Petition for Writ of Certiorari — Monogram Credit Card Bank v. Heaton
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IN THE
Supreme Court of the Anited States
MONOGRAM CREDIT CARD BANK OF GEORGIA,
Petitioner,
Vv.
PATRICIA HEATON,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Fifth Circuit
PETITION FOR A WRIT OF CERTIORARI
PAUL M. SMITH CARTER G. PHILLIPS *
IAN HEATH GERSHENGORN SIDLEY & AUSTIN
JENNER & BLOCK, LLC 1722 Eye Street, N.W.
601 Thirteenth Street, N.W. Washington, D.C. 20006
Washington, D.C. 20005 (202) 736-8000
(202) 639-6000
JEROLD S. SOLOVY
JENNER & BLOCK, LLC
One IBM Plaza
Chicago, IL 60611
(312) 222-9350
March 29, 2001 * Counsel of Record
(additional counsel on inside cover)
SRO ah RL NTRS OS RACER OARS PORN, Ri esa wn
WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D. C. 20001
ALAN S. KAPLINSKY
JEREMY T. ROSENBLUM
BALLARD SPAHR ANDREWS
& INGERSOLL, LLP
1735 Market Street
$1st Floor
Philadelphia, PA 19103
(215) 665-8500
COLVIN G. NORWOOD
DAVID S. WILLENZIK
ANTHONY J. ROLLO
MCGLINCHEY STAFFORD
A Professional Limited
Liability Company
643 Magazine Street
New Orleans, LA 70130
(504) 586-1200
QUESTION PRESENTED
Whether the Fifth Circuit erred by refusing to review a
remand order and holding, contrary to numerous other courts of
appeals, that a district court’s invocation of 28 U.S.C.
§ 1447(c) as the basis for a remand order constitutes “magic
words” that insulate that order from appellate review, even
though it is clear from the face of the remand order that it could
not have been based on § 1447(c).
il
LIST OF PARTIES
AND
CORPORATE DISCLOSURE STATEMENT
The parties to the proceedings before the Fifth Circuit are —
listed in the Appendix at Pet. App. 1a.
Pursuant to Supreme Court Rule 29.6, petitioner states as
follows: :
Monogram Credit Card Bank of Georgia is a wholly-
owned subsidiary of General Electric Capital Corporation.
General Electric Capital Corporation is a wholly-owned
subsidiary of General Electric Capital Services, Inc. General
Electric Capital Services, Inc., is a wholly-owned subsidiary of
General Electric Company, which is a publicly held
corporation. ;
TABLE OF CONTENTS
Page
| PTT TE TERETE EET CTT i
LIST OF PARTIES AND CORPORATE
DISCLOSURE STATEMENT .....0........0000- ii
TABLE OF AUTHORITIES ....................44. vi
I bs ba ewheck bank oddbhaaceuauce l
i te ; Oe OT ERT EN TET EE 2
STATUTORY PROVISIONS INVOLVED ............. 2
Perper OF EME CAGE ow wn. oc cc ccccceeewssss 2
A. Factual Background. ....:.......... reeees 4
B. Federal District Court Proceedings .......... 4
» © Fifth Circuit Proceedings ................. 7
REASONS FOR GRANTING THE PETITION ......... 9
A. The Fifth Circuit’s Reliance on a “Magic
Words” Doctrine to Determine the Review-
‘ ability of Remand Orders Conflicts with
the Decisions of Every Other Circuit to
Have Considered the Issue................ 1]
iv
B. The Fifth Circuit’s Refusal to Review a
Remand Order Issued after the District
Court Exercised Subject Matter Jurisdiction
over the Case Conflicts with Numerous
Decisions of Other Courts of Appeals. ...... 18
i The Fifth Circuit’s Approach Conflicts
with Numerous Decisions of this Court
and the Courts of Appeals Holding in
Analogous Contexts that a District
Court’s Characterization of its Own Actions
Is Not Conclusive of the Reviewability of
TOUR A hi eines teed coun ae 21
D. The Fifth Circuit’s Magic Words Approach
Cannot Be Justified By Precedent or Policy. . 24
Eee ere rere 28
APPENDIX A
Opinion, Heaton v. Monogram Credit Card Bank
of Georgia (Sth Cir. Nov. 2, 2000) ............... la
APPENDIX B
Order and Reasons, Heaton v. Monogram Credit Card
Bank of Georgia (E.D. La. Oct. 7, 1998) ......... 13a
APPENDIX C
Minute Entry, Heaton v. Monogram Credit Card
Bank of Georgia (E.D. La. Nov. 25, 1998) ........ 17a
APPENDIX D
Minute Entry, Heaton v. Monogram Credit Card
Bank of Georgia (E.D. La. Nov. 22, 1999) ........ 20a
APPENDIX E
Order, Heaton v. Monogram Credit Card Bank of
Georgia (E.D. La. Nov. 22, 1999) .............. 23a
APPENDIX F
Order on Rehearing, Heaton v. Monogram Credit
Card Bank of Georgia (Sth Cir. Jan. 5, 2001)...... 24a
APPENDIX G
Statutory Provisions Involved .................. 26a
vi
TABLE OF AUTHORITIES
CASES Page
In re Amoco Petroleum Additives Co..,
964 F.2d 706 (7th Cir. 1992) ............... 3, 18, 20
Archuleta v. Lacuesta, 131 F.3d 1359 (10th Cir.
