In the
United States Court of Appeals For the Seventh Circuit ____________________ No. 18-2809 JACKSON COUNTY BANK, Plaintiff-Appellee, v.
MATHEW R. DUSABLON, Defendant-Appellant. ____________________
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:18-cv-01346 — Sarah Evans Barker, Judge. ____________________
ARGUED JANUARY 14, 2019 — DECIDED FEBRUARY 6, 2019 ____________________
Before WOOD, Chief Judge, and BRENNAN and ST. EVE, Cir- cuit Judges. ST. EVE, Circuit Judge. Jackson County Bank sued its former employee, Mathew R. DuSablon, in Indiana state court, as- serting various state law claims, including theft of property and breach of contract. Following his unsuccessful motion to dismiss, DuSablon removed the case to federal court. The dis- trict court remanded the case to state court for want of juris- diction and untimely removal and further ordered DuSablon 2 No. 18-2809
to pay the costs and fees for the wrongful removal. DuSablon now appeals the remand order and the district court’s impo- sition of sanctions. We dismiss the appeal of the district court’s remand order and affirm its award of costs and fees. I. Background Jackson County Bank (“JCB”) is an Indiana state-chartered bank. Although not a registered broker-dealer, JCB had a third-party agreement with INVEST Financial Corporation, a registered broker-dealer, to offer securities to JCB customers. Mathew R. DuSablon, who resides in Indiana, began working for JCB in 2007. In July 2017, JCB assigned DuSablon to assist the bank in identifying and establishing an invest- ment business with a new third-party broker-dealer. DuSa- blon, however, failed to perform his job and abruptly re- signed on January 8, 2018. JCB thereafter learned that DuSa- blon had transferred customers’ accounts from JCB’s former third-party broker-dealer, INVEST, into his own name and had started a business to compete with JCB. On February 28, 2018, JCB filed suit in Indiana state court, seeking a preliminary injunction and asserting state-law claims against DuSablon, including violation of the Indiana Uniform Trade Secrets Act, breach of contract, breach of fidu- ciary duty, tortious interference, unfair competition, civil con- version, and computer trespass. DuSablon moved to dismiss, arguing with references to federal law that JCB is an unli- censed broker-dealer and therefore lacks standing to enforce its rights in the information at issue; and that Financial Indus- try Regulatory Authority, Inc. (“FINRA”) rules bar the suit. JCB responded that it had standing and is not subject to FINRA rules. The court denied the motion on April 20, 2018. No. 18-2809 3
Days later, on May 2, 2018, DuSablon removed this case to the United States District Court for the Southern District of Indiana, asserting that the federal district court “has exclusive jurisdiction pursuant to 15 U.S.C. § 78aa and the Securities and Exchange Act of 1934.” Acknowledging that JCB did not plead a federal claim, DuSablon contended that JCB’s re- sponse to his motion to dismiss in state court “raises a federal question as all of [JCB’s] claims against [DuSablon] rest upon the legality of direct participation in the securities industry which is determined and regulated by the [Securities] Act.” On May 11, 2018, JCB moved to remand for lack of juris- diction, and also argued, among other things, that DuSablon used the removal statute inappropriately to postpone prelim- inary injunction proceedings in state court and “run the clock” on his non-compete. The district court granted the mo- tion, concluding that it lacked jurisdiction and that the re- moval was untimely. The district court accordingly remanded the case to state court and additionally ordered DuSablon to pay JCB costs and fees of $9,035.61 under 28 U.S.C. § 1447(c). II. Discussion DuSablon appeals the district court’s remand and sanc- tions orders. JCB, for its part, requests additional costs and fees under § 1447(c) for its defense of this appeal. DuSablon challenges the district court’s order remanding this case to state court. But “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise,” subject to exceptions not pertinent here. 28 U.S.C. § 1447(d); see also PNC Bank, N.A. v. Spencer, 763 F.3d 650 (7th Cir. 2014) (per curiam). We therefore dismiss this aspect of DuSablon’s appeal for lack of jurisdiction. See 4 No. 18-2809
Adkins v. Illinois Cent. R.R. Co., 326 F.3d 828, 834 (7th Cir. 2003) (“[T]he rule of nonreviewability … in § 1447(d) means that even remands based on an erroneous belief in the lack of fed- eral subject matter jurisdiction cannot be reviewed….”). DuSablon next challenges the district court’s award of costs and fees to JCB pursuant to 28 U.S.C. § 1447(c). This we can review. See, e.g., Garbie v. DaimlerChrysler Corp., 211 F.3d 407, 409–10 (7th Cir. 2000) (holding that an appellate court has jurisdiction to review sanctions under § 1447(c)). Under § 1447(c), “‘[a]n order remanding a removed case to state court ‘may require payment of just costs and any actual ex- penses, including attorney fees, incurred as a result of the re- moval.’” Martin v. Franklin Cap. Corp., 546 U.S. 132, 134 (2005) (quoting 28 U.S.C. § 1447(c)). A district court may award fees under § 1447(c) where “the removing party lacked an ‘objec- tively reasonable basis’” for seeking removal. Wolf v. Kennelly, 574 F.3d 406, 411 (7th Cir. 2009) (quoting Martin, 546 U.S. at 141). Sanctions may be awarded when removal is clearly im- proper, id., but not necessarily frivolous, Martin, 546 U.S. at 138–40 (further explaining the rationale for fee-shifting in ap- propriate cases). We review a district court’s decision to award sanctions for abuse of discretion. See Wolf, 574 F.3d at 410. And here, we find no abuse of discretion, as we agree that DuSablon lacked an objectively reasonable basis to remove this case to federal court. The impropriety of removal, as the district court ob- served, was “not a close question.” JCB did not plead any fed- eral claim nor is any federal question apparent from the face of its complaint. See Bastien v. AT&T Wireless Servs, Inc., 205 F.3d 983, 986 (7th Cir. 2000). The complaint is based entirely on state law and any potential federal defense cannot form the No. 18-2809 5
basis for removal. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987); Studer v. Katherine Shaw Bethea Hosp., 867 F.3d 721, 723 (7th Cir. 2017). DuSablon nonetheless argues that JCB’s state law claims involve significant questions of federal securities laws.
