The Lamar Company, LLC v. The Mississippi Transportation Commission

Filing 72

Memorandum Opinion and Order re 69 . Lamar Company, LLC's [69-1] Motion for Attorney's Fees and Costs, which was originally filed before the United States Court of Appeals for the Fifth Circuit on September 1, 2020, is Denied in Part as to Lamar's arguments concerning 28 U.S.C. 1447(c) and Fed.R.Civ.P.11. This court expresses no opinion regarding the remaining claims for costs and fees asserted under the Mississippi Litigation Accountability Act. This case is Remanded to the Ch ancery Court of Harrison County, Mississippi. A certified copy of this order or remand shall be immediately mailed by the Clerk of this Court to the clerk of the state court pursuant to 28 U.S.C. 1447(c). Signed by District Judge Louis Guirola, Jr. on 12/4/2020 (wld)

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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
THE LAMAR COMPANY, LLC
v.

PLAINTIFF
CAUSE NO. 1:17CV149-LG-RPM

THE MISSISSIPPI
TRANSPORTATION
COMMISSION

DEFENDANT

MEMORANDUM OPINION AND ORDER DENYING IN PART
PLAINTIFF’S MOTION FOR ATTORNEY’S FEES AND
COSTS AND REMANDING CASE TO STATE COURT
BEFORE THE COURT is Lamar Company, LLC’s [69-1] Motion for
Attorney’s Fees and Costs, which was filed before the United States Court of
Appeals for the Fifth Circuit on September 1, 2020. The Fifth Circuit remanded
consideration of the Motion to this Court on October 14, 2020. The parties fully
briefed the Motion before the Fifth Circuit and provided supplemental briefs to this
Court after remand. After reviewing the submissions of the parties, the record in
this matter, and the applicable law, the Court finds that Lamar’s Motion should be
denied in part to the extent that Lamar seeks relief pursuant to 28 U.S.C. § 1447(c)
and Fed. R. Civ. P. 11. The case must now be remanded to the Chancery Court of
Harrison County, Mississippi pursuant to 28 U.S.C. § 1447(c) for consideration of
the merits of Lamar’s claims as well as the remaining claims in Lamar’s Motion for
Attorney’s Fees and Costs.1

Lamar also seeks costs and fees pursuant to the Mississippi Litigation
Accountability Act. Miss. Code Ann. § 11-55-5.
1

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BACKGROUND
Lamar builds and maintains outdoor advertising signs in Mississippi. The
Mississippi Transportation Commission (“MTC”), by and through the Mississippi
Department of Transportation (“MDOT”), regulates the height of outdoor
advertising signs. MDOT denied Lamar’s request for permission to change the
shape of one of its signs because it considered it a non-conforming structure
pursuant to Miss. Code Ann. § 49-23-9(2)(b). As a result, Lamar filed this lawsuit in
the Chancery Court of Harrison County, Mississippi, asking the Court to construe
Miss. Code Ann. § 49-23-9(2)(b), as well as the rule that MDOT adopted to
implement the statute. Lamar also alleged that MTC’s interpretation of the statute
and rule (by and through MDOT) resulted in a taking of Lamar’s property under the
Mississippi Constitution. MTC removed the case to this Court on the basis of
federal question jurisdiction, and the parties filed cross-motions for summary
judgment.
Since no federal claim appeared on the face of Lamar’s Complaint, this Court
entered an [35] Order Requiring Briefs on the Question of Subject Matter
Jurisdiction. In its brief, MTC asserted that both federal question and diversity
jurisdiction were present. Lamar asserted that the Court did not have federal
question jurisdiction but did not address diversity jurisdiction. The Court therefore
entered a [38] Second Order requiring the parties to provide briefs concerning
whether diversity jurisdiction was present. Both MTC and Lamar agreed that the
Court had diversity jurisdiction over this lawsuit.

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On October 1, 2018, the Court dismissed the lawsuit without prejudice for
failure to exhaust administrative remedies. Lamar appealed, and the Fifth Circuit
reversed and remanded the case back to this Court on the basis that no adequate
administrative remedy existed. Lamar Co., L.L.C. v. Miss. Transp. Comm’n, 786 F.
App’x 457, 461 (5th Cir. 2019) (“Lamar I”). After allowing the parties to submit
supplemental briefs concerning their previously filed Motions for Summary
Judgment, the Court determined that MTC was entitled to summary judgment as
to Lamar’s declaratory judgment claim but not as to Lamar’s takings claim. The
parties filed a Joint Stipulation of Dismissal with Prejudice as to Lamar’s takings
claim, and the Court entered a Final Judgment of Dismissal. Prior to entry of final
judgment this Court did not consider the absence of diversity jurisdiction
Lamar appealed the award of summary judgment in favor of MTC. Almost
seven months later, MTC filed a Motion to Remand with the Fifth Circuit. MTC
noted that it had recently determined that diversity jurisdiction does not exist
because MTC is an agency or alter ego of the State of Mississippi and therefore not
a “citizen” for jurisdictional purposes.
Aggrieved by the possibility of remand after over three years of litigation,
Lamar filed the present Motion for Attorney’s Fees and Costs. In support of its
Motion, Lamar argued that (1) MTC’s removal of the case to this Court from
Harrison County Chancery Court lacked an objectively reasonable basis, thus
permitting an award of fees and costs pursuant to 28 U.S.C. § 1447(c); (2) this
matter presents “unusual circumstances” warranting a fee award pursuant to

