granting plaintiffs motion for summary judgment and rejecting defendants’ defense that plaintiffs case was barred by issue preclusion due to an earlier arbitration award where there were no findings by the arbitration panel; the court reasoned that it was “not persuaded that the issues raised here were by necessary implication decided in the arbitration proceeding.”
How later courts described this case
- granting plaintiffs motion for summary judgment and rejecting defendants’ defense that plaintiffs case was barred by issue preclusion due to an earlier arbitration award where there were no findings by the arbitration panel; the court reasoned that it was “not persuaded that the issues raised here were by necessary implication decided in the arbitration proceeding.”
- finding that claim for which court has original jurisdiction is “separate and independent” from claim based on state law precludes an exercise of supplemental jurisdiction
- explaining “it is our ‘general rule’ that courts should decline supplemental jurisdiction when all federal claims are dismissed or otherwise eliminated from a case”
- explaining that “it is our ‘general rule’ that courts should decline supplemental jurisdiction when all federal claims are dismissed or eliminated from a case.”
Written by the judges who cited it.
The opinion
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
August 17, 2006
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-11168
Certain Underwriters at Lloyd’s, London
and Other Insurers Subscribing to
Reinsurance Agreements F96/2922/00 and No. F97/2992/00
Plaintiff-Appellee,
versus
Warrantech Corp.; Warrantech Consumer Products Services, Inc.;
Warrantech Help Desk, Inc.; Joel San Antonio
Defendant-Appellant.
Appeal from the United States District Court
For the Northern District of Texas
Before REAVLEY, HIGGINBOTHAM, and GARZA, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
This case brings questions of our jurisdiction to review an
order remanding the case to state court after its removal as a case
that “relates to” an earlier arbitration proceeding. Certain
Underwriters at Lloyd’s, London and Other Insurers Subscribing to
Reinsurance Agreements F96/2922/00 and No. F97/2992/00 seek
dismissal for lack of jurisdiction of the appeal filed by
Warrantech Corporation and Joel San Antonio (collectively,
“Appellants”). Appellants appeal (1) the district court’s order
remanding all “unresolved” issues back to state court; (2) the
district court’s order granting Underwriters partial summary
judgment on Appellants’ res judicata and collateral estoppel
affirmative defenses; and (3) the district court’s order dismissing
with prejudice Warrantech’s counterclaims.1
I
This case arises out of the administration of consumer
warranties and extended service plans on computers, printers, and
related items sold by CompUSA, a national electronics retailer.
CompUSA contracted with Warrantech to administer the warranties on
CompUSA’s consumer goods. The contract required Warrantech to
obtain insurance to cover the cost of paying warranty claims, which
Warrantech did with Houston General Insurance Company, a nonparty
to this litigation. Houston General, in turn, reinsured a portion
of the risk with Underwriters.
After approximately one year, Underwriters contended that
Warrantech was paying unauthorized claims and refused to reinsure
Houston General for any unauthorized amounts. Houston General
instituted arbitration proceedings to determine Underwriters’
obligations, which took place under the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards
(hereinafter, “the New York Convention”).2 After five weeks of
hearings, the arbitration panel ordered Underwriters to pay Houston
1
Both Warrantech and San Antonio assert affirmative defenses based on the
arbitration award. Only Warrantech asserts various state-law counterclaims
against Underwriters. As such, when discussing the affirmative defenses, we
refer to “Appellants” and when discussing the counterclaims, we refer only to
“Warrantech.”
2
See 9 U.S.C. §§ 201-208 (2000).
2
General $39 million, and the order was confirmed by the United
States District Court for the Southern District of New York.3
On September 19, 2002, one month after the arbitral panel’s
decision, Underwriters filed the instant lawsuit against Warrantech
in Texas state court, seeking to recoup as damages the reinsurance
payments that Underwriters was ordered to pay Houston General.4
Warrantech filed counterclaims, asserting causes of action for
fraud, unfair and deceptive insurance practices in violation of
Article 21.21 of the Texas Insurance Code,5 and violation of the
duty of good faith and fair dealing.6 After Underwriters added San
Antonio to the litigation, the case was removed under 9 U.S.C. §
205,7 with Appellants asserting res judicata and collateral
3
Houston General Ins. Co. v. Certain Underwriters at Lloyd’s London, No.
02 Civ. 7559 JSR, 2003 WL 22480058 (S.D.N.Y. Oct. 31, 2003).
4
Underwriters asserts causes of action against Warrantech for fraud and
negligent misrepresentation, alleging that they are subrogated to all rights
Houston General may have to seek damages from defendants concerning claims
wrongfully submitted and paid under the insurance policies. Underwriters also
seeks to recover for spoilation, alleging that Warrantech destroyed certain
evidence during the course of the arbitration proceeding.
5
Article 21.21 of the Texas Insurance Code was repealed by Acts 2003, 78th
Leg., ch. 1274, § 26(a) (effective Apr. 1, 2005). It was replaced by Tex. Ins.
Code Ann. tit. 5, § 541.001 et seq. The recodification does not affect the
issues in this appeal.
6
Warrantech’s counterclaims arise from Underwriters’ alleged discovery
conduct during the arbitration proceedings and the failure of Underwriters to
voluntarily make payment of warranty claims.
7
Section 205 provides:
Where the subject matter of an action or proceeding pending in a
State court relates to an arbitration agreement or award falling
under the Convention, the defendant or the defendants may, at any
time before the trial thereof, remove such action or proceeding to
the district court of the United States for the district and
division embracing the place where the action or proceeding is
3
estoppel affirmative defenses based on the arbitration award to
Houston General.
Underwriters moved to remand the matter to state court. In
consideration of its jurisdiction, the district court, relying upon
Beiser v. Weyler,8 stated that its only task was to determine
whether Appellants’ arbitration-related affirmative defenses were
“facially frivolous.”9 Concluding that they were not, the district
court denied Underwriters’ motion to remand. In its order, the
court supplied a caveat: “If the court later makes a summary ruling
that the arbitration award does not provide a defense to any of
[Underwriters’] claims, the court will then consider whether the
action should be remanded to the state court.”10
Subsequently, Underwriters moved for partial summary judgment
on Appellants’ res judicata and collateral estoppel affirmative
defenses and on Warrantech’s state-law counterclaims. On August
24, 2004, the district court granted summary judgment for
Underwriters, concluding that the affirmative defenses were without
merit and dismissing Warrantech’s counterclaims with prejudice.
pending. The procedure for removal of causes otherwise provided by
law shall apply, except that the ground for removal provided in this
section need not appear on the face of the complaint but may be
shown in the petition for removal.
