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Local# 1674 of Howard Mental Health v. Howardcenter, Inc.

United States District Court, D. Vermont

December 3, 2014

LOCAL #1674 OF HOWARD MENTAL HEALTH, A SUBORDINATE BODY OF COUNCIL 93 OF THE AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES AFL-CIO a/k/a AFSCME LOCAL #1674, Plaintiff,
v.
HOWARDCENTER, INC., Defendant.

Opinion and Order

WILLIAM K. SESSIONS, III, District Judge.

In light of the Court's recent remand order, the parties have each filed a motion now pending before the Court. First, Plaintiff moves for attorney's fees for wrongful removal. ECF No. 35. Second, Defendant moves for a certificate of appealability and to stay the proceedings. ECF No. 37. For the following reasons the Court denies both motions.

I. Relevant Background

Plaintiff originally filed this action in Vermont Superior Court against Defendant for its alleged failure to properly apply state Medicaid funds. Plaintiff claims that Defendant is obligated to raise the compensation for its direct service employees as a result of a Vermont state statute.

On April 1, Defendant removed the action to this Court on a theory of complete preemption under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185. Plaintiff subsequently filed a motion to remand and Defendant filed a motion to dismiss. On August 27, 2014 the Court granted Plaintiff's Motion to Remand to State Court for Lack of Subject Matter Jurisdiction and denied as moot Defendant's Motion to Dismiss for Failure to State a Claim. ECF No. 34.

II. Plaintiff's Motion for Attorney's Fees

Plaintiff moves for attorney's fees for wrongful removal pursuant to 28 U.S.C. § 1447(c) and Federal Rule of Civil Procedure 54(d)(2)(B). "Absent 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). When an objectively reasonable basis exists, fees should be denied. Id.

District courts retain discretion to consider whether "unusual circumstances" warrant a departure from the rule in a given case but any reason for departing from the general rule should be "faithful to the purposes" of awarding fees. Id. Objective reasonableness is evaluated based on the circumstances that existed at the time that the case was removed. Williams v. Int'l Gun-A-Rama, 416 F.Appx. 97, 99 (2d Cir. 2011).

Plaintiff argues that because Defendant never used the proper term "complete preemption" in any of its pleadings that even Defendant found its legal claim "fundamentally implausible." ECF No. 35 at 3. Moreover, Defendant's "strained factual assertions" were "always of a defensive character and thus never legally sufficient grounds for removal." Id.

Defendant counters that it had an objectively reasonable basis for removal and incorporates by reference arguments it makes in the interlocutory appeal context. Defendant argues that there is substantial ground for difference of opinion regarding preemption. Moreover, Defendant notes that Plaintiff never raised the issue of defensive preemption until the Court did sua sponte and disputes Plaintiff's statement that it never raised the issue of complete preemption in its pleadings.

Plaintiff concedes in its reply that its initial statement was overbroad and it should have stated that Defendant did not present complete preemption as the sole basis for removal jurisdiction. Plaintiff suggests that if Defendant had done so rather than also including "irrelevant if fascinating defensive claims" the lack of removal jurisdiction would have been clear and far less complex. ECF No. 42 at 3.

The Court finds that Defendant had an objectively reasonable basis for removal. The Court issued a twenty-seven page opinion explaining its reasoning and recognized that the boundary between claims requiring "interpretation" of a collective bargaining agreement and those requiring "consultation" can be "elusive." ECF No. 34 at 12. Defendant raised a colorable argument. The Court simply rejected it. Attorney's fees, therefore, are not warranted at this time.

III. Defendant's Motion for a Certificate of Appealability

Defendant moves for certification of the Court's August 27, 2014 Opinion and Order for immediate interlocutory appeal pursuant ...


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