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Martin v. Franklin Capital Corp., 546 U.S. 132 (2005); (3) MTC failed to conduct a
reasonable inquiry into the law and facts supporting its position as required by Fed.
R. Civ. P. 11; and (4) MTC’s actions created unnecessary litigation justifying an
award of fees and costs pursuant to the Mississippi Litigation Accountability Act.
In a detailed written opinion, the Fifth Circuit determined that both federal
question jurisdiction and diversity jurisdiction are lacking. Lamar Co., L.L.C. v.
Miss. Transp. Comm’n, 976 F.3d 524 (5th Cir. 2020) (“Lamar II”). The Fifth Circuit
first noted that federal question jurisdiction was not present, even though there was
some potential that part of any award for a takings claim could come from the
federal treasury pursuant to 23 U.S.C. § 131(g).
Regarding diversity jurisdiction, the Fifth Circuit noted that a state cannot
be considered a citizen of itself for purposes of diversity. Id. at 530 (citing Moor v.
Alameda Cnty., 411 U.S. 693, 717 (1973)). In order to be considered a citizen of
Mississippi, a state agency must be sufficiently independent of the state, not an
alter ego. Id. Since no court had previously determined whether MTC was an alter
ego of Mississippi, the Fifth Circuit applied the following factors set forth in
Tradigrain, Inc. v. Miss. State Port Auth., 701 F.2d 1131, 1132 (5th Cir. 1983):
whether the agency has been granted the right to hold and use
property, whether it has the express authority to sue and be sued in its
corporate name, the extent of its independent management authority,
and a factor that subsumes all others, the treatment of the agency by
the state courts.
Lamar, 976 F.3d at 530 (internal quotation marks omitted). The Fifth Circuit also
noted that other factors can tend to show that an agency is independent of the state,

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including its ability to hire its own employees, to enter into its own contracts, and to
hire its own counsel. Id. at 531. Although several factors supported a finding that
MTC is independent, the Fifth Circuit found that the most important factors
warranted a finding that MTC is an alter ego of the state that cannot be considered
a “citizen” for jurisdictional purposes. Id. at 532-34.
In conclusion, the Fifth Circuit held that the case should be remanded to the
state court after this Court’s consideration of Lamar’s requests for attorney’s fees
and costs pursuant to 28 U.S.C. § 1447(c) and Rule 11. Id. at 534-35. Lamar’s
request under the Mississippi Litigation Accountability Act would be considered by
the state court. Id.
DISCUSSION
I. 28 U.S.C. § 1447(c)
When remanding a case to state court for lack of jurisdiction, the district
court can “require payment of just costs and any actual expenses, including attorney
fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). “Absent unusual
circumstances, courts may award attorney’s fees under § 1447(c) only where the
removing party lacked an objectively reasonable basis for seeking removal.
Conversely, when an objectively reasonable basis exists, fees should be denied.”
Martin v. Franklin Cap. Corp., 546 U.S. 132, 141 (2005). “In applying this rule,
district courts retain discretion to consider whether unusual circumstances warrant
a departure from the rule in a given case.” Id. “When a court exercises its
discretion in this manner, however, its reasons for departing from the general rule
should be faithful to the purposes of awarding fees under § 1447(c).” Id. (internal
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quotation marks omitted). These purposes are Congress’s “desire to deter removals
sought for the purpose of prolonging litigation and imposing costs on the opposing
party” as well as its desire to “afford defendants a right to remove as a general
matter, when the statutory criteria are satisfied.” Id. at 140.
The Court finds that MTC had objectively reasonable grounds to believe that
its removal was legally proper pursuant to 28 U.S.C. § 1441. Initially, MTC
removed the case to this Court on the basis of federal question jurisdiction because
it believed that Lamar’s takings claim required interpretation of the Highway
Beautification Act and a federal regulation, 23 C.F.R. § 750.707. The Court and the
parties also concluded that diversity jurisdiction was present even if the presence of
federal question jurisdiction was unclear. There is no indication that MTC removed
the case to this Court in order to prolong litigation or increase Lamar’s costs. In
fact, the Fifth Circuit found that MTC’s decision to raise a newly discovered
jurisdictional issue in a case in which it was the prevailing party was
“commendable.” Lamar II, 976 F.3d at 528. The Fifth Circuit also noted that the
discovery of a jurisdictional defect on appeal is not a “unique” circumstance. Id.
Lamar’s failure to file a motion to remand at any point during the
proceedings further indicates the objectively reasonable basis for MTC’s removal.2

