Julber et al v. Premera Blue Cross et al
OPINION AND ORDER: Plaintiff's Motion to Remand 8 is GRANTED. Signed on 8/8/2017 by Judge Ann L. Aiken. (ck) Modified on 8/9/2017 by adding opinion (ck).
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
EVAN JULBER and PATRICIA JULBER,
husband and wife,
OPINION AND ORDER
PREMERA BLUE CROSS, a Washington
nonprofit corporation dba LIFEWISE
HEALTH PLAN OF OREGON,
This case arises from a dispute over heath insurance coverage. Plaintiffs, Evan and
Patricia Julber, are husband and wife.
Defendant is Premera Blue Cross, plaintiffs' health
Plaintiffs allege defendant denied coverage for Mr. Julber's cancer
treatment, in violation of their health insurance policy. Plaintiffs assert claims of breach of
contract and breach of the covenant of good faith and fair dealing.
Plaintiffs filed suit in
Deschutes County Circuit Court, asserting damages of $55,032.38, and reasonable attomeys'
fees. Defendant removed the case to federal court based on diversity jurisdiction under 28
U.S.C. § 1332. Now plaintiffs move to remand this case to state court.
Page 1 - OPINION AND ORDER
There is a strict presumption against removal, and the pmiy seeking removal bears the
burden of establishing that jurisdiction is proper. Provincial Gov 't of }vfarinduque v. Placer
Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009) (citing Syngenta Crop Prat., Inc. v. Henson,
537 U.S. 28, 32 (2002) and Cal. ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir.
2004)). Even though the removing patiy has the burden of establishing jurisdiction, a federal
court "may raise the question of subject matter jurisdiction, sua sponte, at any time during the
pendency of the action[.]" Nevada v. Bank of Am. Corp., 672 F.3d 661, 673 (9th Cir. 2012)
(quotation marks and citations omitted).
The initial question presented is whether attorneys' fees are calculated in the "amount in
controversy" when removing a lawsuit to federal comi under diversity jurisdiction. The answer
to this question is yes. The question that follows is whether courts should consider attorneys'
fees incuned by the time ofremoval or potential attorneys' fees. I hold that only attorneys' fees
incurred by the time of removal are considered in calculating the amount in controversy.
To answer the first question, I look to both Supreme Court and Ninth Circuit precedent.
lvlissouri State Life Insurance Company et al. v. Jones, 290 U.S. 199, 202 (1933), says when a
statute authorizes attorneys' fees, they become "part of the matter put in controversy by the
complaint, and not mere costs excluded from the reckoning by the jurisdictional and removal
statutes" (quotation marks omitted). 1 Since lvlissouri State, the Supreme Court has been silent on
The Comi mentioned that attorneys' fees are not "mere costs excluded from the
reckoning" because the attorneys' fees at issue were authorized by a Missouri statute that treated
attorneys' fees as costs. 28 U.S.C. § 1332(a) provides that the amount in controversy in diversity
of citizenship cases is "exclusive of interest and costs[.]" But the Court said "the mere
declaration of the state statute" that attorneys' fees are costs does "not alter the true nature of the
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the issue of whether to consider attorneys' fees when calculating the amount in controversy. In
Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998), the Ninth Circuit held "that
where an underlying statute authorizes an award of attorneys' fees, either with mandatory or
discretionary language, such fees may be included in the amount in controversy."
Here, the Complaint asserts plaintiffs "are entitled to an award of their reasonable
attorney fees and costs inclmed herein pursuant to O[r. Rev. Stat.§] 742.061." Comp!.
(doc. 1-1). Or. Rev. Stat. § 742.061, titled "Recovery of attorney fees in action on policy or
contractor's bond", is an underlying statute authorizing an award of attorneys' fees. Therefore,
attorneys' fees may be included in the amount in controversy. Galt G/S, 142 F.3d at 1156.
Next, I must discern whether I should consider only attorneys' fees incuned by the time
of removal, as distinct from potential future attorneys' fees, in calculating the amount in
controversy. The circuits are cmTently divided on this question. Seven circuits, including the
Ninth Circuit, have yet to decide the issue. See, e.g., Gonzales v. Carlvfax Auto Superstores,
LLC, 840 F.3d 644, 649 n.2 (9th Cir. 2016) ("It remains an open question whether attorney's fees
that are anticipated but unaccrued at the time of removal or filing in federal court ... may be
included in the amount-in-controversy."). 2
obligation." lv!issouri State, 290 U.S. at 202. In other words, a statute's description of attorneys'
fees as "costs" does not exclude attorneys' fees from the amount in controversy under§ 1332(a).
