Grancare v. Ruth Thrower ( 2018 )


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  •                     FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    GRANCARE, LLC, DBA Vale                    No. 16-15533
    Healthcare Center; MARINER
    HEALTH CARE, INC.,                       D.C. Nos.
    Defendants-Appellants,        3:15-cv-05362-WHA
    3:15-cv-05575-WHA
    v.
    RUTH THROWER, by and                        OPINION
    through her Successor in
    Interest, Rosie Lee Mills;
    ROSIE LEE MILLS; HELEN
    MILLS; LORETTA EDDINGS;
    LASHAWN THROWER; PERRY
    JOHNSON, JR.; ELLEN MASON,
    Plaintiffs-Appellees.
    Appeal from the United States District Court
    for the Northern District of California
    William Alsup, District Judge, Presiding
    Argued and Submitted October 18, 2017
    San Francisco, California
    Filed April 26, 2018
    Before: Michael Daly Hawkins, William A. Fletcher,
    and Richard C. Tallman, Circuit Judges.
    Opinion by Judge W. Fletcher
    2                    GRANCARE V. THROWER
    SUMMARY*
    Remand / Removal
    The panel affirmed the district court’s order remanding a
    case that GranCare LLC had removed to federal court and
    awarding costs and attorney’s fees pursuant to 28 U.S.C.
    § 1447(c), after finding that GranCare administrator Remy
    Rhodes was not fraudulently joined as a party in order to
    defeat diversity and that removal to federal court was
    objectively unreasonable.
    The heirs of Ruth Thrower filed suit in California state
    court, naming as defendants GranCare, and a GranCare
    administrator, Remy Rhoades. GranCare removed to federal
    court even though the named parties were not completely
    diverse. The district court granted Thrower’s heirs’ motion
    to remand, and awarded them costs and attorneys’ fees.
    The panel first addressed GranCare’s argument that the
    award was improper because the district court’s remand
    order was legally incorrect. The panel rejected GranCare’s
    argument that the district court applied an incorrect standard
    for fraudulent joinder. The panel held that the fraudulent
    joinder standard shared some similarities with the analysis
    under Fed. R. Civ. P. 12(b)(6), but the tests for fraudulent
    joinder and failure to state a claim were not equivalent. The
    panel further held that if a plaintiff’s complaint could
    withstand a Rule 12(b)(6) motion with respect to a particular
    defendant, that defendant had not been fraudulently joined;
    *
    This summary constitutes no part of the opinion of the court. It has
    been prepared by court staff for the convenience of the reader.
    GRANCARE V. THROWER                       3
    but the reverse was not true, and if a defendant could not
    withstand a Rule 12(b)(6) motion, the fraudulent joinder
    inquiry did not end there. The panel concluded that
    Thrower’s heirs had shown a possibility of recovery against
    Rhodes. Specifically, the panel held that Thrower’s heirs had
    shown a colorable claim against Rhodes under California’s
    Elder Abuse and Dependent Adult Civil Protection Act, as
    well as a colorable negligence per se claim.
    The panel next addressed GranCare’s argument that even
    if incorrect, removal was objectively reasonable, and the
    award was improper. Costs and attorneys’ fees may be
    awarded against GranCare if its decision to remove was
    objectively unreasonable. The panel held that GranCare’s
    reliance on a district court’s order in Johnson v. GranCare
    LLC, No. 15-CV-03585-RS, 
    2015 WL 6865876
    (N.D. Cal.
    Nov. 9, 2015) (determining that Rhodes was a fraudulently
    joined defendant), was unreasonable due to clear factual
    distinctions between the cases. The panel held that, unlike
    the complaint in Johnson, the complaint in this case contained
    detailed allegations against Rhodes, and it was obvious that
    GranCare would not have been entitled to removal in this
    case even if the Johnson standard had been applied.
    The panel concluded that the district court’s award of
    costs and attorneys’ fees was not premised on an erroneous
    view of the law or a clearly erroneous assessment of the
    evidence.
