Chan Healthcare Group, Ps v. Liberty Mutual Fire Insurance

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

CHAN HEALTHCARE GROUP, PS, a Nos. 16-35210
Washington professional services 16-80019
corporation,
Plaintiff-Appellee/Respondent, D.C. No.
2:15-cv-01705-
v. RSM

LIBERTY MUTUAL FIRE INSURANCE
CO.; LIBERTY MUTUAL INSURANCE OPINION
COMPANY, foreign insurance
companies,
Defendants-Appellants/Petitioners.

Appeal from the United States District Court
for the Western District of Washington
Ricardo S. Martinez, Chief Judge, Presiding

Argued and Submitted December 6, 2016
Seattle, Washington

Filed January 3, 2017

Before: M. Margaret McKeown, Richard C. Tallman,
and Morgan B. Christen, Circuit Judges.

Opinion by Judge McKeown
2 CHAN HEALTHCARE V. LIBERTY MUTUAL

SUMMARY *

Removal / Remand

The panel (1) dismissed a petition for permission to
appeal the district court’s remand order in a class action case
founded on federal question jurisdiction and (2) vacated the
district court’s order granting attorneys’ fees.

Joining the Fifth, Sixth, and Eighth Circuits, the panel
held that the interlocutory review provision set forth in the
Class Action Fairness Act, 28 U.S.C. § 1453(c)(1), is limited
to orders granting or denying remand of diversity class
actions brought and removed under CAFA. Therefore,
under 28 U.S.C. § 1447(d), the panel lacked jurisdiction to
review the district court’s order remanding the case to the
state court from which it had been removed.

The panel vacated the district court’s award of attorneys’
fees to the plaintiff under 28 U.S.C. § 1447(c). The district
court awarded attorneys’ fees on the ground that that the
defendant lacked an objective basis for removal because the
notice of removal was untimely under § 1446(b). The panel
held that the notice of removal was timely filed within thirty
days after receipt of plaintiff’s state court reply brief, which
was the first filing that referenced a federal due process
claim. The panel remanded the case to the district court.

*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
 CHAN HEALTHCARE V. LIBERTY MUTUAL 3

COUNSEL

Joshua S. Lipshutz (argued) and Joseph C. Hansen, Gibson
Dunn & Crutcher LLP, San Francisco, California; Russell R.
Yager, Vinson & Elkins LLP, Dallas, Texas; John M. Silk,
Wilson Smith Cochran Dickerson, Seattle, Washington; for
Defendants-Appellants/Petitioners.

David Elliott Breskin (argued) and Cynthia J. Heidelberg,
Breskin Johnson & Townsend PLLC, Seattle, Washington,
for Plaintiff-Appellee/Respondent.

OPINION

McKEOWN, Circuit Judge:

This consolidated appeal presents an issue of first
impression in our circuit, namely the scope of appellate
jurisdiction to review a district court’s remand order in a
class action case founded on federal question jurisdiction.
Remand orders are not appealable as a matter of course.
28 U.S.C. § 1447(d). Nonetheless, as part of the Class
Action Fairness Act of 2005 (“CAFA”), Congress created an
exception under 28 U.S.C. § 1453(c)(1) that permits courts
of appeals to accept appeals from remand orders in cases that
are removed “under this section.” Joining our sister circuits,
we conclude that this interlocutory review provision is
limited to orders granting or denying remand of diversity
class actions brought and removed under CAFA.

Background

This case has a long and tortured procedural history that
spans a series of interrelated lawsuits. One player is central
4 CHAN HEALTHCARE V. LIBERTY MUTUAL

to the action: attorney David Breskin, who represented
plaintiff Dr. David Kerbs in previous rounds of litigation and
who represents Chan Healthcare Group, PS (“Chan”) in two
ongoing disputes, including this one.

Breskin got things going in 2010. On May 13 of that
year, he filed a putative class action on behalf of Dr. Kerbs
in Washington state court against defendants Safeco
Insurance Company of Illinois, Inc. and Safeco Insurance
Company of America (collectively “Safeco”). Dr. Kerbs
alleged that Safeco violated Washington law by using a
computerized bill-review system that automatically reduced
the amounts paid to medical providers pursuant to Personal
Injury Protection coverage in automobile insurance
contracts. The superior court certified a class of
“Washington health care providers who, from May 13, 2006,
through March 31, 2011, submitted [claims] to Safeco for
payment” under their patients’ Personal Injury Protection
policies and received “less than the amount billed based
solely on a [computerized] reduction.”