Lamar argues that it relied on MTC’s representation that MTC is a citizen of
Mississippi in several pleadings filed before this Court and the Fifth Circuit.
However, as the Fifth Circuit held in Lamar II, MTC was incapable of waiving
jurisdiction by erroneously claiming that it is a citizen of Mississippi. Lamar II, 976
F.3d at 534 (“A state can at times waive its immunity but can never concede
subject-matter jurisdiction.”).
2

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See Martin, 546 U.S. at 711 (noting that a plaintiff's delay in seeking remand may
affect the decision to award attorney’s fees). In addition, this Court and at least one
panel of the Fifth Circuit did not discern the absence of diversity jurisdiction.
Under these circumstances, the Court finds that Lamar’s request for attorney’s fees
and costs pursuant to 28 U.S.C. § 1447(c) should be denied as MTC had an
objectively reasonable basis for removal. In addition, this case does not present
“unique circumstances” warranting an award of attorneys’ fees under Martin.
II. Fed. R. Civ. P. 11
Rule 11 provides:
By presenting to the court a pleading, written motion, or other paper-whether by signing, filing, submitting, or later advocating it-- an
attorney or unrepresented party certifies that to the best of the
person’s knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to
harass, cause unnecessary delay, or needlessly increase the cost of
litigation;
(2) the claims, defenses, and other legal contentions are warranted by
existing law or by a nonfrivolous argument for extending, modifying, or
reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically
so identified, will likely have evidentiary support after a reasonable
opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or,
if specifically so identified, are reasonably based on belief or a lack of
information.
Fed. R. Civ. P. 11(b). Courts are permitted to impose sanctions for failure to
perform the duties imposed by Rule 11. Fed. R. Civ. P. 11(c).
Rule 11 requires attorneys who sign pleadings to conduct “a reasonable
inquiry into the relevant law.” CJC Holdings, Inc. v. Wright & Lato, Inc., 989 F.2d

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791, 793 (5th Cir. 1993). “Indicia of reasonable inquiry into the law include the
plausibility of the legal theory espoused and the complexity of the issues raised.”
Id. In other words, a legal argument does not violate Rule 11 unless it is
“unreasonable from the point of view both of existing law and of its possible
extension, modification, or reversal.” Id.
The Court once again finds that MTC’s attorneys had an objectively
reasonable basis for removing the case to this Court and for continuing to assert the
existence of jurisdiction. MTC’s briefs concerning subject matter jurisdiction
demonstrate that its attorneys conducted thorough research regarding jurisdiction
but merely overlooked one possible basis for finding that this Court lacked
jurisdiction. Lamar’s attorneys, this Court, and the Fifth Circuit panel in Lamar I,
also believed that this Court had jurisdiction. As a result, the Court finds no basis
to impose Rule 11 sanctions against MTC’s attorneys.
CONCLUSION
For the foregoing reasons, Lamar’s Motion for Attorney’s Fees and Costs is
denied in part. Pursuant to the Fifth Circuit’s opinion in Lamar Co., L.L.C. v. Miss.
Transp. Comm’n, 976 F.3d 524 (5th Cir. 2020), this case must now be remanded to
the Chancery Court of Harrison County, Mississippi.
IT IS THEREFORE ORDERED AND ADJUDGED that Lamar Company,
LLC’s [69-1] Motion for Attorney’s Fees and Costs, which was originally filed before
the United States Court of Appeals for the Fifth Circuit on September 1, 2020, is
DENIED IN PART as to Lamar’s arguments concerning 28 U.S.C. § 1447(c) and

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Fed. R. Civ. P. 11. This Court expresses no opinion regarding the remaining claims
for costs and fees asserted under the Mississippi Litigation Accountability Act.
IT IS FURTHER ORDERED AND ADJUDGED that this case is
REMANDED to the Chancery Court of Harrison County, Mississippi. A certified
copy of this order of remand shall be immediately mailed by the Clerk of this Court
to the clerk of the state court pursuant to 28 U.S.C. § 1447(c).
SO ORDERED AND ADJUDGED this the 4th day of December, 2020.
s/

Louis Guirola, Jr.

LOUIS GUIROLA, JR.
UNITED STATES DISTRICT JUDGE

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