Lott, Ricky v. Pfizer, Incorporated

In the

United States Court of Appeals

For the Seventh Circuit

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No. 06-3372

RICKY LOTT, GERALD SUMNER,

SANDY BECKER, AND MIKE BALDWIN,

Plaintiffs-Appellees,

v.

PFIZER, INC.,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Southern District of Illinois.

No. 05 CV 230—Michael J. Reagan, Judge.

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ARGUED MARCH 29, 2007—DECIDED JUNE 25, 2007

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Before FLAUM, EVANS, and WILLIAMS, Circuit Judges.

FLAUM, Circuit Judge. On February 17, 2005, the

plaintiffs filed a purported class action lawsuit against

Pfizer in Illinois state court. Pfizer removed the case

under the Class Action Fairness Act (CAFA), 28 U.S.C.

§ 1332(d), but the district court remanded it after con-

cluding that CAFA only applies to lawsuits filed on or after

February 18, 2005. The court then awarded the plaintiffs

$23,664.83 in attorneys’ fees and costs under 28 U.S.C.

§ 1447(c). Pfizer appeals the award of fees and costs. For

the following reasons, we reverse.

2 No. 06-3372

I. Background

Hoping to avoid removal to federal court, the plaintiffs

filed a purported class action lawsuit in Madison County

Circuit Court on February 17, 2005—the day before

President Bush enacted CAFA, a law that gives federal

courts jurisdiction to hear class action lawsuits involv-

ing minimally diverse parties and more than five-million

dollars in controversy. 28 U.S.C. § 1332(d). The plaintiffs’

complaint alleged that Pfizer misrepresented the health

hazards associated with two drugs, Celebrex and Bextra,

and charged more for the drugs than their fair market

value. They sought compensatory damages and attorneys’

fees under the Illinois Consumer Fraud and Deceptive

Business Practices Act, 815 ILCS 505/10a.

Although CAFA, by its terms, applies only to “civil

action[s] commenced on or after the date of enactment of

th[e] Act,” Pub. L. No. 109-2, § 9, 119 Stat. 4, 13 (2005),

Pfizer filed a notice of removal in federal district court

on April 1, 2005. In response to the plaintiffs’ motion for

remand, Pfizer argued that the case “commenced” on the

date that it was removed to federal court, not the date on

which the plaintiffs filed their complaint. Pfizer also

asserted, under two different theories, that removal was

appropriate because the case satisfied the requirements

for traditional diversity jurisdiction under 28 U.S.C.

§ 1332(a). For their part, the plaintiffs contended that

the case commenced on the day it was filed in state

court and that the district court lacked diversity juris-

diction because the plaintiffs had disclaimed damages

in excess of $75,000.

On May 26, 2005, the district court ruled that it

lacked subject matter jurisdiction and remanded the case

to state court. It found that the suit commenced on

February 17, 2005 and that the case did not satisfy the

requirements for diversity jurisdiction. It also awarded

No. 06-3372 3

the plaintiffs their attorneys’ fees and costs under 28

U.S.C. § 1447(c). It cited Seventh Circuit case law hold-

ing that fees and costs should be awarded as “normal

incidents of remands for lack of jurisdiction.” Citizens for

a Better Env’t v. Steel Co., 230 F.3d 923, 927 (7th Cir.

2000). The district court then referred the case to a

magistrate judge to determine the precise amount of

fees and costs.

On August 4, 2005, this Court affirmed the district

court’s ruling that it lacked subject matter jurisdiction.

Pfizer, Inc. v. Lott, 417 F.3d 725, 727 (7th Cir. 2005). We

held, citing Knudsen v. Liberty Mutual Insurance Co., 411

F.3d 805 (7th Cir. 2005), that “commenced” means “filed”

and not “removed.” Id. We also held that Pfizer offered

no evidence that someone in the class satisfied the diver-

sity jurisdiction statute’s amount in controversy require-

ment. Id. at 726 (noting that to invoke the district court’s

diversity jurisdiction, Pfizer had to show that one class

member suffered damages in excess of $75,000). The Court

did not consider the propriety of the district court’s

award of fees and costs, however, because the magistrate

judge was still resolving the award’s precise amount.

