Hart v. Wal-Mart Stores, Inc. Associates' Health

• Decision Date: 01 March 2004
• Docket Number: No. 03-2832.,03-2832.
• Citation: 360 F.3d 674
• Parties: Justin HART, Plaintiff-Appellee, v. WAL-MART STORES, INC. ASSOCIATES' HEALTH AND WELFARE PLAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

360 F.3d 674

Justin HART, Plaintiff-Appellee, v. WAL-MART STORES, INC. ASSOCIATES' HEALTH AND WELFARE PLAN, Defendant-Appellant.

No. 03-2832.

United States Court of Appeals, Seventh Circuit.

Argued January 20, 2004.

Decided March 1, 2004.

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Stacey E. Lynch (argued), Hilfman, Martin & Barr, Chicago, IL, for Plaintiff-Appellee.

John M. Russell (argued), Lawrence & Russell, Memphis, TN, for Defendant-Appellant.

Before CUDAHY, KANNE, and EVANS, Circuit Judges.

CUDAHY, Circuit Judge.

Yogi Berra might describe this case as "deja vu all over again." For if the case seems familiar, it may be because we have decided the precise question presented in this appeal twice before — both times under virtually identical circumstances — and most recently, against the same appellant. See Speciale v. Seybold, 147 F.3d 612 (7th Cir.1998); Blackburn v. Sundstrand Corp., 115 F.3d 493 (7th Cir.1997). In both of these earlier cases we held that a petition to apportion claims to a settlement fund between an ERISA plan subrogation claim and other lienholders was not preempted by ERISA's civil enforcement provision and the allocation of the funds was a matter for determination in the state court. In the present case, Wal-Mart asks us to re-reconsider the issue, this time in the context of an award of $11,500 in attorney's fees, which the district court taxed against Wal-Mart under 28 U.S.C. § 1447(c). After serious consideration (mainly of the possibility of sanctioning Wal-Mart for bringing this presumptuous appeal), we reaffirm our previous holdings in Blackburn and Speciale and affirm the order of the district court.

I.

On December 25, 1999, Appellee Justin Hart suffered permanent brain injury in an automobile accident with Robert Chinn. As a result of his injuries, Hart received substantial medical treatment and incurred certain resulting liens. At the time of the accident, Hart was an employee of Wal-Mart Stores. Blue Cross/Blue Shield is the third-party administrator of the Wal-Mart Stores Associates' Health and Welfare Plan, an employee welfare benefits plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). The Plan paid out $61,475.45 in medical benefits for the treatment stemming from his injuries.

Hart filed a tort suit against Chinn in the Circuit Court of Rock Island County and ultimately obtained a settlement in the amount of $180,000. After reaching this settlement, Hart filed a petition in the state court to adjudicate the liens of six separate lienholders, including Blue Cross/Blue Shield as Administrator of the Plan (hereinafter Wal-Mart). Wal-Mart's plan included a "right to reduction, reimbursement and subrogation" provision. Wal-Mart Br. at 4. Wal-Mart believed that unlike federal law, Illinois state law allowed common fund reductions for attorney's fees even when the plan's terms expressly disclaimed the doctrine. Thus, in an apparent effort to take advantage of the more favorable federal law, Wal-Mart independently removed the case to the Central District of Illinois pursuant to 28 U.S.C. § 1441(a), (b) and (c), arguing that Hart's claim was completely preempted by ERISA.

Hart filed a motion to remand on July 17, 2002, arguing that the district court lacked subject matter jurisdiction. In an order dated December 23, 2002, the district court ordered that the case be remanded. The district court relied on our holdings in Blackburn and Speciale in finding that ERISA preemption was not applicable. Moreover, the district court noted that the case had not been properly removed under 28 U.S.C. § 1441 because Wal-Mart failed to join the other lienholders in its notice of removal.

Thereafter, Hart filed a petition pursuant to 28 U.S.C. § 1447(c), seeking $13,750 in attorney's fees and costs for improper removal. Wal-Mart opposed this petition, arguing that (1) Hart had not submitted any evidence of a reasonable hourly rate; (2) Hart's counsel's claimed tasks were insufficiently documented; (3) Hart's counsel's time entries were excessive; and (4) Hart's bill of costs should be denied. In an order dated April 28, 2003, the district court awarded $11,500 in attorney's fees. This appeal followed.

II.

1. Jurisdiction

An order remanding a case to the state court from which it was removed is generally not subject to appeal. 28 U.S.C. § 1447(d). The purpose of precluding review is to avoid the delay that might be caused by prolonged federal litigation of jurisdictional questions. See Matter of Amoco Petroleum Additives Co., 964 F.2d 706, 708 (7th Cir.1992); Mobile Corp. v. Abeille General Ins. Co., 984 F.2d 664, 666 (5th Cir.1993); Appalachian Volunteers, Inc. v. Clark, 432 F.2d 530 (6th Cir.1970); In re MacNeil Bros. Co., 259 F.2d 386, 388 (1st Cir.1958). However, it is well-settled that an award of attorney's fees occasioned by a wrongful removal is an independently appealable order not subject to the prohibition against reviewing a remand order. See Garbie v. DaimlerChrysler Corp., 211 F.3d 407, 409-10 (7th Cir.2000); LaMotte v. Roundy's, Inc., 27 F.3d 314, 315 (7th Cir.1994).

