Fourth Circuit Says Parties Bear the Risks of Removal to Federal Court

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Attorneys advising clients on the strategic value of removal to Federal court are free to advise their clients without risking the threat of sanctions in the event the case is remanded back to state court after removal. Instead, clients bear the risks of sect. 1447’s award of costs and fees, which puts the client back in the driver’s seat on this strategic decision.

In Crescent City Estates, No. 08-2367 (4th Cir. Dec. 7, 2009), the United States Court of Appeals for the Fourth Circuit appears to be the first federal circuit court examining the question of whether 28 U.S.C. sect. 1447(c), which allows the imposition of fees and costs including attorneys’ fees on a party who erroneously removes a case to federal court, allows the award of fees to be imposed on just the losing party, or the party and the attorney who filed the removal notice. The Fourth Circuit held because the statute was silent on whether fees awarded would be born by the party or by the attorney, the presumption was that the sanction could not be imposed on the attorneys. Thus, the risk of filing a removal notice and then having to pay the fees if the case is remanded back to state court is solely on the shoulders of the party requesting removal.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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