IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 99-20519
Summary Calendar
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LUPE VALDES,
Plaintiff-Appellant,
versus
WAL-MART STORES, INC.; ET AL.,
Defendants,
WAL-MART STORES, INC.; TERRY WILLIAM,
Defendants-Appellees.
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
_________________________________________________________________
January 12, 2000
Before JOLLY, JONES, and SMITH, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
In this appeal, we consider the sole question of whether 28
U.S.C. § 1447(c) requires an award of attorney’s fees in each case
remanded to the state court because the removal was improper. We
make clear that the statute is discretionary. Here, the district
court did not abuse its discretion in denying attorney’s fees to
the plaintiff.
I
Lupe Valdes was abducted at knifepoint from a busy Wal-Mart
parking lot at 5:30 p.m. on August 2, 1993. Her assailant forced
her to drive to another location, behind a Petsmart store, where he
raped her. Valdes sued Wal-Mart, the Wal-Mart general manager of
the store from which she was abducted, Terry Williams, and Petsmart
in Texas state court. Wal-Mart removed the case to federal
district court. Wal-Mart argued that Valdes fraudulently joined
the Wal-Mart general manager. The district court denied Valdes’s
motion to remand. The district court later entered summary
judgment against Valdes’s claims. On appeal, in an unpublished
opinion issued September 4, 1998,1 we reversed on the basis of
improper removal, and ordered the case remanded to state court.
The summary judgment against Valdes was thus mooted. Following our
disposition, Valdes made a motion before the district court under
28 U.S.C. § 1447(c) for an award of attorney’s fees, costs, and
expenses.2 On April 26, 1999, without explanation, the district
court denied Valdes’s motion in its entirety. Valdes appeals this
judgment.
II
1
Valdes v. Wal-Mart Stores, Inc., et al., Nos. 97-20179 &
97-20610.
2
28 U.S.C. § 1447(c) provides: “. . . An order remanding the
case may require payment of just costs and any actual expenses,
including attorney’s fees, incurred as a result of the removal.”
(Emphasis added.)
2
The decision of the district court to award or not to award
attorney’s fees is reviewed for an abuse of discretion. See Avitts
v. Amoco Prod. Co., 111 F.3d 30, 32 (5th Cir. 1997). Valdes argues
that once a determination of improper removal has been made, an
award of fees is virtually automatic. Valdes argues that “[o]nce
the court determines that removal was indeed legally improper . . .
the only remaining issue is the amount of costs and fees to award.”
Such is not the law. There is no automatic entitlement to an award
of attorney’s fees. Indeed, the clear language of the statute
makes such an award discretionary. Although from time to time
factual situations may arise in which the district court is
required to award attorney’s fees, the mere determination that
removal was improper is not one of them.
In deciding this matter, we do not consider Wal-Mart’s motive
in removing the case to district court. To be sure, the district
court may award fees even if removal is made in subjective good
faith. In 1988, Congress amended § 1447(c) to delete language that
might have been construed to necessitate a showing of bad faith
removal.3 See Pub. L. 100-702, Tit. X, § 1016(c)(1), 102 Stat.
4670. Other circuits have construed this amendment to require a
3
Prior to the 1988 amendment, subsection (c) read in pertinent
part: “If at any time before final judgment it appears that the
case was removed improvidently and without jurisdiction, the
district court shall remand the case, and may order the payment of
just costs.”
3
focus on the legal propriety of removal without regard to motive.
See Excell, Inc. v. Sterling Boiler & Mechanical, Inc., 106 F.3d
318, 322 (10th Cir. 1997) (“[T]he key factor is propriety of
defendant’s removal. The district court does not have to find that
the state court action has been removed in bad faith as a
prerequisite to awarding attorney fees and costs under § 1447(c)”);
Morgan Guar. Trust Co. v. Republic of Palau, 971 F.2d 917, 923 (2d
Cir. 1992) (“[T]he statute as amended makes no reference at all to
the state of mind or intent of the party removing the action,
instead focusing strictly on the mere absence of subject matter
jurisdiction.”). See also Penrod Drilling Corp. v. Granite State
Ins. Co., 764 F.Supp. 1146, 1147 (S.D. Tex. 1990). In sum, we do
not consider the motive of the removing defendant.
