Amicus Curiae Brief — Kircher v. Putnam Funds Trust

“

o

No. 05-409

IN THE

Supreme Court of the United States

CARL KIRCHER, et a/.,

Petitioners,

v.

PUTNAM FUNDS TRUST, et ai...

Respondents.

On Writ of Certiorari to the

United States Court of Appeals for the Seventh Circuit

BRIEF OF LAW PROFESSORS ARTHUR R.

MILLER, E. FARISH PERCY, MICHAEL E.

SOLIMINE, AND JILL E. FISCH AS AMICI CURIAE

IN SUPPORT OF PETITIONERS

ARTHUR R. MILLER GREGORY A. BECK

1545 Massachusetts Ave. BRIAN WOLFMAN

Cambridge, MA 02138 (Counsel of Record)

(617) 495-4111 PUBLIC CITIZEN LITIGATION

GROUP

1600 20°" STREET. N.W.

WASHINGTON, D.C. 20009

(202) 588-1000

February 2006 Counsel for Amici Curiae

_

TABLE OF CONTENTS

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DUSPEPGAER DD GIT AUPRIIIOD 65s ccc acc cavuacssees 2

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I. The Thermtron Exception Is Not Supported by the

Text of § 1447(d) and Should Not Be Extended. .. 4

I. Thermtron’s Holding Undermines the Purpose of

§ 1477(d) by Encouraging Appeal as a Delaying

Pe ina 66bs bons Phd ba8 WV ERaES eR ERTEeES. 9

III. The District Court’s Remand Order in this

Case Falls Well Outside the Scope of the

PCN IE. ccc peek setenenencnces 14

A. The District Court Dismissed on

Grounds of Subject Matter Jurisdiction. .. 14

B. The Seventh Circuit Impermissibly

Second-Guessed the District Court's

Ce aime aes ae 16

[RET Ack nodes mecduda redeevny eauuay Rees 18

il

TABLE OF AUTHORITIES

CASES

Abada v. Charles Schwab & Co.,

300 F.3d 1112 (9th Cir. 2002) ................ 15

In re Amoco Petroleum Additives Co.,

964 F.2d 706 (7th Cir. 1992) ......... 6, 11, 13, 17

Archuleta v. Lacuesta,

131 F.3d 1359 (10th Cir. 1997) ............... 2

Balazik v. County of Dauphin,

ee err er rrr 12

Baldridge v. Kentucky-Ohio Transp., Inc.,

983 F.2d 1341 (6th Cir. 1993) ................ 16

Beneficial Nat'l Bank v. Anderson, 539 U.S. 1 (2003) ... 16

Cohen v. Beneficial Indus. Loan Corp.,

ee eee ope eye prer ry Tee 7-8

Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978) ..... 8

Edelman v. Lynchburg College, 535 U.S. 106 (2002) ..... 6

Falkowski v. Imation Corp.,

gO Bee Bee errr rere 16

Gillespie v. United States Steel Corp.,

PPR PUTS Sek tavieeackaxees seein 8

ill

Glasser v. Amalgamated Workers Union Local 88,

806 F.2d 1539 (11th Cir. 1986) ............... 16

Gonzalez-Garcia v. Williamson Dickie Mfg. Co.,

a | ee 16

Heaton v. Monogram Credit Card Bank,

eee ee ee re 1]

