# Slip Opinion — Kircher v. Putnam Funds Trust > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0221%3A15 ## Record - **Collection:** Supreme Court brief - **Document type:** Slip Opinion - **Published:** January 1, 2006 - **Citation:** 547 U.S. 633 ## Text (Shp Opunien) OCTOBER TERM, 2005 l Syllabus 2 NOTE: Where it us feasible, a syllabus (headnote) will be released, as is being done in connection with this case at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been repared by the Reporter of Decisions for the convemence of the reader. ee United States ¥. Detroit Timber & Lumber Co., 200 U.S. 321, 337. SUPREME COURT OF THE-UNITED STATES Syllabus KIRCHER eT AL. v. PUTNAM FUNDS TRUST ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT ~~ eee No. 05-409. Argued April 24, 2006—Decided June 15, 2006 The Securities Litigation Uniform Standards Act of 1998 (Act) specifies that private state-law “covered” class actions alleging untruth or ma- nipulation “in connection with the purchase or sale” of a “covered” se- curity may not “be maintained in any State or Federal court,” 15 U.S.C. §77p(b), and authorizes removal to federal district court of “lalny covered class action brought in any State court involving a covered security, as set forth in subsection (b),” §77p(c). “A ‘covered class action’ is a lwsutf-in-which damages are sought on behalf of more than 50 people. Cite as’ 547U.S.____ (2005) 9 Opinion of the Court section (b)”); H. R. Rep. No. 105-640, p. 16 (1998) (same)."' The funds argue that removal jurisdiction is broader by emphasizing the adjective that introduces subsection (c): “Any” covered action. §77p(c). But that suggestion would be persuasive only if «e stopped reading right there, and we do not stop there; we do not read statutes in little bites. And, as just noted, if we did read the removal power that broadly there would be no point to the phrase “as set forth in subsection (b),” for subsection (b) cases would be remov- able anyway as a subset of covered class actions. Ibid. The funds purport to counter this objection with their "argument that on our reading the last phrase of subsec- tion (c) is redundant in providing that removed cases “shall be subject to subsection (b),” since subsection (b) cases would_in any event be so subject. /bid. The funds are in fact right about that redundancy, but the point does not count for their side, because the phrase is redundant on their reading, too: any subsection (b) case removed as falling within the broad category of covered class actions _would be treated in accordance with subsection (b) if the subsection applied to that case. In sum, we see no reason to reject-the straightforward reading: removal and juris- (diction to deal with removed cases is limited to those precluded by the terms of subsection (b). Once removal jurisdiction under subsection (c) is under- stood to be restricted to precluded actions defined by subsection (b), a motion to remand claiming the action is. not precluded must be seen as posing a jurisdictional issue. If the action is precluded, neither the District Court nor the state court may entertain it, and the proper course "Like the Court of Appeals here, we said in Dabit that a “key provi- sion of the [Act] makes all ‘covered class actions filed in state court removable.” 547 U.S, at __. n. 7 (ship op., at 10, n. 7) (quoting 112 Stat. 3230). We sketched the removal provision in broad strokes then because the question of its scope was not before us. Now that it is. we speak more cautiously. 10 KIRCHER v. PUTNAM FUNDS TRUST Opinion of the Court is to dismiss. If the action is not precluded, the federal court likewise has no jurisdiction to touch the case on the merits, and the proper course is to remand to the state court that can deal with it. In either event, as the Court of Appeals said, the district court's order comes because its adjudicatory power has been exercised and its work is done. But its adjudicatory power is simply its authority to determine its own jurisdiction to deal further with the case, see United States v. Shipp, 203 U.S. 563, 573 (1906) (opinion for the Court by Holmes, J.) (A federal court “necessarily ha[s] jurisdiction to decide whether the case jis] properly before it”). The work done is jurisdictional,'* '2The funds argue 15 U.S.C. §77p confers jurisdiction greater than that necessary to render the preclusion decision, analogizing §77p(c) to the federal officer removal statute. 