Opposition Brief — Chesapeake Insurance v. Foster

upreme Court, U.S.

FILED

of SEP 17 1993

No. 91-287

melrié CLERK

IN THE

Supreme Court of the United States

OcToBER TERM, 1991

CHESAPEAKE INSURANCE COMPANY, LIMITED,

Petitioner,

VS.

CONSTANCE B. FOSTER, Insurance Commissioner of the

Commonwealth of Pennsylvania, as Rehabilitator of The

Mutual Fire, Marine and Inland Insurance Company,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

GAETAN J. ALFANO

MILLER, ALFANO & RASPANTI, P.C.

Counsel of liecord for Respondent

Constance Bb. Foster, Insurance

Commissioner of the Commonwealth

of Pennsylvania, as Rehabilitator

of The Mutual Fire, Marine and

Inland Insurance Company

1818 Market Street, Suite 3402

Philadelphia, Pennsylvania 19103

(215) 972-6400

On the Brief:

Grecory P. MILLER

ANN KRASNOWIECKI

4

“s

j

ad

Ptah

QUESTIONS PRESENTED FOR REVIEW

Whether the district court’s remand order would be review-

able under 28 U.S.C. § 1447(d) (1964), which bars review of a

remand order based on a “defect in removal procedure” under

28 U.S.C. § 1447(c) (1988), where Petitioner now characterizes

the district court’s remand order as one based on a “defect in

removal procedure.”

Whether the Third and Fifth Circuits’ decisions are consis-

tent where both courts have held that the thirty-day filing limit

under 28 U.S.C. § 1447(c) applies only to a remand motion based

on a “defect in removal procedure.”

Whether the Third Circuit’s decision is consistent with this

Court’s holdings in Carnegie-Mellon University v. Cohill, 484

U.S. 343 (1988) and Thermtron Products, Inc. v. Hermansdorfer,

423 U.S. 336 (1976) where the Third Circuit held that the district

court was authorized to remand a removed case in order to en-

force the parties’ forum selection agreement.

Whether the Third Circuit’s decision that Petitioner, a non-

foreign state defendant, waived its right to remove, conflicts with

the Sixth Circuit’s decision in In re Delta America Re Insurance

Co., 900 F.2d 890 (6th Cir.), cert. denied, 111 S. Ct. 233 (1990),

which applies exclusively to removal by a foreign state under

the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602-1611

(1976).

ili

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW......

Sy ee iy 0 | gy | ON

ek yc aks vee vce e eee rss

SIALEMenNt OF THE CASE.................

SUMMARY OF THE ARGUMENT.............

ES

I. UNDER PETITIONER’S CURRENT

CONSTRUCTION OF SECTION 1447, THE

DISTRICT COURT’S REMAND ORDER

WOULD NOT BE REVIEWABLE..........

II. THERE IS NO CONFLICT BETWEEN THE

CIRCUITS REGARDING THE

CONSTRUCTION OF SECTION 1447(c) ....

I1l. THE THIRD CIRCUIT’S OPINION IS IN

ACCORD WITH THIS COURT’S

ES

IV. THERE IS NO CONFLICT AMONG THE

CIRCUITS REGARDING THE

CONSTRUCTION OF THE FORUM

eee EO

a

~l

~]

1]

TABLE OF AUTHORITIES

Cases: Page

Baris v. Sulpicio Lines, Inc., 932 F.2d 1540 (5th

I TR a 5s oes bk ee coe bbc GN sae asec 8, 9, 10,

1]

Capital Bank and Trust Co. v. Associated Int7

Ins. Co., 576 F. Supp. 1522 (M.D. La. 1984).. 14n, 17

Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343

CES a cia tee sree kee ee eee i @, ii,

lin, 12,

12n, 13,

14, 15

Carnival Cruise Lines, Inc. v. Shute, 111 S. Ct.

OE ED le a ae eae ee eae l4n

Cessna Aircraft Co. v. Fidelity & Casualty Co.,

Gi6 F. Supp. G71 (D.N.]. 1963) ..... 5.2.52: 14n

Chestnut Realty of Haverford, Inc. v. First State

ins. Co., No. 90-2294, 1990 U.S. DIST. LEXIS

ttim (UD. Pe. Jee 19, TOO) «oo vee eves 14n

City of Rose City v. Nutmeg Ins. Co., 931 F.2d

13 (5th Cir. 1991)....... LS Ce cape Ria ees 13n, 17n

Clorox Co. v. United States Dist. Court, 779 F.2d

ee Ce Ge SIO oes oo i ee ek oneness 1. g

Corcoran v. Ardra Ins. Co., 842 F.2d 31 (2d Cir.

PE 5b oS Eh eich ee era er erases 12n

Euzzino v. London & Edinburgh Ins. Co., 228 F.

ae a ee eer Serre 14n

Foster v. Chesapeake Ins. Co. Ltd., 933 F.2d

Se es eo vere cen ewe Cente ees passim

vi

Page

General Phoenix Corp. v. Malyon, 88 F. Supp.

502 (S.D.N.Y. 1949) l4n

Himes v. Admiral Ins. Co., 575 F. Supp. 312

(E.D. Ky. 1983) l4n

In re Delta America Re Ins. Co., 900 F.2d 890

(6th Cir.), cert. denied, 111 S. Ct. 233 (1990) | i, 6, 13n.

15, 15n,

16, 17,

l7n, 18

In re Shell Oil Co., 631 F.2d 1156 (5th Cir. 1980) 8, 9, 10,

]]

Karl Koch Erecting Co. v. New York Convention

Ctr. Dev. Corp., 838 F.2d 656 (2d Cir. 1988) 2, 13n

Lavan Petroleum Co. v. Underwriters at Lloyds,

334 F. Supp. 1069 (S.D.N.Y. 1971)..... , 14n

M/S Bremen v. Zapata Offshore Co., 407 U.S. |

“| ee ae sis ditdses l4n

Oil Well Serv. Co. v. Underwriters at Lloyd’s

London, 302 F. Supp. 384 (C.D. Cal. 1969) . 14n

Pelleport Investors, Inc. v. Budco Quality

Theatres, Inc., 741 F.2d 273 (9th Cir. 1984)... 1, 2, 14n

Perini Corp. v. Orion Ins. Co., 331 F. Supp. 453

NE UNO oo nlc Up S ES bckwce diva no's oe 14n

Regis Assocs. v. Rank Hotels (Management) Ltd.,

894 F.2d 193 (6th Cir. 1990) ................ 13n

Rothner v. City of Chicago, 879 F.2d 1402 (7th

IR sar oars eR Krew tee veeenéee 12n

Thermtron Prods. v. Hermansdorfer, 423 U.S.