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In the
United States Court of Appeals For the Seventh Circuit ____________________ No. 18-2809 JACKSON COUNTY BANK, Plaintiff-Appellee, v.
MATHEW R. DUSABLON, Defendant-Appellant. ____________________
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:18-cv-01346 — Sarah Evans Barker, Judge. ____________________
ARGUED JANUARY 14, 2019 — DECIDED FEBRUARY 6, 2019 ____________________
Before WOOD, Chief Judge, and BRENNAN and ST. EVE, Cir- cuit Judges. ST. EVE, Circuit Judge. Jackson County Bank sued its former employee, Mathew R. DuSablon, in Indiana state court, as- serting various state law claims, including theft of property and breach of contract. Following his unsuccessful motion to dismiss, DuSablon removed the case to federal court. The dis- trict court remanded the case to state court for want of juris- diction and untimely removal and further ordered DuSablon 2 No. 18-2809
to pay the costs and fees for the wrongful removal. DuSablon now appeals the remand order and the district court’s impo- sition of sanctions. We dismiss the appeal of the district court’s remand order and affirm its award of costs and fees. I. Background Jackson County Bank (“JCB”) is an Indiana state-chartered bank. Although not a registered broker-dealer, JCB had a third-party agreement with INVEST Financial Corporation, a registered broker-dealer, to offer securities to JCB customers. Mathew R. DuSablon, who resides in Indiana, began working for JCB in 2007. In July 2017, JCB assigned DuSablon to assist the bank in identifying and establishing an invest- ment business with a new third-party broker-dealer. DuSa- blon, however, failed to perform his job and abruptly re- signed on January 8, 2018. JCB thereafter learned that DuSa- blon had transferred customers’ accounts from JCB’s former third-party broker-dealer, INVEST, into his own name and had started a business to compete with JCB. On February 28, 2018, JCB filed suit in Indiana state court, seeking a preliminary injunction and asserting state-law claims against DuSablon, including violation of the Indiana Uniform Trade Secrets Act, breach of contract, breach of fidu- ciary duty, tortious interference, unfair competition, civil con- version, and computer trespass. DuSablon moved to dismiss, arguing with references to federal law that JCB is an unli- censed broker-dealer and therefore lacks standing to enforce its rights in the information at issue; and that Financial Indus- try Regulatory Authority, Inc. (“FINRA”) rules bar the suit. JCB responded that it had standing and is not subject to FINRA rules. The court denied the motion on April 20, 2018. No. 18-2809 3
Days later, on May 2, 2018, DuSablon removed this case to the United States District Court for the Southern District of Indiana, asserting that the federal district court “has exclusive jurisdiction pursuant to 15 U.S.C. § 78aa and the Securities and Exchange Act of 1934.” Acknowledging that JCB did not plead a federal claim, DuSablon contended that JCB’s re- sponse to his motion to dismiss in state court “raises a federal question as all of [JCB’s] claims against [DuSablon] rest upon the legality of direct participation in the securities industry which is determined and regulated by the [Securities] Act.” On May 11, 2018, JCB moved to remand for lack of juris- diction, and also argued, among other things, that DuSablon used the removal statute inappropriately to postpone prelim- inary injunction proceedings in state court and “run the clock” on his non-compete. The district court granted the mo- tion, concluding that it lacked jurisdiction and that the re- moval was untimely. The district court accordingly remanded the case to state court and additionally ordered DuSablon to pay JCB costs and fees of $9,035.61 under 28 U.S.C. § 1447(c). II. Discussion DuSablon appeals the district court’s remand and sanc- tions orders. JCB, for its part, requests additional costs and fees under § 1447(c) for its defense of this appeal. DuSablon challenges the district court’s order remanding this case to state court. But “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise,” subject to exceptions not pertinent here. 28 U.S.C. § 1447(d); see also PNC Bank, N.A. v. Spencer, 763 F.3d 650 (7th Cir. 2014) (per curiam). We therefore dismiss this aspect of DuSablon’s appeal for lack of jurisdiction. See 4 No. 18-2809
