Supplemental Brief — Ford Motor Co. v. McCauley

Supreme Court, U.S

N2/) FILED

SEP 2 6 2002

No. 01-896

| OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

FORD MOTOR COMPANY and

CITIBANK (SOUTH DAKOTA), N.A.,

Petitioners,

v.

JOHN B. McCAULEY, et al.,

Respondents.

On Wait oF CERTIORARI TO THE

Unitep States Court OF APPEALS FOR THE NINTH CIRCUIT

SUPPLEMENTAL BRIEF FOR RESPONDENTS

Steve W. BERMAN

Counsel of Record

R. BRENT WALTON

HAGENS BERMAN LLP

1301 Fifth Avenue

Suite 2900

Seattle, WA 98101

(206) 623-7292

Counsel for Respondents

(Additional Counsel for Respondents Listed on Signature Page)

176453 g

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

QUESTION PRESENTED BY THE COURT

Whether there is appellate jurisdiction when Petitioners,

as the nominally prevailing party in the district court,’ appeal

the district court’s dismissal of a complaint for lack of subject

matter jurisdiction.

1. Respondents/Plaintiffs do not understand as a factual matter

how Petitioners are a nominally prevailing party in the district court.

Other than the order appealed from, the only other order entered by

the district court relevant to the issue here was one denying

Petitioners’ motion to dismiss the consolidated complaint under

Fed. R. Civ. P. 12(b)(6). J.A. 110. In contrast, the dismissal of the

consolidated complaint was done by the district court sua sponte,

after briefing on class certification, and was unrelated to Petitioners’

motion.

il

TABLE OF CONTENTS

Page

Question Presented by the Court ............... i

Table of Contents ....cccccccssssessuneueneeee il

Table of Cited Authorities .............00000e: ill

Respondents’ Supplemental Statement .......... |

Summary Of Argument ....ccccccccsesssusnaes 2

| tt UUUCt~”~—~— 2

I. If The Court Determines That The Appeal

Was A Review Of A Remand Order, Appellate

Jurisdiction Is Lacking ................. 2

II. If The Court Determines That The Appeal

Was A Review Of The Dismissal Of The

Consolidated Action, Then There Is Appellate

Jurtedictios .....ccsscceseeuee eee 5

III. The Consolidated Complaint Does Not

Supercede The State-Court Actions ....... 8

iii

TABLE OF CITEDAUTHORITIES

Cases:

Anusbigian v. Trugreen/Chemlawn, 72 F.3d 1253

Meee c ch ch decenseduccacevcess

Archuleta v. Lacuesta, 131 F.3d 1359 (10th Cir. 1997)

Board of Managers of 2900 Ocean Ave. Condo. v.

Bronkovic, 83 F.3d 44 (2d Cir. 1996) .........

Briscoe v. Bell, 432 U.S. 404 (1977) ............

Budget Rent-A-Car Inc. v. Higashiguchi, 109 F.3d

ee ees ec eccebacecece

Carney v. BIC Corp., 88 F.3d 629 (8th Cir. 1996) ...

Carr v. American Red Cross, 17 F.3d 671 (3d Cir.

eee ee eececccecketecseces

Eyak Native Village v. Exxon Corp., 25 F.3d 773

eee ehkcakheeecesessecccccss

Glasser v. Amalgamated Workers Union Local 88,

806 F.2d 1539 (11th Cir. 1986) ..............

Gravitt v. Southwestern Bell Tel. Co., 430 U.S. 723

Ne i eecesesse

In re Ticketmaster Corp. Antitrust Litig., 929 F. Supp.

re anes cance idereneecens

Page

iv

Cited Authorities

Page

International Primate Protection League v.

Administrators of Tulane Educ. Fund, 500 U.S.