MNES ars oy )0-% ate Wile oe sa Dad hae a © i. kia’

es Bhs

lin, 12

vil

Page

Weltman v. Silna, 879 F.2d 425 (8th Cir 1989) 17, 18

Statutes:

98 U.S.C. § 1254(1) (1940)

98 U.S.C. § 1291 (1982)

98 U.S.C. § 1332(a) (1988) 13n

28 U.S.C. § 1441(b) (1948) 10

28 U.S.C. § 1441(d) (1976) 16

28 U.S.C. § 1447(c) (1948) (amended 1988) l1n

98 U.S.C. § 1447(c) (1988) passim

28 U.S.C. § 1447(d) (1964) i, 2, G,

7,9

28 U.S.C. § 1603 (1976) 16n

98 U.S.C. §§ 1602-1611 (1976) i, 6, 15,

15n, 16,

18

40 Pa. Cons. Stat. Ann. §§ 921.1-221.63 (Purdon

Supp. 1990) 2

Court Rules:

Sup. Ct. R. 15.1 4n

Sup. Ct. R. 29.1 2n

Other Authorities:

1A J. Moore, B. Ringle & J. Wicker, Moore's

Federal Practice, 4 0.157[9] (2d ed. 1987) l7n

—————————

No. 91-287

IN THE

Supreme Court of the United States

Ocroser TERM, 199]

CHESAPEAKE INSURANCE COMPANY, LIMITED,

Petitioner,

VS.

CONSTANCE B. FOSTER, Insurance Commissioner of the

Commonwealth of Pennsylvania, as Rehabilitator of The

Mutual Fire, Marine and Inland Insurance Company,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

JURISDICTION

This Court has jurisdiction to review the decision of the

United States Court of Appeals for the Third Circuit by writ

of certiorari under 28 U.S.C. § 1254(1) (1940).

The Third Circuit had jurisdiction to review the rernand order

of the United States District Court for the Eastern District of

Pennsylvania because it was a collaterally final order pursuant

to 28 U.S.C. § 1291 (1982). Clorox Co. v. United States Dist.

Court, 779 F.2d 517, 520 (9th Cir. 1985); Pelleport Investors,

Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 276-78 (9th

Cir. 1984). Furthermore, review of the remand order was not

eel

barred by 28 U.S.C. § 1447(d), which precludes review of a re-

mand order issued under 28 U.S.C. § 1447(c). As Petitioner

argued below, the district court’s remand order was not based

on a ground specified within 28 U.S.C. § 1447(c), and thus, was

reviewable. Karl Koch Erecting Co. v. New York Convention

Center Dev. Corp., 838 F.2d 656, 658-59 (2d Cir. 1988); Clorox;

Pelleport.

However, Petitioner now contends that the district court’s re-

mand order was grounded in a “procedural defect in removal,”

under 28 U.S.C. § 1447(c). Under Petitioner’s current cha-

racterization of the remand order, 28 U.S.C. § 1447(d) would

preclude appellate review. Thermtron, 423 U.S. 336 (1976).

STATEMENT OF THE CASE

Respondent, Constance B. Foster, is the Insurance Commis-

sioner of the Commonwealth of Pennsylvania. Respondent is the

statutory Rehabilitator of an insolvent insurance company, The

Mutual Fire, Marine and Inland Insurance Company (“Mutual

Fire”). See 40 Pa. Cons. Stat. Ann. §§ 22].1-221.63 (Purdon Supp.

1990): At all relevant times, Mutual Fire was a mutual proper-

ty, casualty and special risks insurance company organized and

licensed under the laws of the Commonwealth of Pennsylvania.’

Pursuant to a December 8, 1986 Order of the Commonwealth

Court of Pennsylvania, Respondent controls the assets and af-

fairs of Mutual Fire. In an effort to collect Mutual Fire’s assets

' As of December 31, 1988, Mutual Fire’s deficit was over $400 million. At

that time, the Mutual Fire insolvency was the country’s third or fourth largest

insurer failure. Foster v. Chesapeake Ins. Co. Ltd., 933 F.2d 1207, 1210 n.3;

A-4 n.3. (references to the Appendix in the Petition for Writ of Certiorari are

designated as “A-___”; references to the Appendix in Respondent’s Brief in

Opposition are designated as “RA-___”).

? Mutual Fire has no parent company. Mutual Fire’s subsidiaries, as defined

by Sup. Ct. R. 29.1, are: Endmark Data Processing Corporation; First New

York Syndicate Corporation; and Ryansure Intermediaries, Inc.

for distribution to its creditors, Respondent has sued Petitioner

in the Commonwealth Court of Pennsylvania for its failure to

pay Mutual Fire over $4 million under a reinsurance contract.’

Petitioner and Mutual Fire executed the reinsurance contract

in 1982. The contract contained a clause that provided Mutual

Fire with the unilateral choice of forum in which to resolve any

payment disputes (the “forum selection clause”). The clause pro-

vided, in relevant part: .

In the event the Retrocessionaire is not domiciled in

the United States of America, and the Retrocessionaire

fails to pay any amount claimed to be due hereunder,

the Retrocessionaire, at the request of the Company,

will submit to the jurisdiction of any court of com-

petent jurisdiction within the United States and will

comply with all requirements necessary to give such

court jurisdiction. . ..

Chesapecke, 933 F.2d at 1216; A-20.*

Mutual Fire paid Petitioner the premiums due under their

agreement. However, when Mutual Fire’s underlying risks

became actual liabilities, Petitioner failed to pay the reinsurance

due Mutual Fire. On September 29, 1989, Respondent sued Peti-

tioner in the court overseeing Mutual Fire’s rehabilitation, the

? A reinsurance contract is an indemnity agreement between insurance com-

panies under which one company, the reinsurer or retrocessionaire (in this

case, Petitioner), agrees to reinsure risks written by the other (in this case,

Mutual Fire). The contract in this case provided that Mutual Fire would pay

premiums to Petitioner. In return for the premiums, Petitioner would assume

a portion of the risks that Mutual Fire bore on its insurance policies. Peti-

tioner would be obligated to pay Mutual Fire for the assumed risks once they

became actual liabilities. Chesapeake, 933 F.2d at 1209; A-3.

* The contract between Petitioner and Mutual Fire was effective on July 1,

1982. The parties renewed it in 1983. The contract eventually covered an under-

writing period through June 30, 1985. The forum selection clause in the 1983

renewal was virtually identical to that in the 1982 contract.

Commonwealth Court of Pennsylvania. On October 18, 1989.

Petitioner, in violation of the forum selection clause, removed

this action to the United States District Court for the Eastern

District of Pennsylvania. Chesapeake, 933 F.2d at 1210, 1216;

A-4, A-19.

