Environmental Research Center v. Hotze Health Wellness Center
20-15457
| 9th Cir. | Jun 17, 2021Background
- Hotze (appellant/defendant-removing party) removed an action to federal court twice; the district court remanded and awarded attorneys’ fees and costs to Environmental Research Center (ERC).
- The district court concluded Hotze failed to establish federal subject-matter jurisdiction in the first removal (ERC did not sufficiently allege injury-in-fact, and an assigned California injury would defeat diversity), so supplemental jurisdiction was not implicated.
- Hotze’s second removal repeated the same grounds rather than relying on any intervening change in law or amended pleadings.
- The district court awarded ERC fees under 28 U.S.C. § 1447(c), using the lodestar method and excluding hours not incurred because of the removals.
- ERC moved for damages under Federal Rule of Appellate Procedure 38 for frivolous portions of Hotze’s appeal (challenging nonappealable remand orders); the panel found those parts frivolous and granted fees for them, but denied sanctions for Hotze’s appeal of the fee award itself.
- The Ninth Circuit affirmed the fee award, upheld the Rule 38 grant in part, and referred the determination of amount to the Appellate Commissioner.
Issues
| Issue | Plaintiff's Argument (Hotze) | Defendant's Argument (ERC) | Held |
|---|---|---|---|
| Whether district court erred in awarding attorneys’ fees under §1447(c) for removal | District court first remand relied on Hotze’s failure to cite supplemental jurisdiction; fee award/amount was improper | Removal lacked an objectively reasonable basis; second removal repeated rejected grounds; fee award was properly calculated by lodestar and excluded unrelated time | Affirmed. Removal objectively unreasonable; second petition not based on new circumstances; fee award not an abuse of discretion |
| Whether successive removal was permitted (i.e., whether a relevant change of circumstances justified second removal) | Second removal cured defects in first petition | Successive removal is allowed only upon a relevant change of circumstances; Hotze did not show such a change | Held Hotze’s second removal was impermissible because it repeated the same grounds previously rejected |
| Whether ERC is entitled to appellate damages under FRAP 38 for frivolous portions of the appeal | Appeals were not frivolous | Appeals of the district court’s nonappealable remand orders were frivolous; ERC entitled to fees for defending those portions | Granted in part: fees for frivolous portions awarded; amount referred to Appellate Commissioner |
| Whether Hotze’s appeal of the district court’s fee award was frivolous | Appeal of fee award was not frivolous | Sought Rule 38 damages for entire appeal | Denied as to the fee-award appeal; that portion was not frivolous |
Key Cases Cited
- Gardner v. UICI, 508 F.3d 559 (9th Cir.) (district-court fee awards under §1447(c) reviewable by the circuit)
- Martin v. Franklin Capital Corp., 546 U.S. 132 (U.S.) (fees under §1447(c) may be awarded only when removal lacked an objectively reasonable basis)
- Reyes v. Dollar Tree Stores, Inc., 781 F.3d 1185 (9th Cir.) (successive removals permitted only upon a relevant change of circumstances)
- Herman Family Revocable Tr. v. Teddy Bear, 254 F.3d 802 (9th Cir.) (supplemental jurisdiction requires an independent hook of original jurisdiction)
- Moore v. Permanente Med. Grp., Inc., 981 F.2d 443 (9th Cir.) (district court discretion in calculating reasonable attorney fees; lodestar method)
- Malhiot v. S. Cal. Retail Clerks Union, 735 F.2d 1133 (9th Cir.) (definition of frivolous appeal)
- Wood v. McEwen, 644 F.2d 797 (9th Cir.) (sanctions justified to compensate litigants needlessly put to trouble and expense)