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Sanctions for Frivolous Removal — § 1447(c) Trumps § 1927 — Attorneys’ Fees Application Untimely After 14 Days Post-Remand

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The plaintiff in Jericho Group, Ltd. v. Midtown Development, LP, 2008 U.S. Dist. LEXIS 52706 (S.D.N.Y. May 22, 2008), prevailed on a motion to remand but waited 81 days after the case was remanded to seek attorneys' fees, moving under 28 U.S.C. §§ 1447(c) and 1927. The Court ruled that a motion for attorneys' fees under § 1447(c) must be made within 14 days after entry of judgment pursuant to Fed.R.Civ.P. 54(d)(2)(B) and that the removal-specific standard set forth in § 1447(c) determines whether an award of attorneys' fees is appropriate, not the more general standard of § 1927:

[§ 1447(c) Timing.] [I]t is well settled that costs and attorneys' fees pursuant to § 1447(c) can be awarded after entry of a remand order. Bryant v. Britt, 420 F.3d 161 (2d Cir. 2001). The question that naturally arises is: How long after?

The Second Circuit has expressly declined to address that question, Bryant, supra, 420 F.3d at 165 n.4. However, most courts that have considered the question treat a remand order as the equivalent of a final judgment — because it terminates the case in the district court — and have ruled that Fed. R. Civ. P. 54(d)(2)(B) sets the outer limit for applying for an award of attorneys' fees. Under Rule 54(d), a litigant has fourteen days after the "entry of judgment" to make a motion for attorneys' fees, "unless otherwise provided by statute or order of the court." Decisions from the only two Circuit Courts of Appeal to consider the matter impose a fourteen day limit on post-remand applications for attorneys' fees. Mints v. Educ. Testing Serv., 99 F.3d 1253, 1259 (3d Cir. 1996); Stallworth v. Greater Cleveland Reg'l Transit Auth., 105 F.3d 252, 257 (6th Cir. 1997). So do most of the district court decisions addressing the issue. [Citations omitted.] In fact, plaintiff did not cite the court to a single case supporting its position that it could return to federal court whenever it chose to seek attorneys' fees following remand (although there is one such case, not binding on this court, to which defendants' counsel appropriately called the court's attention: Sinclair v. City of Rochester, 2007 WL 3047096, at *3 (W.D.N.Y. Oct. 18, 2007)). The one case plaintiff did cite *** contains a clear and concise summary of why the fourteen day rule should apply to litigants in plaintiff's position: "Allowing a state court litigant to return to federal court whenever he may feel like doing so for the sole purpose of raising a fee claim multiplies litigation." ***

[§ 1927 vs. § 1447(c).] The first issue to be addressed is whether an award of attorneys' fees incurred in connection with a remand can be made pursuant to § 1927, when another section of the Judicial Code, § 1447(c), makes specific provision for an award of attorneys' fees upon remand of a wrongfully removed case. Whatever the answer to that question may be (and I need not answer it), one thing seems clear: when counsel's allegedly "unreasonable and vexatious" conduct consists of wrongful removal, the standard against which an application for § 1927 attorneys' fees must be judged can be no different than the one that applies specifically to removal cases. That standard was announced by the United States Supreme Court in Martin v. Franklin Capital Corp., 546 U.S. 132 (2005), where the Court said: "Absent unusual circumstances, courts may award attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for removal." Id. at 141 (emphasis added).***

It would *** be impossible to conclude that defendants' attorneys had multiplied the proceedings in a removed case "unreasonably and vexatiously" under § 1927 unless the record showed that they lacked an objective basis for removal. [Footnote 2: 2 I have no reason to decide whether there is any substantive difference between the "objectively reasonable" standard announced in Martin and the "entirely meritless" standard applied in this Circuit to arguments that are the subject of fee awards under § 1927, see Revson v. Cinque & Cinque, 221 F.3d 71, 79 (2d Cir. 2000). If there is any difference, "objectively reasonable" appears to be a higher standard than "entirely meritless." If that is so, the court's finding on the Martin question necessarily means that the argument propounded by counsel here was not "entirely meritless."

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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