Following removal, the parties executed a court-approved

stipulation (the “Stipulation”) in which Respondent agreed to

extend, until November 10, 1989, the time for Petitioner to

respond to her Complaint. In exchange, Petitioner agreed that

Respondent could have until December 11, 1989, “to file a motion

to remand, based on any defect in the removal procedure under

28 U.S.C. § 1447(c).” The Stipulation further provided that “these

extensions are without prejudice to the rights of either party

and shall not be deemed to constitute a waiver of any rights

of either party.” Chesapeake, 933 F.2d at 1212; A-9, A-28.'

On December 11, 1989, Respondent moved to remand the ac-

tion to the Commonwealth Court of Pennsylvania on the ground

that Petitioner, by agreeing to litigate in the forum chosen by

Mutual Fire, waived its right to remove.® Petitioner opposed

* Petitioner did not inform this Court of the Stipulation in its Petition for Writ

of Certiorari. Petitioner's failure to do so constitutes a “misstatement[] of

fact. . .which ha[s] a bearing on the question of what issues would properly

be before the Court if certiorari were granted.” Sup. Ct. R. 15.1. Contrary

to its position below, Petitioner now contends that a contractual waiver of

removal is a procedural defect under Section 1447(c). See Petition for Writ

of Certiorari at 10-15. Thus, under Petitioner's present characterization of the

district court’s remand order, the Stipulation properly extended the time for

Respondent to file her motion to remand. Moreover, pursuant to the Stipula-

tion, Respondent’s motion was timely filed. For this reason, Petitioner's argu-

ment about the applicability of the thirty-day limit for filing a remand mo-

tion under Section 1447(c), as well as Petitioner's argument about the alleged

conflict between the Third and Fifth Circuits on this point, are moot. See

Argument infra, pp. 7-9.

* Respondent also moved to remand on abstention grounds. Petitioner op-

posed remand on this basis. The district court did not address Respondent's

abstention argument in light of its ruling on the forum selection clause. A-4]1.

remand, arguing that the forum selection clause was not a waiver

of its right to remove; that the district court lacked authority

to remand the action; and that, in any event, Respondent’s mo-

tion to remand was untimely, despite the Stipulation.’

On October 4, 1990, the Honorable Louis H. Pollak of the

United States District Court for the Eastern District of Penn-

sylvania, rejected Petitioner’s arguments and remanded the case

to the Commonwealth Court of Pennsylvania. Judge Pollak con-

cluded that the forum selection clause was both a waiver of Peti-

tioner’s removal right and an appropriate ground for remand.

A-40, A-41.

On October “1990, Petitioner appealed to the United States

Court of Appeals for the Third Circuit.

On May 20, 1991, the Honorable Morton I. Greenberg,

writing for a unanimous Third Circuit panel, affirmed Judge

Pollak’s remand order. The Third Circuit held that the forum

selection clause in the parties’ contract was a waiver of Peti-

tioner’s removal right; that the district court properly enforced

the parties’ agreement by remanding this action to the forum

originally chosen by Respondent; and that Respondent’s motion

to remand was not untimely.

Petitioner moved to stay the issuance of the Third Circuit's

mandate on June 10, 1991. On June 28, 1991, the Third Circuit

denied Petitioner’s motion and issued its mandate.

On August 15, 1991, Petitioner filed its Petition for Writ of

Certiorari to the United States Court of Appeals for the Third

Circuit (the “Petition”).

’ Petitioner further argued that the forum selection clause was invalid due

to Mutual! Fire’s alleged “fraud, undue influence, or overweening bargaining

power.” Chesapeake, 933 F.2d at 1218-19; A-26. The district court summarily

rejected this argument. A-40.

SUMMARY OF THE ARGUMENT

The Petition should be denied for several reasons.

First, under Petitioner’s current construction of Section 1447,

the district court’s remand order is not reviewable. Contrary to

its position below, Petitioner now argues that the remand order

was based on a “defect in removal procedure” under Section

1447(c). Although Respondent disagrees with Petitioner’s new

position, under Petitioner’s current construction, Section 1447(d)

would preclude appellate review of the remand order.

Second, there is no conflict between the circuits regarding

the construction of Section 1447(c). The Fifth Circuit has held,

as did the Third, that only remand motions grounded in a “pro-

cedural defect in removal” are subject to a thirty-day filing limit

under Section 1447(c). Neither court has held that a motion to

remand, based on contractual waiver of removal, constitutes a

procedural! defect in removal subject to this time limit.

Third, the Third Circuit’s decision that, despite diversity

jurisdiction; a district court may remand a removed case in order

to enforce a forum selection agreement is consistent with this

Court’s decisions in Cohill and Thermtron.

Finally, there is no conflict among the circuits regarding the

construction of the forum selection clause. Both the Third and

Fifth Circuits have held that the forum selection clause con-

stitutes a waiver of removal, while the Sixth Circuit’s decision

in Delta America, because it applies exclusively to removal by

a foreign state under the Foreign Sovereign Immunities Act, is

inapposite.

Ne

ARGUMENT

I. UNDER PETITIONERS CURRENT CONSTRUCTION

OF SECTION 1447, THE DISTRICT COURT'S

REMAND ORDER WOULD NOT BE REVIEWABLE.

Section 1447(d) provides, in relevant part, that:

An order remanding a case to the State court from

which it was removed is not reviewable on appeal or

otherwise. ...

Section 1447(d) must be construed together with Section

1447(c). Thermtron, 423 U.S. at 345. “This means that onl , re-

mand orders issued under § 1447(c) and invoking grounds

specified therein. . .are immune from review.” Thermtron, 423

U.S. at 346. Section 1447(c) enumerates two grounds for remand:

(1) if there is a “defect in removal procedure”; and (2) if it “ap-

pears that the district court lacks subject matter jurisdiction.”

The parties agreed in the district court that Respondent’s re-

mand motion did not invoke a ground specified in Section

1447(c), i.e., it was based neither on a procedural defect in

removal nor on a lack of subject matter jurisdiction. A-36. Fur-

thermore, when the Third Circuit questioned whether the re-

mand order was reviewable in light of Section 1447(d), Petitioner

reiterated that the remand order was not grounded in Section

1447(c), and thus, was reviewable:

Here, as noted, Plaintiffs remand motion was based

on two grounds not provided for by § 1447(c), ab-

stention and the “Service of Suit” clause in the sub-

ject reinsurance agreements; the District Court

granted the motion based on the latter ground. Clear-

ly, a remand order premised on a forum selection

clause is not based on either ground specified by

§ 1447(c); therefore, it is not immunized from review

by § 1447(d).

Accordingly, since the Remand Order below was not

predicated on a ground authorized by § 1447(c), it

fully is reviewable by this Court on appeal.