Kircher v. Putnam Funds Trust,

Fe ee CPN Ge BD hn kb 65 0 ees ee eies 13

Mangold v. Analytic Servs., Inc.,

EE Pate CORR OIET, TOPE 6 oss cavesveeeesss 12

Nutter v. Monogahela Power Co..,

oe Bo lk rr eer 16

Smith v. Texas Children's Hosp.,

Eee ye ost le | eee 16

Spielman v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,

332 F.3d 116 (2d Cir. 2005) ........... 7.9, 15, 16

In re TMI Litig. Cases Consol. I],

om gs | eee ee 4

Thermtron Prods., Inc. v. Hermansdorfer,

423 U.S. 336 (1976)... 2, 3,4, 10, 11, 13, 14, 16, 17

Things Remembered, Inc. v. Petrarca,

Pees SUNNONE 6 kdi odes cca wkeh psy s us 4,7,9

iV

Trans Penn Wax Corp. v. McCandless,

SO P.36 ZU OCH, FIG occ evcddivuveusiuann 16

United States v. Rice, 327 U.S. 742 (1946) ... 2, 3, 4,5, 6,9

United States v. Rodgers, 466 U.S. 475 (1984) .......... 5

Van Cauwenberghe v. Biard, 486 U.S. 517 (1988) ....... 7

Whitman vy. Raley's Inc., 886 F.2d 1177 (9th Cir. 1989) .. 16

Williams v. AFT Enters., Inc.,

389 F.3d 1185 (11th Cir. 2004) ............... 15

STATUTES

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MISCELLANEOUS

Administrative Office of the United States Courts, 2004

Annual Report of the Director, Table B-4, available

at http://www.uscourts.gov/judbus2004/appendices/

A ee re 5,7

Thomas R. Hrdlick, Appellate Review of Remand

Orders in Removed Cases: Are They

Losing a Certain Appeal?,

O2 Mara. L. Rev. 335 (1999) ...... 0.6000 eees 5,7

Thomas F. Lamprecht, Note, How Can /t Be

Wrong When_TIt Feels So Right? Appellate

Review of Remand Orders Under

the Securities Litigation Uniform

Standards Act, 50 Vill. L. Rev. 305 (2005) .... 7, 10

Michael E. Solimine, Removal, Remands,

and Reforming Federal Appellate Review,

58 Mo. L. Rev. 287 (1993).............. 7, 10, 13

Rhonda Wasserman, Rethinking Review

of Remands: Proposed Amendments

to the Federal Removal Statute,

43 Emory L.J. 83 (1994) ............. 6,7, 10, 13

Charles Alan Wright, Arthur R. Miller

& Edward H. Cooper, Federal Practice

and Procedure § 3740 (3d ed. 1998) ..... 1,3.7.10

INTERESTS OF AMICI CURIAE'

Professor Arthur. R. Miller is the Bruce Bromley

Professor of Law at the Harvard Law School. He has devoted

his teaching and writing career to an understanding of federal

courts, civil procedure, and federal practice. Among his

numerous publications are the leading treatise in federal

practice and the leading casebook in civil procedure: Charles

A. Wright & Arthur R. Miller, Federal Practice and Procedure

(West 2005); Jack H. Friedenthal, Arthur R. Miller, John E.

Sexton & Helen Hershkoff, Civil Procedure: Cases and

Materials (Thomson West 9th ed. 2005). In addition, he has

written numerous articles and consulted on numerous cases

raising novel issues of federal practice and procedure.

Assistant Professor E. Farish Percy joined the faculty at

the University of Mississippi School of Law in 2001 and

teaches Civil Procedure, Torts, and Insurance. Much of her

recent research has been devoted to the issue of federal court

jurisdiction. She has recently written two law journal articles

proposing a framework to be used by federal district courts

when evaluating allegations of fraudulent joinder in cases where

removal is based on federal diversity jurisdiction.

Professor Michael E. Solimine is the Donald P.

Klekamp Professor of Law at the University of Cincinnau

College of Law, where he has been a member of the faculty

since 1987. He teaches and has written numerous articles on

‘The partics have consented to the filing of this brief. Letters

of consent to the filing of this brief are being filed in conjunction

with this brief. Pursuant to this Court's Rule 37.6, counsel states that

this brief was not authored in whole or in part by counsc! for a party

and that no one other than amici and their counsel made a monctary

contribution to the preparation or submission of this brief.

2

civil procedure and federal courts. He also written extensively

on federal appellate practice, and is the co-author of the new

edition of a leading appellate practice case book: Robert J.

Martineau, Kent Sinclair, Michael E. Solimine & Randy J.

Holland, Appellate Practice and Procedure: Cases and

Materials (Thomson West 2d ed. 2005).

Professor Jill E. Fisch is the Alpin J. Cameron Professor

of Law at Fordham Law School, where she has been a member

of the faculty since 1989. She teaches Corporate Law,

Securities Regulation, and Federal Courts. Professor Fisch’s

scholarship includes work on corporate law, securities

regulation, and federal courts and has appeared in a variety of

publications including the Harvard Law Review, the Yale Law

Journal, the Columbia Law Review, and the Comell Law

Review.

Having devoted their carcers to teaching and wniting

about the federal courts and working for their improved

administration, amici have a keen interest in seeing that those

courts function efficiently. It is equally important that the lower

federal courts function only as Congress has authorized. Unless

the court below is reversed, appellate panels will continue to

entertain appeals that Congress has specifically prohibited.