9 U.S.C. § 205.
8
284 F.3d 665 (5th Cir. 2002).
9
Order Denying Remand (May 13, 2004), at 4.
10
Order Denying Remand (May 13, 2004), at 4.
4
After determining that “there [was] no just reason for delay,” the
district court entered final judgment dismissing Warrantech’s
counterclaims.11 That decision forms the basis of part of this
appeal.
After its August 24 order, the district court requested
additional briefing on whether Underwriters’ remaining state-law
claims should be remanded to state court given that the issues
related to the arbitration award were no longer part of the
lawsuit. After briefing, the district court granted Underwriters’
motion to remand, concluding that Appellants were not asserting any
“non-frivolous” defense based on the arbitration award.12 Finding
no “policy” reasons in support of exercising jurisdiction over this
case and concluding that there were “no other grounds for federal
jurisdiction,” the district court remanded all “unresolved claims
and causes of action” to state court.13
II
We must first decide what we can decide. Prior to remanding
all “unresolved” matters to the Texas state court, the district
court granted Underwriters’ motion for partial summary judgment on
Appellants’ res judicata and collateral estoppel affirmative
defenses and Warrantech’s state-law counterclaims. Appellants seek
11
Summary Judgment Order (Aug. 24, 2004), at 13.
12
Remand Order (Sept. 23, 2004), at 3.
13
Remand Order (Sept. 23, 2004), at 3-6.
5
merits review of each of the district court’s orders. Underwriters
seeks dismissal for lack of appellate jurisdiction.
A
1
Our analysis of the district court’s remand order begins with
28 U.S.C. § 1447(d): “An order remanding a case to the State court
from which it was removed is not reviewable on appeal or
otherwise.”14 The Supreme Court instructs that § 1447(d) must be
read in pari materia with § 1447(c),15 which provides two bases for
remanding cases to state court: (1) a defect in the removal
procedure (which must be made within 30 days of the date of
removal) and (2) the lack of subject matter jurisdiction.16
It is plain that with any remand based on the enumerated
grounds of § 1447(c), the clear language of § 1447(d) is an
absolute bar to appellate review.17 Since there is no contention,
here, of a defect in the removal procedure, we only lack appellate
jurisdiction to review the district court’s remand order if it is
based on a lack of subject matter jurisdiction.
14
28 U.S.C. § 1447(d) (2000).
15
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711 (1996); Things
Remembered, Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995); Thermtron Prods., Inc.
v. Hermansdorfer, 423 U.S. 336, 345-46 (1976).
16
28 U.S.C. § 1447(c) (2000).
17
Gravitt v. Southwestern Bell Tel. Co., 430 U.S. 723, 723 (1977) (per
curiam) (noting that § 1447(d) gives an “unmistakable command” so as to preclude
review of remands for grounds stated in § 1447(c) “by appeal, mandamus, or
otherwise”); see also Thermtron Prods., 423 U.S. at 343.
6
Our analysis is complicated by the Supreme Court’s
recognition, in a narrow category of cases,18 that a district court
can remand a case to state court on the basis of a non-§ 1447(c)
ground.19 In Carnegie-Mellon University v. Cohill, the Supreme
Court held that where all federal claims have been eliminated a
federal district court “has discretion to remand to state court a
removed case involving pendent claims upon a proper determination
that retaining jurisdiction over the case would be inappropriate.”20
To the Court, under limited circumstances “a remand may best
promote the values of economy, convenience, fairness, and comity.”21
Thus, it is also plain that with any remand based on the policy
considerations offered in Carnegie-Mellon, § 1447(d) is no longer
a bar to appellate review.22 Should we find jurisdiction to review
the district court’s remand order, our review is for an abuse of
discretion.23
So framed, we must determine whether the district court’s
order remanding all “unresolved” matters to state court was based
18
See Angelides v. Baylor Coll. of Medicine, 117 F.3d 833, 836 (5th Cir.
1997) (noting that the Thermtron Court carved out only a “narrow exception to the
strict bar to appellate review of remand orders”).
19
Thermtron Prods., 423 U.S. at 343 (finding jurisdiction review remand
order expressly based on the district court’s crowded docket).
20
484 U.S. 343, 357 (1988).
21
Id. at 353.
22
See Bogle v. Phillips Petroleum Co., 24 F.3d 758, 761 (5th Cir. 1994);
Burks v. Amerada Hess Corp., 8 F.3d 301, 304 (5th Cir. 1993).
23
Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 339 (5th Cir. 1999).
7
on jurisdictional grounds, i.e., § 1447(c), which bars appellate
review, or nonstatutory grounds, i.e., Carnegie-Mellon, which
allows for discretionary review. Our inquiry is guided by a clear
statement requirement: for a remand order to be reviewable on
appeal, the district court must “clearly and affirmatively” state
a non-§ 1447(c) ground for remand.24 Our clear-statement
requirement allows a quick inquiry into jurisdiction, preventing
delay through protracted litigation of jurisdictional issues,25 and
it avoids having this Court decipher the tea-leaves of a district
court’s remand order to determine whether it was “jurisdictional”
or not. When the matter is remanded to state court (often
following removal from state court initially), the district court
has determined that the plaintiff’s choice of forum should stand.
Our clear-statement requirement best serves this policy.
Moreover, our clear-statement requirement focuses our inquiry
away from the merits of the district court’s decision. Section
1447(d) precludes examination of the merits of the district court’s
24
Heaton v. Monogram Credit Card Bank of Georgia, 231 F.3d 994, 997 (5th
Cir. 2000); Copling v. Container Store, Inc., 174 F.3d 590, 596 (5th Cir. 1999);
Giles, 172 F.3d at 336; Soley v. First Nat’l Bank of Commerce, 923 F.2d 406, 408
(5th Cir. 1991); Royal v. State Farm Fire & Cas. Co., 685 F.2d 124, 126 (5th Cir.
1982); In re Weaver, 610 F.2d 335, 337 (5th Cir. 1980); see also In re Merrimack
Mutual Fire Ins. Co., 587 F.2d 642, 648 (5th Cir. 1978).