    4                 GRANCARE V. THROWER
    COUNSEL
    Ben Ogletree (argued), Verdi & Ogletree PLLC, Washington,
    D.C., for Defendants-Appellants.
    David M. Medby (argued), Mark A. Schadrack, and Stephen
    M. Garcia, Garcia Artigliere & Medby, Long Beach,
    California, for Plaintiffs-Appellees.
    OPINION
    W. FLETCHER, Circuit Judge:
    Defendant-Appellant GranCare LLC (“GranCare”)
    removed a diversity case to federal court, arguing that the
    sole non-diverse defendant, nursing home administrator
    Remy Rhodes, was fraudulently joined as a defendant in
    order to defeat diversity and prevent removal. The district
    court remanded the case and awarded costs and attorney’s
    fees to Plaintiffs pursuant to 28 U.S.C. § 1447(c) after finding
    that Rhodes was not fraudulently joined and that removal was
    objectively unreasonable. GranCare appeals the award,
    arguing that the district court applied an improper standard
    for fraudulent joinder and that removal was objectively
    reasonable. We have jurisdiction under 28 U.S.C. § 1291.
    We affirm.
    I. Factual and Procedural Background
    Ruth Thrower died on July 30, 2015, after a stay at a
    nursing facility operated by GranCare LLC. On September
    14, 2015, Thrower’s estate and her successors (“Thrower’s
    heirs”) filed suit in California state court naming as
    GRANCARE V. THROWER                       5
    defendants, among others, GranCare and a GranCare
    administrator, Remy Rhodes. The complaint alleged that
    Thrower suffered a fall while residing at the facility, which
    could have been prevented by the adoption of an adequate
    care plan, and that GranCare staff delayed before sending
    Thrower to a hospital for treatment. The complaint alleged
    claims under California law against all defendants for elder
    abuse, negligence, negligent hiring and supervision, and
    wrongful death, and an additional claim against GranCare
    only for fraud.
    On December 7, 2015, defendants removed to federal
    court, even though the named parties are not completely
    diverse. Thrower’s heirs and defendant Rhodes are all
    California citizens. The remaining defendants contended
    that Rhodes is a sham defendant who was fraudulently joined
    to the lawsuit for the purpose of defeating diversity. They
    also contended that the complaint was “devoid of allegations
    that Defendant Rhodes herself committed any specific
    wrongdoing” and failed to “ascrib[e] any particular act or
    omission by Rhodes.” Finally, they contended that Rhodes,
    as a non-clinician administrator, owed no duty of care to
    Thrower under California law.
    Defendants relied on a district court order in Johnson v.
    Grancare LLC, No. 15-CV-03585-RS, 
    2015 WL 6865876
    (N.D. Cal. Nov. 9, 2015) as supporting removal. In Johnson,
    the heirs of a different resident who died at a GranCare
    facility sued the same set of defendants in California state
    court for elder abuse. 
    Id. at *1.
    As in this case, defendants
    removed to federal court on the basis of diversity, asserting
    that Rhodes had been fraudulently joined. 
    Id. The district
    court in Johnson concluded that “[t]he standard for
    determining whether a defendant is fraudulently joined is
    6                 GRANCARE V. THROWER
    similar to that of a 12(b)(6) motion to dismiss.” 
    Id. at 2.
    Under that standard, the court held that the complaint failed
    to plead viable claims against Rhodes and denied plaintiffs’
    motion to remand. GranCare argued in the district court that
    the reasoning and result in the Johnson order compelled the
    same outcome in this case because plaintiffs “[did] not plead
    a viable cause of action against Rhodes.” At a hearing in this
    case, GranCare conceded that there was “some possibility, if
    plaintiff[s] properly pleaded such,” that Thrower’s heirs
    could state a cause of action against Rhodes, but GranCare
    emphasized that the complaint contained “no allegations”
    against her.