SUMMARY OF ARGUMENT

Prior to Thermtron Products, Inc. v. Hermansdorfer,

423 U.S. 336 (1976), this Court had consistently held that 28

U.S.C. § 1447(d) and its predecessors forbade appeal of a

district court’s remand order under any circumstances. See

United States v. Rice, 327 U.S. 742, 749 (1946). This time-

honored bar to appellate review of remand orders rested on

Congress's legislative “policy of not permitting interrupt[ion]

of the litigation of the merits of a removed cause by prolonged

litigation of questions of jurisdiction of the district court to

3

which the cause is removed.” /d. at 751. In an apparent effort

to address an injustice in a particular case, 7hermtron for the

first time created an exception to § 1447(d)’s categorical rule,

holding despite the statute’s plain language that when a district

court’s decision to remand is based on “grounds not provided

by [] statute,” the court’s order is subject to appellate review.

Thermtron, 423 U.S. at 349.

Chief Justice Rehnquist, then Associate Justice, in his

dissent in Thermtron called the Court’s new exception “both

unworkable and portentous of the significant impairment of

Congress's carefully worked out scheme.” /d. at 357

(Rehnquist, J., dissenting). Chief Justice Rehnquist's words

have proved prophetic. In the years since Thermtron, the lower

courts have struggled with the limits of the exception, creating

several circuit splits and eviscerating Congress's clear statutory

rule. See 14C Charles Alan Wright, Arthur R. Miller & Edward

H. Cooper, Federal Practice and Procedure § 3740 (3d ed.

1998). In practice, Thermtron has allowed defendants to

undermine the purpose of § 1447(d) by subjecting plaintiffs in

state court actions to unjustified delays during the appeal of a

district court's remand order.

Because it is difficult or impossible to distinguish a

remand order that is not authorized by statute and is thus subject

to appeal under 7hermtron from a remand order that is merely

erroneous and thus unappealable under § 1447(d), the Court

should take this opportunity to limit 7hermiron to its facts and

thereby end the confusion in the lower courts. In any case, the

district court's decision below specifically purported to be

based on a lack of subject matter jurisdiction and is therefore

barred from appellate review by § 1447(d).

4

ARGUMENT

I. The Thermtron Exception Is Not Supported by the

Text of § 1447(d) and Should Not Be Extended.

It is difficult to imagine how Congress could more

clearly have expressed an intent to bar all appellate review of

remand orders than it did in 28 U.S.C. § 1447(d): “An order

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

is not reviewable on appeal or otherwise... .” Prior to

Thermtron, the Court faithfully enforced Congress’s explicit

statutory bar “regardless of the reasons underlying the [district

court’s] decision to remand.” /n re TMI Litig. Cases Consol. II,

940 F.2d 832, 840 (3d Cir. 1991). Indeed, since the first

predecessor to § 1447(d) was enacted in 1887, the Court had

consistently held that mo appeal of remand orders was

permissible under the statute. See Rice, 327 U.S. at 749.

Thermtron for the first time created an exception to this

categorical rule, holding that the basis of the district court's

decision to remand in that case—its crowded dockets—was one

that the court “had no authority to consider.” 7Thermtron, 423

U.S. at 351. The Court held that § 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, Inc. v. Petrarca, 516 US.

124, 127(1995). Thus, courts of appeals had jurnsdiction over

a remand order as long as the remand was not based on either

a defect in removal procedure or a lack of subject-matter

jurisdiction—the two grounds for remand recognized by

§ 1447(c). Id. at 127-28.

‘In 1996, Congress amended § 1447(c) to read:

(continued...)

5

Given the unambiguous statutory language of § 1447(d),

however, the Court’s resort in Thermtron to a canon of statutory

construction for its interpretation of the statute is, with all

respect, unconvincing. Section 1447(d) states simply and

plainly that any order remanding a case is unreviewable. As the

Court noted in Rice when construing § 1447(d)'s predecessor,

“[s]tatutory language and objective, thus appearing with

reasonable clarity, are not to be overcome by resort to a

mechanical rule of construction, whose function is not to create

doubts, but to resolve them when the real issue or statutory

purpose is otherwise obscure.” Rice, 327 U.S. at 752-53. The

plain meaning of § 1447(d) does not lead to results that are

“absurd or glaringly unjust,” United States v. Rodgers, 466 U.S.

475, 484 (1984) (quotation omitted), and is_ therefore

*(.. continued)

A motion to remand the case on the basis of any

defect other than lack of subject matter jurisdiction

must be made within 30 days after the filing of the

notice of removal under section 1446(a). If at any

time before final judgment it appears that the district

court lacks subject matter jurisdiction, the case shall

be remanded.