Here, Or. Rev. Stat. § 742.061, like the statute in lv!issouri State, characterizes attorneys' fees as
"costs[.]" This language does not change the analysis, and attorneys' fees authorized by Or.
Rev. Stat. § 742.061 are considered part of the amount in controversy.
Like the Ninth Circuit, the First, Second, Sixth, Eighth, Eleventh, and District of
Columbia Circuits have not decided whether attorneys' fees incurred by the time of removal, or
future attorneys' fees, should be considered as part of the amount in controversy. This issue is
irrelevant in the Federal Circuit because it hears no diversity cases.
Page 3 - OPINION AND ORDER
The Third, Fourth, Fifth, and Tenth Circuits all allow potential attorneys' fees to be
calculated as pati of the amount in controversy, so long as recovery of fees is authorized by
statute or contract. 3 The Tenth Circuit offers the most thorough reasoning regarding the issue.
"The Supreme Court has long held that when a statute permits recovery of attorney's fees a
reasonable estimate may be used in calculating the necessary jurisdictional amount in a removal
proceeding based upon diversity of citizenship." lvfiera v. Daily/and Ins. Co., 143 F.3d 1337,
1340 (10th Cir. 1998) (emphasis added) (citing lvfissouri State, 290 U.S. at 202). In 1998, when
J\1iera was published, the amount in controversy had to exceed $50,000 to establish diversity
jurisdiction under 28 U.S.C. § 1332. Id. at 1339-40. In J\1iera, the prayer for damages without
including statutorily permitted attorneys' fees was $41,028.51. Id. at 1340. Up to the point of
removal, the plaintiff accrued $6,854 of attorneys' fees, for a total of $47,882.51-short of the
$50,000 threshold for diversity jurisdiction. But the Court reasoned that plaintiff would surely
incur at least $2,117.50 in additional attorneys' fees. Therefore, the Court held that plaintiff
satisfied the requirements for diversity jurisdiction.
The Comi implicitly held that future
attorneys' fees could be considered in the amount in controversy.
In contrast, the Seventh Circuit allows only those attorneys' fees (again, so long as fee
recovery is authorized by statute or contract) incurred up to the time of removal to be included in
the amount in controversy. Gardynski-Leschuck v. Ford 1vfotor Co., 142 F.3d 955, 959 (7th Cir.
1998). The Seventh Circuit reasoned that "legal expenses that lie in the future and can be
avoided by the defendant's prompt satisfaction of the plaintiffs demand are not an amount 'in
controversy' when the suit is filed." Id. The court further explained that "the Supreme Court
See, e.g., Suber v. Cluysler Corp., 104 F.3d 578, 585 (3d Cir. 1997); Francis v. Allstate
Ins. Co., 709 F.3d 362, 369 (4th Cir. 2013); Grant v. Chevron Phillips Chem. Co., 309 F.3d 864,
873 (5th Cir. 2002); J\1iera v. Dai1yland Ins. Co., 143 F.3d 1337, 1340 (10th Cir. 1998).
Page 4 - OPINION AND ORDER
held that legal expenses yet to be incurred on the date a suit begins do not create a 'case or
controversy' within the meaning of Article III." Id (citing Steel Co. v. Citizens for a Better
Env 't, 523 U.S. 83, 107 (1998) ("An interest in attorney's fees is ... insufficient to create an
Atiicle III case or controversy where none exists on the merits of the underlying claim.")
(quotation marks omitted) (ellipsis in original) (emphasis added)). I agree with the Seventh
Circuit's rule-that only attorneys' fees inctmed by the time of removal should be considered in
calculating the amount in controversy-for three reasons.
First, the Seventh Circuit's rule comports well with Supreme Couti precedent. It aligns
with lvfissouri State. It also aligns with Citizens for a Better Environment, which established that
speculative attorneys' fees are not in themselves an Atticle III case or controversy, and therefore
iD"elevant to establishing Atticle III jurisdiction. See Steel Co. v. Citizens for a Better Env 't, 523
U.S. at 107.
Second, the Seventh Circuit's rule is consistent with District of Oregon cases. In Reames
v. AB Car Rental Services, Inc., 899 F. Supp. 2d 1012, 1016 (D. Or. 2012), Judge Marsh
concluded that "including anticipated, but unaccrued attorney fees in calculating the amount in
controversy is necessarily speculative." Judge Marsh reached that conclusion after adopting
Magistrate Judge Papak's findings, which thoroughly reviewed the case law in this area. Id at
1019-21. More recently, in Sturdevant v. 24 Hour Fitness USA, Inc., 2017 WL 359175, *2 (D.