—

RA-4.

Despite its position before the Third Circuit and the district

court, Petitioner now argues that Respondent’s remand motion

was grounded in a procedural defect and, thus, based on a

ground enumerated in Section 1447(c):

The Fifth Circuit reasoned that removal in deroga-

tion of a substantive restriction on removal jurisdic-

tion (i.e., a forum selection clause), as well as in viola-

tion of a particular removal procedure, each con-

stitutes a defect in ‘removal process’ and is governed

by Section 1447(c).

Petition at 13 (discussing Baris v. Sulpicio Lines, Inc., 932 F.2d

1540 (5th Cir. 1991) and In re Shell Oil Co., 932 F.2d 1518 (5th

Cir. 199])).

Petitioner's construction of Section 1447 is disingenuous.

Before the Third Circuit, Petitioner argued that the remand

order was not based on a defect in removal procedure under

Section 1447(c). This position suited Petitioner’s goal - appellate

review of the district court’s remand order. Now, having lost its

appeal, Petitioner has changed its tack. In an effort to create

a conflict between the Third and Fifth Circuits, Petitioner now

argues that removal in violation of a forum selection clause does

constitute a defect in removal procedure under § 1447(c).

Such disingenuity should not be countenanced. Petitioner

should be estopped from disavowing its prior construction of

Section 1447. Under Petitioner’s earlier construction, the remand

order was not grounded in a defect in removal procedure under

Section 1447(c). The Fifth Circuit’s opinions in Baris and Shell

Oil, however, are germane only to a remand order grounded in a

such a defect. Therefore, under Petitioner’s former construction of

Section 1447(c), the Fifth Circuit’s decisions in Baris and Shell Oil

have no bearing on the issues that were before the Third Circuit.

ee

Alternatively, under Petitioner’s new construction, the remand

order was based on a ground specified in Section 1447(c), name-

ly, a defect in removal procedure. Under this construction, the

fact that Respondent moved for remand on the fifty-fourth day

after removal does not take the remand order out of Section

1447(c). Through the Stipulation, Petitioner, with the court’s

approval, extended the statutory period for Respondent “to file

a motion to remand, based on any defect in the removal pro-

cedure under 28 U.S.C. 1447(c).” A-28. Thus, under Petitioner’s

current characterization, the remand order was based on a

ground that Petitioner alleges is within Section 1447(c). Accord-

ingly, the Petition should be denied, as the order from which

Petitioner appeals would not be reviewable under Section 1447(d).

ll. THERE IS NO CONFLICT BETWEEN THE CIRCUITS

REGARDING THE CONSTRUCTION OF SECTION

1447(c).

Section 1447(c) provides, in relevant part, that:

A motion to remand the case on the basis of any defect

in removal procedure must be made within thirty days

after the filing of the notice of removal under section

1446(a).

Petitioner argues that the Fifth Circuit’s construction of the

thirty-day filing limit differs from that of the Third Circuit. In

Baris and Shell Oil, the Fifth Circuit held that a remand mo-

tion based on a procedurally defective removal must be filed

within thirty days of removal. Baris, 932 F.2d at 1543-46; Shell

Oil, 932 F.2d at 1521. The Third Circuit does not disagree with

the Fifth. Chesapeake, 933 F.2d at 1212-13; A-9-A-13.

Furthermore, the Fifth Circuit’s decisions in Baris and Shell

Oil are immaterial under Petitioner’s prior construction of Sec-

tion 1447(c). The Third Circuit had before it a remand motion

that Petitioner stated was not based on a defect in removal pro-

cedure within the meaning of Section 1447(c). A-29, A-36,

RA-l-RA-4. Thus, the Fifth Circuit’s opinions, which apply only

to a remand motion based on a procedurally defective removal,

have no bearing on the issues that were before the Third Circuit.

10

Despite Petitioner’s misapplication of Baris and Shell Oil,

there is no conflict between the Third and Fifth Circuits. Neither

Baris nor Shell Oil involved a remand motion based on contrac-

tual waiver. Rather, both cases involved remand motions that

the Fifth Circuit defined as grounded in a “procedural defect

in removal” based on a statutory prohibition against removal.

In Baris, the removing party violated an alleged prohibition on

removal under admiralty law. 932 F.2d at 1543. In Shell Oil,

the removing party violated 28 U.S.C. § 1441(b) (1948), which

prohibits the removal of cases in which forum defendants are

present. 932 F.2d at 1521.

The removal petitions in Baris and Shell Oil were procedurally

defective because of a flaw in the “process” by which the

respective cases reached the district court. See Baris, 932

F.2d at 1545. If either Baris or Shell Oil had been filed in a

district court in the first instance, they would have been within

that district court’s original jurisdiction, based on either diver-

sity or federal question jurisdiction. However, once the cases were

filed in state court, neither district court had removal jurisdic-

tion, i.e., the cases became non-removable. Under these cir-

cumstances, the Fifth Circuit considered removal to be a defec-

tive “process” for bringing the cases to the federal forum. See

Baris, 932 F.2d at 1545. Hence, the Fifth Circuit deemed the

removal petitions to be procedurally defective under Section

1447(c).

In this action, there was no flaw in the process by which the

case reached the district court. Petitioner’s removal petition was

timely filed, and the district court had removal jurisdiction based

on diversity of citizenship and an adequate amount in contro-

versy. Chesapeake, 933 F.2d at 1210; A-4. The district court, in

order to enforce the parties’ agreement, properly adjudicated

this case within its removal jurisdiction. In the exercise of this

jurisdiction, the district court enforced a substantive contract

provision between the parties. As the Third Circuit recognized:

Indeed, the district court accepted jurisdiction and,

in the exercise of that jurisdiction, determined, as a

st aceeeee een ee eee

11

threshold matter on the merits, that Chesapeake had

waived its right to remove the case - i.e. that, pur-

suant to the parties’ contract, the case ought not to

have been in federal court.

Chesapeake, 933 F.2d at 1215-16; A-18.

Thus, far from being a defect in the process by which the case

reached the federal forum, as in Baris and Shell Oil, Petitioner’s

removal created an issue of substantive contract law to be re-

solved by the district court. In the exercise of its removal jurisdic-

tion, the district court decided the contract issue in favor of

Respondent and properly remanded this action to enforce the

parties’ agreement. Because the Fifth Circuit’s opinions are in-

applicable to the circumstances of this case, Petitioner’s “con-

flict” is illusory. Accordingly, the Petition should be denied.

Ili. THE THIRD CIRCUIT'S OPINION IS IN ACCORD

WITH THIS COURT'S DECISIONS.