28 U.S.C. § 1447(c). By changing the statute to cover remands based

on both defects of subject matter jurisdiction and defects “other than

lack of subject matter jurisdiction,” the statute’s new language

appears to cover al] remands, and Thermtron’s distinction between

those remands that are authorized by § 1447(c) and those that are not

scems no longer to have any basis in the language of the statute. The

legislative history of the amendment, however, indicates that it was

not intended to effect a substantive change. See Thomas R. Hrdlick,

Appellate Review of Remand Orders in Removed Cases’ Are They

Losing a Certain Appeal?, 82 Marg. L. Rev. 335, 561-69 (1999)

(examining the legislative history).

6

controlling. Yet, the Court’s decision in Zhermtron discounted

the clear statutory language, holding in effect “that § 1447(d)

does not mean what it says.” /n re Amoco Petroleum Additives

Co , 964 F.2d 706, 708 (7th Cir. 1992).

The decision in Thermtron also discounted the Court's

uninterrupted history of interpreting § 1447(d)’s predecessor

statutes to prohibit a// appellate review of remand orders. Rice,

327 U.S. at 752 (noting the “universality of the practice” of

denying review of remand orders). Congress is presumed to

have been aware of this unanimous judicial authority when it

enacted the present version of § 1447(d). See Edelman v.

Lynchburg College, 535 U.S. 106, 116-17 (2002) (noting that

Congress is presumed to know of and incorporate settled

judicial doctrines when enacting and amending statutes). In

those instances where Congress has intended to create an

exception to the general rule of non-appealability, it has not

hesitated to provide the necessary statutory language. For

example, § 1447(d) itself provides that civil mghts cases

“removed pursuant to section 1443 of this title shall be

reviewable by appeal or otherwise” (emphasis added).

Congress has created a total of four such exceptions to

§ 1447(d).’

‘Another example is the recently enacted Class Action

Farmess Act of 2005, which provides that, “notwithstanding section

1447(d), a court of appeals may accept an appeal from an order of a

district court granting or denying a motion to remand a class action

to the State court from which it was removed.” 28 U.S.C.

§ 1453(c1) (emphasis added). Two other exceptions allow the

United States to appeal remands in cases involving Native American

tribes and the Federal Deposit Insurance Corporation and the

Resolution Trust Corporation to appeal remands in cases where they

are parties. Rhonda Wasserman, Rethinking Review of Remands:

Proposed Amendments to the Federal Removal Statute, 43 Emory L.

(continued )

7

Since Thermtron was decided, it has faced substantial

academic criticism on tl vund that it ignored Congress's

clearly expressed intent .. oar appellate review of remand

orders,‘ and this Court has generally rejected attempts to further

expand the scope of the exception. See Things Remembered,

516 U.S. at 129. Nevertheless, as explained in the following

section, the Court's decision in Thermtron to allow an appeal

under the facts of that particular case has led to a widespread

disregard of the statute’s plain meaning in the lower courts. To

prevent any additional erosion of § 1447(d)’s clearly expressed

rule, the Court should limit Thermtron to the particular facts of

that case, leaving any further modifications of § 1447(d) to

Congress. See Spielman v. Merrill Lynch, Pierce, Fenner &

Smith, Inc., 332 F.3d 116, 127 (2d Cir. 2003) (“It is not our

place as jurists to supply that which is omitted by the

legislature.”).

Developments before this Court in another area of

appellate jurisdiction parallel the approach that amici urge here

with respect to Thermtron. The principal basis for federal

appellate jurisdiction is 28 U.S.C. § 1291, under which litigants

may appeal only from “final decisions” of the district courts. In

general, § 1291 means what is says: A final decision is one that

“ends the litigation on the merits and leaves nothing for the

court to do but execute the judgment.” Van Cauwenberghe v.

Biard, 486 U.S. 517, 521-22 (1988) (quotation omitted). Under

. continued)

J. 83. 104-08 (1994)

‘See, ¢.g., Hrdlick, supra note 2; Thomas F. Lamprecht,

Note, How Can It Be Wrong When It Feels So Right? Appellate

Review of Remand Orders Under the Securities Litigation Uniform

Standards Act, 50 Vill. L. Rev. 305 (2005): Michael E. Solimine,

Removal, Remands, and Reforming Federal Appellate Review, 38

Mo. L. Rev. 287 (1993); Wasserman, supra note 3: see also 14€

Wright, Miller & Cooper, supra, § 3740, at 525-27.

