Petition for Writ of Certiorari — In re Aeroquip Corp.

Supreme Coun, U.S.

(» FILED

No. ORFrE DE THE CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1995

IN RE: AEROQUIP CORPORATION, CHEVRON, U.S.A.,

PARKER-HANNIFIN CORPORATION, SEQUENTIA, INC.,

Amoco O1L COMPANY, BASF CorPoRATION, ICI

AMERICAS, INnc., ICI ACRYLICS, INC., FRIGOSCANDIA

Foop PRocEss SYSTEMS, INC., STEIN, INC., DANA Cor-

PORATION, W.W. GRAINGER, INC., HONEYWELL, INC.,

CHEMED Corp., GATES RUBBER COMPANY, EATON

CORPORATION, SQUARE D COMPANY, CRANE COMPANY,

KEMLITE COMPANY, BRUNSWICK CORPORATION, VAPOR

CORPORATION, ECLIPSE INCORPORATED, SOUTHEAST

COOLER CORPORATION, WORMALD FIRE SYSTEMS,

Inc., and Mosit Ort CorRPORATION,

Petitioners.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

PETITION FOR WRIT OF CERTIORARI

KENNETH KYRE, JR.

PINTO, COATES & KYRE, L.L.P.

P.O. Box 4848

Greensboro, NC 27404

(910) 632-1680

Counsel of Record

for Petitioners

WILSON - Epgs PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

PRT EBD TA INeBeh,

QUESTIONS PRESENTED FOR REVIEW

Did the Fourth Circuit Court of Appeals err, by

refusing to issue a Writ of Mandamus, in allowing the

United States District Court for the Middie District of

North Carolina io overrule improperly and without au-

thority prior findings and a decision issued in this case

by the United States District Court for the Eastern Dis-

trict of Texas?

Does a United States District Court have the power

to remand a casé on equitable grounds pursuant to 28

U.S.C. § 1452(b) if it was not the court to which the

case was initially removed pursuant to 28 U.S.C. § 1452?

(i)

il

PARTIES TO THE MANDAMUS PETITION

PROCEEDING IN THE COURT OF APPEALS

FOR THE FOURTH CIRCUIT

The parties who pursued the Petition for Mandamus

in the Court of Appeals for the Fourth Circuit (the court

whose decision is sought to be reviewed) are listed below,

along with their parent companies and nonwholly owned

subsidiaries (publicly held):

Aeroquip Corporation—parent company: Trinova

Corporation; no subsidiary

Amoco Oil Company—parent company: Amoco

Corporation; no subsidiary

BASF Corporation—parent company: BASF A.G.;

no subsidiary

Brunswick Corporation—parent company: Old Or-

chard Industrial Corp.; no subsidiary

Chemed Corporation—Dubois Chemicals, formerly a

division of Chemed; Dubois Chemicals was acquired

by Diversey Corporation; parent company of Diver-

sey Corporation: The Molson Companies, Ltd.; no

subsidiary

Chevron, U.S.A.—parent company: Chevron Cor-

poration; no subsidiary

Crane Company—no parent company or subsidiary

Dana Corporation—no parent company; subsidi-

aries: Albarus, S.A. Industrial E Comercio; Albarus

Sistemas Hidraulicos, Ltda.; E. Daneri 1.C.S.A.;

Hayes-Dana, Inc.; Industrial de Eyes y Transmis-

siones, S.A. (Transejes); Mahindra & Mahindra;

Perfect Circle Victor, Ltd.; Rosetta Technologies,

Inc.; Reinz Talbros, Ltd.; Super Circle Gasket, Ltd.;

Spicer, S.A.; Victor Gaskets de Colombia, S.A.

Eaton Corporation—no parent company or subsidiary

Eclipse Incorporated—no parent company or sub-

sidiary

iii

Frigoscandia Food Process Systems, Inc.—parent

company: Frigoscandia, Inc.; no subsidiary

Gates Rubber Company—no parent company or sub-

sidiary

Honeywell, Inc.—no parent company or subsidiary

ICI Acrylics, Inc.—parent company: Imperial

Chemical Industries, PLC; no subsidiary

ICI Americas, Inc.—parent company: _ Imperial

Chemical Industries, PLC; no subsidiary

Kemlite Company—parent company: Crane Co.;

no subsidiary

Mobil Oil Corporation—parent company: Mobil

Corporation; no subsidiary

Olympic Oil Company—no parent company or sub-

sidiary

Parker-Hannifin Corporation—no parent company or

subsidiary

Sequentia, Inc.—no parent company or subsidiary

Southeast Cooler Corporation—no parent company

or subsidiary

Square D Company—no parent company or sub-

sidiary

Stein, Inc.

subsidiary

parent company: Frigoscandia, Inc.; no

Superior Door Company—no parent company or

subsidiary

Vapor Corporation—now known as Old Orchard

Industrial Corp.; no parent company or subsidiary

W.W. Grainger, Inc.—no parent company or sub-

sidiary

Wormald Fire Systems, Inc.—proper name: Wor-

mald U.S. Inc.; parent company: Tyco International,

Inc.; no subsidiary

iv

The names of the persons and companies who were

listed in the caption of Plaintiffs’ Complaint initially filed

in the Texas state court are set out at pp. 22a-27a of

the Appendix. :

aos Sr RE

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW .........

