# Amicus Curiae Brief — Kircher v. Putnam Funds Trust

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0221%3A09

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2006
- **Citation:** 547 U.S. 633

## Text

“

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
SARE CIS FATT OIE TD 0 6 oo 00506 caee cesar eee
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DUSPEPGAER DD GIT AUPRIIIOD 65s ccc acc cavuacssees 2
PND Savieeccitedesssvasueeencveuunneens 4
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

RD See. 6 FED cucncdecceieheusneneesl eee 14
5D Wi dilen | VAD «6b ben dn 040s eo eeeeesehaneeneee 15
SD Ws BO FREE oo vk sveuhuruesn bess dene 9
Be BTRPF onc 0b 44ecehe ekkus teceeeebcasee 7
ee BOGUT 5s ckavnnessedeniascebeceueee 4,5
Oe tes B PORTE ovo. 0 0 0kas vis eeieeennens 2,3, 4, 5,6

Se De GOUT vc on ceuchvdhvesssunenteeeeal 6

Vv

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0221%3A09. Public record. Not legal advice.