On December 7, 2005, the Supreme Court issued Martin

v. Franklin Capital Corporation, 546 U.S. 132, ___, 126

S. Ct. 704, 711 (2005), and held that a district court may

award attorneys’ fees under § 1447(c) only where the

removing party lacked an objectively reasonable basis

for seeking removal. On December 21, 2005, Pfizer filed

a motion to reconsider the fee award in light of Martin, but

the district court denied the motion. The court held that

Martin did not apply retroactively and, therefore, did not

affect the outcome of the previous decision. Alternatively,

the district court held that Pfizer’s attempt to remove

the case based on diversity jurisdiction was objectively

unreasonable. Lott v. Pfizer, Inc., No. 05-CV-230, 2006 WL

4 No. 06-3372

2224155, *3 (S.D. Ill. Aug. 2, 2005). Notably, the district

court did not assess the reasonableness of Pfizer’s at-

tempt to remove the case under CAFA. Pfizer appeals the

district court’s denial of its motion to reconsider.

II. Analysis

A defendant may remove a civil action from state court

if it is one over which a district court has original jurisdic-

tion. 28 U.S.C. § 1441(a). Removal must occur within

thirty days of the defendant’s receipt of the complaint or

within thirty days of the date that removal becomes

possible. Id. § 1446(b). “An order remanding the case may

require payment of just costs and any actual expenses,

including attorney fees, incurred as a result of the re-

moval.” Id. § 1447(c). We review a district court’s award of

fees and costs under § 1447(c) for an abuse of discretion.

Bauknight v. Monroe County, Fla., 446 F.3d 1327, 1329

(11th Cir. 2006); Hart v. Wal-Mart Stores, Inc. Associates’

Health and Welfare Plan, 360 F.3d 674, 678 (7th Cir. 2004)

(pre-Martin case).

In Martin, the Supreme Court resolved a circuit split

over the correct standard for awarding attorneys’ fees

under § 1447(c). Compare, e.g., Hornbuckle v. State Farm

Lloyds, 385 F.3d 538, 541 (5th Cir. 2004) (“Fees should

only be awarded if the removing defendant lacked objec-

tively reasonable grounds to believe the removal was

legally proper.”) (internal quotation omitted), with Sirotzky

v. N.Y. Stock Exch., 347 F.3d 985, 987 (7th Cir. 2003)

(“[P]rovided removal was improper, the plaintiff is pre-

sumptively entitled to an award of fees.”) (emphasis in

original). The Court adopted the Fifth Circuit’s approach

and held that plaintiffs are entitled to attorneys’ fees

under § 1447(c) only if the defendant “lacked an objec-

tively reasonable basis for seeking removal.” Martin, 126

S. Ct. at 711. As a policy matter, it pointed out that “[i]f

No. 06-3372 5

fee shifting were automatic, defendants might choose to

exercise this right only in cases where the right to remove

was obvious.” Id. The Court noted that Congress would

not have conferred a right to remove and then discouraged

its exercise in all but the obvious cases. Id.

The parties agree that the district court erred by con-

cluding that Martin does not govern this dispute. Supreme

Court decisions announcing a rule of federal law always

govern civil cases pending in the district courts. See Raines

v. Shalala, 44 F.3d 1355, 1363 (7th Cir. 1995). The only

question, therefore, is whether either of Pfizer’s two

bases for removal was objectively reasonable.

In Martin, the Supreme Court did not have occasion to

define “objectively reasonable” because the parties agreed

that the defendant’s basis for removal was reasonable. Id.

at 712. It approved, however, a Fifth Circuit decision that

applied the objectively reasonable standard by examin-

ing the clarity of the law at the time the notice of removal

was filed. See Valdes v. Wal-Mart Stores, Inc., 199 F.3d

290, 293 (5th Cir. 2000). In Valdes, Wal-Mart attempted

to remove a case based on the plaintiff ’s fraudulent

joinder. The court noted that it had upheld removal in

analogous circumstances and that applicable state law

suggested that the plaintiff ’s cause of action against the

non-diverse defendant lacked merit. As a result, the

court held that Wal-Mart could have concluded from the

case law that its position was reasonable.

Of course, there are other contexts in which courts

determine whether an act is objectively reasonable by

examining the clarity of the case law. The qualified

immunity doctrine assumes that state officials are aware

of existing case law and holds officials liable only if

they violate clearly established and particularized rights.

See Brosseau v. Haugen, 543 U.S. 194, 199 (2004). The

doctrine balances society’s desire to punish those who

6 No. 06-3372

knowingly violate the law with a need for zealous law

enforcement, and, as such, allows state officials to make

reasonable errors without worrying about being sued. See

Hunter v. Bryant, 502 U.S. 224, 229 (1991).

As discussed above, Martin’s objectively reasonable

standard—like the qualified immunity doctrine’s objec-

tively reasonable standard—also balances competing

interests. Congress, in passing the removal statute, en-

couraged defendants to remove certain cases to federal

court, while at the same time discouraged defendants

from delaying the resolution of claims by removing cases

without legal justification. Martin, 126 S. Ct. at 711.

