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.”