|MARTIN V. FRANKLIN CAPITAL CORP. (04-1140) 546 U.S. 132 (2005)
393 F.3d 1143, affirmed.
[ Roberts ]
GERALD T. MARTIN, et ux., PETITIONERS
FRANKLIN CAPITAL CORPORATION et al.
ON WRIT OF CERTIORARI TO THE UNITED STATES
APPEALS FOR THE TENTH CIRCUIT
[December 7, 2005]
Chief Justice Roberts delivered the opinion of the Court.
A civil case commenced in state court may, as a general matter, be removed by the defendant to federal district court, if the case could have been brought there originally. 28 U.S.C. § 1441 (2000 ed. and Supp. II). If it appears that the federal court lacks jurisdiction, however, the case shall be remanded. §1447(c). An order remanding a removed case to state court may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal. Ibid. Although §1447(c) expressly permits an award of attorneys fees, it provides little guidance on when such fees are warranted. We granted certiorari to determine the proper standard for awarding attorneys fees when remanding a case to state court.
Petitioners Gerald and Juana Martin filed a class-action lawsuit in New Mexico state court against respondents Franklin Capital Corporation and Century-National Insurance Company (collectively, Franklin). Franklin removed the case to Federal District Court on the basis of diversity of citizenship. See §§1332, 1441 (2000 ed. and Supp. II). In its removal notice, Franklin acknowledged that the amount in controversy was not clear from the face of the complaintno reason it should be, since the complaint had been filed in state courtbut argued that this requirement for federal diversity jurisdiction was nonetheless satisfied. In so arguing, Franklin relied in part on precedent suggesting that punitive damages and attorneys fees could be aggregated in a class action to meet the amount-in-controversy requirement. See App. 35.
Fifteen months later, the Martins moved to remand to state court on the ground that their claims failed to satisfy the amount-in-controversy requirement. The District Court denied the motion and eventually dismissed the case with prejudice. On appeal, the Court of Appeals for the Tenth Circuit agreed with the Martins that the suit failed to satisfy the amount-in-controversy requirement. The Tenth Circuit rejected Franklins contention that punitive damages and attorneys fees could be aggregated in calculating the amount in controversy, in part on the basis of decisions issued after the District Courts remand decision. The Court of Appeals reversed and remanded to the District Court with instructions to remand the case to state court. 251 F.3d 1284, 1294 (2001).
Back before the District Court, the Martins moved for attorneys fees under §1447(c). The District Court reviewed Franklins basis for removal and concluded that, although the Court of Appeals had determined that removal was improper, Franklin had legitimate grounds for believing this case fell within th[e] Courts jurisdiction. App. to Pet. for Cert. 20a. Because Franklin had objectively reasonable grounds to believe the removal was legally proper, the District Court denied the Martins request for fees. Ibid.
The Martins appealed again, arguing
that §1447(c) requires granting attorneys fees on
remand as a matter of course. The Tenth Circuit disagreed,
noting that awarding fees is left to the wide
discretion of the district court, subject to review only
for abuse of discretion. 393 F.3d 1143, 1146 (2004). Under
Tenth Circuit precedent, the
We granted certiorari, 544 U.S. ___ (2005), to resolve a conflict among the Circuits concerning when attorneys fees should be awarded under §1447(c). Compare, e.g., Hornbuckle v. State Farm Lloyds, 385 F.3d 538, 541 (CA5 2004) (Fees should only be awarded if the removing defendant lacked objectively reasonable grounds to believe the removal was legally proper (internal quotation marks omitted)), with Sirotzky v. New York Stock Exchange, 347 F.3d 985, 987 (CA7 2003) ([P]rovided removal was improper, the plaintiff is presumptively entitled to an award of fees), and Hofler v. Aetna U.S. Healthcare of Cal., Inc., 296 F.3d 764, 770 (CA9 2002) (affirming fee award even when the defendants position may be fairly supportable (internal quotation marks omitted)). We hold that, absent unusual circumstances, attorneys fees should not be awarded when the removing party has an objectively reasonable basis for removal. We therefore affirm the judgment of the Tenth Circuit.
The Martins argue that attorneys fees should be awarded automatically on remand, or that there should at least be a strong presumption in favor of awarding fees. Section 1447(c), however, provides that a remand order may require payment of attorneys feesnot shall or should. As Chief Justice Rehnquist explained for the Court in Fogerty v. Fantasy, Inc., 510 U.S. 517, 533 (1994), [t]he word may clearly connotes discretion. The automatic awarding of attorneys fees to the prevailing party would pretermit the exercise of that discretion. Congress used the word shall often enough in §1447(c)as when it specified that removed cases apparently outside federal jurisdiction shall be remandedto dissuade us from the conclusion that it meant shall when it used may in authorizing an award of fees.
The Martins are on somewhat stronger
ground in pressing for a presumption in favor of awarding fees.
As they explain, we interpreted a statute authorizing a
discretionary award of fees to prevailing plaintiffs in civil
rights cases to nonetheless give rise to such a presumption.
Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402
(1968) (per curiam). But this case is not at all like
Piggie Park. In Piggie Park, we concluded that a
prevailing plaintiff in a civil rights suit serves as a
In this case, plaintiffs do not serve as private attorneys general when they secure a remand to state court, nor is it reasonable to view the defendants as violators of federal law. To the contrary, the removal statute grants defendants a right to a federal forum. See 28 U.S.C. § 1441 (2000 ed. and Supp. II). A remand is necessary if a defendant improperly asserts this right, but incorrectly invoking a federal right is not comparable to violating substantive federal law. The reasons for adopting a strong presumption in favor of awarding fees that were present in Piggie Park are accordingly absent here. In the absence of such reasons, we are left with no sound basis for a similar presumption. Instead, had Congress intended to award fees as a matter of course to a party that successfully obtains a remand, we think that [s]uch a bold departure from traditional practice would have surely drawn more explicit statutory language and legislative comment. Fogerty, supra, at 534.
