Gibson

Chrysler Corporation (“Chrysler”) 1 appeals sanctions and attorneys’ fees awarded by the district court. Chrysler has twice attempted to remove plaintiffs’ class actions from California state court to federal court. After Chrysler’s second attempt, the district court held that several of Chrysler’s arguments were frivolous, and awarded sanctions and fees. We believe that removal was improper, but we hold that Chrysler’s arguments, taken as a whole, were not frivolous. We reverse the district court’s award of sanctions, but we *931 affirm the district court’s award of attorneys’ fees.

I. Background

This appeal involves three state-law class actions against Chrysler. The complaints in all three actions alleged that Chrysler used a finishing process known as “electrocoat” (marketed under various trade names, including “Uniprime,” “HBEC,” and “Ecoat”) to paint vehicles it manufactured between 1986 and 1997. Plaintiffs alleged that the electrocoat process produced a poor bond between the primer and the exterior paint on the vehicles, and that the exterior paint is prone to peel off, especially after prolonged exposure to ultraviolet light. They further alleged that Chrysler knew…