    The district court granted plaintiffs’ motion to remand. In
    the court’s view, Johnson improperly conflated the test for
    fraudulent joinder with the test under Rule 12(b)(6). The
    court observed that no appellate decision has “explicitly
    established how [the] standard [for fraudulent joinder]
    interacts with the ‘plausibility’ standard used in evaluating
    motions to dismiss under Rule 12(b)(6),” but concluded that
    fraudulent joinder should not be found if there is “any
    possibility” that a plaintiff could state a claim against the
    defendant, even if the complaint actually fails to state a claim.
    Applying this standard, the district court remanded. The
    district court granted plaintiffs’ request for costs and
    attorney’s fees after finding that removal was “patently
    unreasonable.”
    GranCare now appeals the award of costs and attorney’s
    fees.
    GRANCARE V. THROWER                        7
    II. Standard of Review
    We review an award of costs and attorney’s fees under
    28 U.S.C. § 1447(c) for abuse of discretion. Moore v.
    Permanente Med. Grp., Inc., 
    981 F.2d 443
    , 447 (9th Cir.
    1992). We will reverse a district court decision only if it is
    premised on “clearly erroneous findings of fact or erroneous
    determinations of law.” Dahl v. Rosenfeld, 
    316 F.3d 1074
    ,
    1077 (9th Cir. 2003).
    III. Discussion
    GranCare makes two arguments on appeal. First, it
    argues that the award is improper because the district court’s
    remand order is legally incorrect. Second, it argues that, even
    if incorrect, removal was objectively reasonable. We address
    each argument in turn.
    A. Remand Order
    While an order remanding a case for lack of subject
    matter jurisdiction is unreviewable under 28 U.S.C.
    § 1447(d), we may consider the merits of a remand order
    when determining whether an award that flows from that
    order is proper. Balcorta v. Twentieth Century-Fox Film
    Corp., 
    208 F.3d 1102
    , 1105 (9th Cir. 2000).
    A defendant may remove “any civil action brought in a
    State court of which the district courts . . . have original
    jurisdiction.” 28 U.S.C. § 1441(a). Diversity removal
    requires complete diversity, meaning that each plaintiff must
    be of a different citizenship from each defendant. Caterpillar
    Inc. v. Lewis, 
    519 U.S. 61
    , 68 (1996). In determining whether
    there is complete diversity, district courts may disregard the
    8                 GRANCARE V. THROWER
    citizenship of a non-diverse defendant who has been
    fraudulently joined. Chesapeake & Ohio Ry. Co. v.
    Cockerell, 
    232 U.S. 146
    , 152 (1914).
    There are two ways to establish fraudulent joinder:
    “(1) actual fraud in the pleading of jurisdictional facts, or
    (2) inability of the plaintiff to establish a cause of action
    against the non-diverse party in state court.” Hunter v.
    Phillip Morris USA, 
    582 F.3d 1039
    , 1044 (9th Cir. 2009)
    (quoting Smallwood v. Illinois Cent. RR. Co., 
    385 F.3d 568
    ,
    573 (5th Cir. 2004)). Fraudulent joinder is established the
    second way if a defendant shows that an “individual[] joined
    in the action cannot be liable on any theory.” Ritchey v.
    Upjohn Drug Co, 
    139 F.3d 1313
    , 1318 (9th Cir. 1998). But
    “if there is a possibility that a state court would find that the
    complaint states a cause of action against any of the resident
    defendants, the federal court must find that the joinder was
    proper and remand the case to the state court.” 
    Hunter, 582 F.3d at 1046
    (quoting Tillman v. R.J. Reynolds Tobacco,
    
    340 F.3d 1277
    , 1279 (11th Cir. 2003) (per curiam)) (emphasis
    added). A defendant invoking federal court diversity
    jurisdiction on the basis of fraudulent joinder bears a “heavy
    burden” since there is a “general presumption against
    [finding] fraudulent joinder.” 
    Id. (citations omitted).
    We have upheld rulings of fraudulent joinder where a
    defendant demonstrates that a plaintiff is barred by the statute
    of limitations from bringing claims against that defendant.
    See 
    Ritchey, 139 F.3d at 1320
    ; Hamilton Materials, Inc. v.