For its part, Franklin begins by arguing that §1447(c) provides little guidance on when fees should be shifted because it is not a fee-shifting statute at all. According to Franklin, the provision simply grants courts jurisdiction to award costs and attorneys fees when otherwise warranted, for example when Federal Rule of Civil Procedure 11 supports awarding fees. Although Franklin is correct that the predecessor to §1447(c) was enacted, in part, because courts would otherwise lack jurisdiction to award costs on remand, see Mansfield, C. & L. M. R. Co. v. Swan, 111 U.S. 379, 386387 (1884), there is no reason to assume Congress went no further than conferring jurisdiction when it acted. Congress could have determined that the most efficient way to cure this jurisdictional defect was to create a substantive basis for ordering costs. The text supports this view. If the statute were strictly jurisdictional, there would be no need to limit awards to just costs; any award authorized by other provisions of law would presumably be just. We therefore give the statute its natural reading: Section 1447(c) authorizes courts to award costs and fees, but only when such an award is just. The question remains how to define that standard.
The Solicitor General would define the standard narrowly, arguing that fees should be awarded only on a showing that the unsuccessful partys position was frivolous, unreasonable, or without foundationthe standard we have adopted for awarding fees against unsuccessful plaintiffs in civil rights cases, see Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978), and unsuccessful intervenors in such cases, see Zipes, supra, at 762. Brief for United States as Amicus Curiae 1416. But just as there is no basis for supposing Congress meant to tilt the exercise of discretion in favor of fee awards under §1447(c), as there was in Piggie Park, so too there is no basis here for a strong bias against fee awards, as there was in Christiansburg Garment and Zipes. The statutory language and context strike us as more evenly balanced between a pro-award and anti-award position than was the case in either Piggie Park or Christiansburg Garment and Zipes; we see nothing to persuade us that fees under §1447(c) should either usually be granted or usually be denied.
The fact that an award of fees under §1447(c) is left to the district courts discretion, with no heavy congressional thumb on either side of the scales, does not mean that no legal standard governs that discretion. We have it on good authority that a motion to [a courts] discretion is a motion, not to its inclination, but to its judgment; and its judgment is to be guided by sound legal principles. United States v. Burr, 25 F. Cas. 30, 35 (No. 14,692d) (CC Va. 1807) (Marshall, C. J.). Discretion is not whim, and limiting discretion according to legal standards helps promote the basic principle of justice that like cases should be decided alike. See Friendly, Indiscretion About Discretion, 31 Emory L. J. 747, 758 (1982). For these reasons, we have often limited courts discretion to award fees despite the absence of express legislative restrictions. That is, of course, what we did in Piggie Park, supra, at 402 (A prevailing plaintiff should ordinarily recover an attorneys fee unless special circumstances would render such an award unjust), Christiansburg Garment, supra, at 422 ([A] plaintiff should not be assessed his opponents attorneys fees unless a court finds that his claim was frivolous, unreasonable, or groundless), and Zipes, 491 U.S., at 761 (Attorneys fees should be awarded against intervenors only where the intervenors action was frivolous, unreasonable, or without foundation).
In Zipes, we reaffirmed the
principle on which these decisions are based: Although
the text of the provision does not specify any limits upon the
district courts discretion to allow or disallow fees, in
a system of laws discretion is rarely without limits.
Id., at 758. Zipes also explains how to discern
the limits on a district courts discretion. When
applying fee-shifting statutes, we have found limits in
the large objectives of the relevant Act, which
embrace certain equitable considerations.
By enacting the removal statute, Congress granted a right to a federal forum to a limited class of state-court defendants. If fee shifting were automatic, defendants might choose to exercise this right only in cases where the right to remove was obvious. See Christiansburg Garment, supra, at 422 (awarding fees simply because the party did not prevail could discourage all but the most airtight claims, for seldom can a [party] be sure of ultimate success). But there is no reason to suppose Congress meant to confer a right to remove, while at the same time discouraging its exercise in all but obvious cases.
Congress, however, would not have enacted §1447(c) if its only concern were avoiding deterrence of proper removals. Instead, Congress thought fee shifting appropriate in some cases. The process of removing a case to federal court and then having it remanded back to state court delays resolution of the case, imposes additional costs on both parties, and wastes judicial resources. Assessing costs and fees on remand reduces the attractiveness of removal as a method for delaying litigation and imposing costs on the plaintiff. The appropriate test for awarding fees under §1447(c) should recognize the desire to deter removals sought for the purpose of prolonging litigation and imposing costs on the opposing party, while not undermining Congress basic decision to afford defendants a right to remove as a general matter, when the statutory criteria are satisfied.
In light of these
* * *
The District Court denied the Martins request for attorneys fees because Franklin had an objectively reasonable basis for removing this case to federal court. The Court of Appeals considered it a close question, 393 F.3d, at 1148, but agreed that the grounds for removal were reasonable. Because the Martins do not dispute the reasonableness of Franklins removal arguments, we need not review the lower courts decision on this point. The judgment of the Court of Appeals is therefore affirmed.
*. * In Fogerty, we did not identify a standard under which fees should be awarded. But that decision did not depart from Zipes because we granted certiorari to decide only whether the same standard applied to prevailing plaintiffs and prevailing defendants. See Fogerty v. Fantasy, Inc., 510 U.S. 517, 521 (1994). Having decided this question and rejected the claim that fee shifting should be automatic, we remanded to the Court of Appeals to consider the appropriate test in the first instance. Id., at 534535.