PARTIES TO THE MANDAMUS PETITION PRO-

CEEDING IN THE COURT OF APPEALS FOR

Ee Te IER | rasoresrcistnicckartercabinestgnsiasitiaees

TABLE OF AUTHORITIES ...

STATEMENT OF BASIS OF JURISDICTION

STATUTES INVOLVED IN THE CASE

STATEMENT OF THE CASE ..............0000000000002.. aes

ARGUMENT ...................... jecsibeieaccmmivssaliileicia REA es nent shes

I. THE NORTH CAROLINA DISTRICT COURT

IMPROPERLY AND WITHOUT AUTHORITY

OVERRULED THE TEXAS _ DISTRICT

COURT’S IMPLICIT DENIAL OF REMAND

AND EXPRESS FINDING THAT EQUITA-

BLE FACTORS DISFAVORED REMAND TO

THE TEXAS STATE COURT

If. A COURT OTHER THAN THE ONE TO

WHICH A CASE IS REMOVED LACKS

POWER TO REMAND ON EQUITABLE

GROUNDS PURSUANT TO 28° U.S.C.

§ 1452 (b) satnibiehs beoenainiddeaaamimemaaaede

Ill. MANDAMUS RELIEF WAS WARRANTED

See EE OPIN ee sedecdaptosedaieicatanaipemicnavadiam its

CPE ceerricsiediscienjcnabeenioedena ame

APPENDIX

A. Order Denying Petition for Writ of Mandamus

(4th Cir. Aug. 2, 1995)

(v)

11

14

17

la

vi

TABLE OF CONTENTS—Continued

Page

Memorandum Opinion (M.D.N.C. June 26, 1995)

PIII. NLD \cccisnvs visnarcndsnnasnooaumacenseasiademeaendeatied 2a

Order (M.D.N.C. June 26, 1995) (Tilley, J.)-..... 9a

Report and Recommendation to District Court

(Bankr. E.D. Tex. July 11, 1994) (Sharp, J.)... 10a

Order of Withdrawal of Reference (E.D. Tex.

Aimee, |, TORE CC Bad svwticdtrentinehivnnnen 16a

Order of Transfer (E.D. Tex. Aug. 5, 1994)

SEMA Gud - cctavvoisotcerccesectcinisecemiecadhteneaidedaananin 18a

Order Denying Petition for Rehearing and Re-

hearing in Banc (4th Cir. Sept. 12, 1995) ...... ——— |

Caption of Case on Original Complaint .............. 22a

vii

TABLE OF AUTHORITIES

CASES Page

Arizona v. California, 460 U.S. 605 (1983) 11

Celotex Corp. v. Edwards, US. , 115

S. Ct. 1498 (1995) 0 .. 7-8,17

Christianson v. Colt Industries Operating Corp.,

486 U.S. 800 (1988) 20, 10-11

Connecticut Nat’l Bank v. Germain, 503 U.S. 249

GERI sicencessscntecame paladepesemniendakauan Nl ako 12

Hayman Cash Register Co. v. Sarokin, 669 F.2d

162 (3d Cir. 1982) __ 7 . 10-11

Howat v. Kansas, 258 U.S. 181 SI ciiesccctesc ue 7

In re Finley, 62 B.R. 361 (Bankr. N.D. Ga. 1986). 13

Jamison v. Wiley, 14 F.3d 222 (4th Cir. 1994). s- 14-15

Kolibash v. Committee on Legal Ethics of W. Va.

Bar, 872 F.2d 571 (4th Cir. 1969) ........... ARC 5

Mills Music, Inc. v. Snyder, 469 U.S. 153 (1985) __ 12

Railroad Co. v. Wiswall, 90 U.S. 507 (1874) . 14

River Cement Co. v. Bangert Bros. Constr. Co., 852

F. Supp. 25 (D. Colo. OU aie 13

Thermtron Prods., Ine. v. Hermansdorfer, 423 U.S.

et GEE cece ibpenatonsumaee pelncmaceaaes 14-16

71 F.2d 511 (4th Cir. 1934) 16

Walker v. Birmingham, 388 U.S. 307 (1987) .......... 7

Williams v. Shell Oil Co., 169 B.R. 684 (S.D. Cal.

a NERO DE: SIDA RAEN a ea Ne 8

STATUTES

co LN eee IAS. 2, 5,9

Re NE tcechodbeicsSucisorasinredciciiicu ie 3

28 U.S.C. § 1442 (a) (1) 15

28 U.S.C. § 1447 (¢) 12, 15-16

ihc, a TTT TTT: 14, 15

seid dgetgeiadl einen, TN 2-3, 11

28 U.S.C. § 1452(b) oo 2, 4-6, 8, 11-14, 16

OTHER

Supreme Court Rule 10(a) 00 6

ed

IN THE

Supreme Court of the United States

OCTOBER TERM, 1995

No.

