When Should Attorney Fees Be Awarded?

Martin v. Franklin Capital Corp.

The new Chief Justice John Roberts’ first opinion (unanimous)

In a class-action suit between the Martins and Franklin Corp. the issues of awarding attorney fees when a case is remanded back to state court from an improper federal court removal. The defense can request this removal on the condition of complete diversity (see previous case discussion) and that the amount in controversy is greater than $75,000. In deciding to remove the case, Franklin aggregated the punitive damages in calculating the amount in controversy, a practice that was later ruled against, but was based on a good faith reading of what had been valid precedent. The question in this case is whether the Martins are entitled to attorney fees as a matter of course, where the law states that attorney fees “may” be awarded.

Initially, the Court rejects the idea that “may” requires the award, because Congress could have used the word “shall” or “should.” Basing their reasoning on a case involving a civil rights violation, the Martins argue that there should be a strong presumption in favor of the plaintiffs, as there was in Piggie Park (had to get the name in there). The Court rejects this reasoning because the reasoning in Piggie Park was based on the fact that the defendants had violated federal law, presumably in a similar removal procedure, whereas in this case “incorrectly invoking a federal right is not comparable to violating substantive federal law.”

Contrary to Piggie Park, the Court decides that the statute to be more neutral regarding presumptive awards, and that the discretion was left to the courts. Since Congress most likely intended to provide the federal forum to the defendants without discouraging its use, while allowing fee shifting in order to discourage its abuse (to delay resolution for example), the Court decides that “the standard for awarding fees should turn on the reason­ableness of the removal.”

When and Why are Fuel Distributors Taxed?

Wagnon v. Prairie Band Potawatomi Nation

The state of Kansas applies a tax to fuel delivered to non-Indian distributors who then deliver the fuel to gas stations in the Indian Nation. The Potawatomi Indian Nation argues that this is invalid under White Mountain Apache Tribe v. Bracker, which balances the state, federal and Indian Nation’s interests.

The Nation argues that because it bears the legal incidence of the tax (Chickasaw), and because (even if this is not the case) the tax arises because of the distributor’s actions while he is on the Nation’s land. The Court holds that the incidence of the tax falls on the distributor, demonstrated both by dispositive language in the statute, and by the distributors freedom to pass the burden of the tax along to the Nation or not, as he chooses. A determination by the state court is then discarded because of imprecise language, and because the statute has been altered since its ruling.

In response to the argument that the tax arises from on-reservation actions, the Court holds that statute clearly states that the tax arises because of the amount of fuel a distributor receives each month, and only if the distributor is the first recipient. Though the statute does tax “the use, sale or delivery of all motor vehicle fuels or special fuels which are used sold or delivered in this state for any purpose whatsoever,” this statement taken in the context of the entire statute cannot be read to tax the on-reservation transaction without allowing multiple taxation of the same fuel.

The dissent argues, among other things, that placing the burden on the distributor only avoids the “categorical bar” on imposing a tax directly on a nation or its Tribal members, and that Chickasaw indicated this would bring about the balancing test that the majority holds is not applicable, rather than avoid it. There is then some defense of balancing tests per-se and an evaluation of the Appeals Court’s application of the balancing test in Brakcer.

The Limits of Complete Diversity for Federal Jurisdiction

Lincoln Property Co. v. Roche

The Roches lived in an apartment containing toxic mold and suffered for it. They brought a suit against three different companies from three other states. The case was tried in federal court by way of the federal court's jurisdiction over cases with "complete diversity between all named plaintiffs and all named defendants." After the Roches lost to a motion for summary judgment in favor of the defendants, but before the final judgment was entered, the Roches moved to remand the case to state court, arguing that one of the companies was in a partnership that destroyed complete diversity. The court denied the motion. It had been this company ("Lincoln") that had moved for federal jurisdiction, and because it is the partner of a subsidiary which the Court of Appeals found to be "the real and substantial party in interest" Lincoln had not met its burden of proof.

It is then necessary to determine who is a "real party to the controversy." Rule 17(a) requires that "[e]very action shall be prosecuted in the name of the real party in interest," referring only to plaintiffs, not defendants (as Lincoln is). The Court then cites a rule that “Ordinarily, a court will not interfere with the consequences of a plaintiff's selection in naming parties, unless the plaintiff has impermissibly manufactured diversity or used an unacceptable device to defeat diversity.” On the other hand, the Court notes, "A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court.”

Since Lincoln is incorporated in only one state, for the purposes of diversity of the parties, its subsidiary in another state has no effect. The plaintiffs could have chosen to attempt to make this subsidiary a defendant, but Lincoln was not required to do so.

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So there were only a few (real) opinions since this term started, and because I was so busy I didn't do any this semester. Ill do whichever ones I think are interesting of these nine and then pick up again next semester ... time permitting.