WA... 16
Baldridge v. Kentucky-Ohio Transportation,
Inc., 983 F.2d 1341 (6th Cir. 1993) .... 3, 16, 17, 18, 19
Bogle v. Phillips Petroleum Co., 24 F.3d 758
CODER TRUE 00.00dedcedeebesotnassessscasne 12
Borneman v. United States, 213 F.3d 819
(4th Cir. 2000), cert. denied, 121 S. Ct. 759 (2001) .. 15
Burks v. Amerada Hess Corp., 8 F.3d 301
CSU GA SOU 6 cab oceeeedbieeteeseeeeseeeee oe 6
Carnegie-Mellon University v. Cohill,
G5 Ue, Hee Cae na nkbcouseenns 2, 7, 9, 12, 25, 26
Carson v. American Brands, Inc., 450 U.S. 79
CUOGER oc cuctveccsceectiees eee 22, 23
Carvel v. Thomas and Agnes Carvel Foundation,
RG Fe Oe Cae Ge GOOD. cbs voasess eases 3, 15, 16
City of Chicago v. International College of _
Supeens,, FES UI. PDOCESOT oc ccccesvcccccccse 25
Dalrymple v. Grand River Dam Authority,
145 F.3d 1180 (10th Cir. 1998) .................. 16
Engelhardt v. Paul Revere Life Insurance Co.,
139 F.3d 1346 (11th Cir. 1998) ............. 3, 20, 25
vii
TABLE OF AUTHORITIES - continued
Page
Executive Software North America, Inc. v.
United States District Court for the Central
District of California, 24 F.3d 1545
oo 4 ee ae 3, 20, 21
Flores v. Long, 110 F.3d 730 (10th Cir. 1997) ...... 3, 16
Greenwood Trust Co. v. Massachusetts,
ke te eee ee 4
Kunzi v. Pan American World Airways, Inc.,
ee ee re I PR occ srecccaccdebacns 17
Liberty Mutual Insurance Co. v. Wetzel,
Ss SEE os cacddanddsdbdchnnthe sd. 3, 22
Linton v. Airbus Industrie, 30 F.3d 592
ER Ee a eee nee 19
Mangold v. Analytic Services, Inc.,
77 F.3d 1442 (4th Cir. 1996) ............... 3, 14, 15
Marquette National Bank of Minneapolis
v. First of Omaha Service Corp., 439 U.S. 299
SUES «cea as £0 daldilahta ce neds pas excawe 4
Mobil Oil Exploration Co. v. FERC,
> . (+ 4. ye 27
Nguyen Da Yen v. Kissinger, 528 F.2d 1194
SE NN cs 8 ae ko wube Usb das 6 chute a3 hs 23
Poore v. American-Amicable Life Insurance Co.
of Texas, 218 F.3d 1287 (11th Cir. 2000) ....... 17,19
vill
TABLE OF AUTHORITIES - continued
Page
Princess Lida of Thurn & Taxis v. Thompson,
ee EN vache 0hs dae KORa ss eves ba 16
Quackenbush v. Allstate Insurance Co.,
FEF es CeO OE sevterieecierescseceerss 2, 12
Richards v. Federated Department Stores, Inc.,
rg pig. 2. 3. Ree Ann ane 12, 13
Sampson v. Murray, 415 U.S. 61 (1974) ....... 3, 22, 24
San Francisco Real Estate Investors v.