We do, however, consider objectively the merits of the
defendant’s case at the time of removal. See, e.g., Miranti v.
Lee, 3 F.3d 925, 928 (5th Cir. 1993). In Miranti, an insurance
company defendant removed a tort action to federal court based on
diversity. After removal, the plaintiff dismissed his action
against the individual policyholder. This dismissal limited the
plaintiff’s recovery to the policy limit, a sum less than the
necessary amount in controversy for federal jurisdiction under 28
U.S.C. § 1332. Following a trial and adverse verdict, the
plaintiff moved to remand the case. The district court granted
4
this motion on the basis of lack of jurisdiction, and awarded costs
and attorney’s fees to the plaintiff. We reversed the award of
attorney’s fees. In so doing so, we stated: “[W]e are not
persuaded that Congress intended for routine imposition of attorney
fees against the removing party when the party properly removed.”
(Emphasis added.) Applying a sort of deductive rationale, Valdes
would read this language to suggest implicitly that an award of
attorney’s fees must be routine if a party improperly removes an
action to federal court. Valdes insists, in other words, that when
it is subsequently determined that removal was in legal error,
attorney’s fees must be granted to the plaintiff. Without
demeaning the efforts of Valdes to turn an argument, we cannot
accept this sophistic reading of Miranti.
The application of § 1447(c) requires consideration of the
propriety of the removing party’s actions based on an objective
view of the legal and factual elements in each particular case. We
evaluate the objective merits of removal at the time of removal,
irrespective of the fact that it might ultimately be determined
that removal was improper. “[T]he propriety of the defendant’s
removal continues to be central in determining whether to impose
fees.” Id. at 928.4 See also Daleske v. Fairfield Communities,
4
In Miranti, we stated:
“The matter is left to the [district] court’s discretion,
5
Inc., 17 F.3d 321 (10th Cir. 1994) (declining to award fees on
conclusion that defendant had legitimate basis for believing
district court had jurisdiction); Schmitt v. Ins. Co. of N.Am.,
845 F.2d 1546, 1552 (9th Cir. 1988) (holding fees to be
inappropriate where removal was “fairly supportable”); cf. Morgan
Guar. Trust Co., 971 F.2d at 923 (awarding fees only after finding
fault with defendant’s tactics). In other words, the question we
consider in applying § 1447(c) is whether the defendant had
objectively reasonable grounds to believe the removal was legally
proper.
to be exercised based on the nature of the removal and
nature of the remand.” Commentary on 1988 Revision by
David D. Siegel following 28 U.S.C.A. § 1447 (West.Supp.
1993). . . . Courts considering fees awards under
§ 1447(c) invariably take into consideration the
defendant’s decision to remove. See Vatican Shrimp [Co.
v. Solis], 820 F.2d [674] at 821 [(5th Cir. 1987)]
(considering complexity and uncertainty of the law on the
removal issue in evaluating sanctions); see also Moore
[v. Permanente Medical Group], 981 F.2d [443] at 447
[(9th Cir. 1992)] (finding some evaluation of merits of
remand necessary to review attorney’s fee award,
regardless of the standard of review); but see Bucary [v.
Rothrock], 883 F.2d [447] at 449 [(6th Cir. 1989)]
(refusing to review defendant’s arguments because to do
so would amount to review of the remand). . . . Although
the Bucary court seemingly eschewed consideration of the
merits of the defendant’s argument for removal, it
nevertheless considered the “weakness” of “the removal
question” in evaluating the district court’s exercise of
discretion. Bucary, 883 F.2d at 449.
3 F.3d at 928.
6
Wal-Mart argues that it had a reasonable belief that removal
was proper on the basis of fraudulent joinder of the store manager.
We agree. First, Wal-Mart asserts that it has removed at least one
similar case and we upheld its removal on appeal. See Anne Lacamu
v. Wal-Mart Stores, Inc. and James Quillman, No. 95-20313 (affirmed
on appeal in unpublished disposition). Such a result in itself is
sufficient to justify a decision to remove a similar case. Second,
Wal-Mart asserts that Texas case law at the time of removal implied
that Valdes could not sustain her cause of action against the
Wal-Mart store manager. Wal-Mart points to Texas Supreme Court
case law “show[ing] a definite trend against recognizing individual
liability on employees.” (Citing Leith v. Hornsby, 935 S.W.2d 114,
117 (Tex. 1996); Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195,
197 (Tex. 1995); Holloway v. Skinner, 898 S.W.2d 793, 795 (Tex.