25
See United States v. Rice, 327 U.S. 742, 751 (1946) (noting that Congress
opposes “interruption of the litigation of the merits of removed cause by
prolonged litigation of questions of jurisdiction of the district court to which
the cause is removed”); Soley, 923 F.2d at 408 (citing Thermtron Prods., 423 U.S.
at 251) (noting that the purpose of § 1447(d) is “to prevent delay through
protracted litigation of jurisdictional issues”). As a result, “the district
court is the final arbiter of whether it has jurisdiction to hear the case.”
Smith v. Texas Children’s Hosp., 172 F.3d 923, 925 (5th Cir. 1999).
8
actions; we only must determine what the district court perceived
it was doing, as “no matter how erroneous,”26 a remand order based
on a § 1447(c) ground precludes review on appeal. A contrary
rule––one requiring a thorough and exhaustive examination of the
district court’s reasons for remand––risks tainting the limited,
jurisdictional-inquiry mandated by § 1447(d) with a merits-inquiry,
a process that, as noted, would only lead to a lengthier appeals
process. Although we are not in search of magic words, our clear-
statement requirement carefully delimitates our
jurisdiction––neither expanding it beyond statutorily imposed
limits, nor eschewing it when matters are appropriately before us.
Nothing in the Supreme Court’s recent decision in Kircher v.
Putnam Funds Trust requires us to back away from our clear
statement requirement. There, the Court held that § 1447(d)’s ban
on appellate review of remand orders applied to cases removed under
the Securities Litigation Uniform Standards Act of 1998.27 The
Court had no reason to consider a clear statement requirement, as
the district court plainly indicated that it remanded the case for
a lack of subject matter jurisdiction.28
We recognize that there is some disagreement among the
26
Arnold v. State Farm Fire & Cas. Co., 277 F.3d 772, 775 (5th Cir. 2001);
State of Rio de Janeiro of Federated Republic of Brazil v. Phillip Morris, 239
F.3d 714, 716 (5th Cir. 2001).
27
Kircher v. Putnam Funds Trust, 126 S. Ct. 2145, 2153-55 (2006).
28
Id. at 2158 (Scalia, J., concurring) (quoting the district court).
9
circuits regarding the methodology for reviewing remand orders. We
apply a clear-statement requirement; others do not, opting instead
to analyze a remand order for what the district court did rather
than what the district court said it did. The Supreme Court
recognized but did not resolve this dispute in Kircher. Justice
Scalia would stop with the district court’s words, forgoing any
examination of the merits; the majority passed on the issue, noting
that the result was the same under either approach. As the
Solicitor General recently recognized, this type of “methodological
dispute may have more impact on how district court judges draft
remand orders than on the rights of the parties.”29 The validity
of our methods for reviewing remand orders is not before us, so we
need say no more.
2
With these principles in mind, our analysis requires
examination of the text of the district court’s remand order.30
After concluding that Appellants were not “asserting any non-
frivolous defense to [Underwriters’] claims based on the
arbitration award,” the court made passing reference to policy
29
Brief for the United States as Amicus Curiae, No. 05-107, Davis v. Int’l
Union, United Automobile, Aerospace & Agricultural Implement Workers of Am.
(UAW), at 9-11 (2006) (filed in response to invitation from Supreme Court).
30
See McDermott Int’l, Inc. V. Lloyds Underwriters of London, 944 F.2d
1199, 1201 n.1 (5th Cir. 1991) (directing district courts to “take care to
explain their reasons for remanding cases” because “the availability of appellate
review turns exclusively on the district court’s reason for remand”); Tillman v.
CSX Transp., Inc., 929 F.2d 1023, 1026 (5th Cir. 1991) (“Reviewability of a
remand order depends entirely upon the trial court’s stated grounds for its
decision to remand.”).
10
considerations:
No policy evidenced by the federal arbitration statutes
would be advanced in the slightest by the exercise by
this court of subject matter jurisdiction over the issues
that remain to be resolved in this case. . . . There is
no reason from a policy standpoint for this court to
further entertain jurisdiction over this case, bearing in
mind that there is no claim of arbitrability, and that
the only issues which implicate the arbitration award
itself have been summarily removed from the case.31
Appellants contend that the order’s reference to “policy” indicates
that the remand was based, not on a lack of subject matter
jurisdiction, but on the efficiency and economy considerations
guiding courts under Carnegie-Mellon. Underwriters point to
subsequent language in the remand order, which, they contend,
indicates the remand was based on a lack of subject matter
jurisdiction. Specifically,
[N]ow that the arbitration award issues have been removed
from this case by a summary ruling, and there being “no
other grounds for federal jurisdiction” in this case, the
case should be remanded to the state court.
Therefore, [t]he court ORDERS that all unresolved
claims and causes of action in the above-captioned action
be, and are hereby, remanded to the state court from
which this action was removed.32
With only this language before us, we conclude that the district
court did not “clearly and affirmatively” state a non-§ 1447(c)
ground for remand. To be sure, Appellants’ contentions are not
without merit, as this presents a close case: both parties can
point to language in the remand order supporting their position.
31
Remand Order (Sep. 23, 2004), at 5 (emphasis added).
32
Remand Order (Sep. 23, 2004), at 6 (emphasis added).
11
Appellants’ argument falls short however, following a closer
examination of the district court’s language and upon application
of the clear-statement requirement embraced by this Court.
The district court’s first reference to “policy” is to that
“evidenced by the federal arbitration acts,” and not the concerns
animating discretionary remands.33 The second reference to “policy”
considerations is essentially a single sentence, with no citation
to Carnegie-Mellon, Thermtron Products, or any of the efficiency
and economy factors guiding courts in making discretionary remands.
Any conclusion that this was a discretionary remand, on the basis
of references to policy, is militated by the subsequent discussion
by the district court suggesting that it perceived itself to lack
subject matter jurisdiction. As the district court concluded its
remand order, it stated that there are “no other grounds for
jurisdiction,” language we read to mean the court perceived it
lacked subject matter jurisdiction. Moreover, the court also
states that the case “should”––a derivative of the imperative
“shall”; although “must” might have been a more emphatic indication
of a jurisdictional remand, so too would “may” be more probative of
a discretionary remand. As such, we cannot say that the district
court “clearly and affirmatively” stated a non-§ 1447(c) ground for
33
See Carnegie-Mellon, 484 U.S. at 353 (“[A] remand may best promote the
values of economy, convenience, fairness, and comity.”).