28 U.S. C. §1442(a). If there is any colorable claim that an action ts precluded. the argument goes, the district court can keep the case for adjudication, even after concluding on the merits that the state-law claims are not precluded: but because it has discretion to keep the case or remand to state court, a remand ts not jurtsdictional and hence is reviewable. The argument ts flawed for two reasons. The District Court here did not indicate it thought there was any basis to keep the case for further development: nght or wrong, it understood that it was making a jurisdictional ruling. Nor is the analogy with federal officer cases sound. Section 1442(a) is an exception to the “well-pleaded complaint” rule, under which (absent diversity) “a defendant may not remove a case to federal court unless the plaintiff's complaint establishes that the case ‘arises under federal law” Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 10 (1983) (empha- sis deleted). The federal officer removal statute allows “suits against federal officers |to] be removed despite the nonfederal cast of the com- plaint,” Jefferson County v. Acker, 527 U.S. 4123, 131 (1999), and reflects a congressional policy that “federal officers. and indeed the Federal Gov- ernment itself, require the protection of a federal forum.” Willingham v. Morgan, 305 U.S. 402. 107 (1969). An officer's federal defense need be only colorable to assure the federal court that it has jurisdiction to adjud- cate the case. see Acher, supra, at hil The funds assert that a preclusion defense need be only colorable as well. but the Act is different. It avails a defendant of a federal forum in contemplation not of further litigation over the merits of a clam brought Cite as: 547U_S. (2006) ll Opinion of the Court as is the conclusion reached and the order implementing it.!° in state court, but of termination of the proceedings altogether, and a merely colorable claim of preclusion does not satisfy a district court that it may dismiss a case as precluded by the Act. There is no room for such a case to exist in a limbo of colorable preclusion; if a claim is precluded, it “may [not] be maintained,” 15 U.S. C. §77p(b). and if the claim is not, the federal courts no longer have any business Deing involved, as there is no longer any federal question on which to moor the district court's jurisdic- tion. Nor has Congress expressed in the Act, as it did with 28 U.S.C. §1442(a). any policy of having particular suits tried in a federal court: there is no indication whatsoever in the Act that, apart from its purpose to preclude certain vexing state-law class actions, Congress intended to add other state-law cases to the federal dockets, and there is no apparent federal interest in spending time on such cases akin to the interest in adjudicating suits against federal officers. "The funds suggest, in the alternative, that appellate jurisdiction in this case was proper under Waco v. United States Fidelity &Guaranty Co., 293 U.S. 140 (1934). Without passing on the continued vitality of that case in light of §1447(d), we note that on its own terms it is distin- guishable. In Waco, a case was removed to federal court on an invocation of diversity jurisdiction, id., at 141, and the District Court thereafter “entered a single decree embodying .. . separate orders.” /d., at 142. In one order, the District Court dismissed a cross-complaint against one party. In another, the District Court concluded that because of the dismissal there was no diversity of citizenship and it thus lacked jurisdiction, and so it remanded the case to state court. An appeal was taken from the order of dismissal. This Court determined that the appeal would lie, because “the decree of dismissal preceded that of remand,” and because the District Court's order of dismissal was conclusive upon the parties” /d., at 143. We noted that a “reversal [of the dismissal] cannot affect the order of remand, but it will at least, if the dismissal ... was erroneous, remit the entire controversy. with the |previously dismissed party| still a party, to the state court for ... further proceedings.” /d., at 143-144. The order appealed in Waco was not a remand order: the order here is, and thus falls within §11417(d)s bar on appeals of “[a]n order re- manding a case” to state court. Moreover, the funds do not explain how to reconcile their argument with Waco's acknowledgement that the order of remand “cannot [be] affectled]’ notwithstanding any reversal of a separate order, id., at 143. The District Court's remand order here - | Ce, 12 KIRCHER v, PUTNAM FUNDS TRUST Opinion of the Court HII We have yet to deal with one-objection to our application of §1447(d), which if well-taken would be a serious one. The Seventh Circuit's reading of subsection (c) so as to treat the application of the preclusion rule as non- jurisdictional was in part motivated by its assumption that the Act gives federal courts exclusive jurisdictian to decide the preclusion issue. If that is so, and §1447(d) applies, a remand order based on a finding that an action _is not precluded would arguably