In May 2012, Dr. Kerbs and Safeco reached a class-wide
settlement agreement in which Safeco agreed to pay the class
members for Safeco’s past conduct. As to future claims,
Safeco agreed, among other things, to stop using the
computerized bill-review system and start using the “FAIR
Health database” to determine the proper amount of
reimbursement. In approving the settlement, the superior
court explained that the use of the FAIR Health database
“does not, in and of itself, breach any duty or obligation
under any applicable law or contract requiring Safeco to pay
 CHAN HEALTHCARE V. LIBERTY MUTUAL 5

or reimburse ‘usual and customary’ or ‘reasonable’ charges
for Covered Treatments.” 1

In 2014, the drama continued in another state: Lebanon
Chiropractic Clinic, P.C. (“Lebanon”) commenced a
separate class action lawsuit—based on the same allegedly
improper reductions of reimbursements to medical
providers—in Illinois state court against Safeco and its
parent, Liberty Mutual Fire Insurance Company and Liberty
Mutual Insurance Company (collectively, “Liberty”).
Lebanon Chiropractic Clinic, P.C. v. Liberty Mut. Ins. Co.,
No. 5-15-0111, 2016 WL 546909, at *1 (Ill. App. Ct. Feb. 9,
2016). This new case—filed without Breskin’s
involvement—was not limited to one state, but instead
challenged Safeco’s and Liberty’s review and payment
practices in multiple states, including both Illinois and
Washington. See id. at *2.

In October 2014, Lebanon, Safeco, and Liberty reached
a settlement agreement eerily similar to the one reached in
the earlier Washington state case. Like the settlement in the
Kerbs case, “with regard to future claims, Liberty agreed to
implement certain measures, such as the continued use of the
FAIR Health database.” Id. at *3. After preliminary
approval of the settlement agreement, Breskin reentered the
scene.

1
Breskin brought two separate class action lawsuits in Washington
state court against other insurers, both of which resulted in settlements
that allowed use of the FAIR Health database. The courts there similarly
determined that the “use of FAIR Health data in the payment of [Personal
Injury Protection] claims does not, in and of itself, breach any applicable
duty or law.”
6 CHAN HEALTHCARE V. LIBERTY MUTUAL

Breskin, on behalf of Dr. Kerbs, objected to the
settlement, contending that the proposed settlement
conflicted with the Kerbs settlement in the earlier
Washington case (as well as that the proposed settlement
was generally unfair to Washington providers and the
Illinois court did not have jurisdiction). Simultaneously,
Breskin unsuccessfully petitioned the Washington state
court to reopen the Kerbs case and enjoin the proposed
settlement in Illinois. Id. at *4. Although the Illinois court
concluded that there was no conflict between the proposed
settlement and the earlier Kerbs settlement, it ordered that
the proposed settlement “include[] specific language that the
Lebanon settlement would not conflict in any way with the
Kerbs settlement.” Id. at *5. Dr. Kerbs did not prevail in his
appeal regarding the Illinois settlement. See id. at *15.

This history provides the necessary backdrop to
understanding the appeal before us. While the Lebanon
appeal in Illinois was still pending, Breskin filed two new
offensive class action lawsuits in Washington state court.
The first, filed in August 2015, was filed on behalf of Chan
against Safeco (the Safeco case). The second, filed in early
September 2015, was filed on behalf of Chan against Liberty
and is the case on appeal to us (the Liberty case). The
complaints make similar allegations that Safeco’s and
Liberty’s use of the FAIR Health database to set
reimbursement amounts violates various Washington
statutes. All parties agree that, on the face of the complaint
in the Liberty case, there was no basis for federal
jurisdiction.

Liberty asserts that things changed when Chan filed its
reply brief on its motion for declaratory relief. In the initial
motion, filed on October 2, 2015, Chan sought a declaratory
judgment that the Illinois settlement was unenforceable in
 CHAN HEALTHCARE V. LIBERTY MUTUAL 7

Washington. After Liberty responded that it “might elect
simply to forego raising Lebanon as a defense in this case,”
Chan argued in its October 26, 2015 reply that “the Lebanon
agreement could not be applied to bar Chan’s Washington
[state law] claim against [Liberty] consistent with Chan’s
due process rights.”