Indeed, just as the qualified immunity doctrine attempts

to protect zealous law enforcement, the removal statute

encourages litigants to make liberal use of federal courts,

so long as the right to remove is not abused. Id.

For this reason, our qualified immunity jurisprudence

provides appropriate guidance for determining whether

a defendant had an objectively reasonable basis for

removal. As a general rule, if, at the time the defendant

filed his notice in federal court, clearly established law

demonstrated that he had no basis for removal, then a

district court should award a plaintiff his attorneys’ fees.

By contrast, if clearly established law did not foreclose

a defendant’s basis for removal, then a district court

should not award attorneys’ fees.

Here, the district court erred by awarding the plain-

tiffs’ attorneys’ fees because Pfizer’s attempt to remove

the case under CAFA was objectively reasonable. When

Pfizer filed its notice of removal, no circuit court had

rejected Pfizer’s argument that the word “commenced”

means the date on which a case is removed to federal

court. A few district courts had rejected the argument, see

Hankins v. Pfizer, Inc., No. CV-1797-ABC-RZ, 2005 U.S.

Dist. LEXIS 17191, *3 (C.D. Cal. Mar. 25, 2005); Smith v.

No. 06-3372 7

Pfizer, Inc., No. 05-CV-0112, 2005 WL 3618319, *5 (S.D.

Ill. Mar. 24, 2005); Pritchett v. Office Depot, Inc., 360

F. Supp. 2d 1176, 1180 (D. Colo. 2005), but a number of

other district courts had held, in cases decided shortly

after Congress raised the amount in controversy require-

ment for diversity cases, that “commenced” means the

date on which a case is removed to federal court. See

Cedillo v. Valcar Enters. & Darling Del. Co., 773 F. Supp.

932, 939 (N.D. Tex. 1991); Hunt v. Transport Indem. Ins.

Co., No. Civ. 90-00041 ACK, 1990 WL 192483, *5 (D. Haw.

July 30, 1990); Lorraine Motors, Inc. v. Aetna Cas. & Sur.

Co., 166 F. Supp. 319, 323 (E.D.N.Y. 1958). District court

decisions, let alone conflicting district court decisions, do

not render the law clearly established. See Anderson v.

Romero, 72 F.3d 518, 525 (7th Cir. 1995). Accordingly,

Pfizer acted reasonably when it attempted to remove

this case under CAFA.

The plaintiffs argue that Pfizer should have known

that its construction of CAFA was wrong for two other

reasons: because the legislative history indicates that

“commenced” means the date on which a case was filed

and because Pfizer lobbied Congress about CAFA. We

reject both arguments. First, the legislative history that

the plaintiffs cite is unpersuasive. They quote two con-

gressmen and three senators who said that CAFA was

not retroactive and would not affect matters currently

pending in state court. Two of the legislators voted against

the bill, so their views on the law’s meaning do not bear

on the legislature’s intent. See Selective Serv. Sys. v. Minn.

Pub. Interest Research Group, 468 U.S. 841, 855 n.15

(1984) (stating that statements of legislators who oppose

a bill are entitled to “little, if any, weight”). Additionally,

individual legislators’ statements are of minimal value

when it comes to interpreting statutes. See Chrysler Corp.

v. Brown, 441 U.S. 281, 311 (1979) (“The remarks of a

single legislator, even the sponsor, are not controlling in

8 No. 06-3372

analyzing legislative history.”). Pfizer’s basis for removal

was not unreasonable simply because it conflicted with

three legislators’ understanding of the statute.

The plaintiffs also argue that Pfizer’s basis for re-

moval was objectively unreasonable because Pfizer had an

inside track on what the word “commenced” means, given

that it lobbied Congress for CAFA’s passage. As Pfizer

points out, however, our review is for objective, as opposed

to subjective, reasonableness. The test is whether the

relevant case law clearly foreclosed the defendant’s

basis of removal, not whether the defendant had some

special insight into the legislative process.

Because Pfizer had an objectively reasonable basis for

seeking removal, the district court erred by awarding the

plaintiffs their attorneys’ fees under § 1447(c). See Martin,

126 S. Ct. at 711. As a result, we need not consider

whether Pfizer’s attempt to invoke the district court’s

diversity jurisdiction was also reasonable.

III. Conclusion

The Court REVERSES the district court’s award of attor-

neys’ fees and costs.

A true Copy:

Teste:

________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit

USCA-02-C-0072—6-25-07