Petitioner argues that the Third Circuit’s ruling “clearly con-

flicts with this Court’s decisions in Cohill and Thermtron, and

improperly expands the powers of the district courts beyond those

granted by Congress.” Petition at 7.

In Thermtron, this Court held that a district court “exceed-

ed its authority” in remanding a diversity case on a ground not

enumerated in Section 1447(c),* namely the crowded condition

of the federal docket. Thermtron, 423 U.S. at 345.

In Cohill, this Court revisited the question whether grounds

for remand existed other than those enumerated in Section

1447(c). This Court held that a properly removed case could

be remanded on the basis of pendent jurisdiction, a ground not

specified in Section 1447(c):

* The amendment to Section 1447(c) was not in effect when either Therm-

tron or Cohill were decided. The statute has changed only in that “improvident-

ly” essentially has been recast to mean “procedurally defective,” and a filing

time limit has been placed on this type of remand motion. 28 U.S.C. § 1447(c)

(1948).

12

In Thermtron, a District Court remanded a properly

removed case to state court on the ground that the

federal docket was overcrowded. This Court held that

the remand was improper. In so doing, the Court

stated several times that a district court may not re-

mand a case to a state court on a ground not specified

in the removal statute. ... Petitioners, again noting

that the removal statute does not explicitly authorize

the remand of cases involving pendent state-law

claims, argue that Thermtron thus compels a holding

that such remands are impermissible.

The language from Thermtron that petitioners cite,

viewed in isolation, is admittedly far-reaching, but

it loses controlling force when read against the cir-

cumstances of that case. The Thermtron decision was

a response to a clearly impermissible remand, of a kind

very different from that at issue here.

Cohill, 484 U.S. at 355-56.

Upon review of the quoted Cohill language, the Third Cir-

cuit held that “Cohill clearly overruled Thermtron to the ex-

tent that Thermtron had held that only statutory grounds for

remand are authorized.” Chesapeake, 933 F.2d at 1214; A-15.°

Petitioner argues from Cohill that diversity jurisdiction is man-

datory, and cannot be declined under any circumstances, as if

to suggest that the Third Circuit somehow disagreed. The Third

Circuit did not:

Here, of course, removal was based on diversity of

citizenship, and the district court did not have discre-

tion to decline to exercise jurisdiction: its jurisdiction

was mandatory.

* The Second and Seventh Circuits also have stated that Thermtron has been

overruled by Cohill on this point. Corcoran v. Ardra, 842 F.2d 31, 36 (2d Cir.

1988) (“Cohill reveals that permissible bases for remand are not so limited”

as set forth in Thermtron); Rothner v. City of Chicago, 879 F.2d 1402, 1406

(7th Cir. 1989)(“the Court in effect held, contrary to Thermtron, that § 1447(c)

does not contain all of the permissible grounds for remand”)(emphasis sup-

plied by the court).

ee

13

Chesapeake, 933 F.2d at 1214; A-14 (emphasis supplied by the

court). However, as the Third Circuit also recognized, the district

court in the instant case did exercise its diversity jurisdiction:

Unlike the district court in Thermtron, the district

court here did not refuse to hear a case properly before

it. Indeed, the district court in this case accepted

jurisdiction and, in the exercise of that jurisdiction,

determined, as a threshold matter on the merits, that

Chesapeake had waived its right to remove the case

- i.e. that pursuant to the parties’ contract, the case

ought not have been in federal court. Thus while the

district court did not have discretion, as in Cohill, to

decline to hear the case at all, once it determined that

the clause barred Chesapeake from removing, it would

have been committing clear error - and violence to

the parties’ contract - had it nevertheless continued

to hear the case.

Chesapeake, 933 F.2d at 1215-16; A-18.

Several other circuit courts of appeals, as well as numerous

federal district courts, have held that a district court is authorized

to remand a case based on contractual waiver of removal through

a forum selection clause. The vast majority of these cases have

been diversity cases.”

” In the few instances where the cases do not specifically cite 28 U.S.C. § 1332(a)

or otherwise expressly indicate that removal was based on diversity jurisdic-

tion, the facts reveal that the cases are diversity cases. City of Rose City v.

Nutmeg Ins. Co., 931 F.2d 13 (5th Cir. 1991) (district court refusal to remand

vacated; defendant is a Connecticut corporation and plaintiff is a Texas citizen);

In re Delta America Re Ins. Co., 900 F.2d 890 (6th Cir. 1990)(remand order

reversed on other grounds but availability of remand on basis of foruin selec-

tion clause unquestioned); Regis Assocs. v. Rank Hotels (Management) Ltd.,

894 F.2d 193 (6th Cir. 1990)(remand order reversed on other grounds but avail-

ability of remand order unquestioned; plaintiff is a Michigan limited partner-

ship, defendant is an English corporation); Karl Koch Erecting Co. v. New York

Convention Ctr. Dev. Corp., 838 F.2d 656 (2d Cir. 1988)(remand order upheld;

(Footnote continued)

14

The district court could have dismissed this case on the basis

of a forum selection clause, as Petitioner has conceded, in order

to enforce the parties’ agreement. RA-5-RA-6. In Cohill, this

Court endorsed a district court’s discretionary power to remand,

rather than to dismiss, based on the doctrine of pendent jurisdic-

tion. A remand, rather than dismissal, furthered the principles

underlying that doctrine, namely “economy, convenience,

fairness, and comity.” Cohill, 484 U.S. at 357. Advancing the

principles enunciated in Cohill, the Third Circuit upheld the

district court’s power to remand based on the parties’ forum

agreement. As in Cohill, such a remand promotes economy, con-

venience, and fairness. Chesapeake, 933 F.2d at 1216; A-19. As

the Third Circuit held, such principles must be taken into ac-

count, or else “a plaintiff proceeding in accordance with the

parties’ agreement will be penalized for the conduct of a defen-

dant who does not.” Chesapeake, 933 F.2d at 1216; A-19."

Petitioner cites the dissenting opinion in Cohill throughout

its argument. The dissenting Justices in Cohill were concerned

with the plaintiffs’ ability to dismiss federal claims as a means

of manipulating a case back to state court. Such a tactic would

diversity case); Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741

F.2d 273 (9th Cir. 1984)(remand order upheld; diversity case); Chestnut Realty

of Haverford, Inc. v. First State Ins. Co., No. 90-2294, 1990 U.S. DiST. LEXIS

7772 (E.D. Pa. June 19, 1990) (diversity case); Cessna Aircraft Co. v. Fidelity

& Cas. Co. of New York, 616 F. Supp. 671 (D.N.J. 1985); Capital Bank & Trust

Co. v. Associated Intl Ins. Co., 576 F. Supp. 1522 (M.D. La. 1984)(diversity

case); Himes v. Admiral Ins. Co., 575 F. Supp. 312 (E.D. Ky. 1983)(diversity

case); Lavan Petroleum Co. v. Underwriters at Lloyds, 334 F. Supp. 1069

(S.D.N.Y. 1971); Perini Corp. v. Orion Ins. Co., 331 F. Supp. 453 (E.D. Cal.