12
remand.34
3
Unclear remand orders are not a new thing in this Court, even
give our strict adherence to a clear-statement requirement. We
have confronted situations before in which a district court’s
remand order offered language supporting both a statutory and a
nonstatutory remand. In Bogle v. Phillips Petroleum Co., various
plaintiffs injured in a chemical-plant explosion brought state-law
claims against Phillips for their injuries as well as a claim for
wrongfully denied medical benefits, which Phillips used to remove
the case alleging that the Employee Retirement Income Security Act
preempted the litigation.35 The district court ruled on the
asserted ERISA-preemption defense, finding no preemption, and
granted plaintiffs’ motion to remand, stating that “[t]his case
does not contain a federal claim” and applying the discretionary
factors from Carnegie-Mellon.36 On appeal, we dismissed for lack
of jurisdiction, concluding that “[t]he district court’s discussion
[of the Carnegie-Mellon factors], although improper surplusage,
[did] not taint its ultimate conclusion that it lacked subject
34
We do not decide today whether, had the district court omitted the
language indicating a perceived lack of subject-matter jurisdiction, the passing
reference to “policy” considerations would be sufficient to satisfy our clear-
statement requirement.
35
24 F.3d 758, 760-61 (5th Cir. 1994).
36
Id. at 762.
13
matter jurisdiction.”37
The district court’s reliance on Beiser v. Weyler does not
alter our conclusion. Reading “relates to” very broadly,38 Beiser
suggests that in cases removed under 9 U.S.C. § 205, the district
court, as here, should initially deny remand as long as the
defendant’s asserted, arbitration-related defenses are not
“facially frivolous.”39 That is precisely what the district court
did here, initially denying Underwriters’ motion to remand, and no
contention is raised on appeal that this decision was error.40 We
37
Id.
38
Beiser relies, in part, on the expansive definition of “relates to” in
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983), an ERISA preemption
case. Beiser v. Weyler, 284 F.3d 665, 669 (5th Cir. 2002); see also Acosta v.
Master Maintenance and Const. Inc., ___ F.3d ___, 2006 WL 1549959, *3 (construing
“relates to” under § 205 and again relying on Shaw). We do not revisit Beiser’s
construction of “relates to” here, but we do note, as did the district court
here, that subsequent ERISA preemption cases have recognized some limits on the
reach of “relates to.” See, e.g., New York State Conference of Blue Cross & Blue
Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654 (1995).
39
Beiser v. Weyler, 284 F.3d 665, 669 (5th Cir. 2002) (holding that a
dispute “relates to” an arbitration clause “whenever the clause could conceivably
have an affect on the outcome of the case”). We continued,
As a result, absent the rare frivolous petition for removal, as long
as the defendant claims in its petition that an arbitration clause
provides a defense, the district court will have jurisdiction to
decide the merits of the claim. This approach honors the statute’s
command that we treat defenses based on arbitration clauses under
the Convention in the same way that we treat removal generally. It
allows the district court to determine its jurisdiction from the
petition for removal, without taking evidence and without a merits-
like inquiry.
Id. at 671-72 (internal footnote omitted).
40
As the question is not presented, we do not decide whether the district
court’s decision was correct. We do recognize, however, that Warrantech’s
affirmative defenses in the present litigation are rather tangentially related
to the arbitration award between Houston General and Underwriters.
14
do not depart from Beiser’s insistence on easy removal of causes
whenever a defendant can assert a nonfrivolous connection to an
arbitration award under the New York Convention.
Moreover, nothing in Beiser alters our analysis of the
district court’s order. The mere citation of dicta in Beiser
suggesting a discretionary remand cannot serve to satisfy our
clear-statement requirement,41 and nothing in Beiser suggests that
we should not apply our clear-statement requirement within the
context of § 205 removals. Application of our clear-statement
requirement is consistent with the plain text of § 205, which
provides that, although allowing removal on the basis of a federal
defense presented in the petition for removal, “[t]he procedure for
removal of causes otherwise provided by law shall apply.”42 This
“procedure for removal” incorporates § 1447(d)’s absolute bar to
appellate review,43 as well as our insistence that a district court
“clearly and affirmatively” state a non-§ 1447(c) ground for
remand. As we find no clear statement in this case, our appellate
41
Cf. Giles, 172 F.3d at 335 (finding a discretionary remand where the
district court stated that “[t]his is an appealable order because the basis of
my ruling is an exercise of discretion to remand pendent state law claims”).
42
9 U.S.C. § 205; cf. 28 U.S.C. § 1441(a) (2000) (“[A]ny civil action
brought in a State court of which the district courts of the United States have
original jurisdiction, may be removed by the defendant or the defendants, to the
district court of the United States for the district and division embracing the
place where such action is pending.”).
43
Dahiya v. Talmidge Int’l, Ltd., 371 F.3d 207, 209 (5th Cir. 2004) (citing
Transit Cas. Co. v. Certain Underwriters at Lloyd’s of London, 119 F.3d 619, 624-
25 (8th Cir. 1997); LaFarge Coppee v. Venezolana De Cementos, S.A.C.A., 31 F.3d
70, 71-72 (2d Cir. 1994); In re Amoco Petroleum Additives Co., 964 F.2d 706, 712-
13 (7th Cir. 1992)).
15
jurisdiction is precluded by § 1447(d).44
B
Although we lack jurisdiction to review the district court’s
remand order, we still must consider whether we can review the
district court’s grant of partial summary judgment to Underwriters
on Appellants’ res judicata and collateral estoppel defenses.
District court determinations accompanying remand orders are
reviewable despite § 1447(d) if they meet the requirements of City
of Waco, Texas v. United States Fidelity & Guaranty Co.45 Under
City of Waco, we can review a pre-remand decision of the district
court if the decision is “separable” from the remand order and
independently reviewable under the collateral order doctrine.46 A
decision is “separable” if (1) the decision preceded the remand
order “in logic and in fact” such that it was “made by the district
44
Appellants also attempt to revive the oft-rejected argument that a “post-
removal event” offers an escape from the strictures of § 1447(d). Appellants
argue that because the district court initially denied Underwriters’ motion to
remand, then adjudicated Underwriters’ summary judgment motions, and only then
issued its remand order, § 1447(d) is no longer a bar to appellate review. We
have consistently rejected this argument. See Angelides v. Baylor College of
Medicine, 117 F.3d 833, 836 & n.3 (5th Cir. 1997) (collecting cases). Appellants
offer no reason why we should not do so here once again.
