added: 2024-06-11T15:36:01.894062
License: Public Domain

PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                  _____________

                      No. 22-1402
                     _____________

           MEDICAL ASSOCIATES OF ERIE

                            v.

            MICHAEL B. ZAYCOSKY, D.O.,
                                Appellant
                  _____________

      On Appeal from the United States District Court
          for the Western District of Pennsylvania
               (D.C. Civil No. 1:20-cv-00071)
      District Judge: Honorable Susan Paradise Baxter
                       _____________

                  Argued April 19, 2023

      Before: HARDIMAN, PORTER, and FISHER,
                   Circuit Judges.

                  (Filed: August 9, 2023)

Anthony F. Andrisano, Jr. [Argued]
Buchanan Ingersoll & Rooney
409 N Second Street
Suite 500
Harrisburg, PA 17101

       Counsel for Appellant

Peter J. Adonizio, Jr.
Stevens & Lee
425 Spruce Street
Suite 300
Scranton, PA 18503

Mark D. Bradshaw [Argued]
Stevens & Lee
17 N Second Street
16th Floor
Harrisburg, PA 17101

       Counsel for Appellee

                         _____________

                 OPINION OF THE COURT
                      _____________

PORTER, Circuit Judge.

       Congress created a right to remove certain cases from
state court to federal court. Litigants must satisfy procedural
and substantive statutory requirements to exercise that right.
District courts may remand cases that fail to satisfy those
requirements and award just costs and any actual expenses,
including attorney fees, incurred as a result of the removal.
Here, the District Court remanded to enforce a forum-selection

                               2
clause. Because a forum-selection clause is not a removal
defect and does not deprive the District Court of subject matter
jurisdiction, the District Court cannot remand and award
attorney fees under 28 U.S.C. § 1447(c). We will vacate the
award of attorney fees.

                               I

       Medical Associates of Erie (MAE) and Michael
Zaycosky entered an employment contract. They could not
agree on when Zaycosky promised to start his employment, so
MAE sued in the state court venue prescribed in the contract.
Zaycosky removed, and MAE moved for remand to enforce the
contract’s forum-selection clause and for an award of fees. The
District Court remanded and allowed MAE 30 days to petition
for costs and fees. MAE timely submitted a petition and
affidavit supporting its request for $29,517.25.

       Zaycosky opposed the petition. He argued that the
District Court lacked authority under 28 U.S.C. § 1447(c) to
award costs and attorney fees for a remand based on a forum-
selection clause, and, alternatively, that a fee award was not
warranted because he had an objectively reasonable basis for
removal. The District Court rejected Zaycosky’s arguments
and awarded the amount requested. Zaycosky appealed.

                               II

       The District Court had diversity jurisdiction over this
action. 28 U.S.C. § 1332. The notice of removal alleges that
Zaycosky is a citizen of Georgia and that MAE is incorporated
and has its principal place of business in Pennsylvania. MAE’s
complaint alleges in good faith that it is entitled to at least
$361,800, so the amount in controversy is satisfied. Dart

                               3
Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 84
(2014). This Court has jurisdiction under 28 U.S.C. § 1291 to
review the award.

      We review de novo the proper interpretation of a statute.
Walsh v. Defs., Inc., 894 F.3d 583, 586 (3d Cir. 2018).

                                III

        We decide whether courts may award attorney’s fees
against the “bedrock principle known as the American Rule.”
Peter v. Nantkwest, Inc., 589 U.S. ----, 140 S.Ct. 365, 370
(2019) (quoting Hardt v. Reliance Standard Life Ins., Co., 560
U.S. 242, 253 (2010)). Under that rule, we presume “[e]ach
litigant pays his own attorney’s fees, win or lose, unless a
statute or contract provides otherwise.” Id. (quoting Hardt, 560
U.S. at 253). Courts may award fees when Congress provides
“a sufficiently ‘specific and explicit’ indication of its intent to
overcome the American Rule’s presumption against fee
shifting.” Id. at 372 (quoting Alyeska Pipeline Serv. Co. v.
Wilderness Soc’y, 421 U.S. 240, 260 (1975)).

