Martin v. Franklin Cap. Corp., 546 U.S. 132 (2005)

Held: Absent unusual circumstances, attorney’s fees should not be awarded under § 1447(c) when the removing party has an objectively reasonable basis for removal. Conversely, where no objectively reason able basis exists, fees should be awarded. This Court rejects the Martins’ argument for adopting a strong presumption in favor of award ing fees. The reasons for adopting such a presumption in Newman v. Piggie Park Enterprises, Inc., 390 U. S. 400, 402 (per curiam), are ab sent here. Also rejected is Franklin’s argument that § 1447(c) simply grants courts jurisdiction to award costs and attorney’s fees when other [p. 133] wise warranted. Were the statute 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.” The Court there fore gives the statute its natural reading: Section 1447(c) authorizes courts to award costs and fees, but only when such an award is just. That standard need not be defined narrowly, as the Solicitor General argues, by awarding fees only on a showing that the unsuccessful party’s position was frivolous, unreasonable, or without foundation. Chris tiansburg Garment Co. v. EEOC, 434 U. S. 412, 422, and Flight Attend ants v. Zipes, 491 U. S. 754, 762, distinguished. The fact that a § 1447(c) fee award is discretionary does not mean that there is no governing legal standard. When applying fee-shifting statutes, the Court has found limits in “ ‘the large objectives’ ” of the relevant Act. E. g., id., at 759. The appropriate test for awarding fees under § 1447(c) should recognize Congress’ desire to deter removals intended to prolong litiga tion and impose 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 “ ‘large objectives,’ ” the standard for awarding fees should turn on the reasonableness of the removal. In applying the general rule of reasonableness, district courts retain discretion to consider whether unusual circumstances warrant a departure in a given case. A court’s reasons for departing, however, should be “faithful to the purposes” of awarding fees under § 1447(c). Fogerty v. Fantasy, Inc., 510 U. S. 517, 534, n. 19. Pp. 136–141.

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 [p. 135] 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 Franklin’s contention that punitive damages and attorney’s fees could be aggregated in calculating the amount in controversy, in part on the basis of decisions is sued after the District Court’s 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).

The Martins are on somewhat stronger ground in pressing for a presumption in favor of awarding fees. As they ex [p. 137] plain, 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 “ ‘private attorney general,’ ” helping to ensure compliance with civil rights laws and ben efiting the public by “vindicating a policy that Congress considered of the highest priority.” Ibid. We also later explained that the Piggie Park standard was appropriate in that case because the civil rights defendant, who is required to pay the attorney’s fees, has violated federal law. See Flight Attendants v. Zipes, 491 U. S. 754, 762 (1989) (“Our cases have emphasized the crucial connection between liabil ity for violation of federal law and liability for attorney’s fees under federal fee-shifting statutes”).

For its part, Franklin begins by arguing that § 1447(c) pro vides little guidance on when fees should be shifted because [p. 138] it is not a fee-shifting statute at all. According to Franklin, the provision simply grants courts jurisdiction to award costs and attorney’s fees when otherwise warranted, for ex ample when Federal Rule of Civil Procedure 11 supports awarding fees. Although Franklin is correct that the prede cessor 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, 386–387 (1884), there is no reason to assume Congress went no further than conferring jurisdiction when it acted. Con gress 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 party’s position was “frivolous, unreason able, or without foundation”—the 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 14–16. But just as there is no basis for sup posing 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 [p. 139] position than was the case in either Piggie Park or Chris tiansburg Garment and Zipes; we see nothing to persuade us that fees under § 1447(c) should either usually be granted or usually be denied.

In Zipes, we reaffirmed the principle on which these deci sions 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 with out limits.” Id., at 758. Zipes also explains how to discern the limits on a district court’s discretion. When applying fee-shifting statutes, “we have found limits in ‘the large ob [p. 140] jectives’ of the relevant Act, which embrace certain ‘equita ble considerations.’ ” Id., at 759 (citation omitted).