United States District Court, D. Nevada
M. Navarro, District Judge United States District Court
before the Court is Plaintiff Christine Owens's
(“Plaintiff's”) Motion for Attorney Fees and
Sanctions, (ECF No. 33). Defendants Adam Stokes, Adam Stokes
LLC, Half Price Lawyers, LLC, and Mark Coburn (collectively,
“Defendants”) filed a Response, (ECF No. 36).
Plaintiff filed a Reply, (ECF No. 37). For the reasons
discussed below, Plaintiff's Motion is GRANTED in part
and DENIED in part.
case arises from Defendants' alleged failure to pay
Plaintiff referral fees and bonuses consistent with the Half
Price Lawyers, LLC licensing and operating agreements.
(See Compl. ¶ 27, Ex. 2 to Pet. of Removal, ECF
No. 1-2). Plaintiff filed her Complaint in state court,
asserting fifteen state-law causes of action. (Id.
¶¶ 28-114). Defendants removed the case pursuant to
28 U.S.C. § 1331 because the breached agreements
described in the Complaint allegedly “require[d] the
interpretation of federal substantive law and federal
procedure.” (Pet. of Removal ¶ 7, ECF No. 1).
Plaintiff filed the Motion to Remand, arguing that the
Complaint did raise a federal question. (Mot. Remand
4:4-7:20, ECF No. 7).
August 26, 2019, the Court entered an Order granting
Plaintiff's Motion to Remand, (See Order, ECF
No. 32). In the Order, the Court concluded that the Complaint
did not raise a federal question under well-settled law, and
“Defendants fail[ed] to provide the Court any specific
argument or legal authority as to how
Plaintiff's claims are supposedly dependent on federal
issues.” (Id. 4:6-5:21) (emphasis original).
The Court found that Defendants premised their arguments in
favor of removal on misrepresentations of the parties'
Operating Agreement. (Id. at 6:20-7:10). While
Defendants explained that the Operating Agreement provided
that “[t]he construction, performance, and
interpretation” of the Agreement would be governed by
the Lanham Act, the Agreement in fact stated that it
“shall be governed by and construed and enforced in
accordance with the laws of the State of Nevada . . .
.” (Id.) (emphasis original). The Court
advised Plaintiff that “it will entertain a motion for
attorney's fees based on improper removal.”
(Id. 7:13-14). The Court also admonished that, in
light of Defendants' “blatant mischaracterization
of the contractual agreements . . . . any further
misrepresentations before this Court will result in
appropriate sanctions.” (Id. 7:11-13).
Plaintiff then filed the instant Motion for Attorney Fees and
Sanctions, (ECF No. 33).
U.S.C. § 1447(c) permits a court to award “just
costs and any actual expenses, including attorney's fees,
incurred as a result of removal” where a case was
improperly removed from state court. 28 U.S.C. §
1447(c). However, “[a]bsent unusual circumstances,
courts may award attorney's fees under § 1447(c)
only where the removing party lacked an objectively
reasonable basis for seeking removal.” Martin v.
Franklin Capital Corp., 546 U.S. 132, 141 (2005).
“[R]emoval 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.” Lussier v. Dollar Tree Stores,
Inc., 518 F.3d 1062, 1065 (9th Cir. 2008). Instead,
whether removal was objectively reasonable depends on the
clarity of the applicable law and whether the law
“clearly foreclosed” the defendant's
arguments in favor of removal. See Id. at 1066-67;
Wells Fargo Bank, NA v. Hunt, No. C-10-04965 JCS,
2011 U.S. Dist. LEXIS 14125, 2011 WL 445801, at *5 (N.D. Cal.
Feb. 3, 2011). An award of costs and expenses under section
1447(c) “is left to the district court's
discretion, with no heavy congressional thumb on either side
of the scales.” Martin, 546 U.S at 139.
argues that the Court should award attorney fees and impose
sanctions against Defendants because they filed a frivolous
Notice of Removal. (See Mot. Att'y Fees and
Sanctions 3:1-5:4). Specifically, she alleges that, as the
Court noted in its previous Order, Defendants' arguments
in favor of removal were “meritless” and relied
on “blatant mischaracterizations of the contractual
agreements.” (Id. 2:13-20). Plaintiff
therefore argues that the Court should grant
“[s]anctions in the form of an award of attorney fees
pursuant to 28 USC § 1447 and NRS 7.085, and further
sanctions pursuant to 28 USC § 1447, FRCP 11, and LR IA
11-8” in the case. (Id. 1:20-23).
make the following arguments in response to Plaintiff's
Motion: (1) the Court should deny the Motion because
Plaintiff moved for fees as a sanction rather than for
improper removal, (Resp. 2:4-3:2, ECF No. 36); (2) Plaintiff
failed to demonstrate removal was initiated in bath faith or
for an improper reason, (id. 3:3-4:18); (3)
Plaintiff should bare the fees because she failed to submit
the matter to arbitration as required under the Operating
Agreement, (id. 4:19-5:19); (4) even if the Court
awards fees, the amount sought is excessive, (id.
5:20-6:20); and (5) if the Court awards fees, Plaintiff
should not recover fees related to the issue of arbitration
because it is unrelated to the case's removal,
(id. 6:21-7:5). The Court addresses each contention
argument that the Court should deny Plaintiff's Motion
because she seeks fees as a sanction is meritless. (Order
7:11-13, ECF No. 32). While the Court advised that it would
entertain a motion for fees based on improper removal and
warned Defendants that it would entertain further sanctions
if Defendants continued to misrepresent the record,
(see Order 7:11-14), an award of fees for improper
removal is a sanction. See 28 U.S.C. § 1447(c).
Although Plaintiff likewise moves for attorney fees and
sanctions under additional authorities, (Mot. Fees 1:10-23),
the Court confines its award to Defendants' sanctionable
conduct under 28 U.S.C. § 1447(c).
argument that the Court should deny the Motion for Fees
because Plaintiff has not demonstrated bad faith or improper
purpose mistakes the relevant legal standard. As explained
above, a Court may award fees incurred as a result of
improper removal upon a showing that removal was objectively
unreasonable; bad faith or improper purpose is not required.
Martin, 546 U.S. at 141; See also Albion Pac.
Prop. Res., LLC v. Seligman, 329 F.Supp.2d 1163, 1165
(N.D. Cal. 2004) (explaining that the language of the statute
“distinguishes an award under section 1447(c)
‘from a punitive award which was associated with the
formerly required bad faith finding.'”) (quoting
Gotro v. R & B Realty Group, 69 F.3d 1485, 1487
(9th Cir. 1995)).
provide no authority that the presence of an arbitration
agreement provides an affirmative defense to a motion for
fees incurred from improper removal. Section 1447(c) explains
that a Court can require the improperly removing party to pay
attorney fees “incurred as a result of removal.”
28 U.S.C. § 1447(c). Here, removal was without a
reasonable basis and caused Plaintiff to incur unnecessary
fees. If the parties had an enforceable arbitration agreement
requiring them to arbitrate the dispute, Defendants may seek
sanctions from a court of competent jurisdiction upon
prevailing on a motion to compel arbitration. However, the
parties' arbitration agreement has no bearing on
Plaintiff's instant Motion.
Court concludes that an award of fees under 28 U.S.C. §
1447(c) is proper. Defendants' arguments in favor of
removal were meritless and premised on blatant
mischaracterizations of the Complaint to the Court.
(See Order, 7:3-14). Therefore, Plaintiff is
entitled to recover the costs she incurred as a result of the
improper removal. Defendants remaining arguments ...