Appellants also ask us to adopt a “not-all-post-removal-events-are-equal”
approach, which they contend is illustrated by the Seventh Circuit in Adkins v.
Illinois Central Railroad Co., 326 F.3d 828, 833 (7th Cir. 2003). Given the
clear line of precedent in our Court regarding the treatment of post-removal
events, we decline to do so.
45
293 U.S. 140 (1934).
46
Dahiya, 371 F.3d at 210; Heaton v. Monogram Credit Card Bank, 297 F.3d
416, 421 (5th Cir. 2002).
16
court while it had control of the case”;47 and (2) the decision is
“conclusive”––that is, “functionally unreviewable in state
courts.”48
Our decision in Linton v. Airbus Industrie is illustrative.49
There, prior to remanding the matter to state court, the district
court determined that the defendants did not qualify for foreign
sovereign immunity, the basis for removal.50 We held that “[i]n
light of the district court’s ultimate conclusion that the entire
case had to be remanded for lack of subject matter jurisdiction,
the district court’s [foreign sovereign immunity] determination
[could] be deemed a jurisdictional finding under the facts of this
case and, as such, [could] be reviewed by the state court upon
remand.”51 Thus, determinations made in the process of remanding
a case for lack of jurisdiction are “jurisdictional findings” that
can be revisited by the state court upon remand.52
Here, the district court’s orders––that res judicata and
collateral estoppel did not provide Appellants a defense to
47
City of Waco, 293 U.S. at 143.
48
Arnold, 277 F.3d at 776.
49
30 F.3d 592 (5th Cir. 1994).
50
Linton, 30 F.3d at 594-95. The foreign defendants relied upon 28 U.S.C.
§ 1330(a), which confers original jurisdiction upon district courts over any
action against a “foreign state” that is “not entitled to immunity.” 28 U.S.C.
§ 1330(a) (2000).
51
Linton, 30 F.3d at 597.
52
See Dahiya, 371 F.3d at 210-11 (reviewing cases).
17
Underwriters’ state-law claims––were made in the process of
remanding the case for lack of jurisdiction. We see no difference
between the rejection, in Linton, of the defendants’ foreign
sovereign immunity defense––the basis for removal––and the
rejection, here, of Appellants’ affirmative defenses––again, the
basis for removal. We conclude that the district court’s order
rejecting Appellants’ affirmative defenses is not “conclusive”
under City of Waco; thus, we are unable to review the merits of the
district court’s decision.
C
Finally, we turn to the most troubling aspect of this
case––namely, what to do with the district court’s order dismissing
with prejudice Warrantech’s state-law counterclaims. Unlike
resolution of Appellants’ arbitration-based affirmative defenses,
we cannot say that the decision to dismiss the counterclaims was a
“jurisdictional” finding, not “conclusive” under City of Waco, and
therefore not binding on the state court upon remand. We also
decline to hold that the decision is “conclusive” under City of
Waco, as Warrantech asserts and as Underwriters appears to
concede.53 Rather, the prudent resolution of Warrantech’s state-law
53
We take no position on whether the order dismissing Warrantech’s
counterclaims is “conclusive” under City of Waco. Warrantech relies upon John
G. and Maria Stella Kenedy Memorial Foundation v. Mauro, in which we concluded
that we had jurisdiction to review the dismissal of plaintiffs’ federal law
claims even though the district court remanded the remaining state-law claims for
lack of jurisdiction. 21 F.3d 667, 670 (5th Cir. 1994). In John G., unlike
here, there was a sound basis for federal jurisdiction––plaintiffs asserted
claims fell under 28 U.S.C. § 1331. Here, in contrast, there are no federal
18
counterclaims requires a step-back, a reexamination of what the
district court should have done upon concluding that Appellants’
arbitration-related affirmative defenses were meritless. We
conclude that the district court, upon resolving the merits of the
arbitration-related affirmative defenses, abused its discretion in
continuing to exercise supplemental jurisdiction over Warrantech’s
state-law counterclaims.54
Warrantech’s state-law counterclaims rode into federal court
on the coattails of Appellants’ assertion that Appellants’ res
judicata and collateral estoppel affirmative defenses “relate[d]
to” the state-law claims asserted by Underwriters.55 As we have
noted, this is proper, and it would be within the district court’s
prerogative to adjudicate them on the merits, but only if the
district court properly exercised its discretion under 28 U.S.C.
§ 1367, the statute granting the federal courts supplemental
jurisdiction over related state-law claims.56 After concluding that
claims; the only basis for federal jurisdiction was 9 U.S.C. § 205, and once the
arbitration-related affirmative defenses were found to be without merit, the
district court properly remanded the matter to state court.
54
See Hernandez ex rel. Hernandez v. Tex. Dep’t of Protective & Regulatory
Servs., 380 F.3d 872, 878 (5th Cir. 2004) (“Prior to reaching the merits, we must
verify, sua sponte, that our jurisdiction . . . is proper.”); In re McCloy, 296
F.3d 370, 373 (5th Cir. 2002) (“[A] lack of subject matter jurisdiction may be
raised at any time, and we can examine the lack of subject matter jurisdiction
for the first time on appeal.”).
55
See 9 U.S.C. § 205.
56
Robertson v. The Neuromedical Center, 161 F.3d 292, 296 (5th Cir. 1998);
Parker & Parsley Petroleum Co. v. Dresser Industries, 972 F.2d 580, 585 (5th Cir.
1992).
19
Appellants’ affirmative defenses lacked merit, the following claims
remained in the case: (1) Underwriters’ state-law claims against
Warrantech and San Antonio; and (2) Warrantech’s state-law
counterclaims against Underwriters. It is at this moment in time
that we must examine the district court’s exercise of supplemental
jurisdiction.
Our inquiry starts with the mandatory nature of 28 U.S.C.
§ 1367(a), which provides that a district court “shall” have
supplemental jurisdiction over claims “so related to” claims within
the court’s original jurisdiction.57 Yet § 1367(a)’s command is
moderated by the factors provided in 28 U.S.C. § 1367(c), which
allow a district court to decline supplemental jurisdiction under
certain circumstances.58 In consideration of these factors, we have
stated that it is our “general rule” that courts should decline
supplemental jurisdiction when all federal claims are dismissed or
otherwise eliminated from a case.59
57
28 U.S.C. § 1367(a) (“Except as provided in subsections (b) and (c) or
as expressly provided otherwise by Federal statute, in any civil action of which
the district courts have original jurisdiction, the district courts shall have
supplemental jurisdiction over all other claims that are so related to claims in
the action within such original jurisdiction that they form part of the same case
or controversy under Article III of the United States Constitution.”).