IN RE: AEROQUIP CORPORATION, CHEVRON, U.S.A..,

PARKER-HANNIFIN CORPORATION, SEQUENTIA, INC.,

Amoco OiL Company, BASF Corporation, ICI

AMERICAS, INC., ICI Acrytics, INC., FRIGOSCANDIA

Foop Process Systems, INC., STEIN, INC., DANA Cor-

PORATION, W.W. GRAINGER, INC., HONEYWELL, INC..,

CHEMED Corp., GATES RUBBER COMPANY, EATON

CORPORATION, SQUARE D ComMPANY, CRANE COMPANY.

KEMLITE COMPANY, BRUNSWICK CORPORATION, VAPOR

CORPORATION, ECLIPSE INCORPORATED, SOUTHEAST

COOLER CORPORATION, WORMALD FIRE SySTEMS,

Inc., and Mosit O1t CorPoRATION,

Petitioners.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

PETITION FOR WRIT OF CERTIORARI

STATEMENT OF BASIS OF JURISDICTION

Date of Order sought to be reviewed (i.e., the Fourth

Circuit’s Order denving petitioners’ Petition for Writ of

Mandamus): August 2, 1995.

2

Date of the Fourth Circuit’s denial of petitioners’ Peti-

tion for Rehearing: September 12, 1995.

This Court has jurisdiction to review the order in ques-

tion by virtue of 28 U.S.C. § 1254(1).

STATUTES INVOLVED IN THE CASE

28 U.S.C. § 157. Procedures

(b)(5) The district court shall order that personal

injury tort and wrongful death claims shall be tried

in the district court in which the bankruptcy case is

pending, or in the district court in the district in

which the claim arose, as determined by the district

court in which the bankruptcy case is pending.

28 U.S.C. § 1452. Removal of claims related to bank-

ruptcy cases

(a) A party may remove any claim or cause of

action in a civil action other than a proceeding be-

fore the United States Tax Court or a civil action by

a governmental unit to enforce such governmental

unit’s police or regulatory power, to the district court

for the district where such civil action is pending, if

such district court has jurisdiction of such claim or

cause of action under section 1334 of this title.

(b) The court to which such claim or cause of

action is removed may remand such claim or cause of

action on any equitable ground. An order entered

under this subsection remanding a claim or cause of

action, or a decision to not remand, is not reviewable

by appeal or otherwise by the court of appeals under

section 158(d), 1291, or 1292 of this title or by the

Supreme Court of the United States under section

1254 of this title.

STATEMENT OF THE CASE

On September 3, 1991, a fire at the Imperial Food

Products, Inc. (“Imperial”) plant in Hamlet, North Carolina

(the “Hamlet Fire”) took the lives of 25 employees of

3

Imperial and injured many others. Representatives of the

decedents and injured parties filed a multiplicity of law-

suits against Imperial in North Carolina, the state where

the fire occurred and the injuries were sustained. As a

result of that litigation and actions taken by the State

of North Carolina, Imperial was fc -ced into involuntary

bankruptcy in the bankruptcy court in North Carolina.

Eventually, the personal injury and wrongful death claims

then pending in North Carolina were settled. That settle-

ment was overseen by the bankruptcy court and the United

States District Court for the Middle District of North

Carolina. The administration of the Imperial bankruptcy

continues in North Carolina, and the bankruptcy trustee

for Imperial is still engaged in adversary proceedings in

the bankruptcy court, including two proceedings against

several Petitioners based on the same theories raised by

Plaintiffs in this case.

On July 23, 1993, almost 200 plaintiffs instituted this

case—a products liability action claiming wrongful death,

personal injury, and other torts against almost 50 corpora-

tions whose products were allegedly present at the Hamlet

Fire in North Carolina. See Appendix pp. 22a-27a (list

of parties on Complaint). However, this action was not

initiated in North Carolina, even though most of the Plain-

tiffs are North Carolina residents or the personal repre-

sentatives of North Carolina decedents’ estates. Instead,

Plaintiffs instituted the action in a Texas state court.’

On August 24, 1993, the entire case was removed by

Defendant PNC Bank pursuant to 28 U.S.C. § 1452(a)

to the Bankruptcy Court for the Eastern District of Texas,

Beaumont Division.* Plaintiffs then filed a motion for

? Plaintiffs filed their action in a state whose law at the time did

not recognize nor apply the principle of forum non conveniens, and

hence the unfairness of Plaintiffs’ forum shopping could not be

challenged in the state court on that ground.

