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United States District Court, E.D. New York

April 11, 2005.

ROBERT JACOBS and GLORY JACOBS, suing both individually and on behalf of all others similarly situated Plaintiffs,
ABN-AMRO BANK N.V., et al., Defendants.

The opinion of the court was delivered by: NICHOLAS G. GARAUFIS, District Judge


On April 21, 2004, the court issued a Memorandum & Order ("M&O"), Jacobs v. ABN-AMRO Bank, N.V., No. 03-CV-4125, 2004 WL 869557, in which it granted the plaintiffs' motion to remand the above-captioned case to the Supreme Court of the State of New York, Queens County. The M&O did not address the issue of awarding costs and attorney's fees to the plaintiffs. Following the entry of the M&O, however, the plaintiffs moved the court for such an award, pursuant to 28 U.S.C. § 1447(c). Not surprisingly, the defendants have opposed this motion. For the reasons that follow, the plaintiffs' motion is denied.


  A. Jurisdiction

  In response to the plaintiffs' motion for fees and costs, the defendants initially contend that this court lacks jurisdiction to entertain the motion. Specifically, the defendants argue that the language of 28 U.S.C. § 1447(c) demands that any award of fees and costs must be made in the order remanding the case, or not at all. Following remand, the defendants claim, a district court lacks jurisdiction to rule on such a motion. Because the court must have jurisdiction to reach the merits of this motion, it considers this issue first.

  Under 28 U.S.C. § 1447(c), "[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." The wording of this provision has caused varying interpretations of a district court's authority to decide a motion for fees and costs after remand. Compare United Broadcasting Corp. v. Miami Tele-Communications, Inc., 140 F.R.D. 12, 14 (S.D.Fla. 1991) ("the plain language of the statute controls and clearly provides that if the court is going to award costs and expenses, including attorneys' fees pursuant to 28 U.S.C. § 1447(c), it must be taken care of in the order of remand.") with 14C Wright, Miller, Cooper, Federal Practice & Procedure 3d § 3739, at 490 (1998) ("Under the language of Section 1447(c) it is not clear whether or not a court is prohibited from awarding costs and attorney fees after remanding the case.") and with 16 James Wm. Moore, et al., Moore's Federal Practice § 107.41[3][a][iii] (3d ed. 2004) ("The district court retains jurisdiction, even after remand, to award attorney's fees.").

  Despite the defendants' claim that "New York courts have consistently followed [the statute's] plain language" and found jurisdiction lacking after remand (Def. Opp. at 4), the standard employed in the Second Circuit is not so well settled. Although one court has clearly expressed the view that a district court lacks jurisdiction after the remand order has been entered, see Frydman v. Cosmair, Inc., No. 94-CV-3772, 1996 WL 417516, at *1 (S.D.N.Y. July 25, 1996) ("Having remanded the case to the New York Supreme Court, I no longer have subject matter jurisdiction to hear this motion."), the other cases cited in support by the defendants are much less committed to the principle that jurisdiction is lacking than the defendants represent.

  In Britt v. Britt, No. 03-CV-9135, 2004 WL 1664003, at *1 n. 3 (W.D.N.Y. July 23, 2004) (citing Frydman), only after denying an award of fees on the merits, did the court observe in a footnote: "Moreover, there is some question as to whether this Court has subject matter jurisdiction to grant a request for fees under § 1447(c)." While in Intertec Contracting v. Turner Steiner International, S.A., No. 98-CV-9116, 2001 WL 396517, at *1 (S.D.N.Y. Apr. 18, 2001), the court, acting sua sponte, observed that § 1447(c) "appears" to answer in the negative the question of whether it could retain jurisdiction over a fee award, but provided that "counsel for either side may submit letter briefs expressing a contrary view, with citations to authority." Based on this limited support, it is far from settled that federal courts in New York consistently find jurisdiction over fees and costs to be lacking after remand has occurred.

