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Beauford v. E.W.H. Group Inc.

September 28, 2009


The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge


Document # 28

This motion for attorneys's fees arises from a motion to remand a class action suit brought by plaintiff Denise Beauford ("Plaintiff") against defendant E.W.H. Group Inc. ("Defendant"), who operated a car dealership known as "Bakersfield Mitsubishi". The suit was originally filed on Feburary 13, 2008, in the Kern County Superior Court. Plaintiff alleged violations of the California Tire Recycling Act, Cal. Pub. Res. Code § 42885, the Automobile Sales and Finance Act, Cal. Civ. Code § 2981 et. seq., the Consumer Legal Remedies Act, Cal. Civ. Code § 1750 et. seq. and the California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200. Defendant removed the action on January 9, 2009, asserting diversity jurisdiction pursuant to the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. §§ 1332(d) and 1453(b). Plaintiff filed a motion to remand on May 15, 2009, which this court granted on June 24, 2009. Plaintiff seeks fees of $32,162.50 for the legal counsel provided to her by the firm of William M. Krieg & Associates. From the time-sheets provided by Plaintiff, the court calculates that Plaintiff requests 28.6 hours at $425 per hour ("/hr") for the services of William Krieg, 86.9 hours at $225/hr for the services of associate Patrick McManaman, and 2.3 hours at $100/hr for the services of paralegal Barbara Kosinski. For the reasons that follow, the Court will award attorney's fees, but at a lower amount than requested.


In remanding an improperly removed action back to state court, the court "may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447(c). "[I]t is clear that an award of attorney's fees is a collateral matter over which a court normally retains jurisdiction even after being divested of jurisdiction on the merits." Moore v. Permanente Medical Group, Inc., 981 F.2d 443, 445 (9th Cir. 1992); Wells v. California Home Loan Solutions, 2007 WL 2915059 at *2 (S.D. Cal. Oct. 4, 2007) (quoting Moore). In Martin v. Franklin Capital Corp., 546 U.S. 132 (2005), a unanimous Supreme Court announced the standard for determining when attorney's fees are appropriate under Section 1447(c):

Absent unusual circumstances, 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. In applying this rule, district courts retain discretion to consider whether unusual circumstances warrant a departure from the rule in a given case. For instance, a plaintiff's delay in seeking remand or failure to disclose facts necessary to determine jurisdiction may affect the decision to award attorney's fees.

Martin, 546 U.S. at 141 (citations omitted).

If a removal lacked any objectively reasonable basis, the court must determine how to calculate the just costs associated with the removal. "Under a fee-shifting statute," such as Section 1447(c), "the court must calculate awards for attorneys' fees using the lodestar method, which involves multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonably hourly rate, and, if circumstances warrant, adjust[ing] the lodestar to account for other factors which are not subsumed within it." Staton v. Boeing Co., 327 F.3d 938, 965 (9th Cir. 2003) (citing Ferland v. Conrad Credit Corp., 244 F.3d 1145, 1149 n. 4 (9th Cir.2001) and Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir.1996)) (internal quotation marks omitted); see also Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) ("The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate").


I. Objectively Reasonable Removal

Defendant contends it had an objectively reasonable basis for seeking removal to federal court. In support of its arguments, Defendant cites Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008), for the proposition that "removal is not objectively unreasonable solely because the removing party's arguments lack merit, or else attorney's fees would always be awarded whenever remand is granted." Defendant's also cite to Lott v. Pfizer, Inc., 492 F.3d 789 (7th Cir. 2007), which the Ninth Circuit in Lussier analyzed as an analogous situation. In Lott, the Seventh Circuit found "[t]he test [for objective reasonablness] is whether the relevant case law clearly foreclosed the defendant's basis of removal." Id. at 794. Seizing upon this language Defendant argues it's legal basis for "[r]emoval was not 'clearly foreclosed' by existing case law--it was foreclosed by the court's finding of fact." Opp. to Mtn. for Attny's Fees at 4. Defendant argues that "[i]n fact, this very district has recently found a removing defendant to have an objectively reasonable basis for removal in a CAFA case where the Plaintiff and Defendant were diverse. Bains v. Blockbuster Inc., 2008 U.S. Dist. Lexis 100338 (E.D. Cal. Nov. 25, 2008)

Plaintiff, citing Defendant's brief in opposition to remand and the court's remand order, argues that "[n]ot only was EWH entirely wrong in its legal argument regarding residency, but it failed to provide any facutal support for its residency claim." Mtn for Attny's Fees at 4. In support of Plaintiff's position that Defendant's legal conclusions were "entirely wrong", Plaintiff emphasizes Defendant's reliance on its own unsupported assertion that, "[a]ddress and drivers' license information ha[ve] been deemed sufficient for determining the citizenship of putative class members for diversity of citizenship purposes under CAFA." Mtn for Attny's Fees at 3.

The court finds Defendant's arguments unpersuasive and concludes that Defendant had no objectively reasonable basis for removal because the relevant case law clearly foreclosed Defendant's removal. Certainly under CAFA it is clear that Defendant could remove to federal court if it could establish that, at the time of removal, the class of plaintiffs contained 100 or more members, with at least one plaintiff being a citizen of a state different from any defendant, and that the amount in controversy in the aggregate exceeded $5,000,000. See 28 U.S.C. § 1332; Beauford v. E.W.H. Group Inc., 2009 WL 1808468 at *1-2 (E.D. Cal. Jun. 24, 2009) (docket # 27) . However, it should have been equally clear that, given the evidence, Defendant could not have affirmatively alleged diversity of citizenship. Defendant's unsupported conclusion that address and drivers' license information is sufficient for determining citizenship was unavailing on this point.*fn1 The distinction between resident and citizen has been consistently applied in federal jurisdiction jurisprudence. See Axel Johnson, Inc. V. Carroll Carolina Oil Co.,145 F.3d 660, 663 (4th Cir. 1998); Beauford, 2009 WL 1808468 at *4 (docket # 27). As the court observed in its order granting remand:

Despite Defendant's legal conclusion to the contrary, it is clear that at best the evidence Defendant has provided establishes that two potential class members had Texas drivers licenses, implying they were Texas residents a year to a year and a half before the time in question--the date of Defendant's notice of removal-- January 8, 2009. Domicile, not residency, is the central question in determining citizenship for diversity, and Defendant has not produced competent evidence establishing the permanent homes and intentions of potential class members Gavino, C. and Arnold, C. at the time of removal. Allegations of residency are insufficient to support diversity jurisdiction. See Shaw v. Quincy Mining Co.,145 U.S. 444, 447 (1892); see also Snell v. Cleveland, Inc., 316 F.3d 822, 824 (9th Cir. 2002) Beauford, 2009 WL 1808468 at *5 (docket # 27) (explanatory citation parentheticals omitted). Unlike the issues before the courts in Lussier and Lott, the standard for determining citizenship is not a novel issue. The court does not find Defendant's distinction between findings of fact and law persuasive in light of the clearly established case law.

Additionally, the court does not find persuasive Defendant's citation to Bains for the proposition that "this very district has recently found a removing defendant to have an objectively reasonable basis for removal in a CAFA case where the Plaintiff and Defendants were diverse." First, Bains did not involve a class action or reference CAFA. Second, the diversity issue in Bains did not turn on the determination of citizenship, but rather, whether the plaintiff could maintain its claims against the non-diverse defendants.

The court concludes Defendant's removal was clearly foreclosed by well established case law and therefore Defendant did not have an ...

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