Adkins v. Illinois Cent. R.R. Co., 326 F.3d 828, 834 (7th Cir. 2003) (“[T]he rule of nonreviewability … in § 1447(d) means that even remands based on an erroneous belief in the lack of fed- eral subject matter jurisdiction cannot be reviewed….”). DuSablon next challenges the district court’s award of costs and fees to JCB pursuant to 28 U.S.C. § 1447(c). This we can review. See, e.g., Garbie v. DaimlerChrysler Corp., 211 F.3d 407, 409–10 (7th Cir. 2000) (holding that an appellate court has jurisdiction to review sanctions under § 1447(c)). Under § 1447(c), “‘[a]n order remanding a removed case to state court ‘may require payment of just costs and any actual ex- penses, including attorney fees, incurred as a result of the re- moval.’” Martin v. Franklin Cap. Corp., 546 U.S. 132, 134 (2005) (quoting 28 U.S.C. § 1447(c)). A district court may award fees under § 1447(c) where “the removing party lacked an ‘objec- tively reasonable basis’” for seeking removal. Wolf v. Kennelly, 574 F.3d 406, 411 (7th Cir. 2009) (quoting Martin, 546 U.S. at 141). Sanctions may be awarded when removal is clearly im- proper, id., but not necessarily frivolous, Martin, 546 U.S. at 138–40 (further explaining the rationale for fee-shifting in ap- propriate cases). We review a district court’s decision to award sanctions for abuse of discretion. See Wolf, 574 F.3d at 410. And here, we find no abuse of discretion, as we agree that DuSablon lacked an objectively reasonable basis to remove this case to federal court. The impropriety of removal, as the district court ob- served, was “not a close question.” JCB did not plead any fed- eral claim nor is any federal question apparent from the face of its complaint. See Bastien v. AT&T Wireless Servs, Inc., 205 F.3d 983, 986 (7th Cir. 2000). The complaint is based entirely on state law and any potential federal defense cannot form the No. 18-2809 5
basis for removal. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987); Studer v. Katherine Shaw Bethea Hosp., 867 F.3d 721, 723 (7th Cir. 2017). DuSablon nonetheless argues that JCB’s state law claims involve significant questions of federal securities laws. But DuSablon cannot manufacture a basis for removal by inject- ing federal issues into a case under these circumstances. See Panther Brands, LLC v. Indy Racing League, LLC, 827 F.3d 586, 589 (7th Cir. 2016) (holding in a breach of contract action that an allegation that a defendant violated federal statutes is in- sufficient to create subject-matter jurisdiction). This is partic- ularly so because, as the district court observed, DuSablon cited no cases supporting his position nor attempted to apply controlling law, namely Grable & Sons Metal Prods., Inc. v. Da- rue Eng’r & Mfg., 545 U.S. 308, 314–15 (2005) (invoking federal jurisdiction over state law claim to quiet title to property seized by federal government where the validity of the sei- zure was “the only legal or factual issue[] in the case”). Other considerations support the district court’s exercise of discretion. The first is the court’s finding that “DuSablon’s conduct in defending the motion to remand” suggested that “removal was undertaken at least in part to delay a resolution of the noncompete issues to his benefit and to allow for a sec- ond bite at the apple after losing his motion to dismiss in state court.” We see no clear error in this finding. The second con- sideration is the untimeliness of DuSablon’s removal. Despite his claimed ignorance of the supposed substantial federal question until JCB responded to his motion to dismiss, DuSa- blon’s motion itself raised many issues of federal law. The dis- trict court properly determined that DuSablon was or should 6 No. 18-2809
have been aware of his asserted grounds for removal more than 30 days prior to his notice of removal. Accordingly, the district court did not abuse its discretion in determining that DuSablon lacked an objectively reasona- ble basis to remove the case to federal court. Finally, JCB requests an award of costs and fees incurred in defending this appeal.1 “[L]itigants who receive an award of fees in the district court under § 1447(c) automatically re- ceive reimbursement for the expense of defending that award on appeal.” MB Fin., N.A. v. Stevens, 678 F.3d 497, 500 (7th Cir. 2012). JCB is therefore “entitled to an award of ‘legal fees for the cost of work reasonably performed in defense of the dis- trict court’s decision.’” PNC Bank, 763 F.3d at 655 (quoting M.B. Fin., 678 F.3d at 500). JCB has fourteen days from the date of this decision to submit a statement of fees. DuSablon will have fourteen days to respond. III. Conclusion We DISMISS the appeal of the district court’s remand or- der and AFFIRM its award of costs and fees.
1In its brief, JCB also requests fees under Federal Rule of Appellate Procedure 38. But JCB did not file a separate motion under Rule 38, so we deny its request. See Vexol, S.A. de C.V. v. Berry Plastics Corp., 882 F.3d 633, 638 (7th Cir. 2018) (denying request for sanctions where party did not sub- mit a “‘separately filed motion’” for sanctions) (quoting FED. R. APP. P. 38).