It is equally clear that an evaluation of the merits of a remand order may be required to determine whether the district court's award of attorney's fees was appropriate. See Sirotzky v. New York Stock Exch., 347 F.3d 985, 987 (7th Cir. 2003) ("[P]laintiff must show the remand order was correct (that is, that removal was improper) ..."); Moore v. Permanente Med. Group, 981 F.2d 443, 447 (9th Cir.1992) ("[S]ome evaluation of the merits of the remand order is necessary to review an award of attorney's fees ..."); Roxbury Condo. Ass'n, Inc. v. Anthony S. Cupo Agency, 316 F.3d 224, 227 (3d Cir. 2003); Miranti v. Lee, 3 F.3d 925, 927-28 (5th Cir.1993). This merits review does not conflict with the purpose of 28 U.S.C. § 1447(d) because the state court action may proceed expediently while the appellate court reviews the award of attorney's fees. Even if the appellate court determines that it was an abuse of discretion to award attorney's fees because the decision to remand was improper, the remand itself may not be disturbed. See Dahl v. Rosenfeld, 316 F.3d 1074, 1079 (9th Cir.2003); Roxbury Condo., 316 F.3d at 227-28.¹

Generally, we review a district court's award of attorney's fees for abuse of discretion. See Tenner v. Zurek, 168 F.3d 328, 329 (7th Cir.1999). However, "[a] district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law...." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990); Salgado by Salgado v. Gen. Motors Corp., 150 F.3d 735, 739 n. 4 (7th Cir.1998). If removal is found to be improper, the plaintiff is presumptively entitled to an award of fees. See Sirotzky, 347 F.3d at 987.

2. Waiver

As an initial matter, Hart argues that Wal-Mart waived its argument by not specifically reiterating it in opposing attorney's fees. Hart Br. at 8-11. It is true that in opposing attorney's fees below, Wal-Mart attacked only the amount of the fees rather than the merits of the remand order. However, Hart does not dispute that Wal-Mart actively contested and lost the issue whether removal was proper before opposing the award of attorney's fees. After Wal-Mart had made its position plain and lost the issue on the merits, it would be senseless to require that Wal-Mart reiterate its argument in a futile effort to oppose attorney's fees. See, e.g., Dawson v. New York Life Ins. Co., 135 F.3d 1158, 1166 (7th Cir.1998) (rejecting a similar waiver argument and noting that "at some point further objection became useless"); Dresser Indus. Inc. v. The Gradall Co., 965 F.2d 1442, 1450 (7th Cir.1992) (same). Hart cannot claim that he was prejudiced in any way by Wal-Mart's decision not to beat a dead horse in the district court. Nor did Wal-Mart's decision deprive the district court of a meaningful opportunity to review the issue of subject matter jurisdiction. Therefore, we find that Wal-Mart did not waive its argument.

3. Attorney's fees

To determine whether the district court's award of attorney's fees was appropriate, we must decide whether the district court properly found that it lacked subject matter jurisdiction. When determining whether federal jurisdiction exists, we must follow the well-pleaded complaint rule, which states that federal question jurisdiction exists only "when the plaintiff's well-pleaded complaint raises issues of federal law." Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987); Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1486 (7th Cir.1996) ("The issues raised in the plaintiff's complaint, not those added in the defendant's response, control the litigation."). "The paramount policies embodied in the well-pleaded complaint rule [are] that the plaintiff is master of the complaint... and that the plaintiff may, by eschewing claims based on federal law, choose to have the cause heard in state court." Caterpillar, Inc. v. Williams, 482 U.S. 386, 398-99, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987).

However, there is an exception to the well-pleaded complaint rule, known as the "complete preemption doctrine" which provides that, where Congress has completely preempted a given area of state law, a plaintiff's state law claim will be "recharacterized" as a federal claim so that removal becomes proper. See Avco Corp. v. Aero Lodge No. 735 Int'l Ass'n of Machinists and Aerospace Workers, 390 U.S. 557, 560, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968). The Supreme Court has determined that all state actions falling within the scope of section 502(a) of ERISA, 29 U.S.C. § 1132(a), are preempted under the complete preemption doctrine. Taylor, 481 U.S. at 67, 107 S.Ct. 1542. Section 502(a) provides that "[a] civil action may be brought — (1) by a participant or beneficiary — (A) for the relief provided in subsection (c) of this section, or (B) to recover benefits due to...