  Although this issue has not been taken up by the Second Circuit, a number of other circuit courts have considered it and concluded that a district court maintains limited jurisdiction after remand. A central rationale underlying these decisions is that "an award of attorney's fees is a collateral matter over which a court normally retains jurisdiction even after being divested of jurisdiction on the merits." Moore v. Permanente Medical Group, Inc., 981 F.2d 443, 445 (9th Cir. 1992); see also Mints v. Educational Testing Serv., 99 F.3d 1253, 1258 (3d Cir. 1996) ("a post-remand application for fees and costs is collateral to the decision to remand and cannot affect the proceedings in the state court.") (citing Moore). For instance, a court retains jurisdiction to award attorney's fees pursuant to a motion under Rule 11 of the Federal Rules of Civil Procedure after a voluntary dismissal and may also award costs after a case is dismissed for lack of jurisdiction. Id. (citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) (Rule 11) and 28 U.S.C. § 1919 (lack of jurisdiction)).

  The argument that the "plain language" of § 1447(c) demands that fees and costs be awarded in the remand order, if at all, has also been considered by a number of courts and rejected. As the Sixth Circuit observed:

the language of the statute — "an order remanding the case may require payment of . . . attorney fees" — is enabling, but does not purport to be exclusive. If the order does not include an award of attorney fees, there is nothing in the statute to suggest that there cannot be a supplemental or amended order. That there could be additional orders is consistent with the continued jurisdiction of the district court to consider collateral matters after remand.
Stallworth v. Greater Cleveland Reg. Transit Auth., 105 F.3d 252, 256-57 (6th Cir. 1997). This reasoning has been echoed in the decisions of other courts. See Wisconsin v. Hotline Indus., Inc., 236 F.3d 363, 365 (7th Cir. 2000) ("the statute does not purport to be exclusive, and it contains no language to suggest that there cannot be a supplemental order."); Mints, 99 F.3d at 1258 ("In our view, section 1447(c), by providing that a court `may require payment' of costs and attorney's fees incurred as a result of the removal does not imply that the court cannot enter an order for payment of such costs and fees at some later time.").

  This court finds the reasoning of those courts that have held that a district court retains jurisdiction following remand to decide motions for fees and costs under § 1447(c) to be persuasive. The court therefore declines to follow the cases cited by the defendants because it is unconvinced that the language of § 1447(c) mandates that jurisdiction for imposing fees and costs ceases at the moment of remand. Rather, the court finds that the exercise of jurisdiction over such a motion is in keeping with traditional notions of a district court's residual authority over collateral issues, even after the action has concluded. Accordingly, this court has jurisdiction to consider the merits of the plaintiffs' motion for fees and costs.

  B. The Award of Fees and Costs

  Section 1447(c) "affords a great deal of discretion and flexibility to the district courts in fashioning awards of costs and fees." Morgan Guar. Trust Co. of New York v. Republic of Palau, 971 F.2d 917, 924 (2d Cir. 1992). "In exercising their discretion, district courts look to whether the grounds for removal were substantial or presented a close question . . . or colorable, even if ultimately unpersuasive." Natoli v. First Reliance Standard Life Ins. Co., No. 00-CV-5914, 2001 WL 15673, at *5 (S.D.N.Y. Jan 5, 2001) (internal quotations and citations omitted).

  In this case, the defendants removed the case based, inter alia, on an argument that a then-recent decision by the Supreme Court, Beneficial National Bank v. Anderson, 539 U.S. 1 (2003), could be construed to mean that the plaintiffs' claim regarding bank fees was preempted from consideration in state court by the National Bank Act. Although this court ultimately rejected the defendants' argument, because Beneficial had been recently decided at the time of removal and its scope had only been addressed by one other court in the country, see Jacobs at *5, the court finds that the defendants presented a colorable claim. Therefore, the court exercises its discretion in denying the plaintiffs' motion for costs and fees under § 1447(c).


  For the foregoing reasons, the plaintiffs' motion for costs and attorney's fees, pursuant to 28 U.S.C. § 1447(c), is DENIED.



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