Smith et al v. Westminster Management, LLC et al

Filing 51

MEMORANDUM. Signed by Chief Judge James K. Bredar on 2/13/2018. (bmhs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
*
TENAE SMITH, et al.,

*

Plaintiffs

*

v.

*

WESTMINSTER MANAGEMENT, LLC,
et al.,

CIVIL NO. JKB-17-3282

*
*

Defendants.
*
*

*

*

*

*

*

*

*

*

*

*

*

MEMORANDUM
Plaintiffs Tenae Smith and Howard Smith brought an action on behalf of themselves and
similarly situated individuals against Defendants Westminster Management, LLC, JK2
Westminster, LLC, Carroll Park Holdings, LLC, and Dutch Village, LLC (collectively,
“Defendants”), in the Circuit Court for Baltimore City on September 27, 2017. (See Compl.,
ECF No. 2.) Plaintiffs brought only state law claims, but on November 7, 2017, Defendant
Dutch Village, LLC (“Dutch Village”), removed the case to this Court, asserting diversity
jurisdiction pursuant to 28 U.S.C. § 1332(a). (See Notice of Removal, ECF No. 1.) The other
Defendants consented to removal. (See ECF No. 5.) Two Defendants did not fully disclose the
citizenship of their members, and Defendants moved the Court for leave to file a supplemental
removal statement under seal. (See ECF No. 21.) After opposition by the Plaintiffs and a group
of Media Intervenors, the Court denied the Defendants’ motion and ordered the Defendants to
fully disclose the identity and citizenship of their membership by February 9, 2018. (See Mem.
and Order, ECF No. 45.) Instead of disclosing such information, Dutch Village, with the consent

of all Defendants, moved to withdraw its notice of removal and requested that the Court remand
this case to the Circuit Court for Baltimore City. (See ECF No. 48.) Plaintiffs responded, and
agreed that the Court should remand the case, but requested that the Court retain jurisdiction in
order to consider a motion for attorney’s fees related to the litigation of Defendants’ notice of
removal and attempt to file a supplemental removal statement under seal. (See ECF No. 49.)
Without knowledge of the Defendants’ “upstream members” the Court cannot ascertain whether
there is complete diversity and thus cannot confirm its jurisdiction. Accordingly the Court will
grant Defendants’ motion to withdraw their notice of removal and for remand and the case will
return to the state court. Because the Court does not find that Defendants “lacked an objectively
reasonable basis for seeking removal” it will not award Plaintiffs attorney’s fees. An order shall
issue accompanying this memorandum and setting forth this disposition.
I.

Background
After Plaintiffs sued Defendants in the Circuit Court for Baltimore City, Dutch Village

removed the case to this Court. In its Removal Statement, Dutch Village asserted that this Court
had jurisdiction because the parties were diverse and the amount in controversy exceeded
$75,000. (See Removal Statement.) Dutch Village, a limited liability company (LLC), asserted
that it was not a citizen of Maryland, but it did not disclose the identity of its member’s
member’s member(s). (Some of these entities are also LLCs.) The other Defendants consented
to removal, but Defendant Carroll Park Holdings, LLC, similarly did not disclose the identity of
its member’s member’s member(s).
The Defendants filed a motion for leave to file a supplemental removal statement under
seal, essentially asking the Court for leave to disclose their member’s member’s member(s) (and
so forth, if necessary) to the Court alone. (See ECF No. 21.) In essence, the Defendants feared

2

increased press coverage of the case, and possible bias against them, if this information was
publicly disclosed. After Plaintiffs and a group of Media Intervenor’s opposed Defendants’
motion, the Court denied Defendants’ motion and ordered them to file the supplemental removal
statement on the public record by February 9.
Instead of doing so, on that date Dutch Village filed a “Notice of Withdrawal of Notice of
Removal.” (See ECF No. 48.) This document has a curious title, but familiar substance. In it,
Dutch Village “move[d] to withdraw its Notice of Removal, and respectfully request[ed] that this
Court remand this matter to the Circuit Court for Baltimore City.” (Id.) Therefore, the Court
construes this “notice” as a motion to remand. Plaintiffs responded the same day, February 9.
(See ECF No. 49.) Plaintiffs did not oppose Dutch Village’s motion, but did request that they be
given an opportunity to request attorney’s fees that they incurred while litigating this matter.
II.

Analysis
That this motion comes by way of an odd procedural posture – Defendants removed the

case and moved to remand – does not change the underlying statutory command: “If at any time
before final judgment it appears that the district court lacks subject matter jurisdiction, the case
shall be remanded.” 28 U.S.C. § 1447(c). Neither does it affect the Court’s statutorily-provided
ability to assess attorney’s fees: “An order remanding the case may require payment of just costs
and any actual expenses, including attorney fees, incurred as a result of the removal.” Id.
The question of whether to grant Defendants’ motion to remand can be easily resolved.
In addition to the fact that it is uncontested, the Court cannot determine that it has subject matter
jurisdiction without knowledge of the citizenship of the parties. Defendants, who bore “the
burden of demonstrating that removal jurisdiction [was] proper,” In re Blackwater Security
Consulting, LLC, 460 F.3d 576, 583 (4th Cir. 2006), have failed to fully disclose their