* The court of first instance possessed federal subject matter

jurisdiction over this action pursuant to 28 U.S.C. § 1334.

4

remand with the bankruptcy court in Texas. Plaintiffs’

supporting memorandum requested a remand to Texas

state court on equitable grounds pursuant to 28 U.S.C.

— § 1452(b). The Defendants joined issue on the question

of equitable remand by memorandur: of PNC Bank in

support of its answer to the Plaintiffs’ motion for remand

dated September 29, 1993, and by responsive pleading of

the remaining Defendants detailing the factors to be con-

sidered by the court in determining the issue of equitable

remand under the Bankruptcy Act. Thereafter, periodic

supplemental briefs, memoranda, reports and affidavits

were filed over the course of ten months in the bankruptcy

court in Texas.*

Paralleling the Plaintiffs’ motion for remand, certain

Defendants moved for dismissal of the action for lack of

personal jurisdiction or, in the alternative, for transfer

of the action to the United States District Court for the

Middle District of North Carolina (“North Carolina Dis-

trict Court”). In support of the motions for transfer, the

Defendants demonstrated that the vast majority of the

Plaintiffs were residents of North Carolina or adjacent

areas of South Carolina. Moreover, the center of gravity

as determined by site of the fire, relevant witnesses, facts,

decuments, discovery materials and parties is located in

North Carolina.

On July 11, 1994, United States Bankruptcy Judge

Donald R. Sharp issued a report and recommendation that

the federal district court, rather than the bankruptcy

court, was vested with subject matter jurisdiction over the

removed case. See Report and Recommendation to Dis-

trict Court (Bankr. E.D. Tex. July 11, 1994) (Appendix

pp. 10a-15a). Judge Sharp recommended transfer of the

%The Texas bankruptcy and federal district courts had the

benefit of the supporting brief of the Plaintiffs (31 pages), PNC’s

response (12 pages) and supporting brief (47 pages), Defendants’

response and brief (17 pages) and numerous multi-page filings.

——

5

case to the North Carolina District Court for a determina-

tion as to the district within North Carolina in which the

case should be tried. /d. (Appendix p. 15a). The report

and recommendation of Judge Sharp was then subject to

critical review and comment by all parties. The Plaintiffs

filed an objection to the bankruptcy judge’s report and

recommendation. Plaintiffs raised in this objection argu-

ments on jurisdiction and equitable remand under 28

U.S.C. § 1452(b).

After considering Plaintiffs’ motion to remand and De-

fendants’ motion to transfer and the numerous supporting

legal memoranda, United States District Judge Howell

Cobb adopted on August 5, 1994, the recommendations of

Judge Sharp as his findings of fact, see Order of With

drawal of Reference (E.D. Tex. Aug. 5, 1994) ( Appendix

pp. 16a-17a), and in a separate order, Judge Cobb trans-

ferred the case to the North Carolina District Court.

Order of Transfer (E.D. Tex. Aug. 5, 1994) ( Appendix

pp. 18a-19a). Judge Cobb specifically recognized a number

of equitable grounds for trying the case in North Carolina.

including that the operative facts, parties, witnesses, and

evidence are located in North Carolina. Judge Cobb spe-

cifically found that “the interests of justice require the

transfer of this case to the District where it belongs.”

Id. (Appendix p. 19a). Judge Cobb’s transfer order

clearly stated that he was transferring the case to the

Middle District of North Carolina for a determination

under 28 U.S.C. § 157 as to where the case shall be tried.

Id. Remanding the case to a state court in Texas was not

one of the options provided.

Despite the clear instruction from Judge Cobb, and

contrary to the previous findings and Order of Judge

Cobb, the North Carolina District Court (Tilley, J.) on

June 26, 1995, ruled that remand to a Texas state court

was warranted under 28 U.S.C. § 1452(b). See Memo-

randum Opinion (M.D.N.C. June 26, 1995) ( Appendix

pp. 2a-8a).

6

Petitioners filed a Petition seeking a Writ of Mandamus

from the Fourth Circuit directing the North Carolina

District Court to vacate its order remanding the case on

the grounds that it had no power to remand under 28

U.S.C. § 1452(b), that it exceeded its statutorily defined

power and usurped judicial authority of a sister court,

and that it disregarded law of the case implicit in the prior

decision of a sister court.

A three-judge panel of the United States Court of Ap-

peals for the Fourth Circuit denied the Petition for Man-

damus with no explanation for its decision. See Order

Denying Petition for Writ of Mandamus (4th Cir. Aug.