PPEEEED cncucdcctevcetéeneceusescéuueueteas 2

Lexecon Inc. v. Milberg Weiss Bershad Hynes &

SONG, TEP a SP ENESED scccccncnncvesses 9

Liberty Mut. Ins. Co. v. Ward Trucking Corp., 48 F.3d

PGE DUE 6 6S ceueeantoseeueesesusue 5,8

Morey v. Lockhart, 123 U.S. 56 (1887) .......... 5

Pelleport Investors, Inc. v. Budco Quality Theatres,

Inc., 741 F.2d 273 (9th Cir. 1984) ............ 6

Quackenbush vy. Allstate Ins. Co., 517 U.S. 706

DEE cebadnsneneceaouveseeuuecesbaeeenent 3

Robertson v. Ball, 534 F.2d 63 (Sth Cir. 1976) .... 5

Thermtron Products v. Hermansdorfer, 423 U.S. 336

SPEED ccicenenceensetasecilentaekins 3, 4, 5, 6, 8

Things Remembered v. Petrarca, 516 U.S. 124 (1995)

senaeeueuseusseeesiededesbeskieeetenwens 3-4, 5

United States v. Rice, 327 U.S. 742 (1946) ....... 4

Waco v. United States Fidelity & Guar. Co., 293 U.S.

DPE acctecndennneneddbatsatensentes 5,6

ee

Vv

Cited Authorities

Page

Statutes:

PEE Sd encennccnesccusccacéuesess |

SP EET Sede denccncedessvcucessecees 1,9

Pe OED Sov adedcccctisdendscceeucnces 3

BP le OF ED ho sctesecesscncsscceuscess 2, 3,5

PEED Kuuvedecedtinensunedennnce 2,3,4

Rules:

Pe Ee SED cedunccscccccansennéees i

es SE Oe SEED hd 6 cdnecctctconunensass 2

Other Authorities:

Section 5 of the Judiciary Act of 1875, 18 Stat. 472 -

The Act of Mar. 3, 1887, c. 373, 24 Stat. 553 ..... 7

l

RESPONDENTS’ SUPPLEMENTAL STATEMENT

In each of the underlying actions, Plaintiffs filed their cases

under state law asserting state law claims. Petitioners removed

each case to federal court and petitioned the Judicial Panel

on Multidistrict Litigation (“MDL Panel”) to consolidate the

cases for pretrial proceedings under 28 U.S.C. § 1407. J.A. 109.

The MDL Panel granted the petition, plaintiffs consented to the

transfer, and all cases were transferred to the Western District

of Washington. J.A. 31-32.

In the Case Management Order proposed by the parties,

the district court noted that the cases were “consolidated for

pretrial purposes,” and ordered that “a consolidated complaint”

— if one was to be filed — must “be filed within fifteen (15)

days after this Order becomes effective.” J.A. 41, 44.

To streamline the pretrial proceedings, Plaintiffs filed a single,

consolidated complaint. J.A. 70.

After class discovery, and following two initial hearings,

sua sponte the district court issued an order to show cause why

the action should not be dismissed for lack of jurisdiction and

why the six original cases “should not be . . . remanded to state

court.” J.A. 66. On October 29, 1999, the district court found

that it lacked subject matter jurisdiction over the claims in the

consolidated complaint, which it therefore dismissed, J.A. 91-

101, and it then remanded to state court each of the six actions

originally filed in state court and removed to federal court by

Petitioners. J.A. 100-101.

The district court dismissed the consolidated complaint and

indicated an intention to dispose of the federal action while

remanding the cases back to their original state courts. J.A. 100-

101, 124-126. Thus, the court of appeals concluded that the

district court’s decision *vas/reviewable under 28 U.S.C. § 1291.

J.A. 111-112.?

2. The district court’s order remanding the state actions is not

before this Court, and the panel below concluded that it was not

reviewable. J.A. 126.

2

The Ninth Circuit affirmed the dismissal of the

consolidated complaint for lack of jurisdiction. The panel

confirmed that it had jurisdiction to review the district

court’s order, which the panel construed as dismissing the

consolidated action. J.A. 111-112.