1971) (diversity case); Oil Well Serv. Co. v. Underwriters at Lloyd’s London,

302 F. Supp. 384 (C.D. Cal. 1969); Euzzino v. London & Edinburgh ins. Co.,

228 F. Supp. 431 (N.D. Ill. 1964)(plaintiff is an Illinois citizen; defendant is

a British corporation); General Phoenix Corp. v. Malyon, 88 F. Supp. 502

(S.D.N.Y. 1949)(plaintiff is a Pennsylvania corporation; defendant is an alien

residing in England).

“ The Third Circuit's rationale for upholding the district court's remand order

is consistent with this Court's strong endorsement of the enforceability of forum

selection clauses. See, e.g., Carnival Cruise Lines, Inc. v. Shute, 111 S. Ct.

1522 (1991); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972).

TT

15

“subject the defendant’s supposed statutory »ight of removal to

the plaintiffs caprice.” Cohill, 484 U.S. at 362 (White, J., dissent-

ing). Petitioner fails to recognize, however, chat a remand based

on a forum selection clause does not implicate this concern. A

plaintiff that has chosen its court and iegitimately expects to

stay in that court pursuant to a forum selection clause cannot

be viewed as having any interest in forum manipulation. Unlike

the situation posited by the dissenting Justices in Cohill, any

abuse in the instant case stemmed from Petitioner’s ability to

manipulate federal court procedure to avoid its contractual

obligation.

The Third Circuit’s decision is in accord with this Court’s deci-

sions. By upholding the district court’s power to enforce the

forum selection clause through a remand, rather than through

a dismissal, the Third Circuit advanced principles commonly

espoused by this Court - economy, convenience, fairness, enforce-

ment of legitimate contractual obligations, and the avoidance

of forum manipulation. Accordingly, the Petition should be

denied.

IV. THERE IS NO CONFLICT AMONG THE CIRCUITS

REGARDING THE CONSTRUCTION OF THE

FORUM SELECTION CLAUSE.

Petitioner argues that the Third Circuit’s decision “squarely

conflicts with the ruling of the Sixth Circuit” in Delta America.

In Delta America, the Sixth Circuit reversed a remand order

based on the same clause, holding that the clause was not a “clear

and unequivocal waiver” of the removal right of a foreign state

defendant. 900 F.2d at 894.

Delta America, however, is inapposite. By its facts, Deltc

America applies only to removal by a foreign state under the

Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602-1611 (1976)

(“FSIA”)2

* Petitioner apparently believes that in labelling itself a “foreign defendant”

it somehow brings itself within the parameters of the Delta America holding.

Petition at 16. This legerdemain does not transform Petitioner into a “foreign

state” under the FSIA.

16

The FSIA restricted the immunity of foreign states from

federal and state court jurisdiction. See 28 U.S.C. § 1605."

However, to deter the possibility of local bias and prejudice, the

FSIA provides a foreign state with an absolute right of removal,

relaxes the time limits for the filing of a removal petition,

and guarantees the right to a non-jury trial in federal court.

28 U.S.C. § 1441(d) (1976). The Sixth Circuit reasoned that these

removal rights were so important to a foiciyn state that the court

required a high standard by which to ascertain whether a

foreign state had waived these rights. Delta America, 900 F.2d

at 893.

The Sixth Circuit also was interested in developing a uniform

body of federal law in light of the judiciary’s new responsibili-

ty under the FSIA to decide questions of sovereign immunity.

“(T]he development of a uniform body of law is served when

cases involving foreign sovereigns or their agencies are tried in

a federal forum.” Delta America, 900 F.2d at 894. The concerns

underlying the Sixth Circuit’s decision, however, are inapplicable

because Petitioner is not a foreign state. Likewise, the instant

litigation does not implicate any questions of sovereign

immunity.

" Section 1603(a) of the FSIA defines “foreign state” as a “political subdivi-

sion of a foreign state or an agency or instrumentality of a foreign state.” Sec-

tion 1603(b) defines “agency or instrumentality of a foreign state” as follows:

(b) ...any entity—

(1) which is a separate legal person, corporate or

otherwise, and

(2) which is an organ of a foreign state or political

subdivision thereof, or a majority of whose shares or

other ownership interest is owned by a foreign state

or political subdivision thereof, and

(3) which is neither a citizen of a State of the United

States as defined in section 1332(c) and (d) of this ti-

tle, nor created under the laws of any third country.

SS ee ae

17

The Sixth Circuit expressly restricted its holding that “any

claimed waiver of the right of removal stemming from contrac-

tual language must be explicit” to “future cases involving foreign

states.” Delta America, 900 F.2d at 894 (emphasis added). Ac-

cordingly, Delta America does not couflict with the Third Cir-

cuit’s decision in this case. The Sixth Circuit specifically declined

to address cases “involv[ing] forum selection clauses, but not

foreign states.” Delta America, 900 F.2d at 894 n.9. In fact, in

one of the district court cases cited by the Sixth Circuit in sup-

port of its holding that a waiver of removal must be “clear and

unequivocal,” Capital Bank, the district court held that an iden-

tical forum selection clause was a waiver of removal by a non-

foreign state defendant. Capital Bank, 576 F. Supp. at 1524,

cited in Delta America, 890 F.2d at 892."

The Eighth Circuit opinion cited by Petitioner, Weltman v.

Silna, 879 F.2d 425 (8th Cir. 1989) adds nothing to Petitioner’s

argument. The Eighth Circuit, in espousing a “clear and une-

quivocal” standard for waiver of removal, cites, without analysis,

to a treatise. Weltman, 879 F.2d at 427.5 In addition, because

‘ Subsequent to Delta America, the Fifth Circuit held, in accord with the

Third, that a remand based on a nearly identical forum selection clause was

appropriate. Nutmeg, 931 F.2d at 15. As did the Third Circuit, the Fifth Cir-

cuit found Delta America inapplicable to waiver of removal by a non-foreign

state defendant.

‘Ss The Eighth Circuit cites 1A J. Moore, B. Ringle & J. Wicker, Moore’s Federal

Practice 4 0.157[9] (2d ed. 1987). As the Third Circuit pointed out, “Moore

makes his statement solely in the context of a discussion of waiver of removal

by the defendant’s participation in state court proceedings.” Chesapeake, 933

F.2d at 1218 n.15; A-24 n.15. The Third Circuit goes on to note that a “clear

and unequivocal” standard makes sense in this context:

Otherwise, in order not to waive the right to remove detendants

would have to remain inactive in the state court, running the peril

of being held in default should a remand from the district court

later occur.

