NO: 00-922, SECTION: "J" (5)

United States District Court, E.D. Louisiana

STATE OF SAO PAULO/FEDERAL REP. BRAZIL v. AM.

TOBACCO, CO.
Decided Feb 25, 2003

NO: 00-922, SECTION: "J" (5)

February 25, 2003

CARL BARBIER, United States District Judge

Before the Court is the Motion for Costs (Rec. Doc. 33) filed by plaintiff, the State of Sao Paulo of the
Federative Republic of Brazil ("Sao Paolo"). Defendant American Tobacco Company opposes the motion. The
motion, set for hearing on January 29, 2003, is before the Court on briefs without oral argument.

BACKGROUND
In 2000, Sao Paolo filed suit against the defendants in the Civil District Court for the Parish of Orleans for
damages associated with medical treatment and costs resulting from tobacco-related diseases allegedly caused
by the defendants' manufacture and sale of defective products. The defendants removed the suit to this Court
asserting that the plaintiff's claims fell within the federal common law of foreign relations, thereby creating
federal question jurisdiction under 28 U.S.C. § 1331, and further claiming that diversity jurisdiction was
present under 28 U.S.C. § 1332.

On May 26, 2000, this Court granted Sao Paolo's motion to remand the suit and denied the defendants' motion
for this Court to recuse itself. The defendants appealed to the United States Fifth Circuit Court of Appeals, and
on May 14, 2001, this Court's decision denying recusal was reversed and the remand order was vacated. The
case was remanded to this Court and randomly allotted to another district judge. Shortly thereafter, the Panel on
Multi-District Litigation ("MDL Panel") transferred the case to the United States District Court for the District
of Columbia.

On April 1, 2002, the Supreme Court, without requiring briefing, issued a four page per curiam order reversing
the Fifth Circuit's decision which had, ordered recusal, and remanded the case to the Fifth Circuit with
instructions. Before the Fifth Circuit could act on the matter again, however, on June 28, 2002, the MDL Judge
in the District of Columbia remanded the case to the Civil District Court for the Parish of Orleans. Finally, on
September 19, 2002, the Fifth Circuit issued an order affirming this Court's original order denying recusal.
Notably, however, the judgment did not reinstate this court's previously vacated order of remand (presumably
because the case had by that time already been remanded to state court by the MDL court).

Sao Paolo has now filed a motion seeking to recover costs and expenses, including attorney fees, in connection
with the motion to remand, pursuant to 28 U.S.C. § 1447(c). In so moving, Sao Paolo argues that defendants
improperly removed this case with knowledge that other removal attempts in similar lawsuits had failed, that
there was a complete absence of grounds to find that a federal question was present, and that defendants could
not establish that defendant B.A.T. Industries was fraudulently joined (as required to establish jurisdiction

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STATE OF SAO PAULO/FEDERAL REP. BRAZIL v. AM. TOBACCO, CO. NO: 00-922, SECTION: "J" (5) (E.D. La. Feb. 25, 2003)

under 28 U.S.C. § 1332(a)(4)). Defendants argue that fees and costs must be denied because this Court lacks
jurisdiction to award fees and costs, this Court did not enter the operative remand order, reasonable grounds for
removal were present, and the fees sought are unreasonable. Because the recusal of this judge by the Fifth
Circuit has been reversed, the case was transferred back to the undersigned for consideration of the motion for
fees and costs.

DISCUSSION
Defendants have raised as a threshold issue the question whether this Court has jurisdiction to entertain the
instant motion for fees and costs under 28 U.S.C. § 1447(c), arguing that following this Court's initial remand
order, it was completely divested of jurisdiction. The Court's review of applicable law indicates that the
imposition of costs and attorney's fees under 28 U.S.C. § 1447(c) as sought by plaintiff in this motion is a
collateral and independent issue. Miranti v. Lee, 3 F.3d 925, 927 (5th Cir. 1993) (holding that while a remand
order may not be reviewed on appeal under 28 U.S.C. § 1447(d), an award of fees under § 1447(c) may be
reviewed because it is collateral and independent). "It is well established that a federal court may consider
collateral issues after an action is no longer pending." Cooter Gell v. Hartmarx Corp., 496 U.S. 384, 395, 110
S.Ct. 2447, 2455 (1982). Motions for costs, attorney's fees, contempt sanctions, and Rule 11 sanctions are not
judgments on the merits of an action; rather, they are "independent proceeding[s] supplemental to the original
proceeding and not a request for a modification of the original decree." Id., citing Sprague v. Ticonic National
Bank, 307 U.S. 161, 170, 59 S.Ct. 777, 781 (1939). Accordingly, the remand of a case for lack of subject matter
jurisdiction does not deprive the Court of jurisdiction over the collateral and independent issue of whether fees
and costs are appropriate.