SUMMARY OF ARGUMENT

Courts cannot review an order of remand that is based

on a lack of subject matter jurisdiction. 28 U.S.C. § 1447(d).

Courts do have the authority to review dismissals of actions,

even those that are based on subject matter jurisdiction.

Accordingly, if this Court concludes as the panel did that

appellate jurisdiction is based on the dismissal of the

consolidated action, even though it is predicated solely on

lack of subject matter jurisdiction, then appellate jurisdiction

may be proper.

ARGUMENT

I. IF THE COURT DETERMINES THAT THE

APPEAL WAS A REVIEW OF A REMAND ORDER,

APPELLATE JURISDICTION IS LACKING

A district court must remand a removed action when it

appears to the court that it lacks subject matter jurisdiction.

28 U.S.C. § 1447(c) (“If at any time before final judgment it

appears that the district court lacks subject matter jurisdiction,

the case shall be remanded”).’ Indeed, the Court has observed

that “‘the literal words of § 1447(c)... give. . . no discretion

to dismiss rather than remand an action.’ The statute declares

that, where subject matter jurisdiction is lacking, the removed

case ‘shall be remanded.’” /nternational Primate Protection

League v. Administrators of Tulane Educ. Fund, 500 U.S.

72, 89 (1991) (citation omitted).

3. See also Fed. R. Civ. P. 12(h)(3) (“Whenever its appears by

suggestion of the parties or otherwise that the court lacks jurisdiction

over the subject matter, the court shall dismiss the action.”)

3

The very next subsection of the removal statute appears

to bar all appellate review of remand orders. 28 U.S.C.

§ 1447(d) (except civil rights cases removed pursuant to

28 U.S.C. § 1443, “[a]n order remanding a case to the State

court from which it was removed is not reviewable on appeal

or otherwise ...”). However, this Court has also stated

“Section 1447(d) is not dispositive of the reviewability of

remand orders in and of itself.” Thermtron Products v.

Hermansdorfer, 423 U.S. 336, 345 (1976). Thus, there are

at least some remand orders that are reviewable. See, e.g.,

Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996)

(permitting review of remand order because the “District

Court’s abstention based remand order does not fall into

either category of remand order described in § 1447(c), as it

is not based on lack of subject matter jurisdiction or defects

in removal procedure.”)

Nevertheless, the interplay and command of section

1447(c) and 1447(d) are clear when a remand is based on a

finding that the district court lacks subject matter jurisdiction.

Title 28 U.S.C. § 1447(c) provides for remanding

a removed action when the district court

determines that “the case was removed

improvidently and without jurisdiction”; and

when a remand has been ordered on these grounds,

28 U.S.C. § 1447(d) unmistakably commands that

the order “remanding a case to the State court from

which it was removed is not reviewable on appeal

or otherwise... .”

Gravitt v. Southwestern Bell Tel. Co., 430 U.S. 723, 723

(1977). As the Court explained in Thermtron Products, Inc.

v. Hermansdorfer, 423 U.S. 336 (1976), Ҥ 1447(d) must be

read in pari materia with § 1447(c), so that only remands

based on grounds specified in § 1447(c) are immune from

review under § 1447(d).” Things Remembered v. Petrarca,

4

516 U.S. 124, 127 (1995). And, more recently, the Court

reaffirmed this principle, emphatically stating:

As long as a district court’s remand is based on a

timely raised defect in removal procedure or on lack

of subject-matter jurisdiction — the grounds for

remand recognized by § 1447(c) — acourt of appeals

lacks jurisdiction to entertain an appeal of the remand

order under § 1447(d).

Jd. at 127-28. This bright-line rule applies “no matter how plain

the legal error.” Briscoe v. Bell, 432 U.S. 404, 414n.13 (1977).

The purpose of denial of any review of remand orders is to

prevent delay of the litigation that the removing party may

achieve by seeking appellate reconsideration of a remand order.

United States v. Rice, 327 U.S. 742, 751-52 (1946).