On the basis of Chan’s reply brief, Liberty removed the
case to federal court two days later, on October 28, 2015.
Liberty explained that Chan’s reply brief revealed that Chan
was raising a standalone federal due process claim, thus
creating federal question jurisdiction under 28 U.S.C.
§ 1331. Because Liberty contended that Chan first raised the
federal question in the litigation in its reply brief, Liberty
argued that its removal fell “within thirty days after receipt
by the defendant, through service or otherwise, of a copy of
an amended pleading, motion, order or other paper from
which it may first be ascertained that the case is one which
is or has become removable.” 28 U.S.C. § 1446(b)(3).

Based on various papers received and filings made in this
case and other cases more than thirty days before Liberty
removed, Chan challenged the timeliness of Liberty’s
removal. Chan also argued that there was no federal
question jurisdiction because its federal due process claim
was not raised as an affirmative claim, but instead in
response to Liberty’s assertion of the Illinois settlement as a
defense.

The district court granted Chan’s motion to remand the
case to state court based solely on the ground that removal
was untimely. The court explicitly declined to reach whether
federal question jurisdiction was present. The court also
awarded fees to Chan, in the amount of $18,330.00, after
finding that Liberty “had no objectively reasonable basis for
8 CHAN HEALTHCARE V. LIBERTY MUTUAL

removal, particularly given defense counsel’s involvement
with the related cases and their acknowledgments about the
Chan motions made to the court in the Illinois appeal.”

Liberty petitions for review of the district court’s remand
order and appeals the fee award.

Analysis

I. Jurisdiction to Review the Merits of the Remand
Order

The default rule on remand orders is that “[a]n order
remanding a case to the State court from which it was
removed is not reviewable on appeal or otherwise.”
28 U.S.C. § 1447(d); see Kircher v. Putnam Funds Trust,
547 U.S. 633, 641 (2006) (explaining that § 1447(d) usually
“stands in the way” of reviewing a district court’s remand
order); Watkins v. Vital Pharm., Inc., 720 F.3d 1179, 1181
(9th Cir. 2013) (per curiam) (“District court remand orders
generally are not reviewable on appeal.”).

At issue here is a congressional carve-out of appellate
jurisdiction that was adopted for class action cases as part of
CAFA. Section 1453(c)(1), entitled Review of Remand
Orders, provides that, when a case is removed “under this
section,” “a court of appeals may accept an appeal from an
order of a district court granting or denying a motion to
remand a class action.” 28 U.S.C. § 1453(c)(1). The
question we consider is whether we have jurisdiction to
review the district court’s order remanding this class action
when the asserted basis for jurisdiction is a federal question
rather than traditional diversity or CAFA minimal diversity
jurisdiction. Chan argues that § 1453(c)(1) is limited to
diversity actions under CAFA. Liberty takes a more
expansive view, claiming that there is no CAFA-based
 CHAN HEALTHCARE V. LIBERTY MUTUAL 9

limitation and that all class actions are covered by this grant
of jurisdiction.

To understand the genesis of the appeal provision and its
place in the statutory structure, it is important to review the
multiple provisions adopted as part of CAFA, particularly
28 U.S.C. § 1453. In broad terms, CAFA significantly
expanded federal diversity jurisdiction over class and mass
actions. Congress added a number of statutory provisions to
the United States Code to ensure “[f]ederal court
consideration of interstate cases of national importance.”
Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 1350
(2013) (emphasis added) (citation omitted). One of the most
notable additions is § 1332(d)(2), which was added as a new
subsection in the diversity statute and allows a class action
to be brought in federal court if “the matter in controversy
exceeds the sum or value of $5,000,000” and “any member
of a class of plaintiffs is a citizen of a State different from
any defendant.” This provision is noteworthy because it
expands the jurisdiction of federal courts: unlike traditional
diversity cases under § 1332(a), which require complete
diversity (i.e., each plaintiff is a citizen of a different state
than each defendant), Strawbridge v. Curtiss, 7 U.S. 267,
267 (1806), § 1332(d)(2) supports jurisdiction when there is
minimal diversity (i.e., one plaintiff is a citizen of a different
state than one defendant).

To pave the way for class action cases to get into federal
court, Congress also enacted a new removal provision,
§ 1453, as part of CAFA. 2 Section 1453(b) governs the
general procedure for removing a case and eliminates some
of the obstacles that apply in ordinary diversity cases.