8

Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541

(1949), § 1291 also includes a narrow category of orders that do

not end the entire litigation, but finally decide an important

issue that is wholly collateral to the merits of the litigation,

review of which ts necessary to prevent irreparable harm. Some

fifteen years later, however, in Gillespie v. United States Steel

Corp., 379 U.S. 148 (1964), the Court took Cohen well beyond

its original narrow purpose and allowed an interlocutory appeal

simply where the district court had dismissed one set of claims

on their merits but not another. The Court acknowledged that

appellate review in that case “could be called ‘piecemeal,’” but

justified erosion of the “final decision” rule based on the

Court’s own view of “the inconvenience and cost” of trying the

case prior to appeal, and its concern that delay in resolving the

claims could work “a great injustice” to the plaintiffs. /d. at

153. In dissent, Justice Harlan noted that these reasons

“furnishe[d] no excuse for avoidance of the finality rule,” and

sounded an alarm, not unlike the alarm sounded by Chief

Justice Rehnquist in 7hermtron, that such arguments could

support review in many interlocutory appeals. /d. at 167-70

(Harlan, J., dissenting).

In Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978),

the Court put on the brakes. After holding that a district court

order denying class certification is not an appealable collateral

order under Cohen, the Court rejected the plaintiffs’ reliance on

Gillespie, effectively ending its relevance as a § 1291 precedent.

“If Gillespie were extended beyond the unique facts of that

case,” Justice Stevens explained, “§ 1291 would be stripped of

all significance.” Jd. at 477 n.30. So, too, here, if Thermtron

were allowed to expand beyond its highly unusual

circumstances, the strict no-appeal policy expressed by

Congress in § 1447(d) would be seriously eroded, if not

destroyed entirely.

9

In this case, the court of appeals found a new implicit

exception to § 1447(d) for cases remanded pursuant to

SLUSA’s remand provision. Congress, however, is aware of

the presumption that § 1447(d)’s bar to appellate review applies

“regardless of whether removal was effected pursuant to

§ 1441(a)” (which is the general removal statute) or “under anv

other statutes, as well.” Things Remembered, 516 U.S. at 128

(quotation omitted). “Absent a clear statutory command to the

contrary, Congress is presumed to have intended § 1447(d)’s

bar to apply. /d. The remand provision in SLUSA does net

contain a “clear statutory command” demonstrating a

congressional intent to authorize review of SLUSA remand

orders. 15 U.S.C. § 77p(d)(4): see Spielman, 332 F.3d at 127

(“Conspicuously absent from SLUSA is any express language

Suggesting that it operates to override the appealability

exclusion of Section 1447(d).”). In contrast to SLUSA’s

statutory silence, Congress in the Class Action Fairness Act of

2005 specifically provided for permissive appellate review

“notwithstanding section 1447(d).” See supra note 3. Absent

such an unambiguous command, this Court should reject the

Seventh Circuit's attempt to carve out a new exception to

§ 1447(d)’s rule.

II. Thermtron’s Holding Underminces the Purpose of

§ 1447(d) by Encouraging Appeal as a Delaying

Tactic.

The bar to appellate review of remand orders arises from

Congress’s “policy of not permitting interrupt{ion] of the

litigation of the merits of a removed cause by prolonged

litigation of questions of jurisdiction of the district court to

which the cause is removed.” Rice, 327 U.S. at 751. Congress

understood that distnct courts are not infallible and that some

remand orders—presumably a small minority—would be

erroneously granted. Nevertheless, a defendant whose case ts

10

mistakenly remanded to state court can still obtain a fair trial in

that forum, and, in Congress’s judgment, any degree of

prejudice resulting from denying defendants their forum of

choice is outweighed by the importance of avoiding prolonged

delays in federal court. See Thermtron, 423 U.S. at 355

(Rehnquist, J., dissenting). By providing removal to the district

court but disallowing appeals, Congress struck a balance

between the desirability of allowing access to a federal forum

and the significant costs of delay on appeal. /d. at 354-55.

The Court in Thermtron apparently expected the

exception it created to § 1447(d)’s previously firm rule to be a

narrow one. After Thermtron, the particular basis for the

district court’s remand in that case—its clogged

dockets—cannot be expected to be invoked explicitly as a

ground for remand by district courts. Thermtron, however, has

not been limited to that ground. Courts of appeals have often

been reluctant to let pass a district court’s perceived mistakes

and, as in this case, have stretched to find the authority to

correct them. Indeed, commentators have noted that “[a]t

virtually every opportunity, many of the lower courts chose to

expand Thermtron and create additional exceptions to Section

1447(d).” Solimine, supra note 4, at 332; see also 14C Wright,

Miller & Cooper, supra, § 3740 (documenting the long line of

lower court cases struggling with the application of Thermtron

and expanding its scope); Lamprecht, supra note 4, at 312

(noting that courts have “whittled away at [§ 1447(d)’s]