be immune from review. This is what the funds in effect contend here-when they say that a district court's finding of no subsection (b) preclusion would collaterally estop the state court on remand; the district court would have the last word. And of course the funds’ discomfort is made acute by our recent decision in Dabit, which expressly disavows the dis- trict court’s limited view of the scope of subsection (b) preclusion. But a district court does not have the last word on pre- clusion under the Act, for nothing in the Act gives the federal courts exclusive jurisdiction over preclusion deci- sions. A covered action is removable if it is precluded, and a defendant can enlist the Federal Judiciary to decide preclusion, but a defendant can elect to leave a case where the plaintiff filed it and trust the state court (an equally ‘competent body, see Missouri Pacific R. Co. v. Fitzgerald, 160 U.S. 556, 583 (1896)) to make the preclusion determi- nation. And what a state court could do in the first place it may also do on remand; in this case, the funds can presently argue the significance of Dabit and ask for dismissal on grounds of preclusion when they return to the state court. cannot be disaggregated as the Waco orders could, and if the Seventh Cireuit’s preclusion decision stands, there is nothing to remand to state court. Cite as: 547U.S. (2006) 13 (pinion of the Court Collateral estoppel should be no bar to such a revisitation of the preclusion issue,'* given that §1447(d) prevents the funds from appealing the District Court’s decision. See Standefer v. United States, 447 U.S. 10, 23 (1980) (‘|Cjontemporary principles’ of collateral estoppel strongly militat{e] against giving an [unreviewable judg- ment] preclusive effect” (citing Restatement (Second) of Judgments §68.1 (Tent. Draft No. 3, 1976)); see also Re- statement (Second) of Judgments §28(1) (1980) (“Although an issue is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, relitigation of the issue in a subsequent ‘action between the parties is not precluded [when t]he party against whom preclusion is sought could not, as a matter of law, have obtained review of the judgment in the initial action”). While the state court cannot review the decision to remand in an appellate way, it is perfectly free to reject the remanding court’s reasoning, as we explained over a century ago in Missouri Pacific Railway: “|A|s to applications for removal on the ground that the cause arose under the Constitution, laws, or treaties of the United States,” the finality accorded remand orders is appropriate because questions of this character “if decided against the claimant” in state court are “open to revision .., irrespective of the ruling of the [federal court] in that regard in the matter of removal.” 160 U.S., at 583. Nor is there any reason to see things differently just because the remands basis coincides entirely with the merits of the federal question; it is only the forum designation that is conclusive. Here, we have no reason to doubt that the state court will duly apply Dabit’s holding that holder ‘Modern usage calls for the descriptive term, “issue preclusion.” in place of “collateral estoppel.” But we are backsliders out of pity for the tired reader: “preclusion” by statutory fiat is enough preclusion for one opinion. 14 KIRCHER v. PUTNAM FUNDS TRUST Opinion of the Court claims are embraced by subsection (b),'° but any claim of error on that point can be considered on review by this Court. See Franchise Tax Bd. of Cal. v. Construction La- borers Vacation Trust for Southern Cal., 463 U.S. 1, 12, n. 12 (1983) (If the state courts reject a claim of federal pre- emption, that decision may ultimately be reviewed on appeal by this Court” (citing Fidelity Fed. Sav. & Loan Assn. v. De la Cuesta, 458 U.S. 141 (1982))). IV We hold that the Act does not exempt remand orders from 28 U.S.C. §1447(d) and its general rule of nonap- pealability. We therefore vacate the judgment of the Court of Appeals and remand the case with instructions to dismiss the appeal for lack of jurisdiction. It is so ordered. 'SThe parties further dispute whether the investors claims satisfy the other 15 U.S. C. §77p(b) preclusion prerequisites, particularly the allega- tion of fraud: the investors take issue with the Seventh Circuit's charac- terization of their claims as charging fraud or manipulation, not mis- management. Beeause the Court of Appeals lacked appellate jurisdiction, its reading of the investors’ litigation position is not binding in future proceedings and is open to consideration on remand. Cite as: 547U.S. (2006) ] Opinion of SCALIA, J. SUPREME COURT OF THE UNITED STATES No. 05-409 CARL KIRCHER, ET AL., PETITIONERS v. PUTNAM FUNDS TRUST ET AL. