Martin v. Franklin Capital Corp.

PETITIONER: Gerald T. Martin et ux.
RESPONDENT: Franklin Capital Corporation, et al.
LOCATION: Board of Immigration Appeals

DOCKET NO.: 04-1140
DECIDED BY: Roberts Court (2005-2006)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 546 US 132 (2005)
GRANTED: Apr 25, 2005
ARGUED: Nov 08, 2005
DECIDED: Dec 07, 2005

ADVOCATES:
Jan T. Chilton - argued the cause for Respondents
Samuel H. Heldman - argued the cause for Petitioners

Facts of the case

No. In a unanimous decision authored by Justice Anthony Kennedy, the Court rejected the Ninth Circuit's reasoning. The Court ruled that the state court did not act unreasonably when it determined that the prosecutor's race-neutral explanations were credible. Although there might have been some evidence that could be interpreted as undermining the prosecutor's credibility, the trial court was in a better position to determine those facts. The Court faulted the Ninth Circuit for substituting "its own debatable interpretation of the record" for the trial courts findings, and for "misapplying settled rules that limit [the Circuit Court's] role and authority."

Question

What standard should federal courts use when determining whether to award attorney's fees after an improperly removed case is remanded to state court?

Media for Martin v. Franklin Capital Corp.

Audio Transcription for Oral Argument - November 08, 2005 in Martin v. Franklin Capital Corp.

Audio Transcription for Opinion Announcement - December 07, 2005 in Martin v. Franklin Capital Corp.

John G. Roberts, Jr.:

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.