2, 1995) (Appendix p. la). Petitioners filed a petition

for rehearing with suggestion for rehearing in banc, but

that petition was denied. See Order Denying Petition for

Rehearing and Rehearing in Banc (4th Cir. Sept. 12,

1995) (Appendix pp. 20a-2l1a). A member of the United

States Court of Appeals for the Fourth Circuit requested

a poll on the suggestion for rehearing in banc. Two

judges voted to rehear the case in banc, the majority (six)

voted against. Jd. (Appendix p. 21a).

ARGUMENT

In denying petitioners’ Petition for Writ of Mandamus,

the Fourth Circuit Court of Appeals has sanctioned the

departure of a United States district court from the ac-

cepted and usual course of judicial proceedings to such a

degree as to call for an exercise of this Court’s power of

supervision. See Supreme Court Rule 10(a). Specifically,

when the North Carolina District Court ordered remand

of this case to the Texas state court, it (1) overruled the

prior findings and a decision of a sister court, and (2)

ignored the plain language of a federal statute. The Fourth

Circuit improperly denied petitioners’ request for manda-

mus relief to correct this clear violation of judicial pro-

ceeding and statutory authority. In so doing, the Fourth

Circuit sanctioned the action of the North Carolina Dis-

trict Court in violation of important rules of judicial

proceeding which this Court strives to safeguard.

“wD

7

I. THE NORTH CAROLINA DISTRICT COURT

IMPROPERLY AND WITHOUT AUTHORITY

OVERRULED THE TEXAS DISTRICT COURT'S

IMPLICIT DENIAL OF REMAND AND EXPRESS

FINDING THAT EQUITABLE FACTORS DIS-

FAVORED REMAND TO THE TEXAS STATE

COURT

In this case, one federal court has overruled the prior

findings and a decision of a sister court. This is a clear

violation of judicial proceeding that has been the subject

of recent concern to this Court. See Celotex Corp. v.

Edwards, US. , 115 S. Ct. 1493 (1995).

In Celotex, this Court stated:

We have made clear that [i]t is for the court of first

instance to determine the question of the validity of

the law, and until its decision is reversed for error

by orderly review, either by itself or by a higher

court, its orders based on its decision are to be

respected.’

Celotex, 115 S. Ct. at 1501 (citing Walker v. Birming-

ham, 388 U.S. 307, 314 (1967) (quoting Howat v.

Kansas, 258 U.S. 181, 189-90 (1922)).* This Court

noted that permitting litigants to Stray from this edict

cannot be done without “seriously undercutting the orderly

process of law.” Celotex, 115 S. Ct. at 1501 (emphasis

supplied). This case should be reviewed to enable this

Court to ensure that circuit courts of appeal do not sanc-

tion a course of proceeding by lower courts that could

undercut the orderly process of law. Respect for the find-

ings and decisions of courts of coordinate jurisdiction is

* The dissent in Celotex focussed on a distinction it drew between

the ruling of an Article III judge versus the ruling of a non-Article

III judge, and a difference in weight to be afforded each of the

two rulings. In this case, a non-Article III judge made a recom-

mendation. However, an Article III judge actually entered the

Order transferring this case, which Order established “law of the

case” in this action.

8

vital to principles of comity and the orderly litigation of

cases which pass through such courts of coordinate juris-

diction. When the North Carolina District Court ordered

this case remanded to Texas State court, it violated this

important rule of judicial proceeding. When the Fourth

Circuit failed to grant mandamus relief to correct this

violation, it sanctioned that improper judicial action of the

district court and failed to uphold the important rules of

judicial proceeding promoted by this court in Celotex.

To reach the North Carolina District Court, this case

was transferred from the United States District Court for

the Eastern District of Texas (“Texas District Court”).

In accordance with Celotex, all orders entered by the

Texas District Court were to be respected by the coordinate

transferee court.

The Texas District Court, prior to ordering a transfer,

had before it plaintiffs’ motion for remand and numerous

briefs addressing the equitable factors that favored—or

disfavored—remand to Texas state court. Judge Cobb

did not defer ruling on the motion for remand. Indeed,

he was the only judge with authority to order a remand

pursuant to 28 U.S.C. § 1452(b).°

In cases where motions to remand are filed during the

pendency of a motion to transfer, courts routinely decide

the remand first as it may render the issues raised by the

motion to transfer moot or tangential. See Williams v.

Shell Oil Co., 169 B.R. 684, 694 n.9 (S.D. Cal. 1994).

Thus, it is fair to infer that Judge Cobb did not reach the

transfer issue until after rejecting the arguments supporting

remand under § 1452(b). To reach any other conclusion

requires a finding that Judge Cobb either inadvertently or,

worse, deliberately left a significant issue undecided when

5 Section 1452(b) provides authority to remand a case on equit-

able grounds only to the court to which a case is removed. No

other court is vested with that authority. See infra at 11-14.

Soden eet ee)

9

he was the only judge with the authority to decide the

issue.