2
In addition to §§ 1332(d) and 1453, CAFA also includes §§ 1711–
1715, which relate to approval of settlements in class actions.
10 CHAN HEALTHCARE V. LIBERTY MUTUAL

Section 1453(c) is designed to provide a limited means,
subject to strict timing controls on both the parties and the
court, for appellate review of remand orders in cases
removed under § 1453(b).

In examining the scope of appellate jurisdiction under
§ 1453, we look to the text, structure, and purpose behind the
statute. See Abramski v. United States, 134 S. Ct. 2259, 2267
(2014) (explaining that statutory interpretation involves
interpreting the words in light of the statutory context, which
includes the “structure, history, and purpose” of the statute).
Having done so, those considerations convince us that
§ 1453 is limited to CAFA-based diversity cases and does
not expand interlocutory appellate review to remand orders
where removal is predicated on federal question jurisdiction.

We start with § 1453(a), the definitional section. Here,
“the terms ‘class’, ‘class action’, ‘class certification order’,
and ‘class member’ shall have the meanings given such
terms under section 1332(d)(1).” Significantly, subsection
(a) cross-references a second CAFA provision, as § 1332(d)
was added in its entirety pursuant to CAFA. Section
1332(d)(1)’s definitions also apply to the new minimal
diversity provision, § 1332(d)(2).

Subsection (b) of § 1453 then addresses removal of class
actions:

A class action may be removed to a district
court of the United States in accordance with
section 1446 (except that the 1-year
limitation under section 1446(c)(1) shall not
apply), without regard to whether any
defendant is a citizen of the State in which
this action is brought, except that such action
 CHAN HEALTHCARE V. LIBERTY MUTUAL 11

may be removed by any defendant without
the consent of all defendants. 3

Finally, in subsection (c), the statute spells out
particularized requirements for appellate review:

Section 1447 shall apply to any removal of a
case under this section, except that
notwithstanding section 1447(d), a court of
appeals may accept an appeal from an order
of a district court granting or denying a
motion to remand a class action to the State
court from which it was removed if
application is made to the court of appeals not
more than 10 days after entry of the order.

Notably, this subsection circumscribes its applicability to a
case removed “under this section,” presumably meaning
§ 1453. By invoking the phrase “notwithstanding section
1447(d),” the statute brushes aside § 1447(d)’s traditional
bar on reviewing remand orders for a narrow subset of
orders, namely, “order[s] of a district court granting or
denying a motion to remand a class action to the State court
from which it was removed if application is made to the court
of appeals not more than 10 days after entry of the order.”

In our view, § 1453(c)(1)’s use of “removal of a case
under this section” limits the universe of appealable orders
to those in class action cases brought under CAFA. That
conclusion requires a few interpretative steps. The word
“section” is best understood to reference an entire statutory

3
Subsection (d) is the exception provision. It lists three categories
of claims, not applicable here, that fall outside the scope of § 1453 when
no other claims are raised in a case.
12 CHAN HEALTHCARE V. LIBERTY MUTUAL

section and, because the statute uses the phrase “under this
section,” it refers to the statutory section in which the
language appears, namely, § 1453. This approach fits with
the way the word “section” is used in common parlance and
the normal meaning that legal dictionaries ascribe to it. See,
e.g., Key Tronic Corp. v. United States, 511 U.S. 809, 814
(1994); Metro One Telecomms., Inc. v. Comm’r, 704 F.3d
1057, 1059–60 (9th Cir. 2012); Section, Black’s Law
Dictionary (10th ed. 2014) (defining “section” as “[a]
distinct part or division of a writing, esp. a legal instrument”
and explaining that it is abbreviated with a section symbol,
§); Section, Ballentine’s Law Dictionary 1153 (3d ed. 1969)
(defining “section” as “[a] subdivision or paragraph of a
statute or code”). The text of § 1453(c)(1) itself uses
“section” in the same way, stating, just before the “under this
section” language, that “[s]ection 1447 shall apply to any
removal of a case.” The other circuits that have addressed
the meaning of § 1453(c)(1)’s phrase “under this section” all
agree that it points to removal under § 1453. See Saab v.
Home Depot U.S.A., Inc., 469 F.3d 758, 759 (8th Cir. 2006);
Patterson v. Dean Morris, L.L.P., 448 F.3d 736, 742 (5th
Cir. 2006).