There is no doubt that in order to prevent delay in

the trial of remanded cases by protracted litigation

of jurisdictional issues, ... Congress immunized

from all forms of appellate review any remand order

issued on the grounds specified in § 1447(c), whether

or not that order might be deemed erroneous by an

appeliate court.

Thermtron, 423 U.S. at 351 (citation omitted). In a very real

sense, delay is exactly what Petitioners have already achieved.

Other than one motion to remand that was withdrawn, Plaintiffs

have never opposed any court, be it state or federal court, to

hear the underlying claims; they simply desire them to proceed.

Here, because the district court’s “remand order was plainly

within the bounds of § 1447(c)”* — indeed remand was

4. Even if the Court were to construe the remand order as one

made pursuant to R.P.J.P.M.L. 7.6, section 1447(d) would still apply.

Section 1447(d) applies “not only to remand orders made in suits

removed under [the general removal statute], but to orders of

remand made in cases removed under any other statutes, as well.”

United States v. Rice, 327 U.S. at 752.

5

specifically made because the court found it lacked subject

matter jurisdiction — the remand order !s “unreviewable by

the Court of Appeals, by mandamus or otherwise.”

Thermtron, supra; Gravitt, supra; Things Remembered,

supra; Morey v. Lockhart, 123 U.S. 56 (1887); Board of

Managers of 2900 Ocean Ave. Condo. v. Bronkovic, 83 F.3d

44 (2d Cir. 1996); Liberty Mut. Ins. Co. v. Ward Trucking

Corp., 48 F.3d 742 (3d Cir. 1995); Robertson v. Ball, 534

F.2d 63 (Sth Cir. 1976); Anusbigian v. Trugreen/Chemlawn,

72 F.3d 1253 (6th Cir. 1996); Carney v. BIC Corp., 88 F.3d

629 (8th Cir. 1996); Archuleta v. Lacuesta, 131 F.3d 1359

(10th Cir. 1997); Glasser v. Amalgamated Workers Union

Local 88, 806 F.2d 1539 (11th Cir. 1986).

Il. ‘F THE COURT DETERMINES THAT THE

#P? EAL WAS A REVIEW OF THE DISMISSAL OF

THE CONSOLIDATED ACTION, THEN THERE IS

APPELLATE JURISDICTION

Here, the district court dismissed the consolidated action

before remanding the actions back to their respective state

courts. Leaving aside for one moment the reason for the

district court’s dismissal was for finding a lack of subject

matter jurisdiction — one of the two reasons specified by

Congress in section 1447(c) — this Court has held that

dismissal of an action that precedes an order of remand is

reviewable.

[N]o appeal lies from the order of remand; but in

logic and in fact the decree of dismissal preceded

that of remand and was made by the District Court

while it had control of the cause. ... We are of

the opinion that the petitioner was entitled to have

the Circuit Court of Appeals determine whether

the dismissal of its cross-action . . . was proper.

Waco v. United States Fidelity & Guar. Co., 293 U.S. 140,

143 (1934). In Waco, the Court permitted review of the

dismissal but not the order of remand. Moreover, the Court

6

did so to determine whether the dismissal of the cross-action

against Fidelity was valid because the substantive decision

in the district court was binding on the parties. /d. Similarly,

courts have found appellate jurisdiction to review some

remand orders when that review is predicated on a prior order

that is reviewable. See, e.g., Carr v. American Red Cross, 17

F.3d 671, 682-83 (3d Cir. 1994); Pelleport Investors, Inc. v.

Budco Quality Theatres, Inc., 741 F.2d 273, 277 (9th Cir.

1984).

Accordingly, the panel was at least plausibly correct in

asserting jurisdiction over the appeal as the district court

dismissed the consolidated action. Specifically, the district

court stated: “The consolidated complaint is hereby dismissed

for lack of jurisdiction, and the six cases originally filed in

state court, and removed to federal court by the defendants,

are now remanded to state court...” J.A. 100. Of course,

courts of appeal routinely review dismissals for subject

matter jurisdiction. See, e.g., Budget Rent-A-Car Inc. v.

