Tuesday, June 02, 2009

The Reviewability of Remand Orders

Here's today's issue: 28 U.S.C. Sec. 1447(c) authorizes a federal trial court to remand a case to state court for lack of jurisdiction or procedural defects in the removal process. Section 1447(d) then says that a remand order "is not reviewable on appeal or otherwise."

Clear enough.

But then the Supreme Court held in Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336 (1976), that an appellate court could issue a writ of mandamus to review a remand order issued on the ground that the federal court was too busy to try the case.

We're not kiddding: The federal court had "no available time in which to try the above-styled action in the foreseeable future," id. at 339, and so remanded the case.

The Supremes decided that the prohibition on appellate review created in section 1447(d) applied only to remand orders issued on the grounds specified in section 1447(c). Since the judge in Thermtron remanded on a basis other than those specified in section 1447(c), the remand order was reviewable.

A couple of light years ago -- nah, it was only a couple of decades ago -- Herrmann was obsessed with this question. Which orders remanding cases to state court (if any) were subject to appellate review? If an order was reviewable, should review be by appeal or writ of mandamus? See Mark Herrmann, "Thermtron Revisited: When and How Federal Trial Court Remand Orders are Reviewable," 19 Ariz. St. L.J. 395 (1987).

Back then, Herrmann theorized that remand orders based on section 1447(c) -- generally, jurisdictional remand orders -- were absolutely barred from appellate review. Remand orders based on the resolution of non-jurisdictional issues were "subject to review under standard appellate procedures. Ordinarily such a trial court ruling would be appealable. When a court refuses to accept jurisdiction without legal grounds for doing so, however, mandamus is the proper mechanism for review." Id. at 423.

Would that the law followed such impeccable logic.

The string of Supreme Court cases relating to review of remand orders over the last two decades demonstrate the limits of human (or at least Herrmann's) imagination. The Supreme Court has wrestled with remand orders arising out of a dizzying array of facts.

In Carnegie-Mellon University v. Cohill, 484 U.S. 343 (1988), plaintiffs dismissed their federal claim, leaving only state law claims pending in federal court. The trial court remanded the state law claims, and the Supreme Court affirmed. The Court didn't fret much about whether the remand order was reviewable, focusing its attention on whether federal courts had discretion to remand, rather than dismiss, dangling pendent (now, "supplemental") state law claims.

In Things Remembered, Inc. v. Petrarca, 516 U.S. 124 (1995), the petitioner filed an untimely notice of removal under the bankruptcy removal statute, 28 U.S.C. Sec. 1452(a). The Supreme Court held that section 1447(d)'s prohibition on appellate review applied to removals under the bankruptcy statute, in addition to remands under the general removal statute.

Three to go:

In Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996), the trial court remanded the case based on a federal abstention doctrine. The Supremes held that section 1447(d) does not apply to abstention-based remands, and the remand order was thus reviewable on appeal.

In Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224 (2007), foreign states and American federal agencies removed a case, invoking their unique statutory rights to removal under 28 U.S.C. Sections 1441(d) and 1442(a), respectively. The trial court found, among other things, that Powerex did not qualify as a "foreign state" and remanded. Only Powerex appealed to the Supreme Court, and the Court held that it lacked jurisdiction to hear the appeal. "[T]he remand is covered by section 1447(c) and thus shielded from review by section 1447(d)."

Finally, the motivation for today's post: Last month, in Carlsbad Technology, Inc. v. HIF Bio, Inc., 556 U.S. __ (2009) (link here), the trial court dismissed plaintiff's one federal claim and then declined to exercise supplemental jurisdiction over the remaining state law claims under 28 U.S.C. Sec. 1367(c)(3). The trial court thus invoked the authority recognized in Carnegie-Mellon v. Cohill to remand the remaining state law claims. The Supreme Court accepted the case to address the question left open twenty years earlier: "'whether Cohill remands are subject-matter jurisdictional for purposes of . . . section 1447(c) and section 1447(d).'" Slip op. at 3 (quoting Powerex). The Court held that a remand based on a discretionary decision not to exercise supplemental jurisdiction "is not based on a lack of subject-matter jurisdiction" and so is reviewable. Id. at 6.

But here's the interesting part. (You knew we'd get there eventually.)

Concurring, Justice Stevens wrote that if he were "writing on a clean slate, I would adhere to the statute's text" and not review the remand order. Thus, Stevens is apparently unhappy with Thermtron.

Justice Breyer, joined by Justice Souter, was also uncomfortable with the state of the law: "I suggest that experts in this area of the law reexamine the matter with an eye toward determining whether statutory revision is appropriate."

And Justice Scalia, in his own inimitable style, almost agreed, writing that "[t]his mess -- entirely of our own making -- does not in my view require expert reexamination of this area of the law . . . . It requires only the reconsideration of our decision in Thermtron."

That's four votes raising doubts about either section 1447(d) or Thermtron's interpretation of it -- and no party had asked the Court to overrule Thermtron. Slip op. at 3 n.*. What would have happened if someone had actually raised the issue?

Moreover, the experts sought by Breyer and Souter are in fact already in action: In a recent piece in the Temple Law Review, Deborah J. Challener and John B. Howell, III, argue that Congress should repeal section 1447(d) and permit unrestricted review of remand orders.

What's our reaction to this?

First, at least as to jurisdictional issues -- deciding only the court in which a case will proceed -- it would be nice to have quick and inexpensive answers to questions. Lord knows, American litigation is sufficiently expensive without fighting about the shape of the table -- which court will hear the case.

Second, we generally prefer having appellate review of remand orders, for two reasons. As a matter of principle, choice of court -- state or federal -- can change the dynamics of a case. In many situations, choice of forum will affect the settlement value of a case. In some situations, choice of forum may ultimately be dispositive on the merits. Appellate review would increase the odds that courts would decide issues relating to choice of forum correctly.

And, as a matter of bias, we're defense lawyers. Plaintiffs are typically moving to remand. If a court grants a remand order, that means the defense lost that motion. When we lose, we like to have a chance for appellate review. So we're in favor of permitting appellate review of at least some types of remand orders.

Ultimately, the question is one of cost: Forbidding appellate review of remand orders is unfair to defendants, because virtually all other orders are ultimately reviewable by a higher court. But Congress must weigh that unfairness against the perceived need to avoid delay: interposing the delay inherent in allowing appellate review every time a federal trial court orders remand.

One possible compromise solution is to adopt the system Congress created for review of remand orders in the context of the Class Action Fairness Act: Defendants must seek appellate review promptly, and courts must decide appeals from remand orders within 60 days. 28 U.S.C. Sec. 1453.

That approach puts some additional burden on the appellate courts, but it would ensure fairness by permitting review of remand orders without unduly delaying trial court proceedings.

Perhaps it's worth a thought.

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