United States District Court, S.D. New York
July 7, 2005.
SAM WYLY, Petitioner,
MILBERG WEISS BERSHAD & SCHULMAN, LLP STULL, STULL & BRODY, and SCHIFFRIN & BARROWAY, LLP, Respondents.
The opinion of the court was delivered by: GEORGE DANIELS, District Judge
MEMORANDUM OPINION AND ORDER
Petitioner, a former member of two class actions in the Eastern
District of New York ("EDNY"), commenced this lawsuit in New York
State Supreme Court seeking to obtain documents from lead
counsel, who had represented that class of plaintiffs.
Respondents removed the action to federal court on the grounds
that it presented a federal question. Petitioner moves to remand
the case back to state court. For the reasons stated below,
petitioner's motion is granted.*fn1
The instant action alleges a breach of fiduciary obligation by
respondents for refusing to comply with petitioner's request for
access to attorney work-product and discovery materials in
connection with the previous federal class action lawsuits.*fn2 A defendant may remove a cause of action over which the federal
court has original jurisdiction from state to federal court
pursuant to 28 U.S.C. § 1441(b) when the civil action is founded
on a claim or right that arises "under the Constitution,
treaties, or laws of the United States." Absent diversity
jurisdiction, a cause of action is not removable if the complaint
does not affirmatively allege a federal claim. Beneficial Nat.
Bank v. Anderson, 539 U.S. 1, 6 (2003); see also
Caterpillar v. Williams, 482 U.S. 386, 391-92 (1987).
Respondents argue that the petition raises numerous federal
questions: whether "the claim relates to the rights of a class
member in a class action governed by Fed.R.Civ.P. 23(a);"
"whether under the PSLRA lead counsel represents the class as a
whole or individual class members;" "whether an attorney client
relationship exists between lead counsel and each individual
class member;" and "whether the district court has authority
under Fed.R.Civ.P. 26 to prohibit an absent class member from
accessing confidential discovery materials produced in federal
litigation." Notice of Removal at 5, 6. None of these reasons are
sufficient to find federal jurisdiction based on a federal
question. Moreover, merely invoking the Federal Rules of Civil
Procedure is not sufficient grounds for federal question
jurisdiction. See Fed.R.Civ.P. 82 ("[t]hese rules shall not be
construed to extend or limit the jurisdiction of the United
States district courts . . ."); Creswell v. Sullivan &
Cromwell, 922 F.2d 60, 70 (2d Cir. 1990) ("[t]he Rules do not
provide an independent ground for subject matter jurisdiction
over an action for which there is no other basis for
jurisdiction"). Petitioner's alleged breach of fiduciary duty for
counsel's refusal to turn over materials in the attorneys'
possession does not require the application of any federal laws.
Respondents have not demonstrated a sufficient basis to remove
this case to federal court.*fn3 Petitioner also seeks to recover costs, including reasonable
attorneys' fees, incurred as a result of resisting respondents'
removal. Under 28 U.S.C. § 1447(c), a district court may award
attorneys' fees to the non-moving party when it remands a case to
state court. Such an award is meant to deter improper removal.
Circle Industries USA, Inc. v. Parke Const. Group,
183 F.3d 105, 109 (2d Cir. 1999). Nonetheless, this provision "leaves the
decision to award [fees] to the Court's discretion, and courts
frequently decline to do so." United Mutual Houses, L.P. v.
Andujar, 230 F.Supp.2d 349, 354 (S D.N.Y. 2002). An award of
costs and fees against removing defendants does not require a
finding of bad faith or frivolity, but an assessment of "overall
fairness given the nature of the case, the circumstances of the
remand, and the effect on the parties." Morgan Guaranty Trust
Co. of New York v. Republic of Palau, 971 F.2d 917, 923-4 (2d
Cir. 1992). Considering the dubious nature of petitioner's cause
of action and the surrounding circumstances, the award of fees in
this instance is unwarranted.*fn4
Accordingly, petitioner's motion for remand is granted.
Petitioner's request for attorneys' fees is denied. Respondents'
motion for transfer of venue is denied as moot.