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT jJune 15, 2006] JUSTICE SCALIA, concurring in part and concurring in the judgment. | join the judgment of the Court, and Parts |, II, and IV of the Court's opinion; | do not join Part II for the reasons set forth below. The District Court ordered these cases remanded to state court for want of jurisdiction. We know this because the orders say so: “Because the Court lacks subject matter jurisdiction, the Court REMANDS this action to the Madison County, Illinois Circuit Court.” App. to Pet. for Cert. 27a; see also id., at 30a, 40a, 46a, 5la, 57a, GAa. Kven if those decisions were incorrect, the Court of Ap- peals lacked jurisdiction to review them because 28 U.S.C. §1447(d) bars appellate review of remand orders — based on lack of subject-matter jurisdiction. See, e.g., Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127- 128 (1995). The Court correctly concludes that the Sev- enth Circuit's review of the remand orders overstepped its appellate authority. | disagree with the Court’s reasoning in Part Il, however, because it holds only that the Court. of Appeals’ recharacterization was incorrect, and not (as | believe) that recharacterization—being a form of review— is categorically forbidden. The Court of Appeals rejected the District Court's de- scription of its orders because it’ believed the District o? » >! te KIRCHER v. PUTNAM FUNDS TRUST Opinion of SCALIA, J. Court had been too loose in its use of the term “jurisdic- tion.” 373 F. 3d 847, 849-850 (2004). What the District Court actually did, the Court of Appeals concluded, was to remand on nonjurisdictional grounds (not subject to the appellate-review bar of §1447(d)) after deciding that. peti- tioners’ suits were not precluded. Such recharacterization seems to me flatly inconsistent with §1447(d). Under that section, an “order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.” [bid. (emphasis added). But appellate review is exactly what is involved in looking behind the face of an order to determine its (rue basis: In order to reject a dlis- trict court’s own characterization, a court of appeals must decide, as the Seventh Circuit did here, that the district court was wrong. We have therefore held, in language that makes plain the correct outcome here, that “[i]fa trial judge purports to remand a case on the ground that it was removed ~‘improvidently and without jurisdiction,’ his order is not subject to challenge in the court of appeal, by mandamus, or otherwise.” Thermiron Products, Inc. vy. Hermansdorfer, 423 U.S. 336, 343 (1976) (quoting §1447(c) (1970 ed.); emphasis added). Whether the District Court was right or wrong—even if it was so badly mistaken that it misunderstood the true basis for its orders—it purported to remand for lack of jurisdiction, and §1447(d) bars any further review.* Review of the sort engaged in by the Court of Appeals threatens to defeat the purpose of §1447(d). As we recog- nized in Thermtron Products, the appellate-review bar was enacted “to prevent delay in the trial of remanded cases by *To say that we cannot recharacterize the District Court's remand for lack of jurisdiction is not to say that the basis for the remand is forever insulated from review. Part IIT of the Court's opinion makes clear that the underlying legal issue of preclusion remains open in state court, and need not be resolved in accordance with the (unreviewable) views of the District Court. Cite as: 547U_S. (2006) 3 Opinion of SCALIA, J. protracted litigation of jurisdictional issues.” /d., at 351. Such delay can be created just as easily by asking whether the district court correctly characterized the basis for its order as it can by asking whether that basis was correct— which even the Court of Appeals recognized was beyond its jurisdiction, 373 F.3d, at 849. See also Thermtron Products, supra, at 343 (noting that §1447(d) “prohibits review of all remand orders [based on lack of subject- matter jurisdiction] whether erroneous or not’). The remand orders in these cases date back to early 2004; over two years later, federal courts are still engaged in appel- late review. The Court should end this delay by holding that appel- late courts cannot look behind the stated basis for the district court's remand order. Instead, it concludes that “the District Court was correct in understanding its re- mand order to be dictated by a finding that it lacked re- moval jurisdiction.” Ante, at 8 (emphasis added). It seems to me no more within our authority to declare the District Court’s views correct than it was within the Court of Appeals’ authority to reject them. Either decision is an exercise of appellate review barred by the plain terms of §1447(d). --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0221%3A15. Public record. Not legal advice.