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’
2
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.
11