seemingly decisive language”); Wasserman, supra note 3, at

119. The result has been a “gradual evisceration” of the

§ 1447(d) bar. Lamprecht, supra note 4, at 311; see also

Solimine, supra, at 288-89 (noting that post-7hermtron cases in

the lower courts “permit federal appellate review of district

1]

court remand orders in a wide variety of circumstances.”).°

The rule set forth in Thermtron does not give lower

courts sufficient guidance about where to draw the line between

what 1s appealable and what is not. 7hermtron itself held that

the district court’s remand order was appealable when granted

on “grounds not provided by [] statute.” 7hermtron, 423 U.S.

at 349. But, as Chief Justice Rehnquist pointed out in his

Thermtron dissent, a district court can be said to be acting

outside its statutory authority avy time its grant of remand is

held to be erroneous. /d. at 356 (Rehnquist, J., dissenting).

Although the 7hermtron majority cautioned that a remand

premised on grounds authorized by statute would be

unreviewable “whether erroneous or not,” id. at 343, lower

courts have had a difficult time applying this distinction. See

Amoco, 964 F.2d at 708-09. For example, district courts

sometimes remand on purportedly jurisdictional grounds, but

either do not explain the basis for their lack of jurisdiction or

provide an explanation that is not jurisdictional in nature. See

Thermtron, 423 U.S. at 357 (Rehnquist, J., dissenting). This

problem has led to a circuit split on the question whether the

district court’s mere use of the word “jurisdiction” is sufficient

to deny appellate review, even when it is apparent that the

court’s ruling was actually on a non-jurisdictional and

impermissible ground.®

‘A recent Westlaw search identified 250 cases in the

previous ten years in which courts of appeals had to construe and

apply § 1447(d). Among the reported cases, the majority of cases

allowed review; even counting the unreported cases, more than 40

percent of the appealed remands were found to be within the court's

appellate jurisdiction.

“Compare Heaton v. Monogram Credit Card Bank, 23) F.3d

994, 997 (5th Cir. 2000) (holding that a court of appeals may review

a remand order “only if the district court clearly and affirmatively

(continued )

12

Unfortunately, the courts of appeals’ allowance of

appellate review in some remand cases effectively allows

appellate review in a// remand cases. Defendants in state court

actions can always argue that appellate review of the district

court’s remand decision should be available under an exception

to § 1447(d). These appeals do not need to be meritorious to

achieve the purpose of delay; it was, after all, primarily a

concern with the possibility of the delay resulting from

unmeritorious removals that caused Congress to enact the

appeals bar in the first place and there is thus no reason to think

that litigants who engage in such removals will not press their

positions on appeal. The median length of an appeal in the

federal courts of appeals is 11.4 months.’ By appealing a

. continued)

relies on a non-section 1447(c) basis”) (quotation omitted), with

Mangold v. Analytic Servs., Inc., 77 F.3d 1442, 1450 (4th Cir. 1996)

(holding that if there is any ambiguity about whether the district

judge felt that a remand was compelled, the court of appeals

must “determine by independent review of the record” what the real

basis for remand was). The Seventh Circuit in this case adopted the

latter approach. Under the former approach, which has also been

adopted in slightly modified form by the Third and Tenth Circuits,

the district court’s remand order in this case would have been

unreviewable. See Balazik v. County of Dauphin, 44 F.3d 209, 213

(3d Cir. 1995); Archuleta v. Lacuesta, 131 F.3d 1359, 1362 (10th

Cir. 1997) (barring review as long as the district court’s finding of no

subject matter jurisdiction was made in good faith).

"Administrative Office of the United States Courts, 2004

Annual Report of the Dhirector, Table B-4, available at

http://www.uscourts. gov/judbus2004/appendices/b4.pdf (reporting

the median time interval in all civil cases, other than prison petitions,

between filing the notice of appeal and fina] disposition). Of course,

if the defendant petitions for a writ of certiorari, the length of the

appeal is further increased. This case, for example, first reached the

(continued...)

13

district court’s remand order and arguing that an exception to

the “no appeal” rule applies, state court defendants compound

the initial delay caused by removal by achieving an additional

delay on appeal. Amoco, 964 F.2d at 708 (“Complex

proceedings just to determine whether a remand is reviewable

by the court of appeals defeat the speed and simplicity that one

would have thought to be the principal justification for

§ 1447(d).”); see Solimine, supra note 4, at 304-05 (“The bar to

review does little good if the putative reviewing authority is

forced to ask in every case if the remand order is without the

bounds of ‘correctness.””).