Real Estate Investment Trust of America,
ek Ee ee 3, 22, 23
In re Slimick, 928 F.2d 304 (9th Cir. 1990) .......... 23
Smiley v. Citibank (South Dakota), N.A.,
See Sy ME 4 ow didh SdwaN' Sos Ve tieka denen 4
Smith v. Texas Children’s Hospital, |
Pps poi. os 8 ee ee rere ee 13
Soley v. First National Bank of Commerce,
See Sane PG HED oc bs 60.6 onc dad cevdens 13
Spates v. Manson, 619 F.2d 204 (2d Cir. 1980) ....... 23
St. John v. International Association of Machinists
and Aerospace Workers, 139 F.3d 1214
2 ESE 5 en spore ee ree 25
Sullivan v. Finkelstein, 496 U.S. 617 (1990) ....... 3, 22
ix
TABLE OF AUTHORITIES - continued
Page
Survival Systems of the Whittaker Corp. v.
United States District Court for the Southern
District of California, 825 F.2d 1416
Ce Gt FOE 5a 6 bows e ey enerrersreseeens 19, 21
Sykes v. Texas Air Corp., 834 F.2d 488 (Sth Cir.
PEE Pe eee ee Pee err Te Per Pet ee meyer 24
In re TMI, 940 F.2d 832 (3d Cir. 1991) ............. 16
Thermtron Products, Inc. v. Hermansdorfer,
es BO re 2, 12, 13, 24
Things Remembered, Inc. v. Petrarca,
Fee ee SE whi ce eb vee anie 2 12, 24, 25
In re Thomas and Agnes Carvel Foundation,
36 F. Supp. 2d 144 (S.D.N.Y. 1999),
appeal dismissed in part, 188 F.3d 83
RY CE 555 Gwe as iad bak FEA Koes Ca» 15
Tillman v. CSX Transportation, Inc.,
ee 13
In re U. S. Healthcare, Inc., 193 F.3d 151
(3d Cir. 1999), cert. denied, 120 S. Ct. 2687
I a a a iy hay dna dwn 25
United States v. Sisson, 399 U.S. 267 (1970) ......... 21
STATUTES AND REGULATIONS
Se en og iu hb as ness auakeb onan 5
RE Ne ahce db Khas vackccunseeawals 4,5
ve ate de ies eee asso eee te 4
xX
TABLE OF AUTHORITIES - continued
Page
ek Tee 8 ere rere err 6
Sp Mais & RPE cc dod ase san ca cecuduans 7,19
yp RE ot BO Pree re rer ee er passim
pS eG Rr er Sry passim
General Counsel's Opinion No. i2, Engaged in the
Business of Receiving Deposits Other Than Trust
Funds, 65 Fed. Reg. 14568 (Mar. 17, 2000) ...... 5, 10
MISCELLANEOUS
14C Charles A. Wright, ei al., Federal Practice and
Procedure § 3740 (3d ed. 1998) ................. 17
16 James Wm. Moore, et al., Moore’s Federal Practice
§ 107.44[2][c] (3d ed. 2000) ................. 17, 18
IN THE
Supreme Court of the nited States
No. __
MONOGRAM CREDIT CARD BANK OF GEORGIA,
Petitioner,
v.
PATRICIA HEATON,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Fifth Circuit
PETITION FOR A WRIT OF CERTIORARI
Petitioner Monogram Credit Card Bank of Georgia
(“Monogram”) respectfully petitions for a writ of certiorari to
review the judgment of the United States Court of Appeals
for the Fifth Circuit in this case.
OPINIONS BELOW
The opinion of the court of appeals is reported at 231
F.3d 994 and is reprinted at Pet. App. 1a-12a. The opinion of
the district court is reprinted at Pet. App. 20a-22a.
2
JURISDICTION
The judgment of the court of appeals was entered on
November 2, 2000. A timely petition for rehearing was
denied on January 5, 2001. The court of appeals held that,
pursuant to 28 U.S.C. § 1447(d), it lacked subject matter
jurisdiction to review the order of the district court
remanding this case to state court. That ruling is the subject
of the instant petition. This Court has jurisdiction pursuant
to 28 U.S.C. § 1254(1).
STATUTORY PROVISIONS INVOLVED
This case involves 28 U.S.C. § 1447(c) and (d), as well
as 28 U.S.C. § 1367(c)(3). Those provisions are reproduced
at Pet. App. 26a-28a.