Construing “under this section” as a reference to § 1453
in its entirety, we also look to the other parts of the section.
Section 1453(a), particularly when read in conjunction with
the section as a whole, supports the reading that § 1453’s
reach is limited to CAFA-related diversity cases. That
subsection defines relevant terms, like “class” and “class
action,” by reference to the diversity statute, § 1332—more
specifically, to a provision added by CAFA, § 1332(d)(1),
which also provides the relevant definitions for CAFA’s
minimal diversity provision, § 1332(d)(2). See 28 U.S.C.
§ 1453(a). On its own, the provision defines class action
 CHAN HEALTHCARE V. LIBERTY MUTUAL 13

broadly, but it does not stand alone. Rather it fits within and
must be read in conjunction with the entire “section.”

An even stronger textual basis for reading § 1453 as
excluding federal question cases comes in § 1453(b), which
states that “[a] class action may be removed to a district court
of the United States in accordance with section 1446 (except
that the 1-year limitation under section 1446(c)(1) shall not
apply), without regard to whether any defendant is a citizen
of the State in which the action is brought, except that such
action may be removed by any defendant without the
consent of all defendants.” While the text could be
interpreted to cover both diversity and federal question cases
(as both types of cases “may be removed . . . in accordance
with section 1446”), it is most naturally read to cover only
the former because the exceptions are directed to diversity
cases.

In particular, § 1453(b) includes two references that are
linked exclusively to diversity and fails to include similar
provisions specific to federal question jurisdiction. First,
subsection (b) excepts “the 1-year limitation under section
1446(c)(1).” Section 1446(c)(1) is titled “Requirements;
Removal Based on Diversity of Citizenship,” and its one-
year limitation for removal applies to diversity cases alone.
28 U.S.C. § 1446(c)(1). Second, subsection (b) permits
removal “without regard to whether any defendant is a
citizen of the State in which the action is brought.” The
statutory basis for that prohibition is contained in
§ 1441(b)(2), a provision aptly titled “Removal Based on
Diversity of Citizenship” that also applies only to diversity
cases. It would be strange for subsection (b) to embrace a
class of cases—namely, federal question cases—to which
two of its exceptions never apply.
14 CHAN HEALTHCARE V. LIBERTY MUTUAL

That the final proviso in § 1453(b)—“such action may
be removed by any defendant without the consent of all
defendants”—is not specifically pegged to diversity, see
28 U.S.C. § 1446(b)(2)(A), does not change our conclusion.
Although this final exception is not unique to CAFA cases,
it is consistent with them and fills out the litany of applicable
exceptions. The general focus on diversity cases and failure
to carve out exceptions applicable only to federal question
cases underscores that § 1453(b) is directed to the former
type of case.

Finally, § 1453(d) further solidifies the targeted nature
of § 1453. That subsection says that § 1453 “shall not apply
to any class action that solely involves” three enumerated
classes of state- and federal-law claims involving securities
and corporate governance. Subsection (d) exactly mirrors a
CAFA provision, § 1332(d)(9), which places those same
three categories of claims outside of CAFA’s minimal
diversity provision. The overlapping scope of those two
provisions buttresses the conclusion that the statutes both
operate in the CAFA diversity sphere.

CAFA’s legislative history supports our conclusion that
the limited grant of appellate review is tied to CAFA’s
minimal diversity provisions. See Exxon Mobil Corp. v.
Allapattah Servs., Inc., 545 U.S. 546, 568 (2005) (explaining
that the potential for unreliability of legislative history
means that it cannot override statutory text, but noting that it
may still inform the analysis). The Senate Report indicates
that “[t]he purpose of [§ 1453(c)] is to develop a body of
appellate law interpreting the legislation without unduly
delaying the litigation of class actions.” S. Rep. No. 109-14,
at 49 (2005); see also id. (encouraging appellate courts to
“create a . . . body of clear and consistent guidance for
district courts that will be interpreting this legislation” by
 CHAN HEALTHCARE V. LIBERTY MUTUAL 15

“review[ing] cases that raise jurisdictional issues likely to
arise in future cases”). References to “this legislation” are
clearly directed to the CAFA legislation, whose additions
relate almost entirely to the minimal diversity class actions.
Our reading accords with what the Supreme Court has
characterized as CAFA’s “primary objective”: “[f]ederal
court consideration of interstate cases of national
importance.” Knowles, 133 S. Ct. at 1350 (emphasis added)
(citation omitted). Indeed, the particular concerns
motivating CAFA were not attendant to class actions
pleading a federal question because those cases could
already be removed to federal court under § 1441(a).