However, with respect to contractual waiver:

(Footnote continued)

18

the Eighth Circuit failed to set forth the clause at issue, Weltman

cannot serve as a basis for comparison.

In summary, there is no conflict among the circuits regarding

the construction of the forum selection clause. The Sixth Cir-

cuit’s decision in Delta America applies only to waiver of removal

by a foreign state under the FSIA. It is inapposite to the deci-

sions of the Third and Fifth Circuits, which neither involved

a foreign state defendant nor implicated questions of sovereign

immunity. Accordingly, the Petition should be denied.

A court simply should determine contractual waiver of the right

to remove using the same benchmarks of construction and, if ap-

plicable, interpretation as it employs in resolving all preliminary

contractual questions. Indeed, inasmuch as the determination of

whether there is a waiver of the right of removal to be derived

from a forum selection clause will at least in some cases, such as

here, be a matter of construction and thus of law, it seems

anamolous to speak of a “clear and unequivocal” standard for we

simply make plenary determinations of legal issues.

Chesapeake, 933 F.2d at 1218 n. 15; A-24-A-25 n. 15.

——————————

19

CONCLUSION

For the foregoing reasons, Respondent respectfully requests

that this Court deny Petitioner’s Petition for a Writ of Certiorari

to the United States Court of Appeals for the Third Circuit.

Dated: Philadelphia, Pennsylvania

September 16, 1991

Respectfully Submitted,

Fee %e Tf o~ 0

GAETAN J. ALFANO

MILLER, ALFANO & RASPANTI, P.C.

Counsel of Record for Respondent

Constance B. Foster, Insurance

Commissioner of the Commonwealth

of Pennsylvania, as Rehabilitator

of The Mutual Fire, Marine and

Inland Insurance Company

1818 Market Street, Suite 3402

Philadelphia, PA 19103

(215) 972-6400

On the Brief:

Grecory P. MILLER

ANN KRASNOWIECKI

APPENDIX

RA-1

EXCERPT FROM CHESAPEAKE INSURANCE COMPANY,

LIMITED’S RESPONSE TO THIRD CIRCUIT DIRECTIVE

OF OCTOBER 15, 1990 REGARDING JURISDICTION

I. THIS COURT HAS APPELLATE JURISDICTION

TO REVIEW THE REMAND ORDER

A. The Remand Order Is Appealable

Settled law provides that the Remand Order is a final order

and thus appealable pursuant to 28 U.S.C. § 1291. In Pacor, Inc.

v. Higgins, 743 F.2d 984 (3d Cir. 1984), this Court was con-

fronted with a district court order remanding to Pennsylvania

state court ¢ matter originally removed from state court to

bankruptcy court as a “related case” under 28 U.S.C. § 1471(b).

This Court held that the remand order was reviewable pursuant

to 28 U.S.C. § 129] as a “final collateral order” under the doc-

trine of Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541,

69 S.Ct. 1221 (1949). Pacor, 743 F.2d at 987-89.

In holding the district court’s remand order appealable in

Pacor, this Court also relied on Moses H. Cone Memorial Hosp.

v. Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct. 927 (1983)

(“Cone”). See Pacor, 743 F.2d at 989-990. In Cone, the United

States Supreme Court reviewed a district court’s order staying

a federal action in favor of concurrent state court litigation. With

respect to whether there was appellate jurisdiction to review

the district court’s order, the Supreme Court reasoned that the

district court’s decision “meant that there would be no further

litigation in the federal forum; [and] the state court’s judgment

on the issue would be res judicata”. Consequently, the Supreme

Court held that the district court’s order “amount[ed] to a

dismissal of the suit” and therefore was appealable as a final

order. Cone, 460 U.S. at 8-10.

In complete accord with Pacor is Pelleport Investors, Inc. v.

Budco Quality Theatres, Inc., 741 F.2d 273, 276-78 (9th Cir.

1984). In Pelleport, the Court of Appeals for the Ninth Circuit

held that a remand order based on a contractual forum selec-

tion clause — the precise issue raised herein — is “reviewable

RA-2

as a collaterally final order under [28 U.S.C.] section 1291”. Jd.

at 277-78. As in Pacor, the Court in Pelleport held that a re-

mand order satisfies the criteria of both Cohen and Cone. Id.

Furthermore, the Second Circuit has reached the identical con-

clusion. Karl Koch Erecting Co. v. New York Convention Center

Dev. Corp., 838 F.2d 656, 658-59 (2d Cir. 1988) (reviewing by

appeal remand order based on forum selection clause). Cf.

Coastal Steel v. Tilghman Wheelabrator Ltd., 709 F.2d 190,

195-97 (3d Cir.), cert. denied, 460 U.S. 890, 104 S.Ct. 349 (1983)

(order denying motion to dismiss based on forum selection clause

appealable as “collaterally final order under section 1291”).°

Here, the District Court’s Remand Order fits precisely into

the Pacor — Cohen analysis of appellate jurisdiction: The Re-

mand Order conclusively determined the disputed remand issues

(authority to remand, timeliness and the validity and effect of

the “Service of Suit” clause); such questions are wholly separate

from the merits of the litigation (i.e., how much money, if any,

does Chesapeake owe Plaintiff pursuant to the reinsurance

agreements); and, if not appealable now, the Remand Order

would be unreviewable. Pacor, 743-F.2d at 987-989 & n.7; see

also Cone, 460 U.S. at 10-12; Pelleport, 741 F.2d at 278.

Similarly, as with the stay at issue in Cone, the Remand Order

below means that “there [will] be no further litigation in the

federal forum”, and thus “amounts to a dismissal since its “pur-

pose and effect” is “to surrender jurisdiction” to the state court.

Cone, 460 U.S. at 9-10 & n.1; see also Pacor, 743 F.2d at 989-90;

Pelleport, 741 F.2d at 278.

Although, in Thermtron Prod., Inc. v. Hermansdorfer, 423

U.S. 336, 351-52, 96 S.Ct. 584, 593 (1976), the Supreme Court

noted, without discussion, that its earlier decisions had

characterized a remand order as not representing a final judg-

ment reviewable by appeal, this Court, in Pacor, declined to

follow the Thermtron Court’s statement and held a remand

* As discussed below, the Court of Appeals in both Pelleport and Karl Koch

also ruled that the bar of 28 U.S.C. § 1447(d) did not apply to a remand order

based on a contractual forum selection clause.