STATEMENT OF THE CASE
This petition presents an enduring and acknowledged
conflict among the Circuits regarding the scope of appellate
jurisdiction to review a district court order remanding a case
to state court. Review of remand orders is governed by 28
U.S.C. § 1447(d), which precludes appellate review only of
those remand orders issued pursuant to 28 U.S.C. § 1447(c).
See Thermtron Products, Inc. v. Hermansdorfer, 423 U.S.
336 (1976); Carnegie-Mellon University v. Cohill, 484 U.S.
343 (1988); Quackenbush v. Allstate Insurance Co., 517 U.S.
706 (1996). In the decision below, the Fifth Circuit
reaffirmed its unique rule that a district court’s invocation of
28 U.S.C. § 1447(c) in a remand order constitutes “magic
words” that conclusively insulate that order from appellate
review. The Fifth Circuit thus had to ignore what was
3
evident on the face of the order: the remand order in this
case could not have been based on 28 U.S.C. § 1447(c)
because the district court dismissed plaintiff's federal claim
as a predicate to its remand order.
As the Fifth Circuit acknowledged, Pet. App. 8a, its
magic words approach is contrary to the rule in other circuits,
which have uniformly held that courts of appeals must
determine independently the basis of the district court’s
remand order, after review of the surrounding circumstances.
See, e.g., Mangold v. Analytic Services, Inc., 77 F.3d 1442
(4th Cir. 1996); Carvel v. Thomas and Agnes Carvel
Foundation, 188 F.3d 83 (2d Cir. 1999); Flores v. Long, 110
F.3d 730, 732 (10th Cir. 1997); Baldridge v. Kentucky-Ohio
Transportation, Inc., 983 F.2d 1341, 1349 (6th Cir. 1993);
see also In re Amoco Petroleum Additives Co., 964 F.2d 706,
709 (7th Cir. 1992); Engelhardt v. Paul Revere Life
Insurance Co., 139 F.3d 1346, 1350-51 (11th Cir. 1998);
Executive Software North America, Inc. v. United States
District Court for the Central District of California, 24 F.3d
1545, 1549 (9th Cir. 1994). Moreover, the Fifth Circuit’s
decision is flatly at odds with numerous decisions from this
Court and the other courts of appeals in analogous contexts
holding that a district court’s characterization of its own
actions is not conclusive of the jurisdiction of a reviewing
court. See, e.g., Liberty Mutual Insurance Co. v. Wetzel, 424
U.S. 737 (1976); Sullivan v. Finkelstein, 496 U.S. 617
(1990); Sampson v. Murray, 415 U.S. 61 (1974); San
Francisco Real Estate Investors v. Real Estate Investment
Trust of America, 692 F.2d 814 (1st Cir. 1982) (Breyer, J.).
A. Factual Background
In May 1998, plaintiff Patricia Heaton filed a class
action complaint against Monogram in Louisiana state court,
alleging principally that Monogram’s credit card late fees,
though permitted by the law in Monogram’s home State of
Georgia, exceeded the limit prescribed by Louisiana’s
Consumer Credit Law. The threshold legal issue posed by
the complaint was whether Monogram is a “state bank”
under the Federal Deposit Insurance Act (“FDIA”). _ If.
Monogram is a state bank, the fees it charged were
indisputably lawful under federal law and this Court’s
precedent, because a state bank has a federal statutory nght
under Section 27 of the FDIA to assess fees and interest
charges (including late fees) in any State that would be
lawful in its home State. See 12 U.S.C. § 1831d(a)
(permitting a “state bank” to charge interest “at the rate
allowed by the laws of the State, territory, or district where
the bank is located,” “notwithstanding any State constitution
or statute, which is hereby preempted for the purposes of this —
section”); see also Smiley v. Citibank (South Dakota), N.A.,
517 U.S. 735 (1996); Marquette National Bank of
Minneapolis v. First of Omaha Service Corp., 439 U.S. 299
(1978); Greenwood Trust Co. v. Massachusetts, 971 F.2d
818 (ist Cir. 1992).
B. Federal District Court Proceedings
Monogram removed the case to federal court, asserting
that plaintiff's claims under Louisiana law were completely
preempted by Section 27 of the FDIA. See 12 U.S.C.