58
28 U.S.C. § 1367(c) (“The district court may decline to exercise
supplemental jurisdiction over a claim under subsection (a) if –– (1) the claim
raises a novel or complex issue of State law, (2) the claim substantially
predominates over the claim or claims over which the district court has original
jurisdiction, (3) the district court has dismissed all claims over which it has
original jurisdiction, or (4) in exceptional circumstances, there are other
compelling reasons for declining jurisdiction.”).
59
Parker & Parsley Petroleum Co., 972 F.2d at 585; Wong v. Stripling, 881
F.2d 200, 204 (5th Cir. 1989).
20
This is such a case. Here, all claims with even a tenable
connection to federal jurisdiction were dismissed very early in the
litigation. As the Supreme Court noted in United Mine Workers v.
Gibbs, “[I]f the federal claims are dismissed before trial, even
though not insubstantial in a jurisdictional sense, the state
claims should be dismissed as well.”60 We echoed a similar thought
in the context of removal under § 205 in Beiser:
Under § 205 . . . the federal issue in cases will often
be resolved early enough to permit remand to the state
court for a decision on the merits. . . . If the district
court decides that the arbitration clause does not
provide a defense, and no other grounds for federal
jurisdiction exist, the court must ordinarily remand the
case back to state court.61
Thus, the absence of any claims with any connection to federal law
at such an early point in the litigation suggests that the district
court abused its discretion in exercising supplemental jurisdiction
over Warrantech’s state-law counterclaims.62
Moreover, Warrantech’s state-law counterclaims have little, if
any, relation to the arbitration award. Our task is to compare the
federal basis for jurisdiction (here, the asserted affirmative
defenses stemming from the arbitration award) against the dismissed
state-law claims (here, Warrantech’s counterclaims arising from
60
383 U.S. 715, 726 (1966).
61
Beiser, 284 F.3d at 674-75.
62
See Carnegie-Mellon, 484 U.S. at 351 (nothing that when the single
federal law claim is eliminated at an “early stage” of the litigation, the
district court has “a powerful reason to choose not to continue to exercise
jurisdiction”); Parker & Parsley Petroleum Co., 972 F.2d at 585.
21
Underwriters’ alleged discovery conduct and failure to voluntarily
make payment of warranty claims).63 There is little factual overlap
between these two claims. Appellants asserted their arbitration-
related affirmative defenses in response to Underwriters’
underlying claims. Res judicata and collateral estoppel are
judicial economy devices, seeking to prevent religitation of issues
previously adjudicated.64 Warrantech’s counterclaims arise out of
separate and independent actions of Underwriters––discovery
misconduct and failure to pay insurance claims. In short, we do
not see a sufficient connection between the two claims to warrant
the exercise of supplemental jurisdiction. We conclude that the
district court abused its discretion in exercising supplemental
jurisdiction over Warrantech’s state-law counterclaims.
III
In sum, our inquiry into what we can decide leaves us without
jurisdiction to consider the merits of any of the district court’s
orders. First, we lack jurisdiction to review the district court’s
remand order as the district court did not “clearly and
affirmatively” state a non-§ 1447(c) ground for remand. Second,
the district court’s order dismissing Appellants’ res judicata and
63
We are not seeking a connection between the arbitration-based defenses
and Underwriters’ state-law claims properly presented in Texas state court. That
is the proper inquiry under Beiser, but the issue has not been presented on
appeal.
64
See Key v. Wise, 629 F.2d 1049, 1061 (5th Cir. 1981) (discussing res
judicata); Parklane Hosiery, Inc. v. Shore, 439 U.S. 322, 329 (1979) (discussing
collateral estoppel).
22
collateral estoppel affirmative defenses was a “jurisdictional
finding,” not binding on the state court following remand.
Finally, the district court abused its discretion in exercising
supplemental jurisdiction over Warrantech’s state-law
counterclaims. Accordingly, the district court’s order dismissing
with prejudice Warrantech’s counterclaims must be VACATED, and the
remainder of Appellants’ appeal must be DISMISSED.
Appellee’s motion to dismiss appeal for lack of jurisdiction
is GRANTED.
ENDRECORD
23
EMILIO M. GARZA, Circuit Judge, dissenting:
I dissent from the majority’s initial holding that the
district court’s remand order is not reviewable under 28 U.S.C.
§ 1447(d). Because this case involves the discretionary remand of
supplemental state-law claims, the prohibition on appellate review
does not apply.
The law in this area is clear. “After a district court
remands a case to state court for lack of subject matter
jurisdiction, 28 U.S.C. § 1447(d) bars a federal appellate court
from reviewing the remand ruling ‘no matter how erroneous.’ ”
Dahiya v. Talmidge Int’l, Ltd., 371 F.3d 207, 209 (5th Cir. 2004)
(quoting Arnold v. State Farm Fire & Cas. Co., 277 F.3d 772, 775
(5th Cir. 2001)). If the remand order is not based on a lack of
subject-matter jurisdiction but is, rather, discretionary, the
remand order is reviewable. Bogle v. Phillips Petroleum, 24 F.3d
758, 760 (5th Cir. 1994); see Carnegie Mellon Univ. v Cohill, 484
U.S. 343, 357 (1988) (“[A] district court has discretion to remand
to state court a removed case involving pendent claims upon a
proper determination that retaining jurisdiction over the case
would be inappropriate.”). In determining whether a remand is
discretionary or jurisdictional, the scope of our inquiry is
limited to determining the basis for the district court’s remand
order, in other words, what the district court perceived it was
doing. See Bogle, 24 F.3d at 760 (“In determining whether [an]
24
order is appealable, [the] threshold inquiry is whether the
district court based its remand on lack of subject matter
jurisdiction.”); McDermott Int'l, Inc. v. Lloyds Underwriters of
London, 944 F.2d 1199, 1201 (5th Cir. 1991) (“[T]he availability
and means of appellate review for a district court’s remand order
depend entirely on the court’s reason for issuing the order.”).
Asserting a newly tailored “clear-statement requirement,”1 the
majority concludes that “the district court did not ‘clearly and
affirmatively’ state a non-§ 1447(c) ground for remand” and holds
that the court is without jurisdiction on appeal under 28 U.S.C.