RA-3

order to be appealable. Pacor, 743 F.2d at 990 n.9. This Court

reasoned that the earlier cases under discussion in Thermtron

were decided before the Cohen collateral order doctrine was

developed, and that Thermtron itself preceded Cone. Id.*

Accordingly, the Remand Order issued below is appealable

as of right pursuant to 28 U.S.C. § 1291.

B. Chesapeake’s Appeal Is Not Precluded by Statute

In pertinent part, 28 U.S.C. § 1447(d) provides that an “order

remanding a case to the State Court from which it was removed

is not reviewable on appeal or otherwise”. However, this Court’s

appellate jurisdiction to review the remand order at issue herein

is unaffected by this statute.

The Supreme Court and Court of Appeals repeatedly have

held that the appellate bar of § 1447(d) strictly is limited to re-

mand orders expressly based on those grounds for remand

specified in 28 U.S.C. § 1447(c). Thermtron, 423 U.S. at 345-52;

Air-Shields, Inc. v. Hon. John P. Fullam, 891 F.2d 63, 65-66 (3d

Cir. 1989); Karl Koch, 838 F. 2d at 658-59; Pelleport, 741 F.2d

at 276-77; Levy v. Weissman, 671 F.2d 766, 769 (3d Cir. 1982);

see Pacor, 743 F.2d at 991. Accordingly, § 1447(d) is inapplicable

to the remand order issued below.

As set forth above, § 1447(c), the statute which governs the

remand of cases removed from state court, recognizes two

distinct bases for remand — defects in removal procedure, and

defects in subject matter jurisdiction. Supra note 1. In Therm-

tron, the Supreme Court explained:

*In Corcoran v. Adra Ins. Co., Ltd., 842 F.2d 31, 34-35 (2d Cir. 1988), after

much criticism, the Second Circuit abided the Supreme Court’s statement

in Thermtron regarding the finality of a remand order, there based on

grounds of abstention. However, in Ardra the Court expressly reaffirmed

its ruling in Karl Koch that a remand order founded on a forum selection

clause is properly reviewable pursuant to § 129] as a collateral final order.

Id. at 35.

RA-4

Section 1447(d) is not dispositive of the reviewability

of remand orders in and of itself. That section and

§ 1447(c) must be construed together. . .. This means

that only remand orders issued under § 1447(c) and

invoking the grounds specified therein... are immune

from review.

423 U.S. at 345-46. This Court, in Fullam, last year reaffirmed

this construction of § 1447(d). 891 F.2d at 65-66. Accord Karl

Koch, 838 F. 2d at 658-59; Pelleport, 741 F.2d at 276-77.'

Here, as noted, Plaintiffs remand motion was based on two

grounds not provided for by § 1447(c), abstention and the

“Service of Suit” clause in the subject reinsurance agreements;

the District Court granted the motion based on the latter ground.

Clearly, a remand order premised on a forum selection clause

is not based on either ground specified by § 1447(c); therefore,

it is not immunized from review by § 1447(d). Karl Koch, 838

F.2d at 658-59; Pelleport, 741 F.2d at 276-77.

Accordingly, since the Remand Order below was not

predicated on a ground authorized by § 1447(c), it fully is

reviewable by this Court on appeal.°

* Prior to enactment of the 1988 Judicial Improvements and Access to Justice

Act, Pub.L.No. 100-702 (1988), § 1447(c) provided “If at any time before final

judgment it appears that the case was removed improvidently and without

jurisdiction, the district court shall remand the case, and may order the pay-

ment of just costs”. The remand order at issue here, however, is governed by

the amended statutory provisions. See Fullam, 89] F.2d at 65 (1988 amend-

ments to removal and remand provisions effective upon passage).

* Further, irrespective of the basis for remand, the Remand Order is reviewable

because, as in Fullam, 891 F.2d at 66, the District Court “exceeded its statutorily

defined power” by remanding this action in violation of § 1447(c)'s mandatory

thirty day time limit.

RA-5

EXCERPT FROM TRANSCRIPT OF ORAL ARGUMENT

AND THE COURT'S RULING, THE HONORABLE

LOUIS H. POLLAK, U.S.D.J., PRESIDING (OCTOBER 4, 1990)

THE COURT: All right, Mr. Zensky, I think I understand your

position as it relates to the interplay between remand and

abstention.

Let’s take the other prong of the Commissioner’s argument,

the forum selection clause. Now, I understand that you differ

from your friend on how the forum selection clause should be

read. We'll pretermit that.

Let’s assume, however, that there is a forum selection clause

about which none of us can have any argument as to the mean-

ing of — add a few prepositions at the end. The forum selec-

tion clause says all the nice stuff that’s in this clause and adds,

by the way, we, Chesapeake, also mean to waive any privilege

of removal to a Federal Court that we might otherwise enjoy

in the event that — in the event that Mutual Fire, or its suc-

cessor, entitled Commissioner Foster — who is soon going to

~ be coming along because Mutual [Fire] handles its business —

initiates litigation in the State Court.

So there is this language which none of us are going to argue

about. Ms. Foster brings her lawsuit in the State Court. You

remove. Ten minutes later, Ms. Foster moves to remand on the

ground of the forum selection clause. You say, no, with all respect,

Ms. Foster’s got it wrong. Forum selection clauses aren’t em-

braced within the grounds of remand that are covered by

1447(c); is that right?

MR. ZENSKY: That’s right, Your Honor. I would point

certainly to the Thermtron ruling, where the court said that

Congress did intend to let the District Courts revise the federal

statutes governing removal by remanding cases on grounds that

seem justifiable to them, but which are not recognized by the

controlling statute.

THE COURT: On the face of that argument, where does Ms.

Foster go to enforce her forum selection clause?

RA-6

MR. ZENSKY: Well, to the extent there was one that is stated,

as you put it very clearly, perhaps there would lie a dismissal

or summary judgment type motion in that situation to enforce

it, but not a remand.

THE COURT: Dismissal for summary judgment? Let me see

if I understand.

MR. ZENSKY: Enforce the terms of the clause as the plain-

tiff saw it.

THE COURT: So Ms. Foster has brought her suit — she’s

brought her suit and you removed it. She asks for remand, relying

on the clause, and you say, no, judge, you have to dismiss her case.

Then what does she do? She sues again in the State Court,

and by then you hope the statute has run?

MR. ZENSKY: Or we remove it again.

THE COURT: You remove it again, and again it gets dis-

missed. And so there becomes no way in which Ms. Foster can

proceed with her litigation. That doesn’t sound like a likely

scenario.

MR. ZENSKY: The plaintiff hasn’t asked for a dismissal. The

plaintiff asked for remand. Our point is that the statute doesn’t

recognize this basis for remand.

THE COURT: So you’re telling me that this carefully crafted

forum selection provision is functus officio?

MR. ZENSKY: For more reasons than one, yes.