# Opposition Brief — Chesapeake Insurance v. Foster

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1991
- **Citation:** 502 U.S. 908

## Text

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
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ad

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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.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_2562%3A2. Public record. Not legal advice.