    Dow Chem. Corp., 
    494 F.3d 1203
    , 1206 (9th Cir. 2007). We
    have also upheld such rulings where a defendant presents
    extraordinarily strong evidence or arguments that a plaintiff
    could not possibly prevail on her claims against the allegedly
    fraudulently joined defendant. See McCabe v. Gen. Foods
    GRANCARE V. THROWER                         9
    Corp., 
    811 F.2d 1336
    , 1339 (9th Cir. 1987) (defendant’s
    conduct was privileged under state law); United Comput. Sys.
    Inc. v. AT&T Corp., 
    298 F.3d 756
    , 761 (9th Cir. 2002)
    (plaintiff’s claims against alleged sham defendant were all
    predicated on a contract to which the defendant was not a
    party); Kruso v. Int’l Tel. & Tel. Corp., 
    872 F.2d 1416
    ,
    1426–27 (9th Cir. 1989) (same). We have declined to uphold
    fraudulent joinder rulings where a defendant raises a defense
    that requires a searching inquiry into the merits of the
    plaintiff’s case, even if that defense, if successful, would
    prove fatal. See 
    Hunter, 582 F.3d at 1046
    (holding that an
    implied preemption affirmative defense was not a permissible
    ground for finding fraudulent joinder).
    GranCare argues that the district court in this case applied
    an incorrect standard for fraudulent joinder. Specifically, it
    argues that the district court’s standard incorrectly requires a
    removing party to show that there is no possibility that the
    plaintiff could demonstrate a viable claim against the
    allegedly fraudulently joined defendant. GranCare argues
    that the correct standard is close to that of a Rule 12(b)(6)
    motion to dismiss, as applied by the district court in Johnson.
    We disagree.
    We agree with GranCare’s contention that the fraudulent
    joinder standard shares some similarities with the analysis
    under Rule 12(b)(6). Both require some assessment of the
    plaintiff’s lawsuit. Indeed, we have previously framed the
    test in terms of an “obvious” failure to state a claim. See
    
    McCabe, 811 F.2d at 1339
    (holding that fraudulent joinder is
    established when a plaintiff “fails to state a cause of action
    against a resident defendant, and the failure is obvious
    according to the settled rules of the state[.]”). And while the
    party seeking removal is entitled to present additional facts
    10                 GRANCARE V. THROWER
    that demonstrate that a defendant has been fraudulently
    joined, 
    Ritchey, 139 F.3d at 1318
    , in many cases, the
    complaint will be the most helpful guide in determining
    whether a defendant has been fraudulently joined, see
    
    McCabe, 811 F.2d at 1339
    .
    But the test for fraudulent joinder and for failure to state
    a claim under Rule 12(b)(6) are not equivalent. A claim
    against a defendant may fail under Rule 12(b)(6), but that
    defendant has not necessarily been fraudulently joined. We
    emphasized in Hunter that a federal court must find that a
    defendant was properly joined and remand the case to state
    court if there is a “possibility that a state court would find that
    the complaint states a cause of action against any of the [non-
    diverse] defendants.” 
    Hunter, 582 F.3d at 1046
    (emphasis
    added) (internal quotations and citation omitted) (quoting
    
    Tillman, 340 F.2d at 1279
    ). This standard accords with that
    adopted by a majority of our sister circuits. See Batoff v.
    State Farm Ins. Co., 
    977 F.2d 848
    , 851–52 (3d Cir. 1992)
    (noting that “a possibility” of a claim precludes fraudulent
    joinder); Hartley v. CSX Transp.; Inc., 
    187 F.3d 422
    , 424
    (4th Cir. 1999) (“no possibility” standard); Travis v. Irby,
    
    326 F.3d 644
    , 647–49 (5th Cir. 2003) (defendant must show
    “the absence of any possibility” of recovery) (internal
    quotation marks omitted); Schur v. L.A. Weight Loss Ctrs.,
    Inc., 
    577 F.3d 752
    , 764 (7th Cir. 2009) (“[T]he district court
    must ask whether there is ‘any reasonable possibility’ that the
    plaintiff could prevail against the non-diverse defendant.”);
    Junk v. Terminix Int’l Co., 
    628 F.3d 439
    , 445–46 (8th Cir.