However, notwithstanding the fact that this Court has subject matter jurisdiction over a motion for fees and
costs, it appears this is not the proper court to entertain plaintiff's motion, because it did not issue the operative
remand order. The original remand order issued by this court was vacated by the Fifth Circuit when it ordered
this judge to recuse himself. To "vacate" means "to nullify or cancel; make void; invalidate." BLACK'S LAW
DICTIONARY (7th ed. 1999). In other words, the remand order was nullified or voided, so that the status of
things was as if that order had never existed.

The reversal by the Supreme Court of the Fifth Circuit's decision ordering recusal was issued subsequent to the
transfer of the case to the MDL court in the District of Columbia. See, Sao Paulo State of the Federative
Republic of Brazil v. American Tobacco Co., 535 U.S. 229, 122 S.Ct. 1290 (2002). The Fifth Circuit then issued
an order which affirmed the denial of recusal. See, Republic of Panama v. American Tobacco Co., 307 F.3d 317
(5th Cir. 2002). However, there is no language used by either the Supreme Court or the Fifth Circuit that
returns this cause of action to this Court or reinstates this Court's original remand order.

Further, while the Fifth Circuit did not affirm this Court's original denial of recusal until September 19, 2002,
Judge Friedman, the MDL judge, had remanded the case to state court on June 28, 2002, before it would have
been even possible to argue that this Court's remand order was somehow reinstated by the Fifth Circuit.
Accordingly, Judge Friedman's order is the operative remand order that ultimately transferred this case back to
the state court from which it was originally removed in 2000.

This fact is borne out by footnote 1 in Judge Friedman's remand order, which states:

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STATE OF SAO PAULO/FEDERAL REP. BRAZIL v. AM. TOBACCO, CO. NO: 00-922, SECTION: "J" (5) (E.D. La. Feb. 25, 2003)

In the motion to remand, plaintiff argues that the Court should remand the case to the Civil District
Court for the Parish of Orleans based on the Supreme Court's decision in Sao Paulo v. American
Tobacco Co. Inc., 535 U.S. 229, 122 S.Ct. 1290 (2002). The Court, however, does not reach this
argument and instead grants the motion to remand solely for the reasons stated in its opinion in the
Venezuela case [ In re Tobacco/Governmental Health Care Costs Litigation, 100 F. Supp.2d 31 (D.D.C.
2000)].

In re Tobacco/Governmental Health Care Costs Litigation, No. 01-2519, n. 1 (D.D.C. filed June 28, 2002)
(order granting motion to remand).

As this footnote makes clear, this case was ultimately remanded not via the reinstatement of the order originally
issued by this Court, but on Judge Friedman's order.

Finally, the MDL court in the District of Columbia is the proper court to entertain a motion for fees and costs
considering that Sao Paolo is seeking attorney fees and costs incurred after the case was transferred from this
Court, including all costs incurred in Federal Court that allegedly would not have been incurred had the case
not been removed from state court.

The only basis for the possible award of fees and costs in this matter is pursuant to the removal statute, 28
U.S.C. § 1447(c), which provides that "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." (Emphasis added.) Because the
remand of this case to state court was pursuant to an order of the MDL judge and not this Court, this Court is
not the proper forum to entertain the plaintiff's motion for fees and costs. Accordingly, the Court does not reach
the question whether the instant motion was untimely, nor the merits of whether plaintiff would be entitled to
fees. Therefore;

IT IS ORDERED that plaintiff's Motion for Costs (Rec. Doc. 33) is DENIED WITHOUT PREJUDICE.