In ordering the transfer, Judge Cobb made a finding

that “the interests of justice require[d] the transfer” of

this case to North Carolina, the “District. where it be-

longs.” Order of Transfer (E.D. Tex. Aug. 5, 1994)

(Appendix p. 19a). Judge Cobb cited 28 U.S.C. § 157

which provides:

The district court shall order that personal injury

tort and wrongful death claims shall be tried in the

district court in which the bankruptcy case is pend-

ing, Or in the district court in which the claim arose,

as determined by the district court in which the

bankruptcy case is pending.

Order of Transfer (Appendix p. 18a). Judge Cobb then

noted: “Because the bankruptcy case was filed in the

Middle District of North Carolina, that court should

determine where the claim should be tried.” Id. (Appendix

pp. 18a-19a). Judge Cobb’s order thus provided the

transferee court with only two choices for where this case

could be tried, and asked the transferee court to choose

between them.

By transferring this case to North Carolina, the Texas

District Court implicitly denied Plaintiffs’ motion for re-

mand. If the court had thought remand to Texas state

court was proper, it would not have sent the case to

North Carolina “where it belongs” for a district court

there to decide if it should be tried in the district court

where the claim arose or in the district court where the

bankruptcy case is pending—both districts being located

in North Carolina.

Further, all equitable considerations favoring—or dis-

favoring—remand to the Texas state court were placed

squarely before Judge Cobb and were briefed at length

by the parties while this case was pending in the Texas

federal courts. Extensive legal arguments were presented

10

on these issues by the parties. Ultimately, Judge Cobb

found that:

[a]ll operative facts took place in North Carolina.

Consequently, most, if not all, parties, witnesses, and

evidence are located in North Carolina. Further-

more, the bankruptcy case was filed in the Middle

District of North Carolina. Finally, the only ap-

parent connection between the case and the Eastern

District of Texas is the residence of one of the plain-

tiffs’ attorneys.

Id. (Appendix p. 19a). Thus, Judge Cobb found that

equitable factors favored trial in North Carolina and dis-

favored remand to Texas state court, a finding in direct

conflict with the North Carolina District Court’s subse-

quent order remanding the case to Texas on equitable

grounds.

When the North Carolina District Court ignored the

ruling of the Texas District Court and decided that the

case did not belong in North Carolina and should be re-

turned to Texas, it effectively overruled the existing find-

ings and decision of the District Court in Texas. A North

Carolina District Court judge does not have any appel-

late or supervisory role according it the right to review

the decisions of a coequal federal judge. See Hayman

Cash Register Co. v. Sarokin, 669 F.2d 162, 168 (3d

Cir. 1982) (judges of coordinate jurisdictions sitting in

the same case should not overrule the decisions of each

other). A collateral attack by a district court in the

Fourth Circuit on existing orders of a district court in

the Fifth Circuit cannot be permitted.

The transfer order of the Texas District Court, with its

underlying predicate rejection of the motion to remand,

constitutes the “law of the case.” “‘[W]hen a court de-

cides upon a rule of law, that decision should continue

to govern the same issues in subsequent states in the same

case.” Christianson v. Colt Industries Operating Corp.,

11

486 U.S. 800, 816 (1988) (quoting Arizona v. Califor-

nia, 460 U.S. 605, 618 (1983)). It does not matter

whether transferor and transferee courts are involved: the

“law of the case” applies to prior rulings of a coordinate

transferor court. Christianson, 486 U.S. at 816. “Ad-

herence to the law of the case principles is even more

important . . . where the transferor judge and the trans-

feree judge are not members of the same court. [T]he

principles of comity among courts of the same level of

the federal system provide a further reason why the trans-

feree court should not independently re-examine an issue

already decided by a court of equal authority.” Hayman

Cash Register Co., 669 F.2d at 169. Furthermore, im-

plied rulings by the transferor court are due the same

respect and protection under the “law of the case” as are

explicit rulings. See Christianson, 486 U.S. at 817 (“That

the . . . [transferor court] did not explicate its rationale

is irrelevant, for the law of the case turns on whether a

court previously ‘decide[d] upon a rule of law— .. . not

on whether, or how well, it explained the decision.”).

Therefore, by ordering remand, the North Carolina Dis-

trict Court viclated its obligation to respect the prior

decision of a coequal court from a different circuit. This

Court should review this case to address the Fourth Cir-

cuit’s sanctioning of divergence by one of its district

courts from the accepted and usual course of judicial

proceeding.

Il. A COURT OTHER THAN THE ONE TO WHICH

A CASE IS REMOVED LACKS POWER TO RE-

MAND ON EQUITABLE GROUNDS PURSUANT

TO 28 U.S.C. § 1452(b)

This case was removed to the federal court under 28

U.S.C. § 1452(a) and may be remanded on or for equi-

table grounds only under 28 U.S.C. § 1452(b). Unlike

the remand in Things Remembered, Inc. y. Petrarca, No.