    2010) (defendant must establish that there is no “colorable
    claim” against the alleged sham defendant); Stillwell v.
    Allstate Ins. Co., 
    663 F.3d 1329
    , 1332–33 (11th Cir. 2011)
    (“no possibility” standard).
    GRANCARE V. THROWER                         11
    A standard that equates fraudulent joinder with Rule
    12(b)(6) conflates a jurisdictional inquiry with an
    adjudication on the merits. Because the purpose of the
    fraudulent joinder doctrine is to allow a determination
    whether the district court has subject matter jurisdiction, the
    standard is similar to the “wholly insubstantial and frivolous”
    standard for dismissing claims under Rule 12(b)(1) for lack
    of federal question jurisdiction. Bell v. Hood, 
    327 U.S. 678
    ,
    682–83 (1946); Franklin v. Murphy, 
    745 F.2d 1221
    , 1227 n.6
    (9th Cir. 1984) (“A paid complaint that is ‘obviously
    frivolous’ does not confer federal subject matter
    jurisdiction.”). The relative stringency of the standard
    accords with the presumption against removal jurisdiction,
    under which we “strictly construe the removal statute,” and
    reject federal jurisdiction “if there is any doubt as to the right
    of removal in the first instance.” Gaus v. Miles, Inc.,
    
    980 F.2d 564
    , 566 (9th Cir. 1992) (per curiam).
    We articulated this standard most recently in Weeping
    Hollow Avenue Trust v. Spencer, 
    831 F.3d 1110
    (9th Cir.
    2016). In Weeping Hollow, an organization that had
    purchased property at a foreclosure sale filed a quiet title
    action, naming among others the former homeowner,
    Spencer, as a defendant. 
    Id. at 1111.
    Another defendant
    removed the case to federal court. 
    Id. It argued
    that Spencer
    had been fraudulently joined because the foreclosure sale had
    extinguished any interest she had in the property. 
    Id. We held
    that Spencer had not been fraudulently joined because
    she retained the ability to challenge the foreclosure on
    equitable grounds of “fraud, unfairness or oppression.” 
    Id. at 1113–14
    (citation and quotation omitted).
    GranCare cites Sessions v. Chrysler Corp., 
    517 F.2d 759
    (9th Cir. 1975), in support of its argument that the test for
    12                GRANCARE V. THROWER
    fraudulent joinder is roughly equivalent to the test under Rule
    12(b)(6). In Sessions, we concluded that because a plaintiff’s
    claims were “sufficient to withstand a dismissal motion under
    Fed. R. Civ. P. 12(b)(6), the joinder of claims against them
    was not fraudulent.” 
    Id. at 761.
    But our holding in Sessions
    is consistent with the “possibility” standard we follow today.
    If a plaintiff’s complaint can withstand a Rule 12(b)(6)
    motion with respect to a particular defendant, it necessarily
    follows that the defendant has not been fraudulently joined.
    But the reverse is not true. If a defendant cannot withstand a
    Rule 12(b)(6) motion, the fraudulent inquiry does not end
    there. For example, the district court must consider, as it did
    in this case, whether a deficiency in the complaint can
    possibly be cured by granting the plaintiff leave to amend.
    In the case before us, plaintiffs have shown a possibility
    of recovery against Rhodes. California’s Elder Abuse and
    Dependent Adult Civil Protection Act (“the Act”) provides
    civil penalties for elder abuse. Cal. Welf. & Inst. Code.
    § 15600, et seq. Section 15610.07 of the Act defines elder
    abuse as including both “neglect” and “[t]he deprivation by
    a care custodian of goods or services that are necessary to
    avoid physical harm or mental suffering.” Neglect includes
    “[t]he negligent failure of any person having the care or
    custody of an elder or a dependent adult to exercise the
    degree of care that a reasonable person in a like position
    would exercise.” 
