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CAFA Class Action Defense Cases–Lussier v. Dollar Tree: Ninth Circuit Upholds Denial Of Attorney Fees For Flawed Removal Of Class Action Under Class Action Fairness Act Because Basis For Removal Was Objectively Reasonable

Following Remand of Labor Law Class Action to State Court on Grounds that Class Action had been “Commenced” Prior to Effective Date of Class Action Fairness Act of 2005 (CAFA) thus Precluding Removal Jurisdiction under CAFA, District Court did not Abuse its Discretion in Refusing to Award Plaintiffs Attorney Fees because Defense Removed Class Action under a Novel Theory of First Impression Ninth Circuit Holds

Plaintiffs filed a class action lawsuit against Dollar Tree Stores alleging various labor law violations. The class action was filed in Oregon state on February 14, 2005 – four days before the effective date of the Class Action Fairness Act of 2005 (CAFA) – and plaintiffs served Dollar Tree with the class action complaint on April 29, 2005. Lussier v. Dollar Tree Stores, Inc., ___ F.3d ___ (9th Cir. March 7, 2008) [Slip Opn., at 2204]. Defense attorneys removed the class action to federal court on May 27, 2005, alleging removal jurisdiction under CAFA, id., at 2204-05. Plaintiffs’ lawyers moved to remand the class action to state court on the ground that it had been filed prior to CAFA’s effective date, and had been “commenced” on the date it was filed rather than the date served. Id., at 2205. Dollar Tree responded that Ninth Circuit authority holds an action is not “commenced” under Oregon law until the complaint is served, see id., at 2205-06, but the district court granted the motion to remand the class action, holding that the authority relied on by defense attorneys applied only to statutes of limitation and not to “commencement” under CAFA, id., at 2206-07. Plaintiffs then sought attorney fees under 28 U.S.C. § 1447(c), but the district court denied the motion finding that Dollar Tree’s argument raised a novel issue of first impression, id., at 2207. Plaintiffs appealed the denial of attorney fees, and the Ninth Circuit affirmed.

The Circuit Court cited the now settled test that attorney fees arising out of remand motions are awarded based on the reasonableness of the act of removal: if an objectively reasonable ground existed for removing the action to federal court, then attorney fees should be denied. Lussier, at 2207-08 (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005)). Appellate review of such district court decisions is subject to an abuse of discretion standard, id., at 2208 (citations omitted). The Ninth Circuit concluded that while Dollar Tree’s arguments did not prevail, the district court did not abuse its discretion in determining that its interpretation of CAFA and Ninth Circuit case law was objectively reasonable. Id., at 2208-11. Accordingly, it affirmed the district court order denying attorney fees, id., at 2211.

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