1995); Natividad v. Alexsis, Inc., 875 S.W.2d 695 (Tex. 1994);
Maxey v. Citizens Nat’l Bank, 507 S.W.2d 722 (Tex. 1974)). We need
not express an opinion on these cases except to say that Wal-Mart
could conclude from this case law that its position was not an
unreasonable one. 5 Wal-Mart next asserts that there is “no Texas
5
Wal-Mart presented this same line of cases in the previous
appeal in this case. Under a deferential standard of review, we
held that these cases did not clearly bar Valdes’s claim. That
conclusion is not inconsistent with our finding in the instant
appeal despite Valdes’s contention that “had [these cases] truly
evidenced a ‘trend’ as Wal-Mart asserts, presumably the [Fifth
Circuit] would not have acted as it did.”. The basis of our
7
law permitting personal liability on the part of a store manager in
a third[-]party criminal assault case of this type.” Valdes cites
no case law on point to the contrary. In contrast, Valdes’s case
against Wal-Mart’s store manager relied on a single Texas appellate
court case that was in excess of forty years old, which, at the
time of removal, had never been cited by another other court, and
which is factually distinguishable. See S.H. Kress & Co. v. Selph,
250 S.W.2d 883 (Tex. Civ. App.-–Beaumont 1952, writ ref’d n.r.e.).
In our unpublished opinion, we held that removal was improper
because a case decided after Wal-Mart’s removal cited Selph as
still good law. See Wal-Mart Stores, Inc. v. Deggs, 971 S.W.2d 72
previous review should be clearly understood. In our disposition
with respect to improper removal, we stated: “‘[H]aving assumed
all of the facts set forth by [Valdes] to be true and having
resolved all uncertainties as to state substantive law against the
defendant,’ B., Inc. [v. Miller Brewing Co.], 663 F.2d [445] at 550
[(5th Cir. (Unit A) 1981)], we find that there is a reasonable
possibility that Valdes has stated a valid Texas law cause of
action against Williams.” Such deference to the plaintiff’s legal
argument, and construction of case law against the removing party,
logically explains why a case improperly removed may not merit an
award of attorney’s fees under § 1447(c). Indeed, in our
unpublished opinion, we stated: “If read broadly, the principles
of Leitch might well undermine Selph. . . . But Leitch was not a
premises case and we cannot say with full confidence that it will
be applied outside of the employer-employee context. Nothing in it
expressly reflects that it would be so extended. As explained
below, a Texas court of appeals [Deggs] has recently held that
neither Centeq nor Natividad undermines the holding of Selph. We
cannot say that that conclusion is so clearly wrong as to be
unreasonable.” If only with respect to Leitch, this language
suggests, but for the standard of review, the panel would have
concluded that Wal-Mart had a reasonable basis on which to argue
that Valdes had no case against its store manager.
8
(Tex. App.--Beaumont 1996), rev’d on other grounds, 968 S.W.2d 354
(Tex. 1998). Obviously Wal-Mart did not have the benefit of this
case when it removed the action to district court. Even if it had,
Wal-Mart would have had a plausible argument that the reference to
Selph in Deggs is dicta. Finally, Wal-Mart argues that its removal
was reasonable in the light of the fact that,
[j]oining local employees to defeat diversity
jurisdiction is a common and wasteful practice by
attorneys who rarely, if ever, actually pursue claims
against those individuals and know that they tend to be
judgment proof. The lack of desire to obtain judgments
against individual employees is most routinely evidenced
by non-suits of those individuals either before or during
trial.
We would dismiss this argument as speculative and without support
in the record but for a subsequent advisement provided us under 5th
Cir. R. 28.5 stating that “Valdes non-suited the individual, non-
diverse Defendant, Terry Williams, with prejudice, prior to opening
statements.”
9
III
In sum, we find that Wal-Mart had objectively reasonable
grounds upon which to remove this case to district court. Thus,
although we earlier concluded that removal was improper, that
conclusion does not require the district court to award attorney’s
fees on Valdes’s behalf. The district court simply did not abuse
its discretion in declining such an award in this case, and its
judgment is therefore
A F F I R M E D.
10