Argument of Chief Justice Roberts
Mr. Roberts: I have the opinion in 04-1140, Martin versus Franklin Capital Corporation.
This case began when the Martins brought a class-action suit in New Mexico State Court against Franklin Capital.
Franklin removed the case to Federal Court, arguing that there was jurisdiction based on diversity of citizenship.
The case eventually made its way to the 10th Circuit Court of Appeals, which held that removal was improper.
It sent the case back to the District Court with instructions to remand it to State Court.
When it got back to the District Court, the Martins pointed out Section 1447(c) of the Judicial Code.
That provides that when a removed case is remanded to State Court, what the Court of Appeals told the District Court to do, ordering the remand, “may require payment of just costs and any actual expanses, including attorney fees, incurred as a result of the removal”.
The District Court, however, denied the Martins’ request for attorneys’ fees, saying that Franklin’s basis for removal was reasonable, even if wrong.
The Martins appealed, and the 10th Circuit affirmed.
It turns out that courts of appeals around the country have adopted different standards for when district courts should award attorneys’ fees under Section 1447(c), so we granted review to resolve the conflict.
Now, when a statute says that a district court may award attorneys’ fees, but doesn’t provide any guidance as to when it should award such fees, we don’t just throw up our hands and leave it to the hundreds of district courts around the country.
Instead, what we have done in other cases is look to the underlying objectives of the law and sought to find in those objective standards to guide the discretion of the district courts.
Sometimes we’ve said that fees should usually be awarded, as in the case of prevailing plaintiffs in civil-rights cases.
We don’t think that we should adopt such a standard here, because Congress gave defendants a right to remove, and awarding fees in the usual case might discourage all but the most obvious cases of removal.
Sometimes we’ve said that fees should usually not be awarded unless the defendant’s position, the losing party’s position, was frivolous; and we don’t think that standard is appropriate here, either, since it seems that Congress wanted the prospect of awarding fees to serve a more significant role in discouraging removals that might be intended to prolong the litigation or impose costs on plaintiffs.
We think that the correct standard looks to the objective reasonableness of the defendant’s basis for removal.
If the defendant’s position was reasonable, even though ultimately unsuccessful, he should not have to pay the other side’s fees; but if his position was unreasonable, as well as wrong, he should.
Because Franklin’s grounds for removal were reasonable, the lower courts correctly denied the Martins’ request for fees.
For reasons stated more fully in an opinion filed this morning with the Clerk, we therefore affirm the judgment of the Court of Appeals.
The decision is unanimous.