Although our court has not previously addressed the
precise issue here, we have confronted the question whether
there is appellate jurisdiction over a non-CAFA issue that
was decided in an order independently appealable under
§ 1453(c)(1). See Nevada v. Bank of Am. Corp., 672 F.3d
661 (9th Cir. 2012). We said that the answer is yes,
analogizing to a court’s ability to review any issue fairly
included within an order certified for interlocutory review
under 28 U.S.C. § 1292(b). Nevada, 672 F.3d at 672–73.
We acknowledge that Nevada does not dictate the outcome
in this case, but note that its analysis would have been wholly
unnecessary if § 1453(c)(1) could already sustain an appeal
from a grant or denial of remand of any class action. Thus,
our precedent counsels in favor of the determination that
jurisdiction is lacking here.

In reaching our conclusion, we are in good company.
The Fifth, Sixth, and Eighth Circuits have all concluded that
the review provisions of 28 U.S.C. § 1453(c) are limited to
class actions brought under CAFA. As the Eighth Circuit
put it, “we do not interpret ‘class action’ as it is employed in
§ 1453(c) to encompass all class actions. Rather, we must
16 CHAN HEALTHCARE V. LIBERTY MUTUAL

limit § 1453(c)’s review provisions to those class actions
brought under CAFA.” Saab, 469 F.3d at 759; see also In
re UPS Supply Chain Sols., Inc., No. 08-0513, 2008 WL
4767817, at *2 (6th Cir. Oct. 27, 2008); Patterson, 448 F.3d
at 742; Wallace v. La. Citizens Prop. Ins. Corp., 444 F.3d
697, 700 (5th Cir. 2006); 14C Charles Alan Wright et al.,
Federal Practice and Procedure § 3740 (4th ed. 2016) (“The
courts of appeals thus far have been interpreting § 1453 to
permit appeals of grants and denials of motions to remand
only in cases ostensibly removed pursuant to CAFA.”).
Although the analysis in these cases is a bit cursory in tracing
the statutory provisions, we agree with their ultimate focus
on § 1453(c)(1) as a limited means of appealing remand
orders in diversity class actions brought and removed under
CAFA.

Because we lack jurisdiction to review the district court’s
remand order in this class action predicated on federal
question jurisdiction, we dismiss Liberty’s petition for
permission to appeal.

II. District Court’s Fee Award

We next turn to the district court’s award of fees to Chan,
which we have jurisdiction to review under 28 U.S.C.
§ 1291. A district court’s statutory authority to award fees
is spelled out in 28 U.S.C. § 1447(c): “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.” As the Supreme Court has explained, “[a]bsent
unusual circumstances, courts may award attorney’s fees
under § 1447(c) only where the removing party lacked an
objectively reasonable basis for seeking removal.” Martin
v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). Here,
the district court’s decision to remand rests entirely on the
conclusion that Liberty’s notice of removal was untimely
 CHAN HEALTHCARE V. LIBERTY MUTUAL 17

under the 30-day time limitation of the general removal
statute, 28 U.S.C. § 1446(b). Because that conclusion is
incorrect, the fee award must be vacated. See Durham v.
Lockheed Martin Corp., 445 F.3d 1247, 1250 (9th Cir. 2006)
(explaining that an award of fees is reviewed for abuse of
discretion and can be overturned if it is based on an
erroneous determination of law). We offer no judgment with
respect to whether federal question jurisdiction provides an
appropriate basis for removal.

It is undisputed that the initial pleading did not provide a
basis for removal (there being no basis for federal question
jurisdiction under § 1331 or diversity jurisdiction under
§ 1332). However, “if the case stated by the initial pleading
is not removable, a notice of removal may be filed within
thirty days after receipt by the defendant, through service or
otherwise, of a copy of an amended pleading, motion, order
or other paper from which it may first be ascertained that the
case is one which is or has become removable.” Id.
§ 1446(b)(3).