        The question presented is whether § 1447(c)
specifically and explicitly indicates Congress’s intent to allow
fee shifting when courts enforce a forum-selection clause.
Zaycosky argues that § 1447(c) allows fee shifting only for
remands where the removal failed to meet the statutory
requirements or where the court lacks subject matter
jurisdiction over the removed case. We agree, so we will vacate
the award.

                                4
                                 A

        “Except as otherwise expressly provided by Act of
Congress, any civil action brought in a State court of which the
district courts of the United States have original jurisdiction,
may be removed by the defendant or the defendants.” 28
U.S.C. § 1441(a). Plaintiffs may then challenge the removal by
filing a motion to remand. § 1447(c). Section 1447(c) limits
plaintiffs’ ability to challenge the removal, and it limits district
courts’ authority to remedy abuses of the removal procedure. 1
Plaintiffs may move for remand at any time if the district court
lacks subject matter jurisdiction, but they must challenge
removal defects within thirty days after the filing of the notice
to remove. Id. Courts, meanwhile, may issue “[a]n order
remanding” and “may require payment of just costs and any
actual expenses, including attorney fees, incurred as a result of
the removal.” Id.

      The Supreme Court does not read “an order remanding”
to mean any remand order. It held that the phrase, as used in
§ 1447(d), is limited by the grounds for remand specified in

1
       A motion to remand the case on the basis of any
       defect other than lack of subject matter
       jurisdiction must be made within 30 days after
       the filing of the notice of removal under section
       1446(a). If at any time before final judgment it
       appears that the district court lacks subject matter
       jurisdiction, the case shall be remanded. 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. § 1447(c).

                                 5
§ 1447(c). Section 1447(d) limits appellate jurisdiction over
“[a]n order remanding a case to the State court from which it
was removed,” with exceptions not relevant here. The Supreme
Court “has consistently held that § 1447(d) must be read in pari
materia with § 1447(c), thus limiting the remands barred from
appellate review by § 1447(d) to those that are based on a
ground specified in § 1447(c).” Carlsbad Tech’y Inc. v. HIF
Bio, Inc., 556 U.S. 635, 638 (2009).

        Under a prior version of the statute, the Supreme Court
identified such grounds as a “lack of subject matter jurisdiction
or defects in removal procedure.” Quackenbush v. Allstate Ins.
Co., 517 U.S. 706, 712 (1996). Congress amended § 1447 in
1996, and the Supreme Court has since maintained the
distinction between “properly removed” cases and cases
“failing in subject-matter jurisdiction.” Powerex Corp. v.
Reliant Energy Servs., Inc., 551 U.S. 224, 232 (2007)
(emphasis removed). The limits § 1447(c) imposes on other
subsections equally apply to itself. As a result, we read
§ 1447(c) to authorize courts to shift fees when remanding
cases removed without subject matter jurisdiction and cases
defectively removed.

                               B

        We turn to whether an order remanding to enforce a
forum-selection clause authorizes courts to shift fees. Under
§ 1447(c), the District Court could order the payment of fees
only if the forum-selection clause deprives it of subject matter
jurisdiction or if removal in violation of the clause constitutes

                               6
a defect, as that term is used in § 1447(c). 2 Yet to the contrary,
“[i]t is well established that a remand pursuant to a forum
selection clause does not fall within the reasons for remand
listed in § 1447(c).” Carlyle Inv. Mgmt. LLC v. Moonmouth
Co., 779 F.3d 214, 218 (3d Cir. 2015). That rule applies here
in full force.