In those cases in which Congress considers the

availability of appellate review to be more important than the

delay resulting from that review, it has created specific

exceptions to the reach of § 1447(d). See Wasserman, supra

note 3, at 105-07; supra at 6 & note 3. Section 1447(d)’s

exception for appeals of remand orders in civil rights cases, for

example, was based on Congress’s “perception that remands of

civil rights cases were particularly injurious to defeudants in

those cases, and that appellate exposition of Section 1443 was

necessary.” Solimine, supra note 4, at 293. Thus, “Congress

has demonstrated its ability to protect against judicial abuses of

removal rights when it thought it necessary to do so.”

Thermtron, 423 U.S. at 361 (Rehnquist, J., dissenting).

The Seventh Circuit’s decision below is not unusual in

its use of the Thermtron exception to second-guess the policy

judgment of Congress. The court stressed the importance of

“accurate and consistent implementation” of SLUSA and

downplayed the potential for delay, noting that expedited

review would be available in appropriate cases. Aircher v.

Putnam Funds Trust, 373 F.3d 847, 850 (7th Cir. 2004). But

7. continued)

Seventh Circuit in March 2004.

14

the potential for inaccurate and inconsistent application of

federal law is always a cost of denying appellate review in

removal cases. This was a cost Congress was willing to pay in

balancing the desirability of granting access to a federal forum

against the resulting cost of delay. “It is not for this Court to

strike that balance anew.” Thermtron, 423 U.S. at 361

(Rehnquist, J., dissenting).

Ill. The District Court’s Remand Order in this Case

Falls Well Outside the Scope of the Thermtron

Exception.

The Seventh Circuit in this case concluded it had

jurisdiction to review the district court’s order remanding the

case for lack of subject matter jurisdiction because it disagreed

with the district court’s characterization of the remand. Not

only is the Seventh Circuit’s decision wrong as a matter of

statutory interpretation, it also constitutes an impermissible

second-guessing of the district court’s remand order.

A. The District Court Dismissed on Grounds

of Subject Matter Jurisdiction.

First, as a matter of statutory construction, the Seventh

Circuit was wrong to conclude that the district court’s dismissal

was not jurisdictional in nature. SLUSA authorizes the removal

of securities cases only in certain defined circumstances:

Any covered class action brought in any State

court involving a covered security, as set forth

in subsection (b), shall be removable to the

Federal district court for the district in which the

action is pending, and shall be subject to

subsection (b).

15 U.S.C. § 77p(c) (emphasis added). The subset of cases “as

set forth in subsection (b)” consists of those “covered class

actions” that SLUSA preempts. Subsection (b) provides:

15

No covered class action based upon the statutory

or common law of any State or subdivision

thereof may be maintained in any State or

Federal court by any private party alleging —

(1) an untrue statement or omission of a

matenal fact in connection with the

purchase or sale of a covered security; or

(2) that the defendant used or employed

any manipulative or deceptive device or

contrivance in connection with the

purchase or sale of a covered security.

Id. § 77p(b).

Subsection (b) thus “sets forth” a defined set of covered

class actions and preempts them. Subsection (c), in turn, makes

these preempted class actions removable. Because a district

court’s removal jurisdiction under SLUSA extends only to

those covered class actions that SLUSA preempts, a district

court’s remand of a case to state court on the grounds that

SLUSA does not preempt the case ts, by definition, a remand

for lack of subject matter jurisdiction. “[P]reemption and the

existence of subject matter jurisdiction . . . are the opposite

sides of the same coin.” Spielman, 332 F.3d at 132 (Newman,

J., concurring). For this reason, the Second, Ninth, and

Eleventh Circuits have held that a remand under SLUSA }s

jurisdictional in nature. See Williams v. AFT Enters., Inc., 389.

F.3d 1185 (11th Cir. 2004); Spielman, 332 F.3d at 125; Abada

v. Charles Schwab & Co., 300 F.3d 1112 (9th Cir. 2002).

Another way to think of the confluence of subject matter

jurisdiction and preemption that tnggers non-reviewability

under § 1447(d) is to appreciate that SLUSA embodies a

species of federal subject matter jurisdiction that federal courts

have recognized under the “complete preemption” doctrine.

