Valdes v. Wal-Mart Stores, Inc.

                 IN THE UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT

                         _____________________

                              No. 99-20519
                            Summary Calendar
                         _____________________

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       On appeal, in an unpublished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