        First, the District Court had diversity jurisdiction over
MAE’s claims. “The district courts shall have original
jurisdiction” over cases with complete diversity and the
minimum amount in controversy. 28 U.S.C. § 1332. The notice
of removal and the state court petition allege complete
diversity of citizenship and an amount in controversy
exceeding $75,000. See id. MAE did not contest the District
Court’s subject matter jurisdiction in its motion to remand. Nor
does it argue here that the District Court lacked subject matter
jurisdiction all along. Such argument would not succeed in any

2
  The two out-of-circuit cases MAE cites do not persuade us
otherwise. In Excell, Inc. v. Sterling Boiler & Mechanical, Inc.,
the Tenth Circuit upheld a fee award under § 1447(c) following
remand based on a forum selection clause. 106 F.3d 318, 322
(10th Cir. 1997). But the defendant did not argue that fees
weren’t statutorily authorized under § 1447(c), so the court did
not address the question presented here. In Grand View PV
Solar Two, LLC v. Helix Elec., Inc./Helix Elec. of Nevada,
L.L.C., J.V., the Fifth Circuit affirmed both the remand based
on a forum selection clause and the denial of fees under
§ 1447(c). 847 F.3d 255, 259 (5th Cir. 2017). But the court
affirmed the denial of fees on the merits, agreeing with the
district court that the defendant had an objectively reasonable
basis for seeking removal. Id. So it too did not address whether
fees were authorized by § 1447(c).

                                7
event. Facing an analogous venue challenge, the Supreme
Court held that a “forum-selection clause has no bearing” on
whether a case meets the statutory requirements of venue. Atl.
Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 571
U.S. 49, 56 (2013). So too here. The District Court had subject
matter jurisdiction under § 1332, so it may not remand and
award fees under § 1447(c) for a failure of subject matter
jurisdiction.

       Second, MAE has not identified a defect in the removal.
Removal is a statutory mechanism. MAE did not argue here or
before the District Court that Zaycosky failed to satisfy the
statutory requirements of removal. Rather, it argued that the
forum-selection clause was the single obstacle to removal. But
an enforceable forum-selection clause is not a removal defect.
See Carlyle Inv., 779 F.3d at 218; see also Kamm v. ITEX
Corp., 568 F.3d 752, 755 (9th Cir. 2009) (collecting cases
deciding forum-selection clauses are not defects under
§ 1447(c)). Zaycosky had a statutory right to remove, and he
did so according to the statutory requirements, so his removal
was proper. The District Court could not award fees under
§ 1447(c) based on a defective removal.

                              C

       The inability to award fees under § 1447(c) does not
foreclose the power to remand. Section 1447(c) does not
occupy the field for permissible remands. 14C Charles Alan
Wright & Arthur R. Miller, Federal Practice & Procedure
§ 3739 (Rev’d 4th ed.) (listing bases for remand other than
§ 1447(c)). A forum-selection clause can be “a proper, non-
statutory ground for remand.” Foster v. Chesapeake Ins. Co.,
Ltd., 933 F.2d 1207, 1214 (3d Cir. 1991). Since Foster, the
Supreme Court has declared that “the appropriate way to

                              8
enforce a forum-selection clause pointing to a state . . . forum
is through the doctrine of forum non conveniens.” Atl. Marine,
571 U.S. at 60. The “traditional remedy” for forum non
conveniens is outright dismissal, id., but Atlantic Marine does
not eliminate remand as an available remedy for removed
cases.

        Nor is Section 1447(c) the only deterrent against
abusing removal. Rule 11 requires attorneys and unrepresented
litigants to certify that every pleading, written motion, or other
paper presented to the court is not presented “for any improper
purpose, such as to harass, cause unnecessary delay, or
needlessly increase the cost of litigation.” Fed. R. Civ. P. 11.
There are differences between §1447(c) and Rule 11: movants
must meet different standards and Rule 11 recognizes greater
discretion to fashion appropriate deterrents. Because of its
flexibility, Rule 11 provides a sufficient deterrent against
removal abuses. Cf. Arthur Andersen LLP v. Carlisle, 556 U.S.
624, 629 (2009) (Federal Rule of Appellate Procedure 38
provides an adequate guard against abuses of the right to appeal
under the Federal Arbitration Act).

                           *    *   *

        We presume each litigant bears its own fees and costs,
and we do not see a specific and explicit indication of
Congress’s intent to displace that presumption for remands not
specified in § 1447(c). A remand to enforce a forum selection
clause is not a remand specified in § 1447(c). Accordingly, we
hold that the District Court lacked the authority to award
attorney fees under § 1447(c) when Zaycosky properly
removed a case within the District Court’s subject matter
jurisdiction. We will vacate the fee award.

                                9