16

Spielman, 332 F.3d at 123 (“SLUSA was intended to

completely preempt the field of certain types of securities class

actions”); Falkowski v. Imation Corp., 309 F.3d 1123, 1128

(9th Cir. 2002) (“SLUSA provides for . . . complete

preemption.”). When a federal statute completely preempts a

state-law cause of action, a plaintiff's claim arises under federal

law and is removable even if pleaded solely in terms of state

law. See Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8

(2003). On the other hand, when, in a particular case, the

district court finds that the plaintiff's claim is not completely

preempted by SLUSA, that is, that the plaintiff's claim arises

under state law, its ruling constitutes a finding that the court

does not have subject matter jurisdiction. Not surprisingly,

therefore, all circuits that have examined the question, other

than the Seventh Circuit in its decision below, have held that a

remand based on a lack of complete preemption is insulated

from review under § 1447(d).*

B. The Seventh Circuit Impermissibly Second-

Guessed the District Court’s Remand

Decision.

As noted earlier, the district court’s remand order in

Thermtron was granted solely on the ground that the court’s

docket was too crowded to permit a speedy resolution of the

case. Thermtron, 423 U.S. at 344. Such a justification was

‘Spielman, 332 F.3d at 125; Smithy Texas Children's Hosp.,

172 F.3d 923, 926 (Sth Cir. 1999); Gonzalez-Garcia vy. Williamson

Dickie Mfg Co., 99 F.3d 490, 492 (1st Cir. 1996); Trans Penn Wax

Corp. v. McCandless, 50 F.3d 217, 225 n.7 (3d Cir. 1995); Nutter v.

Monogahela Power Co., 4 F.3d 319, 321-22 (4th Cir. 1993);

Baldridge v. Kentucky-Ohio Transp., Inc., 983 F.2d 1341, 1345-46

(6th Cir. 1993); Whitman v. Raley’s Inc., 886 F.2d 1177, 1181 (9th

Cir. 1989); Glasser vy Amalgamated Workers Union Local &8, 806

F.2d 1539, 1540 (11th Cir. 1986).

17

without legal basis, and “plainly irrelevant to whether the

District Court would have had jurisdiction of the case had it

been filed initially in that court, to the removability of a case

from the state court under § 1441, and hence to the question

whether this cause was removed improvidently and without

jurisdiction within the meaning of the statute.” /d. Because

the district court in Thermiron did not even purport to dismiss

the case based on subject matter jurisdiction or a defect in

removal procedure, this Court had no need to second-guess the

claimed basis of the district court’s decision. On the contrary,

the Court stressed that a district court’s decision to remand for

lack of subject matter jurisdiction was unreviewable on appeal

“whether erroneous or not.” Id. at 343 (emphasis added); see

also Amoco, 964 F.2d at 708 (“[E]ven an obviously erroneous

invocation of § 1447(c) is untouchable.”).

To rationalize its ruling, the court below disassociated

SLUSA’s subsection (c) analysis regarding removal from the

subsection (b) requirements regarding complete preemption,

holding that only the requirements of subsection (c) were

jurisdictional in nature. Based on this reading of SLUSA, the

court of appeals concluded that because the district court's

ruling concerned preemption under subsection (b), it had

appellate jurisdiction to review the district court’s remand

order even though the district court explicitly stated that its

remand was based on lack of subject matter jurisdiction. As

explained above, that analysis does not square with the

statute's text. But even if this Court were to agree with the

Seventh Circuit's interpretation of SLUSA, it was not

unreasonable for the district court to believe that subsection

(c)’s phrase “as set forth in subsection (b)” incorporated

subsection (b)’s requirements into the criteria for removal.

This interpretation of the statute, after all. has been accepted by

all the courts of appeals to consider the question other than the

Seventh Circuit.

18

If a court of appeals can second-guess a district court’s

purported jurisdictional dismissal here, where there are strong

textual arguments in support of its position and no contrary

authority in any court of appeals, many, perhaps most, district

court remands could also be second-guessed on appeal. As

Chief Justice Rehnquist feared, the purportedly narrow

exception created in Thermtron would have begun to swallow

§ 1447(d)’s “no appeal” rule. The Court should restore the

Statute to its textual foundation, leaving to Congress the

decision to chart a new course on the appealability of remand

orders.

CONCLUSION

For the reasons stated above, the decision of the court

of appeals should be vacated and remanded with instructions

that the case be further remanded to the state court in which it

was filed.

Respectfully submitted,

Gregory A. Beck

Brian Wolfman

(Counsel of Record)

Public Citizen Litigation Group

1600 20th Street, N.W.

Washington, D.C. 20009

(202) 588-1000

Arthur R. Miller

1545 Massachusetts Ave.

Cambridge, MA 02138

(617) 495-411]

February 2006 Counsel for Amici Curiae