3
§ 1831d.' Plaintiff moved to remand, arguing that
Monogram could not invoke complete preemption under the
FDIA because Monogram, despite having over $670 million
in deposits from its affiliates, was not “engaged in the
business of receiving deposits,” and thus was not a “state
bank” under the FDIA. See 12 U.S.C. § 1813(a)(2) (defining
“state bank” as a banking institution that is “engaged in the
business of receiving deposits” and is “incorporated under
the laws of any State”). Monogram noted that plaintiffs
position contradicted the determination of the Federal
Deposit Insurance Corporation (“FDIC”), the expert agency
charged with interpreting and enforcing the FDIA. The FDIC
had considered Monogram to be a state bank ever since it
approved Monogram’s application for deposit insurance in
1988, and the FDIC had concluded expressly in a September
25, 1998 confirmation letter filed with the district court that
Monogram was a state bank under the FDIA.’
The district court initially denied plaintiff's motion for
remand, holding that Monogram was a state bank under the
FDIA and that plaintiff's claims were completely preempted.
See Pet. App. 2a-3a; see also id. at 13a-16a. The case was
then re-assigned to a newly appointed judge, who denied
' Monogram also contended that the district court had diversity
jurisdiction. In the remand order that is on review, the district court
concluded that plaintiff had not satisfied the amount in controversy
requirement.
? More recently, the FDIC issued General Counsel's Opinion No. 12,
Engaged in the Business of Receiving Deposits Other Than Trust Funds, 65
Fed. Reg. 14568 (Mar. 17, 2000), which provides a thorough analysis of the
FDIC’s long-standing interpretation that credit card banks (and other
institutions) that accept deposits from a parent or affiliate but do not accept
deposits from the general public are still “engaged in the business of
receiving deposits” and thus are state banks under the FDIA. /d. at 14572.
6
plaintiff's motion to certify an appeal of the order denying a
remand, specifically holding that plaintiff had not shown a
“substantial ground for difference of opinion as to whether
defendant is a state bank.’” Pet. App. 3a (quoting order).
Plaintiff then moved successfully to amend her complaint to
assert a federal claim under the Truth in Lending Act
(“TILA”), 15 U.S.C. § 1637(c)(3)(B). Monogram eventually
filed a motion for summary judgment on all of plaintiff's
claims, and plaintiff's respénse was deferred to enable her to
conduct discovery. ‘
More than a year after plaintiff's motion to remand had
been denied, and following the completion of substantial
discovery, plaintiff filed a motion to reconsider the denial of
her remand motion. She reiterated the same “state bank”
arguments that had been previously rejected, adding only the
argument that the FDIC’s September 25, 1998 confirmation
letter was not entitled to deference because Monogram’s
attorneys had participated in its preparation.
At a hearing on plaintiff's motion, Monogram’s counsel
argued that the TILA claim prevented remand.’ This
argument prompted the court to suggest that plaintiff could
voluntarily dismiss that claim. November 10, 1999 Tr. at
25. Later that same day, plaintiff filed a motion voluntarily
to dismiss her TILA claim with prejudice.
The court dismissed the TILA claim with prejudice and,
in a separate order that acknowledged the TILA dismissal,
remanded the remaining claims to state court. The latter
> See Burks v. Amerada Hess Corp., 8 F.3d 301, 304 (Sth Cir. 1993)
(“‘a district court has no discretion to remand a matter in which a federal-law
claim still exists”).
7
order held that Monogram is not a “state bank” and that
plaintiff's claims were thus not completely preempted under
the FDIA. Notwithstanding plaintiff's assertion — and the
district court’s dismissal with prejudice — of the federal TILA
claim, the district court concluded that the court “does not
have federal question jurisdiction” and purported to remand
the case “pursuant to 28 U.S.C. § 1447(c).” Pet. App. 22a.
C. Fifth Circuit Proceedings
Monogram sought expedited review of the remand order
in the Fifth Circuit. Citing settled case law from other courts
of appeals, Monogram argued that neither the district court’s
Statement that the court “does not have federal question
jurisdiction” nor its statement that remand was “pursuant to
28 U.S.C. § 1447(c)” conclusively determined reviewability.
Pet. App. 22a. In this case, as was evident from the face of
the remand order, the district court had dismissed plaintiff's
TILA claim with prejudice, an action that could not have
been taken unless the court had subject matter jurisdiction.
Monogram argued that the remand order thus could not have
been premised on the absence of subject matter jurisdiction,
but instead was necessarily a discretionary remand of pendent
claims following dismissal of federal claims, see 28 U.S.C.
§ 1367(c\(3); Cohill, 484 U.S. at 348, which was
unquestionably appealable.