94-1530, 1995 WL 709623, 1995 U.S. LEXIS 853]

(U.S. Dec. 5, 1995), which was based on the untimeli-

ness of removal, the remand in the present action was

12

based exclusively on equitable grounds. There were no

jurisdictional defects in this action.

No case has been found applying 28 U.S.C. § 1452(b)

to authorize a court other than the one to which a case

was removed to remand that case on equitable grounds.

Because § 1452(b) provides the only basis for a district

court (to which a case is removed) to remand on equi-

table grounds (no provision in 28 U.S.C. § 1447(c) au-

thorizes remand on equitable grounds), the statute itself,

§ 1452(b), provides the only authority on the matter.

The statute clearly and unequivocally states that “[t]he

court to which such claim or cause of action is removed

may remand such claim or cause of action on any equi-

table ground.” 28 U.S.C. § 1452(b) (emphasis added).

It is axiomatic that in construing federal statutes, one

must assume that the ordinary meaning of the language

that Congress employed accurately expresses Iegislative

purpose. See Mills Music, Inc. v. Snyder, 469 U.S. 153,

164 (1985).

[I]n interpreting a statute a court should always turn

first to one, cardinal canon before all others. We

have stated time and again that courts must presume

that a legislature says in a statute what it means and

means in a statute what it says there.

Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253

(1992) (citations omitted ).

Thus, there can be no question that, under 28 U.S.C.

$ 1452(b), only the court to which a case is removed

may remand that case on equitable grounds. The lan-

guage Of § 1452(b) is unambiguous. There is no room

for alternative formulations or interpretive nuance. This

case was removed to the Texas District Court. In ac-

cordance with the express wording of the statute, that

federal court is the only court with the power to remand

this case on equitable grounds.

13

The congressional logic of the bankruptcy removal

Statute granting remand power on equitable grounds only

to the court to which the case was removed is elegant.

The removal court is in the same district as the state

court from which the case is removed. The removal court

is in the best position to assess the important equitable

factors for remand such as the duplication or uneconom-

ical use of judicial resources, comity, prejudice to invol-

untarily removed parties and the expertise of the court

where the case originated. See River Cement Co. vy.

Bangert Bros. Constr. Co., 852 F. Supp. 25, 27 (D. Colo.

1994) (citing Jn re Finley, 62 B.R. 361, 366 (Bankr.

N.D. Ga. 1986) ).

It cannot be seriously argued that a North Carolina

district court has a deeper appreciation for these issues

than the Texas court familiar with the Texas state court

from which the case was removed. Even if reasonable

minds could differ on the most effective means to address

these important equitable issues under § 1452(b), Con-

gress has foreclosed that debate. Congress has decided

the issue in favor of providing authority over equitable

remands under § 1452(b) only to the court to which the

case was removed. In this case, that court was the Texas

District Court, not the North Carolina District Court.

However, the North Carolina District Court in the

present case, without even addressing or acknowledging

the issue involved, simply assumed it had authority to

remand on purported equitable grounds under 28 U.S.C.

§ 1452(b). The North Carolina District Court offered

ne basis for authority for the remand decision other than

§ 1452(b). Therefore, unless the North Carolina Dis-

trict Court derived its power under § 1452(b) to remand

this case on equitable grounds, it exceeded its authority.

Plainly the district court in North Carolina had no power

to remand this case under § 1452(b). It was never the

court to which the case was removed. It never had au-

thority to issue a remand under § 1452(b). In ordering

remand, the Nors Carolina District Court exceeded its

authority.

14

The Fourth Circuit panel that denied the Petition for

Writ of Mandamus must have assumed that the District

Court had the authority to remand, and thus overlooked

or failed to follow the express dictates of 28 U.S.C.

§ 1452(b). Petitioners acknowledge that other remand

Statutes provide the authority to remand in other situa-

tions. However, § 1452(b) is unique in imposing the

limitation that it is “[{t}he court to which such claim. . .

is removed [that] may remand such claim . . . on any

equitable ground.” By not granting the Petition for Writ

of Mandamus, the Fourth Circuit allowed the North Caro-

lina District Court to exercise authority not granted to it

by 28 U.S.C. § 1452(b).

Ill. MANDAMUS RELIEF WAS WARRANTED IN THIS

CASE

In this case, the North Carolina District Court ex-

ceeded its authority by overruling the order of a coequal

court and usurping the authority given by Congress ex-

clusively to the Texas court to which this Texas state

court action was removed, This is an extraordinary over-

reaching by a district court.

When no other adequate remedy is available, review of

an improper or unauthorized order remanding a case must

be by writ of mandamus. See Thermtron Prods., Inc. v.

