Micrometl Corp. v. Tranzact Technologies, Inc.
656 F.3d 467
7th Cir.2011Background
- Micrometl sued Tranzact in Indiana state court for overbillings; Tranzact removed to federal court and later to the Northern District of Illinois due to a contract forum clause.
- After discovery, Micrometl produced an August 2009 spreadsheet showing roughly $140,000 in overbillings but refunds reducing liability to $38,846.98; both sides knew the refunds occurred by November 14, 2007.
- Micrometl conceded the refunds reduced potential damages; Tranzact used the August 2009 numbers to contest diversity jurisdiction.
- Discovery closed January 7, 2010; a settlement conference failed; Tranzact moved to remand and request fees; the district court remanded but did not award fees or costs.
- The district court held that the amount in controversy could not exceed $40,000 and thus lacked § 1332 diversity; the question on appeal concerns whether fees under § 1447(c) or § 1927 should be awarded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court abused its discretion in denying § 1447(c) fees | Micrometl argues no abuse; removal was proper based on allegations at filing. | Tranzact contends fee-shifting should apply due to Micrometl's failure to disclose evidence lowering the amount in controversy. | No abuse; district court properly exercised discretion |
| Whether delay in seeking remand affects fee entitlement under § 1447(c) | Micrometl delays are not dispositive; emphasis on removal merit. | Delay undermines removal efficiency and justifies fee denial. | Delay may support fee denial; court did not err |
| Whether § 1447(c) allows fees to a defendant seeking remand for lack of jurisdiction | Plaintiff’s fees are not at issue; focus is on defendant's sought costs. | Defendant may recover if removal was improper. | Defendant can receive fees; district court did not award them |
| Whether sanctions under § 1927 were warranted | Micrometl did not act in bad faith; no sanctions should be imposed. | Sanctions could deter frivolous litigation and misrepresentations. | Sanctions not warranted; no bad faith found |
Key Cases Cited
- Martin v. Franklin Capital Corp., 546 U.S. 132 (U.S. 2005) (attorneys' fees under § 1447(c) depend on reasonableness of removal)
- Rising-Moore v. Red Roof Inns, Inc., 435 F.3d 813 (7th Cir. 2006) (when complaint states a number, it controls unless legally impossible)
- BEM I, LLC v. Anthropologic, Inc., 301 F.3d 548 (7th Cir. 2002) (deliberate avoidance of jurisdiction is improper and sanctionable)
- Garbie v. DaimlerChrysler Corp., 211 F.3d 407 (7th Cir. 2000) (jurisdictional and fee-shifting questions are reviewable on appeal)
- Tenner v. Zurek, 168 F.3d 328 (7th Cir. 1999) (fee-shifting considerations in removal context)
- Shales v. General Chauffeurs, Sales Drivers and Helpers Local Union No. 330, 557 F.3d 746 (7th Cir. 2009) (sanctions standards under § 1927)
- Smith v. American General Life and Acc. Ins. Co., 337 F.3d 888 (7th Cir. 2003) (pleading damages to meet jurisdictional thresholds)