The Fifth Circuit disagreed and, pursuant to 28 U.S.C.
§ 1447(d), dismissed Monogram’s appeal for lack of
jurisdiction. The court of appeals held that the district
court’s characterization of its own order is conclusive for
purposes of appellate jurisdiction. The court stated that “the
district court is the final arbiter of whether it has jurisdiction
to hear the case,” see Pet. App. 5a (internal quotation and
8
citation omitted), and, because the district court “stated a
§ 1447(c) basis for remand,” its remand order was insulated
from appellate review by § 1447(d). Jd. (citing Thermtron,
423 US. at 345-46). The Fifth Circuit expressly
acknowledged that Monograin’s argument to the contrary
was firmly grounded in the “decisions of other circuits,” but
noted that prior Fifth Circuit cases had adopted a “‘magic
words’” approach to § 1447(d) that prevents that Circuit from
examining the actual basis of the remand once the district
court expressly mentions § 1447(c) or the absence of subject
matter jurisdiction. See Pet. App. 8a (quoting Bogle v.
Phillips Petroleum Co., 24 F.3d 758 (Sth Cir. 1994)). The
Fifth Circuit further held that unless the district court “clearly
and affirmatively” relies on a non-1447(c) basis for remand,
the court of appeals lacks jurisdiction. Pet. App. 10a. Since
the remand order did not expressly rely on a non-1447(c)
basis for remand, the remand order was not reviewable.
The Fifth Circuit recognized, however, that the district
court could not have dismissed the federal TILA claim with
prejudice if the district court did not have jurisdiction over
the case. The court of appeals accordingly held that the
dismissal of the TILA claim with prejudice was “void,” and
that Monogram “may file another petition for removal based
on the TILA claim once this case is returned to state court.” —
Pet. App. 12a & n.6.
The morning after the panel’s decision was released,
Monogram removed the case again based on the TILA claim.
Unbeknownst to Monogram, however, plaintiff had obtained
from the state court an ex parte order dated the previous day
dismissing any TILA claim still in the case. Plaintiff then
sought to remand for lack of subject matter jurisdiction.
Disregarding the Fifth Circuit’s express assumption that
9
Monogram would receive a federal forum, the district court
once again remanded the case to state court.
REASONS FOR GRANTING THE PETITION
The Fifth Circuit’s holding that a district court’s
invocation of § 1447(c) in a remand order constitutes “magic
words” that insulate that order from review reaffirms and
deepens a long-standing conflict between the Fifth Circuit on
one side and all other Circuits that have addressed the issue
on the other. Seven other Circuits have held that a district
court’s characterization of its own remand order is not
conclusive of the order’s reviewability, and that an appellate
court must engage in an independent analysis of the district
court’s actions to determine appellate jurisdiction. This
Court has applied that same rule in analogous contexts. The
Fifth Circuit’s sustained departure from the rule prevailing in
this Court and the other courts of appeals merits this Court’s
review.
Had the Fifth Circuit undertaken the required
independent review, it would have concluded from the face
of the district court’s remand order that the order was
reviewable. The district court purported to remand for lack
of subject matter jurisdiction, as permitted by § 1447(c), but
it did so only after dismissing with prejudice a federal
statutory claim plaintiff had previously asserted. Such an
action (as the Fifth Circuit acknowledged) requires subject
matter jurisdiction, and that jurisdiction, in turn, makes any
remand after dismissal of the federal claim both discretionary
and appealable. See Cohill, 484 U.S. 343; see also infra at
25 n.12. Numerous other courts of appeals have
acknowledged that similar remand orders do not fall within
the bar of § 1447(d).
10
The Fifth Circuit’s approach has important consequences
for courts and litigants alike. By letting the district court’s
characterization of its own order determine reviewability, the
Fifth Circuit facilitates disparate results and disrespect for the
judiciary that appellate review is designed to prevent.
Moreover, the Fifth Circuit’s approach frustrates Congress’
intent that discretionary remands be reviewable, and it
deprives defendants of their right to have their case resolved
in a federal forum. Thus, regardless of the importance of the
particular remand order on review, the conflict presented by
ihe decision below warrants this Court’s review.
