Miscellaneous

S.D.N.Y. Awards Attorneys' Fees to Plaintiff after Defendant Unreasonably Sought Removal to Federal Court

By A. Benjamin Spencer

On January 22, 2008, this Court granted plaintiff's motion to remand on the ground that when defendant Circuit City Stores, Inc. (?Circuit City?) removed this case from state court, it failed to satisfy the $5 million amount-in-controversy requirement under the Class Action Fairness Act of 2005 (?CAFA?). The Court also directed Circuit City to respond to plaintiff's request for attorneys' fees pursuant to 28 U.S.C. § 1447(c). . . .

Circuit City submits that it had a reasonably objective basis for removal for three reasons: (1) it was ?unclear to defendant whether plaintiff was seeking treble damages?, (2) ?at the time of removal, it objectively appeared that plaintiff's claims were not limited to New York State consumers?, and (3) ?the costs of compliance would extend in perpetuity,? and thus ?CAFA's jurisdictional limits would have been easily met?. . . .

In light of the wording of plaintiff's complaint and the law-both of which were clear that plaintiff was not seeking and could not seek treble damages-Circuit City did not have a reasonably objective basis to assume that plaintiff was seeking treble damages to reach the $5 million amount-in-controversy requirement. . . . [P]laintiff could not have sought a nationwide class action against an out-of-state corporation based on New York law. Accordingly, Circuit City did not have a reasonably objective basis to believe that plaintiff was seeking a nationwide class action. . . .Circuit City's post-removal argument that costs of compliance may be counted to meet the jurisdictional requirement also is not objectively reasonable because the Second Circuit had held, prior to the filing of this lawsuit, that the value of the claims is measured from the plaintiff's perspective. DiTolla v. Doral Dental IPA of New York, 469 F.3d 271 (2d Cir.2006). . . .

For the reasons stated above, plaintiff's motion for attorneys' fees is granted. The Court is imposing fees not because Circuit City incorrectly removed this case. Rather, the Court is imposing fees because the removal was not objectively reasonable. If Circuit City had conducted a reasonable investigation of the facts, it would have been apparent, under well-settled law, that the amount in controversy did not exceed $5 million.

Full post as published by Federal Civil Practice Bulletin on February 14, 2008 (boomark / email).