Hermansdorfer, 423 U.S. 336, 353 (1976); Jamison v.

Wiley, 14 F.3d 222, 234 (4th Cir. 1994). This Court

in Thermtron held that remand orders, because they are

not “final judgment[s] reviewable by appeal” are properly

reviewed by “‘mandamus to compel action, and not by

writ of error to review what has been done’.” Thermtron,

423 U.S. at 353 (quoting Railroad Co. v. Wiswall, 90

U.S. 507, 508 (1874)).

More recently, Jamison held that 28 U.S.C. § 1447(d)

does not prevent in all instances the court from reviewing

an order remanding an action to state court.

On its face, § 1447(d) appears to preclude appellate

review of all remand orders, regardless of basis. But

15

as we all know, the Supreme Court has declined to

give § 1447(d) such a literal meaning, holding instead

that it insulates from review only those remand orders

that are based on grounds specified in 28 U.S.C.

§$ 1447(c).

Jamison, 14 F.3d at 231 (citing Thermtron).

The Jamison opinion rejected the claim that the re-

mand at issue was “a remand order and nothing more”

thus precluding review. Jd. Moreover, the court in Jami-

son held that under the removal statute at issue, 28 U.S.C.

§ 1442(a)(1).

. the district court had no right to decline to

exercise jurisdiction over the removed action and its

decision to do so was an error of sufficient magnitude

to merit mandamus relief.

Jamison, 14 F.3d at 239. See also Kolibash y. Committee

on Legal Ethics of W. Va. Bar, 872 F.2d 571, 573 (4th

Cir. 1989) (recognizing that a district court has no au-

thority to abstain from the exercise of mandatory juris-

diction on any ground other than specified by statute ).

The common thread in the Jamison and Kolibash cases

is that a district court may not exceed its authority in

declining to exercise its mandatory jurisdiction over a

removed action. The same principle, a court may not

exceed its authority in making remand decisions. must

apply when the court's decision to remand a case is out-

side its statutory authority. Such a decision exceeds its

authority and must be subject to mandamus. See Therm-

tron, 423 U.S. at 351 (“Because the District Judge re-

manded a properly removed case on grounds that he had

no authority to consider, he exceeded his Statutorily de-

fined power; and issuance of the writ of mandamus was

not barred by § 1447(d).”).

The recently-decided Things Remembered, Inc. y.

Petrarca, No. 94-1530, 1995 WL 709623, 1995 US.

LEXIS 8531 (U.S. Dec. 5, 1995), does not prevent this

16

Court from reviewing the Fourth Circuit’s refusal to

rectify the North Carolina District Court’s unauthorized

exercise of the power to remand in the present case.

Things Remembered is inapplicable here. The remand in

Things Remembered was based on the untimeliness of

removal, but the remand in the present action was based

exclusively on equitable grounds by a court not authorized

to consider such grounds. Therefore, unlike in Things

Remembered, there are no procedural or jurisdictional

defects in the present case. This case is analogous to

Thermtron in that the remand decision was outside the

power of the court. See Things Remembered, 1995

WL 709623, at *4, 1995 U.S. LEXIS 8531, at *11

(Kennedy, J., concurring) (noting the observation in

Thermtron that “a remand order other than the orders

specified in subsection (c) [of 28 U.S.C. § 1447] had

‘no warrant in the law’ and could be reviewed by

mandamus”).

The remand order in this case exceeded the authority

of the North Carolina District Court under § 1452(b)

and violated the principle of deference to the order of a

coequal court. As long ago as 1934, the Fourth Circuit

held that a district court may be ordered by mandamus

to hear and decide a case that it had improperly ordered

remanded to state court. See Travelers’ Protective Ass'n

of America v. Smith, 71 F.2d 511 (4th Cir. 1934).

Mandamus was the appropriate means to direct that

the North Carolina District Court’s Order and Memoran-

dum Opinion be vacated and that the North Carolina

District Court exercise jurisdiction to hear and determine

this case. This Court should review the Fourth Circuit’s

denial >f the Petition for Writ of Mandamus.

nee ener ree

17

CONCLUSION

For the reasons stated herein, this Court should review

this case in order to address the way in which the Fourth

Circuit Court of Appeals has sanctioned the departure

by one of its district courts from the accepted and usual

course of judicial proceeding. As indicated by this Court’s

decision in Celotex Corp. v. Edwards, US. °

115 S. Ct. 1493 (1995), the issues raised by this petition

are of recent concern to this Court. This Court should

review this case to ensure that the principles of judicial

proceeding announced in Celotex are observed by the

district courts and enforced by the circuit courts of

appeal.

Respectfully submitted,

KENNETH KyRE, JR.

PINTO, COATES & KYRE, L.L.P.

P.O. Box 4848

Greensboro, NC 27404

(910) 632-1680

Counsel of Record

for Petitioners

ee ee