§ 1447(d).2 Although it acknowledges that the remand order bears
the hallmarks of a discretionary remand and although it claims to
not require “magic words” to satisfy its clear-statement
requirement, the majority nevertheless finds the remand order to be
“unclear.” Like the majority, I decline to opine as to the
validity of its “clear-statement requirement” because, even under
this standard, the district court’s remand order unmistakably
1
We have never invoked a “clear-statement requirement.” Rather, we
look to the remand order to determine whether a “district court ‘clearly and
affirmatively’ relie[d] on a non-§ 1447(c) basis.” Heaton v. Monogram Credit
Card Bank of Ga., 231 F.3d 994, 997 (5th Cir. 2000) (quoting Copling v. Container
Store, Inc., 174 F.3d 590, 596 (5th Cir.1999)).
2
Tellingly, the majority does not, indeed cannot, affirmatively state
that the district court remanded based upon a § 1447(c) ground such as a lack of
subject-matter jurisdiction. As I explain infra, every aspect of the district
court’s order demonstrates that its remand was discretionary. Instead, the
majority limits its holding by applying an appellate presumption against a
discretionary remand and finding this presumption to be unrebutted by the
district court order.
25
states a discretionary, “non-§ 1447(c) ground for remand.”3
In its analysis, the majority pauses only momentarily to
discuss and cast aside our treatment of a § 205 removal in Beiser
v. Weyler, 284 F.3d 675 (5th Cir. 2002). Yet, Beiser is the only
case relied upon by the district court to determine its subject-
matter jurisdiction upon removal4 and the only case it used to
state and explain the basis for its subsequent remand.5 In so
3
Our cases do not uniformly adhere to this requirement. Furthermore,
this requirement may be in tension with the other courts of appeals and,
possibly, Supreme Court cases addressing the issue of appellate jurisdiction.
Brief for the United States as Amicus Curiae, No. 05-107, Davis v. Int’l Union,
United Aerospace & Agricultural Implement Workers of Am. (UAW), at 9-11 (2006)
(cited in the majority opinion, supra note 29).
4
Upon motion to remand, the district court determined that it had
subject-matter jurisdiction over the action. It supported this determination
with a quotation from Beiser:
[T]he district court will have jurisdiction under § 205
over just about any suit in which a defendant contends
that an arbitration clause falling under the Convention
provides a defense. As long as the defendant’s
assertion is not completely absurd or impossible, it is
at least conceivable that the arbitration clause will
impact the disposition of the case.
Certain UnderWriters at Lloyd’s London v. Warrantech Corp., No. 4:04-CV-208-A,
slip op. at 4 (N.D. Tex. May 13, 2004) (quoting Beiser, 284 F.3d at 669) (“Order
Denying Remand”). The district court concluded that the arbitration-related
defenses were neither facially frivolous nor absurd or impossible and that, under
Beiser, it had “no choice but to deny the motion.” Id. (citing Beiser, 284 F.3d
at 669, 671).
5
Later, in its order remanding the case to state court, the district
court again supported its decision with a lengthy quotation from Beiser:
Moreover, § 205 does not interfere with state courts as
much as ordinary removal under the general removal
statute, 28 U.S.C. § 1441. When a case is removed under
§ 1441, it will often remain in federal court until its
conclusion. Under § 205, however, the federal issue in
cases will often be resolved early enough to permit
remand to the state court for a decision on the merits.
The arbitrability of a dispute will ordinarily be the
first issue the district court decides after removal
under § 205. If the district court decides that the
26
doing, the district court could not have been clearer: it remanded
based upon our guidance in Beiser.
Because the only basis for remand provided by the district
court is taken from Beiser, our analysis of whether the remand
stated a non-§ 1447(c) ground for remand must begin and end with
understanding what that case teaches. A cornerstone to our
reasoning in Beiser was the determination that removal is proper
under § 205 on the basis of a non-frivolous federal defense
presented in the petition for removal. “[A]s long as the defendant
claims in its petition that an arbitration clause provides a
defense, the district court will have jurisdiction to decide the
merits of that claim.” Beiser, 284 F.3d at 671-72. Where the
arbitration clause does not provide a defense, and no
other grounds for federal jurisdiction exist, the court
must ordinarily remand the case back to state court.
[See 28 U.S.C. § 1441(c) (granting district court
discretion to remand all claims in which state law
predominates); Parker & Parsley Petroleum Co. v.
Dresser Indus., 972 F.2d 580, 585 (5th Cir. 1992)
(noting that when all federal claims are resolved early
in a lawsuit and only state law claims remain, the
district court almost always should remand to the state
court); Wong v. Stripling, 881 F.2d 200, 204 (5th
Cir.1989) (same).] Except for state law claims that
turn out to be subject to arbitration, § 205 will rarely
permanently deprive a state court of the power to decide
claims properly brought before it. The district court
will ordinarily remand those cases that turn out not to
be subject to arbitration, such that the state court
will be able to resolve the merits of the dispute.
Section 205 therefore raises fewer federalism problems
than the general removal statute, § 1441: except in
arbitrable cases, it will ordinary [sic] permit state
courts to resolve the ultimate issues in a case.
Certain UnderWriters at Lloyd’s London v. Warrantech Corp., No. 4:04-CV-208-A,
2004 WL 2203244, at *3 (N.D. Tex. Sept. 23, 2004) (quoting Beiser, 284 F.3d at
674-75) (“Remand Order”). The district court supplied no other basis for its
remand.
27
special circumstances presented by a § 205 removal are at issue,
Beiser contemplates a later merit inquiry into arbitrability and,
if the district court decides that the arbitration clause does not
provide a defense, a discretionary remand of supplemental state-law
claims. See id. at 675 (citing authority for the proposition that
a district court has discretion to remand). Beiser does not intend
a remand based upon a post facto determination that it lacked
subject-matter jurisdiction ab initio but, rather, a discretionary
determination that its continued exercise of jurisdiction is no
longer prudent after federal arbitration-related issues have been
removed from the case. Id. at 674-75.