3

citizenship. They have not carried their burden to establish subject matter jurisdiction. By law,
“the case shall be remanded” to the Circuit Court for Baltimore City. 28 U.S.C. § 1447(c).
The question of whether to award Plaintiffs attorney’s fees requires slightly more
discussion before resolution. Under the statute, the Court may award such fees, and that decision
is within the Court’s discretion. See Martin v. Franklin Capital Corp., 546 U.S. 132, 136 (2005)
(discussing 28 U.S.C. § 1447(c)). There is no presumption in favor of granting such fees, nor is
there a “strong bias against fee awards” in this context. Id. at 137-38 (emphasis in the original).
Still, “[t]he fact that an award of fees under § 1447(c) is left to the district court’s discretion, with
no heavy congressional thumb on either side of the scales, does not mean that no legal standard
governs that discretion.” Id. at 139.
In Martin v. Franklin Capital Corp., the Supreme Court determined that standard:
“absent unusual circumstances, attorney’s fees should not be awarded when the removing party
has an objectively reasonable basis for removal.” 546 U.S. at 136. When applying this general
rule, courts “should recognize the desire to deter removals sought for the purpose of prolonging
litigation and imposing costs on the opposing party, while not undermining Congress’ basic
decision to afford defendants a right to remove as a general matter, when the statutory criteria are
satisfied.” Id. at 140. Put differently, the overall goal here is to “reduce the attractiveness of
removal as a method for delaying litigation and imposing costs on the plaintiff” and the
“objectively reasonable basis for removal” test is a convenient way to determine if defendants
are genuinely seeking removal or abusing process.
The Court is unable to determine if the Defendants had an “objectively reasonable”
factual basis for removal, as Defendants have chosen not to disclose the LLC Defendants’
upstream membership. However, the Court finds that the Defendants did have an “objectively

4

reasonable” legal basis for removal, unlike a number of defendants who have been charged
attorney’s fees for improvident removals. See, e.g., Hyatt v. Johns, Case No. GJH-16-2912,
2016 WL 8673870, at *3 (D. Md. Oct. 14, 2016) (in-state defendants removed case); Dot Foods,
Inc. v. Southern Foods Grp., LLC, No. 1:10CV707, 2010 WL 4628193, at *2 (M.D.N.C. Nov. 4,
2010) (same); Lomick v. LNS Turbo, Inc., No. 3:08-CV-00296-FDW, 2008 WL 5084201, at *2*3 (defendants asserted federal question jurisdiction even though plaintiffs only brought state
law claims). Dutch Village asserted that all of the parties were diverse and that the amount in
controversy was over $75,000. (See Notice of Removal.) That is an objectively reasonable basis
for removal. It would be unreasonable for Defendants to have believed that they could assert
federal jurisdiction without fully disclosing enough information for the Court to determine
citizenship, but it does not appear that Defendants believed as much. Rather, it would appear
that Defendants believed that they could disclose such information to the Court alone, and not to
the public.

That belief was incorrect, but it was not unreasonable.

Furthermore, the

reasonableness (or not) of that belief is somewhat irrelevant; what matters is the reasonableness
(or not) of the basis for removal. That Defendants wish to litigate in state court instead of
disclosing their complete membership now has little bearing on whether it was reasonable to
remove the case to this Court when they did so.
Most importantly, the Court is ever mindful of the purpose behind Section 1447(c). See
Martin, 546 U.S. at 140. Even if this Court had found that Defendants lacked an objectively
reasonable basis for seeking removal, it would still consider the overall purpose of preventing
dilatory and wasteful litigation tactics before finally deciding whether to award fees. See Hyatt,
2016 WL 8673870, at *3 (finding that removal on diversity grounds by forum state defendants
was an objectively unreasonable basis for removal, but also discussing that defendants’ attorney

5

had engaged in this dilatory tactic multiple times before). Here, the Court is not concerned that
the Defendants may have removed to this Court simply to waste Plaintiffs’ time and money. The
timing of this motion, filed on the very day on which the Defendants were ordered to publicly
disclose the membership of the Defendant LLCs, strongly suggests the motivation behind this
exercise. It does not appear that Defendants concocted a legally unsound basis for removal in
order to delay resolution of the case. Instead Defendants likely removed the case assuming
(albeit incorrectly) that they would not have to publicly disclose the members of the Defendant
LLCs and then moved to remand when that assumption was proven wrong.
So, although there are certainly some “unusual circumstances” at work in this litigation,
the Court will decline to exercise its discretion to award fees. 1 See Martin, 546 U.S. at 141.
“When a court exercises its discretion in this manner . . . its reasons for departing from the
general rule should be ‘faithful to the purposes’ of awarding fees under § 1447(c).” Id. The
decision the Court makes today is faithful to both the general rule and the purpose of awarding
fees.
III.

Conclusion
The Court will grant Defendants’ motion (ECF No. 48). Accordingly, the case will be

remanded to the Circuit Court for Baltimore City. The Court does not find that Defendants
lacked an objectively reasonable basis for removing the case, and therefore declines to include in
its order remanding the case an assessment for attorney’s fees.

1

The Court holds some sympathy for Plaintiffs’ request for fees related to their opposition to Defendants’ motion to
dismiss, but this does not weigh heavily in the Court’s determination. As the Plaintiffs have only brought state law
claims, research performed in opposing Defendants’ motion to dismiss in Federal Court may well be useful in
opposing such a motion in state court. Furthermore, that Defendants brought a motion to dismiss in this Court
reinforces the Court’s view that Defendants truly did wish to litigate in this forum, and did not remove simply to
waste time and money.

6

DATED this 13th day of February, 2018.
BY THE COURT:
___________/s/_________________
James K. Bredar
Chief Judge

7