Higashiguchi, 109 F.3d 1471 (9th Cir. 1997).

At the same time, Petitioners did not appeal the

substantive decision on the merits of the action denying the

motion to dismiss; instead, Petitioners appealed the dismissal

of the consolidated action for lack of jurisdiction and remand

order. This distinction seems to take this case out of the Waco

line of decisions, as there is no substantive decision on the

merits to review or any threat that some order of the court

will be unreviewable at a later date. Furthermore, Plaintiffs

are hard pressed to find any reason why appellate jurisdiction

should be found here because historically courts were

permitted to dismiss or remand the action to state court for

lack of jurisdiction, as either decision achieves the same result

without impacting the merits of the case. Indeed, as this Court

has noted, “Section 1447(d) has its roots in the Act of Mar.

3, 1887, 24 Stat. 552. Prior to 1875, orders of remand were

not reviewable by appeal or writ of error for want of a final

judgment.” Thermtron, 423 U.S. at 346. However, in 1875,

ee ee

7

Congress enacted Section 5 of the Judiciary Act of 1875,

18 Stat. 472, which provided:

That if, in any suit commenced in a circuit court

or removed from a State court to a circuit court of

the United States, it shall appear to the satisfaction

of said circuit court, at any time after such suit

has been brought or removed thereto, that such

suit does not really and substantially involve a

dispute or controversy properly within the

jurisdiction of said circuit court, or that the parties

to said suit have been improperly or collusively

made or joined, either as plaintiffs or defendants,

for the purpose of creating a case cognizable or

removable under this act, the said circuit court

shall proceed no further therein, but shall dismiss

the suit or remand it to the court from which it

was removed as justice may require, and shall

make such order as to costs as shall be just; but

the order of said circuit court dismissing or

remanding said cause to the State court shall be

reviewable by the Supreme Court on writ of error

or appeal, as the case may be.

(Emphasis added). Subsequently, in 1887, Congress repealed

the provision contained in Section 5 of the 1875 Act

providing for appellate review of ard included a new

provision that forbid review of remand orders. Specifically,

The Act of Mar. 3, 1887, c. 373, 24 Stat. 553, provided in

part:

Whenever any cause shall be removed from any

State court into any circuit court of the United

States, and the circuit court shall decide that the

cause was improperly removed, and order the

same to be remanded to the State court from

whence it came, such remand shall be immediately

carried into execution, and no appeal or writ of

a

: 9

error from the decision of the circuit court so Indeed, such an Order is required when cases are transferred

remanding such cause shall be allowed. pursuant to 28 U.S.C. § 1407, as pretrial proceedings are all

Thus, “while not disturbing the provision for dismissal or that Congress permits the transferee court to conduct in MDL

remand for want of jurisdiction, [the Act] not only repealed proceedings. Lexecon Inc. v. Milberg Weiss Bershad Hynes &

the provision in § 5 of the 1875 Act providing for appellate Lerach, 523 U.S. 26 (1998). At the close of pretrial

review of remand orders but contained a provision that proceedings, the transferred cases must be remanded by the

‘improperly removed’ cases should be remanded” and that transferee court. /d. Although plaintiffs filed a “consolidated

“no appeal or writ of error from the decision of the circuit complaint as expressly permitted by 28 U.S.C. § 1407, this

court so remanding such cause shall be allowed.” Thermtron, streamlining did not, and could not, expand the jurisdiction

423 U.S. at 346-47 (emphasis on “so remanding” in original, of the district court or any court.

otherwise emphasis added). Petitioners’ citation to Jn re Ticketmaster Corp. Antitrust

The statutory history thus indicates that Congress has Litig., 929 F. Supp. 1272 (E.D. Mo. 1996), is inapplicable

determined no review of the decision remanding the action as: (i) all of the claims at issue were brought under federal

is permissible when that decision is based on a lack of subject antitrust law, and hence federal jurisdiction was not an issue,

matter jurisdiction. The only question then is whether and (ii) that decision was a substantive dismissal (i.€., on