The district court understood and scrupulously adhered to our
guidance in Beiser when it exercised jurisdiction and subsequently
remanded this case. Quoting pertinent parts of that opinion, it
initially determined that jurisdiction was proper based upon
purported ties between Warrantech’s res judicata and collateral
estoppel defenses and the arbitration proceeding. Finding no non-
frivolous ties to the arbitration award after its ruling on summary
judgment, however, the district court remanded, “[c]onsistent with
the expectations of the Fifth Circuit,” because § 205 did not
require retention where “the only issues which implicate[d] the
arbitration award itself ha[d] been summarily removed from the
case.” Remand Order at *2-3. In so doing, the district court
spoke plainly: it was exercising its discretion to remand
28
supplemental state-law claims after determining that the
arbitration-related defenses were without merit. Such a remand
order is reviewable.
The majority acknowledges that the district court applied
Beiser and that Beiser calls for a discretionary remand in these
circumstances. Nonetheless, it asserts that “the mere citation of
dicta in Beiser . . . cannot satisfy our clear-statement
requirement . . . .” The majority’s reasoning here is puzzling.
Dicta is, of course, not binding. But in stating the basis for its
remand, there is no principle in law or reason that prevents a
district court from interpreting and using our case law to explain
itself. In this case, the district court used Beiser’s dicta to
clearly and affirmatively state the basis for its remand. No
clearer statement was required.
If there remained any doubt, the district court’s remand order
contains additional convincing indicia of a discretionary, “non-
§ 1447(c) ground for remand.” First, the district court examined
prudential reasons that militate against the exercise of
jurisdiction in its remand order, stating: “No policy evidenced by
the federal arbitration statutes would be advanced in the slightest
by the exercise by this court of subject matter jurisdiction over
issues that remain to be resolved in this case. . . . There is no
reason from a policy standpoint for this court to further entertain
29
jurisdiction over this case . . . .” Remand Order at *2.6 Such a
proffer of prudential reasons would be wholly unnecessary if the
district court felt that it lacked subject-matter jurisdiction
under 28 U.S.C. § 1447(c).7 Second, and most tellingly, the
district court adjudicated the state-law counterclaims brought by
Warrantech in its summary judgment order. The court could only
properly do so if it perceived that it had supplemental
jurisdiction pursuant to 28 U.S.C. § 1367 and exercised such
jurisdiction pursuant to 28 U.S.C. § 1441(c), which gives a federal
court the ability to “determine all issues” in a removed case,
including state-law claims. The district court could not have
determined those state-law claims unless it believed that it had
“original jurisdiction” in the first instance based on federal law.
Significantly, our case law establishes that where there is an
initial determination of jurisdiction, as is evident here, a
subsequent remand is not based on a lack of subject-matter
jurisdiction. In Bogle v. Phillips Petroleum, we stated:
6
The majority contends that the district court made only “passing
reference to policy considerations.” But the paragraph-long statement by the
district court is more than a “passing” reference and, moreover, is more
substantial than the statement upon which the majority relies to support its
determination that the remand order is most likely based upon a lack of
jurisdiction—namely the district court’s statement that there are “no other
grounds for federal jurisdiction.”
7
By contrast, such an expression of prudential reasons is consistent with
a remand of supplemental state-law claims following the dismissal of those claims
that provided the basis for original jurisdiction. See Giles v. NYLCare Health
Plans, Inc., 172 F.3d 332, 339 (5th Cir. 1999) (“When deciding whether to remand
supplemental claims, a court should examine economy, fairness, convenience, and
comity.”).
30
The critical distinction for determining
appealability is the presence of federal
subject matter jurisdiction prior to the order
of remand. In a Section 1447(c) remand [for
lack of subject-matter jurisdiction], federal
jurisdiction never existed, and in a
non-Section 1447(c) remand, federal
jurisdiction did exist at some point in the
litigation, but the federal claims were either
settled or dismissed.
Bogle, 24 F.3d at 762. Here, the district court initially rejected
a motion to remand because, under Beiser, “the district court will
have jurisdiction under § 205 over just about any suit in which a
defendant contends that an arbitration clause . . . provides a
defense.” Order Denying Remand at 4 (quoting Beiser, 284 F.3d at
669). Only after the district court had ruled on a motion for
summary judgment and found the arbitration-related defenses without
merit did it remand the case to state court. Under the reasoning
in Bogle, this is a “non-Section 1447(c) remand, [because] federal
jurisdiction did exist at some point in the litigation, but the
federal claims were either settled or dismissed.” Bogle, 24 F.3d
at 762.8
8
Despite the district court’s exclusive reliance on portions of
Beiser—sections that indicate a discretionary remand occurs after an initial
finding of jurisdiction—and other compelling indicia of a discretionary remand
of supplemental state-law claims, the majority concludes that the district
court’s remand order was unclear because it also, according to the majority,
stated that it was remanding for lack of subject-matter jurisdiction. It rests
this finding upon a single phrase from the remand order; namely, the district
court’s statement that there were “no other grounds for federal jurisdiction.”
Remand Order at *3. Taking the phrase out of context, the majority fails to
acknowledge that the district court was quoting directly from Beiser and its
lengthy discussion of discretionary remands.
If the district court decides that the arbitration
clause does not provide a defense, and no other grounds
31
There is no need to “decipher the tea-leaves” of the district
court’s remand order because the district court clearly and
affirmatively remanded for discretionary reasons based upon the
guidance we provided in Beiser. Accordingly, the restriction on
appellate review in 28 U.S.C. § 1447(d) does not apply. I would
review the district court’s remand order, as well as its decision
granting partial summary judgment in favor of Underwriters.
for federal jurisdiction exist, the court must
ordinarily remand the case back to state court. [See 28
U.S.C. § 1441(c) (granting district court discretion to
remand all claims in which state law predominates);
Parker & Parsley Petroleum Co. v. Dresser Indus., 972
F.2d 580, 585 (5th Cir. 1992) (noting that when all
federal claims are resolved early in a lawsuit and only
state law claims remain, the district court almost
always should remand to the state court); Wong v.
Stripling, 881 F.2d 200, 204 (5th Cir.1989) (same).]
Except for state law claims that turn out to be subject
to arbitration, § 205 will rarely permanently deprive a
state court of the power to decide claims properly
brought before it.
Remand Order at *3 (quoting Beiser, 284 F.3d at 675) (emphasis added)). Read in
context, the district court’s statement does not mean that it perceived a lack
of subject-matter jurisdiction to proceed. To the contrary, it merely
acknowledges that the original grounds for federal jurisdiction are absent, that
no other independent ground for federal jurisdiction exist, and that the court
was exercising its discretion to remand all matters in which State law
predominates pursuant to 28 U.S.C. § 1441(c).
32