United States District Court, N.D. Alabama, Southern Division
FREDDIE DUNNING, JR. and PAULETTE DUNNING, Plaintiffs,
GHS INTERACTIVE SECURITY, LLC and PRESTON BURNETT, Defendants.
MEMORANDUM OPINION AND ORDER
OWEN BOWDRE, CHIEF UNITED STATES DISTRICT JUDGE.
matter is before the court on Plaintiffs' request,
pursuant to 28 U.S.C. § 1447(c), for costs, expenses,
and attorney's fees related to Defendant Preston
Burnett's removal of this action to federal court.
(2:19-CV-376-KOB, Doc. 8 at 18). As explained below, this
court GRANTS Plaintiffs' request as to Defendant GHS
Interactive Security, LLC but DENIES Plaintiffs' request
as to Mr. Burnett.
filed this action in Jefferson County Circuit Court on June
20, 2018. (2:18-CV-1156-KOB, Doc. 1). On July 25, 2018,
Defendant GHS removed the action to this court.
(Id.). As of that date, Plaintiffs had not yet
served Mr. Burnett with process, so Mr. Burnett did not join
GHS's removal petition. On August 24, 2018, Plaintiffs
moved to remand and on November 7, 2018, this court granted
the motion. (2:19-CV-376-KOB, Docs. 7 & 16). As explained
in its Memorandum Opinion, the court determined that GHS had
not met its burden of establishing its own citizenship and
therefore had not met its burden of establishing complete
diversity. (Doc. 16 at 3).
the remand, the plaintiffs served Mr. Burnett with process on
January 31, 2019. Mr. Burnett then filed his notice of
removal on March 1, 2019. (2:19-CV-376-KOB, Doc. 1).
Plaintiffs again moved to remand, arguing that the defendants
had still failed to adequately allege the citizenship of GHS.
(2:19-CV-376-KOB, Doc. 8). Plaintiffs also requested costs,
expenses, and attorney's fees incurred as a result of the
second removal. (Id.). This court granted
Plaintiffs' motion to remand and remanded the case to
Jefferson County Circuit Court. (2:19-CV-376-KOB, Doc. 21
& 22). But the court retained jurisdiction for the
purpose of assessing the appropriateness of awarding costs
and fees and ordered Defendants to show cause why it should
not award them. (2:19-CV-376-KOB, Doc. 21 at 2). Each
Defendant timely responded to the court's Order.
(2:19-CV-376-KOB, Doc. 23 & 24).
Supreme Court has established that “courts may award
attorney's fees under § 1447(c) only where the
removing party lacked an objectively reasonable basis for
seeking removal. Conversely, when an objectively reasonable
basis exists, fees should be denied.” Martin v.
Franklin Capital Corp., 546 U.S. 132, 141 (2005).The
Eleventh Circuit has further explained that “the
reasonableness standard was ultimately the result” of
the attempt to deter removals made for the purpose of
“prolonging litigation and imposing costs on the
opposing party, ” while also not interfering with
Congress's decision “to afford defendants a right
to remove as a general matter, when the statutory criteria
are satisfied.” Bauknight v. Monroe City; 446
F.3d 1327, 1329 (11th Cir. 2006).
Mr. Burnett argues that Plaintiffs have not demonstrated that
he “lacked an objectively reasonable basis for seeking
removal” of this action. According to Mr. Burnett, he
had no reasonable basis to believe that complete diversity
did not exist and that the only information available to him
suggested that complete diversity did exist. When
the court first remanded this case, GHS's failure to
establish diversity appeared to be a result of pleading
deficiencies, as opposed to any substantive barrier to
complete diversity. (See 2:19-CV-1156-KOB, Doc. 16
at 3) (“Defendant has not satisfactorily established
the citizenship of its members.”). The pleadings and
evidence GHS submitted in connection with the prior removal
constituted Mr. Burnett's principal knowledge of
GHS's citizenship, and his independent investigation of
publicly available documents did not reveal any information
that would defeat complete diversity. (Doc. 23 at
¶¶ 10-12). Only after removing the matter
did Defendants jointly investigate GHS's ownership
structure and discover an Alabama citizen member who defeated
complete diversity. (Doc. 23 at ¶¶ 14-15). But
at the time of removal, Mr. Burnett could have had
an objectively reasonable basis that, given a second chance,
GHS could cure the initial removal's defects and properly
establish the citizenship of its members. So the court DENIES
Plaintiffs' request for costs and fees as to Mr. Burnett.
similarly argues that its belief that diversity jurisdiction
existed, while ultimately incorrect, had an objectively
reasonable basis. But GHS's argument fails because,
unlike Mr. Burnett, GHS stood in the best position to
ascertain its own membership. GHS claims that while its
admittedly complex corporate structure ultimately revealed a
lack of complete diversity, Plaintiffs have provided no
evidence that GHS lacked an objectively reasonable basis for
seeking removal. But GHS had imputed, if not actual,
knowledge of its own membership structure and had the
responsibility to determine its own citizenship before
involving this court in a protracted dispute about subject
matter jurisdiction. GHS knew it had a complex ownership
structure and should have resolved the lingering citizenship
questions well before Mr. Burnett removed this action.
Instead, GHS's own response concedes that it provided
(apparently incorrect) ownership information to Mr. Burnett
and suggested he could establish diversity jurisdiction by
clarifying in a second removal petition the entity types of
two of GHS's members. (Doc. 24 at ¶ 12). GHS argues
that only after weeks of investigation did it discover that
its ownership structure included an Alabama resident. But
Plaintiffs moved to remand the first time in August 2018, and
this court granted that motion in November 2018. So even if
GHS diligently attempted but failed to ascertain its proper
citizenship the first time around, it had months to verify
the citizenship of its members before Plaintiffs served Mr.
Burnett. Instead, GHS apparently did nothing until Mr.
Burnett received service and then encouraged him to remove
the action a second time.
cannot now rely on its failure to prepare as establishing an
objectively reasonable basis that complete diversity existed.
So the court concludes that, because its own lack of
diligence resulted in its failure to timely ascertain its
citizenship-and imposed on Plaintiffs the need to seek and
receive remand a second time-GHS lacked an objectively
reasonable basis for the removal. Pursuant to 28 U.S.C.
§ 1447(c), the court GRANTS Plaintiffs' request for
costs, expenses, and attorney's fees as to Defendant GHS.
this court GRANTS the Plaintiffs'
request for attorney's fees and costs pursuant to §
1447(c) as to GHS but DENIES the
Plaintiffs' request as to Mr. Burnett. The court reserves
jurisdiction for the sole purpose of calculating and awarding
those fees and costs. See Cooter & Gell v. Harmarx
Corp., 496 U.S. 384, 395 (1990). (“It is well
established that a federal court may consider collateral
issues after an action is no longer pending. For example,
district courts may award costs after an action is dismissed
for want of jurisdiction.”); Stallworth v. Greater
Cleveland Reg'l Transit Auth., 205 F.3d 352, 257
(6th Cir. 1997) (holding that district court had jurisdiction
to consider plaintiff's application for attorney's
fees after it remanded the case); Montgomery &
Larmoyeux by Montgomery v. Philip Morris, Inc., 19
F.Supp.2d 1334 (S.D. Fla. 1998) (retaining jurisdiction to
award attorney's fees incurred as a result of removal
after case had been remanded).
court DIRECTS Plaintiffs to file with the
court an accounting of the costs and fees that are
recoverable pursuant to 28 U.S.C. § 1447(c) on or before
July 26, 2019. Defendant GHS shall file its response as to
the reasonableness of those fees, if necessary, on or before
August 2, 2019.