10/02/2025
The Fourth Circuit recently upheld a $63,000 attorney fee award to Willoughby Humphrey & D'Antoni, PA against defendants in a securities class action who repeatedly tried – and failed – to move the case from state court to federal court. The court ruled that once jurisdiction had been decided, the defendants’ repeated removal attempts were objectively unreasonable and simply drove up costs for the plaintiffs. The decision reinforces that plaintiffs have the right to structure their cases for state court when the law allows, and that defendants who ignore those boundaries risk significant financial penalties.
WHD serves as class counsel in Black v. Mantei & Associates, Ltd., which concerns the sale of retail structured products to South Carolina investors over 50 years old. Our clients filed their case in state court. When the defendants removed under SLUSA (the Securities Litigation Uniform Standards Act), the plaintiffs clarified that their claims extend only to securities not covered by SLUSA, which removed any basis for federal jurisdiction. The district court then remanded. In doing so, the court explained that disputes over whether a given product is a covered security do not create federal jurisdiction.
Three years later, the defendants removed again, arguing that their disagreement with an expert’s categorization of certain notes as non-covered securities created federal jurisdiction. The district court remanded again. Because the court had rejected the defendants’ basis for removal in its first order remanding the case, the court awarded plaintiffs $63,007.50 in attorneys’ fees and costs under 28 USC § 1447(c). Defendants appealed, and the Fourth Circuit affirmed in a published opinion.
Fourth Circuit's Key Holdings:
*Well-Pleaded Complaint Rule: SLUSA preclusion is determined solely by complaint allegations, not post-pleading expert testimony
*Strategic Pleading Rights: Plaintiffs can use legally binding amendments to exclude covered securities and avoid federal jurisdiction
*Sanctions Standard: Multiple removals on previously rejected grounds constitute objectively unreasonable conduct
*Statutory Interpretation: Section 1447(d) prohibits reconsideration of a remand order through re-removal, just as it bars motions for reconsideration
This ruling strengthens the deterrent effect of § 1447(c) sanctions and provides clearer boundaries for removal in securities litigation. The court’s analysis provides important guidance on the intersection of SLUSA, federal question jurisdiction, and removal sanctions.
Walker Humphrey argued the case on behalf of the plaintiffs, and with him on the brief were Mitchell Willoughby, Margaret O'Shields, and Hunter Pope.