Congress intended to permit review of a dismissal for lack the merits) which was therefore dispositive of the claims.

of subject matter jurisdiction when that dismissal is included Furthermore, Eyak Native Village v. Exxon Corp., 25 F.3d

with the decision to remand and is based on the very same 773, 780-81 (9th Cir. 1994), is equally inapplicable, eocause

grounds. Respectfully, and as much as Plaintiffs would like there the court was concerned with whether the consolidated

the Court to provide clear guidance on the amount-in- class complaint joined all actions into a single action to thus

controversy issue presented, Plaintiffs cannot think of a good make them removable as a group. Here, Petitioners’ use of

reason to permit such review. Indeed, an exception to permit the citation goes to authority to oe the issuance of

review of dismissals based on subject matter jurisdiction remand order. Indeed, the panel considered and repudiated

when included in the same order as a remand order would Petitioners’ argument stating:

swallow the rule and, contrary to Congress’ intent, permit Ford and Citibank begin their argument with the

review of a remand decision based on the lack of subject premise that a consolidated complaint is “akin to

matter jurisdiction. See Liberty Mutual, 48 F.3d at 748-49. an amended complaint,” which “supersedes the

Ill. THE CONSOLIDATED COMPLAINT DOES NOT original, the latter thereafter being treated as non-

SUPERCEDE THE STATE-COURT ACTIONS existent.” Loux v. Rhay, 375 F.2d 55, 57 (9th Cir.

1967). They thus contend that the consolidated

complaint amended the original state complaints,

rendering them “non-existent.” However, they

provide ne authority for this proposition. The

cases on which they rely merely stand for the

unremarkable propositions that: (1) an amended

complaint supersedes an original and (2) in a

Petitioners erroneously contend that the consolidated

complaint “supercedes the state-court actions.” See, e.g., Pet.

Reply at 19. When the MDL panel transferred the cases to

the Western District of Washington, it specifically instructed

the district court to conduct “coordinated or consolidated

pretrial proceedings with the action pending there.” J.A. 32.

10

consolidated action, a consolidated complaint is

the operative pleading and supersedes all

previously filed complaints. No authority supports

the contention that a consolidated complaint

touches or disturbs underlying state claims.

Nor is there anything cited to us in the record that

demonstrates the district court meant for the

complaints in the remand cases to disappear.

On the contrary, the plaintiffs “consolidate” their

efforts into one document which becomes the

operative pleading. No court order did anything

more than this. Once that umbrella complaint was

dismissed, it left the underlying state removed

complaints intact. Therefore, the district court

did not exceed its authority in remanding the

underlying removed actions to state court and,

pursuant to section 1447(d), we lack jurisdiction

to review its decision.

Micuaet J. ROSENFELD

Ka.s, Rosenreco & Essic

283 Commack Road

Commack, NY 11725

(516) 499-3800

James G. Lewis

9911 W. Pico Blvd, Suite 503

(310) 553-1661

Russert J. Drake

Wuat.ey Drake LLC

2323 2nd Ave., North

P.O. Box 10647

Birmingham, AL 35202-0647

(205) 328-9576

|

Respectfully submitted,

Steve W. Berman

Counsel of Record

R. Brent WaLTON

Hacens Berman LLP

1301 Fifth Avenue

Suite 2900

Seattle, WA 98101

(206) 623-7292

Rocer W. Kirsy

ANDREA BIERSTEIN

Kurpy McInerney & Squire

830 Third Ave., 10” Floor

New York, NY 10022

(212) 317-2300

Joun H. ALEXANDER

J.A. 126. There is nothing, by virtue of filing a consolidated ALEXANDER & ASSOCIATES

complaint, that extinguishes the underlying state law 100 W. Monroe Street

complaints, nor could any order issued by a federal court | 21" Floor

without subject matter jurisdiction do so. Chicago, IL 60603

(312) 263-7731

Counsel for Respondents