    Id. § 15610.57(a)(1).
    The Act provides a
    non-exhaustive list of actions that constitute neglect,
    including “[f]ailure to provide medical care for physical and
    mental health needs” and “[f]ailure to protect from health or
    safety hazards.” 
    Id. § 15610.57(b)(2)–(3).
    To prove a neglect claim under the Act, a plaintiff must
    establish that: (1) the plaintiff or decedent was over 65, and
    GRANCARE V. THROWER                       13
    therefore an elder within the meaning of the Act; (2) the
    defendant had “a substantial caretaking or custodial
    relationship” with the elder; (3) the defendant failed to use
    due care; (4) the elder was harmed as a result; and (4) the
    defendant’s conduct was a substantial factor in causing the
    elder’s harm. Cal. Welf. & Inst. Code. § 15610.57; Cal. Civ.
    Jury Instructions § 3103. The Act does not apply to simple
    or gross negligence by healthcare providers, but requires
    proof of “reckless, oppressive, fraudulent, or malicious
    conduct.” Delaney v. Baker, 
    20 Cal. 4th 23
    , 31 (1999).
    Plaintiffs allege a colorable claim against Rhodes. The
    complaint alleges that Rhodes is “the [a]dministrator and
    managing agent of [GranCare], responsible for the day-to-day
    operations.” The complaint states that Thrower was over 65
    “at all relevant times” and therefore was an “elder” as defined
    in the Act. The complaint further alleges several “failure[s]
    to protect from health or safety hazards,” including
    allegations that the defendants failed to provide safety and
    assistance devices to prevent accidents, did not adequately
    train their staff, and that Rhodes did not conduct adequate
    screening procedures before admitting Thrower to confirm
    that the facility was adequately equipped to care for her.
    The complaint alleges that Thrower died after she
    suffered a preventable fall and defendants delayed for over
    18 hours before taking her to a hospital. California applies a
    broad “substantial factor” test for legal causation, and
    Thrower’s heirs need only demonstrate a reasonable
    possibility that Rhodes’s actions played a role in Thrower’s
    death that was not merely “infinitesimal” or “theoretical.”
    Bockrath v. Aldrich Chem. Co., Inc., 
    21 Cal. 4th 71
    , 79
    (1999). Finally, Rhodes’s alleged actions are within the
    range of conduct determined by California courts to qualify
    14                GRANCARE V. THROWER
    as reckless neglect. See, e.g., Sababin v. Superior Court,
    
    144 Cal. App. 4th 81
    , 89–90 (2006) (finding a triable issue on
    the question of recklessness where a rehabilitation center
    established, but failed to follow, a care plan that included
    monitoring a patient’s skin and reporting changes to a
    physician); Fenimore v. Regents of the Univ. of Cal., 245 Cal.
    App. 4th 1339, 1350 (2016) (holding that systemic
    understaffing may provide evidence of “recklessness” under
    the Act).
    Plaintiffs also allege a colorable negligence per se claim
    against Rhodes. Under California law, a failure to exercise
    due care is presumed if “(1) [the defendant] violated a statute,
    ordinance, or regulation of a public entity; (2) [t]he violation
    proximately caused a death or injury to person or property,
    (3) [t]he death or injury resulted from an occurrence of the
    nature that the statute, ordinance, or regulation was designed
    to prevent; and (4) [t]he person suffering the death or injury
    . . . was one of the class of persons for whose protection the
    statute, ordinance, or regulation was adopted.” Cal. Evid.
    Code § 669(a). The complaint alleges that Rhodes violated
    a series of regulations applicable to nursing home
    administrators, including Cal. Code. Regs § 72513(f). It
    specifically alleges that Rhodes violated § 72513(f) by failing
    to conduct a preadmission personal interview with Thrower’s
    physician, and by failing to update screening assessments.
    The complaint alleges further that Thrower’s fall could have
    been prevented had Rhodes and GranCare adopted an
    adequate care plan prior to her arrival, although the precise
    details are unclear. Finally, the complaint alleged that, as a
    resident at an elder care facility, Thrower was within the class
    protected by the regulation.