Chan’s October 26, 2015 reply brief was the first filing
in the present case that referenced a due process claim. Chan
relies on three earlier events (all of which occurred more
than thirty days before Liberty filed its notice of removal)
which Chan says started the clock by putting Liberty on
notice that Chan would raise a federal due process claim.
First, Chan points to a similar motion that was filed on
September 8, 2015, in the Safeco case, in which Safeco has
the same counsel as Liberty. Second, Chan points to an
email exchange on September 17, 2015 between its counsel
and Liberty’s counsel agreeing to hear the declaratory
judgment motion in the Liberty case together with the similar
motion in the Safeco case. Finally, Chan points to Dr.
Kerbs’s September 25, 2015 request for an extension of time
18 CHAN HEALTHCARE V. LIBERTY MUTUAL

in the pending Illinois appellate court case, where he referred
to the motions made in the Safeco and Liberty cases. The
district court agreed with Chan and explained that “the
September 8th, 17th and 25th documents, collectively,
constitute ‘other’ papers from which it could be ascertained
that the case was removable on the basis of a federal
question.” We reject this approach to notice because it runs
afoul of our precedent and would place a burden on
defendants to read the tea leaves and anticipate claims where
none have been asserted.

For starters, the September 8 motion for declaratory
judgment in one of the Washington actions—mentioned in
the September 25 extension of time request in the Illinois
appeal—was filed in a different case against another
defendant (Safeco), so there was no “receipt by the
defendant” Liberty. It simply is not enough to say that
Safeco and Liberty had the same counsel. They are different
parties in different lawsuits. Nor did the September 25 filing
make clear that a federal claim would be raised in the Liberty
case, let alone convert the threatened motion from one that
“would be filed” to one that “had been filed.”

The September 17 email exchange from Chan to
Liberty’s counsel discussed having a consolidated hearing
on the nearly identical declaratory judgment motions against
Safeco and Liberty. This communication about combining
proceedings did not somehow import into the Liberty case
the federal claim that was actually raised in the Safeco case.

More fundamentally, all of the documents fail to trigger
the time limit because they are not “other paper[s] from
which it may first be ascertained that the case is one which
is or has become removable.” 28 U.S.C. § 1446(b)(3). The
plain language of the statute requires a paper that shows a
ground for removal that was previously unknowable or
 CHAN HEALTHCARE V. LIBERTY MUTUAL 19

unavailable. See 14C Charles Alan Wright et al., Federal
Practice and Procedure § 3731 (4th ed. 2016). Documents
that raise federal questions, filed in cases other than the one
at hand, did not show that Chan’s case “is or has become
removable.”

Section 1446(b) is triggered upon “the receipt by the
defendants of a paper in the action from which removability
may be ascertained.” Eyak Native Vill. v. Exxon Corp.,
25 F.3d 773, 779 (9th Cir. 1994) (emphasis omitted). For
obvious reasons, “we don’t charge defendants with notice of
removability until they’ve received a paper that gives them
enough information to remove.” Durham, 445 F.3d at 1251.
Because the focus remains on whether the case “is or has
become removable,” counsel’s clairvoyant sense of what
actions a plaintiff might take plays no role in the analysis.
See Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136,
1141–42 (9th Cir. 2013). Under this approach, a defendant
is not put to the impossible choice of subjecting itself to fees
and sanctions by filing a premature (and baseless) notice of
removal or losing its right to remove the case by waiting too
long. See Durham, 445 F.3d at 1251.

In contrast to the documents referenced by the district
court, Chan’s reply brief—which explicitly referenced due
process—was filed in this litigation on October 26, 2015.
We have explicitly held that a reply brief can constitute an
“other paper” for purposes of § 1446(b). See Eyak Native
Vill., 25 F.3d at 779. Liberty filed its notice of removal just
two days after receiving the reply brief, falling well within
the thirty-day time limit established by § 1446(b)(3).

Because Liberty’s notice of removal was not untimely,
Liberty’s arguments on that score were objectively
reasonable. Untimeliness was the sole basis for the district
20 CHAN HEALTHCARE V. LIBERTY MUTUAL

court’s fee award—the court did not reach the question
whether federal question jurisdiction exists or whether
Liberty’s arguments on that ground were objectively
reasonable, nor do we take a position on these issues. We
vacate the district court’s fee award and remand the case for
proceedings consistent with this opinion.

PETITION FOR PERMISSION TO APPEAL
DISMISSED; ORDER GRANTING FEES VACATED
AND REMANDED.

Each party shall bear its own fees and costs on appeal.