Or. Jan. 23, 2017), Magistrate Judge Acosta acknowledged that "whether the couti may consider
unaccrued attorney fees as part of the amount in controversy ... remains an open question in the
Ninth Circuit." (parentheses, citations, and quotation marks omitted).
Acosta declined to calculate potential attorneys' fees as part of the amount in controversy, ruling,
"[t]he court concludes unaccrued attorney fees are not part of the amount in controversy. The
Page 5 - OPINION AND ORDER
amount in controversy depends on the circumstances at the time of removal or filing." Id. at *3
(emphasis added) (citing Singer v. State Farm J.ifut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir.
1997)). Defendant cites Beaver v. NPC Int'!, Inc., 451 F. Supp. 2d 1196, 1199 (D. Or. 2006), in
which this Court included potential attorneys' fees in the amount in controversy. But Beaver did
not consider the statutory and policy arguments against counting unaccrued attorney's fees in the
amount in controversy. I find the reasoning in Reames and Sturdevant more convincing than that
in Beaver. Moreover, I note that Reames and Sturdevant are more recent cases.
Last, the Seventh Circuit's rule is the best public policy. I am persuaded by the following
reasoning from Gardynski-Leschuck: "[L]egal expenses that lie in the future and can be avoided
by the defendant's prompt satisfaction of the plaintiffs demand are not an amount 'in
controversy' when the suit is filed." Gardynski-Leschuck, 142 F.3d at 959. Indeed, a lawsuit
may settle at any point during litigation, including promptly after removal to federal court.
Attorneys' fees typically do not accrue post-settlement.
Therefore, consideration of future
attorneys' fees in the amount in controversy is potentially an artificial premise upon which to
establish diversity jurisdiction. Removal to federal court should be based on more than mere
speculation about future attorneys' fees. Because attorneys' fees incurred up to the time of
removal are concrete and tangible, and any post-removal settlement would be reached taking
them into account, their inclusion in the amount in controversy is entirely acceptable. But
allowing potential attorneys' fees to be calculated in the amount in controversy risks opening the
floodgates to increased litigation in federal courts under diversity jurisdiction, contrary to
See Lynch v. Household Fin. Corp., 405 U.S. 538, 550 (1972) (citing
legislative history for the proposition that the amount in controversy requirement is designed to
"reduce the federal judiciary's workload with regard to cases rising under federal diversity
Page 6 - OPINION AND ORDER
jurisdiction"). Additionally, considering foture attorneys' fees tips the presumption towards,
instead of against, removal-contrary to the standard set by Provincial Gov't of Jvfarinduque.
Provincial Gov 't of Jvfarinduque, 582 F.3d at 1087 ("The removal statute is strictly construed
against removal jurisdiction.") (citing Syngenta Crop Prof., Inc, 537 U.S. at 32).
Here, plaintiffs assert damages of $55,032.38, plus "reasonable attorneys' fees[.]"
'if'if 14, 19. Defendant removed the case to this Court on the grounds that plaintiffs'
attorneys' fees will exceed $19,967.62, therefore meeting the $75,000 threshold to establish
diversity jurisdiction. To come up with this figure, defendant surmised that one of plaintiffs'
lawyers will charge $168 per hour, one will charge $225 per hour, and they will collectively bill
101.6 hours or more. Notice Removal,
11 (doc. 1). Defendant submitted a Declaration in
Suppmt of Defendant's Opposition to Plaintiffs Motion to Remand Case to State Comt.
Hawkes Deel. (doc. 10). In the Declaration, defendant bolsters its position by asse1ting that in a
similar case, it "spent over a hundred hours preparing the summary judgment motion, reply, and
oral argument" alone. Id.
Defendant's argument fails for two reasons. First, because defendant previously spent
over a hundred hours on a similar case does not mean that plaintiff will necessarily spend the
same amount of time on this case. Second, and more important to this analysis, "including
anticipated, but unaccrued attorney fees in calculating the amount in controversy is necessarily
speculative[,]" and to do so "would be inappropriate[.]" Reames, 899 F. Supp. 2d at 1016, 1020.
The accuracy of defendant's calculation of plaintiffs' anticipated attorneys' fees does not matter.
The case may settle before those attorneys' fees accrue.
Only attorneys' fees incurred by the time of removal should be considered in calculating
the amount in controversy.
The consideration of future attorneys' fees in the amount in
Page 7 - OPINION AND ORDER
not align with precedent from the Supreme Court and the District of Oregon,
nor is it good public policy.
For these reasons, plaintiffs motion to remand (doc. 8) is GRANTED and this case is
IT IS SO ORDERED.
this~y of August 2017.
United States District Judge
Page 8 - OPINION AND ORDER
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