    GRANCARE V. THROWER                      15
    GranCare has not demonstrated that there is no possibility
    that Plaintiffs could prevail against Rhodes. GranCare
    submitted a declaration from Rhodes in which she denied the
    allegations and emphasized that her role is largely
    administrative. But a denial, even a sworn denial, of
    allegations does not prove their falsity, and Rhodes’s status
    as an administrator does not insulate her from liability. See
    Cal. Welf. Inst. & Inst. Code § 15610.17 (including
    administrators within the statutory definition of “care
    custodians”); 
    Delaney, 20 Cal. 4th at 27
    –28, 41 (upholding
    jury verdict finding a nursing home and its administrators
    liable for the death of a patient).
    GranCare also makes a series of arguments to the effect
    that Plaintiffs have not adequately pleaded their claims
    against Rhodes, and that the district court did not accord
    sufficient weight to deficiencies in the complaint.
    Specifically, GranCare argues that the heirs erred in
    “lumping” Rhodes with other defendants by alleging
    misconduct against all defendants collectively, that the heirs
    did not plead their claims with sufficient particularity, and
    that the heirs did not sufficiently allege negligence. Because
    these arguments go to the sufficiency of the complaint, rather
    than to the possible viability of the heirs’ claims against
    Rhodes, they do not establish fraudulent joinder.
    B. The Reasonableness of Removal
    Costs and attorney’s fees may be awarded against
    GranCare if its decision to remove was objectively
    unreasonable. Absent unusual circumstances, a court may
    award costs and attorney’s fees under § 1447(c) only where
    the removing party lacked an objectively reasonable basis for
    seeking removal. Martin v. Franklin Capital Corp., 
    546 U.S. 16
                   GRANCARE V. THROWER
    132, 141 (2005). Removal is not objectively unreasonable
    “solely because the removing party’s arguments lack merit,
    or else attorney’s fees would always be awarded whenever
    remand is granted.” Lussier v. Dollar Tree Stores, Inc.,
    
    518 F.3d 1062
    , 1065 (9th Cir. 2008).
    GranCare argues that the award of costs and attorney’s
    fees is improper. It contends that it reasonably relied on the
    order in Johnson—in which a district court in the same
    district determined that Rhodes was a fraudulently joined
    defendant—in deciding to remove this case. We agree with
    GranCare that the degree of clarity in the relevant law at the
    time of removal is a relevant factor in determining whether a
    defendant’s decision to remove was reasonable. See 
    Lussier, 518 F.3d at 1063
    . We are willing to assume, arguendo, that
    at the time of removal, no appellate decision in this circuit
    had yet clarified the relationship between Rule 12(b)(6) and
    the standard for fraudulent joinder. Further, we recognize
    two district courts in the same jurisdiction, faced with our
    precedents, came to different conclusions as to the governing
    standard. Without agreeing that Johnson’s standard was
    legally correct, we conclude that GranCare had a reasonable
    basis for relying on the standard articulated in that case.
    However, the district court correctly determined that
    GranCare’s reliance on Johnson was unreasonable due to
    clear factual distinctions between the cases. The Johnson
    complaint identified Rhodes as the nursing home
    administrator, but did not mention her elsewhere, leaving the
    basis for plaintiffs’ claims entirely unclear. The failure to do
    anything other than identify Rhodes as the administrator was
    the primary reason for the Johnson court’s conclusion that
    Rhodes had been fraudulently joined. Unlike the complaint
    in Johnson, the complaint in this case contained detailed
    GRANCARE V. THROWER                      17
    allegations against Rhodes, and it is obvious that GranCare
    would not have been entitled to removal in this case even if
    the Johnson standard had been applied.
    Conclusion
    Because the district court’s award of costs and attorney’s
    fees was not premised on an erroneous view of the law or a
    clearly erroneous assessment of the evidence, we affirm.
    AFFIRMED.