In this case, the significance of the underlying remand
order renders this Court’s review imperative. The district
court held that Monogram is not a “state bank” under the
FDIA despite the fact that the FDIC, which has regulatory
and interpretive authority over the FDIA, has treated
Monogram as a “state bank” since 1988, when it issued an
order granting Monogram deposit insurance. Indeed, the
FDIC submitted a letter to the district court prior to the
remand order reaffirming that Monogram is a state bank
under the FDIA and, recently, issued a general counsel’s
opinion, approved by the FDIC’s Board of Directors, that
expressly rejects the district court’s opinion and terms it
“jrrational."* The FDIC has warned that the district court’s
erroneous resolution of the state bank issue “may affect
hundreds of similarly situated FDIC-insured institutions
processing billions of dollars in transactions” and “may
literally open the floodgates of litigation and deluge the
institutions regulated by the FDIC with a torrent of similarly
* General Counsel's Opinion No. 12, 65 Fed. Reg. at 14571.
11
frivolous suits.” See also Fifth Circuit Brief of Amicus
Curiae Conference of State Bank Supervisors, ef ai., at 5, 8
(filed March 29, 2000) (noting that the district court’s
decision “hinders the safety and soundness of our banking
system” and “threatens to destroy . . . the competitive
equality that Congress has established between State banks
and national banks’’).
The Fifth Circuit forthrightly conceded that Monogram’s
appeal presents “significant questions of law concerning the
interpretation of the FDIA and the ability of courts to
‘second-guess’ the FDIC’s determinations about whether
financial institutions are ‘state banks’ under the FDIA.” Pet.
App. lla. The Fifth Circuit declined nevertheless to resolve
those questions, holding that the district court’s utterance of
“magic words” prevented appellate review. This petition
thus vividly illustrates the serious consequences of the Fifth
Circuit’s unique, narrow view of its appellate jurisdiction.
Accordingly, this Court should grant this petition and resolve
the conflict over the scope of appellate jurisdiction to review
remand orders under 28 U.S.C. § 1447(d).
A. The Fifth Circuit’s Reliance on a “Magic Words”
Doctrine to Determine the Reviewability of Remand
Orders Conflicts with the Decisions of Every Other
Circuit to Have Considered the Issue.
The ianguage of 28 U.S.C. § 1447(d) provides broadly
that “[aJn order remanding a case to the State court from
which it was removed is not reviewable on appeal or
* Memorandum of Points and Authorities in Support of the Federal
Deposit Insurance Corporation’s Motion for Leave to Intervene as a Party
Defendant at 4 (filed Nov. 22. 1999).
12
otherwise.” This Court has repeatedly made clear, however,
that § 1447(d), despite its broad language, prohibits appellate
review of only those remand orders actually issued pursuant
to § 1447(c), namely remands on the ground of “any defect”
or due to “lack of subject matter jurisdiction.” See
Thermtron, 423 U.S. at 345-46; Things Remembered, Inc. v.
Petrarca, 516 U.S. 124, 127 (1995); Quackenbush, 517 US.
at 711-12. A remand order is not issued pursuant to
§ 1447(c), and is thus reviewable, when, for example, the
remand order is based on concerns of docket management,
see Thermtron, 423 U.S. at 345-46, or the abstention
doctrine, see Quackenbush, 517 U.S. at 711-12, or — more
critically for the instant petition — when the remand order
involves the discretionary remand of supplemental state
claims following the dismissal of federal claims, see Cohill,
484 U.S. at 348.
In the decision below, the Fifth Circuit reaffirmed its
own precedent that treats the district court’s mere invocation
of § 1447(c) or the words “lack of subject matter
jurisdiction” in a remand order as “magic words” that
conclusively establish that the order was issued pursuant to
§ 1447(c) and is thus unreviewable under § 1447(d). See Pet.
App. 8a; see also Bogle v. Phillips Petroleum Co., 24 F.3d
758, 762 (Sth Cir. 1994) (“The magic words ‘this case does
not contain a federal claim’ rendered the district court’s
remand order unreviewable.”); Richards v. Federated Dep't
Stores, Inc., 812 F.2d 211, 212 n.1 (Sth Cir. 1987) (per
=
® At the time of Thermtron, § 1447(c) provided for remand if the case
was removed “improvidently or without jurisdiction.” See Thermtron, 423
U.S. at 342; see also Cohill, 484 U.S. at 346 n.2. In 1988, Congress
modified that language to permit remand “on the basis of any defect in
removal procedure” or if the district court “lacks subject matter
jurisdiction.” In 1996, the reference to “removal procedure” was deleted.
13
curiam) (“orders which recite the magic words
[improvidently and without jurisdiction] . . . are ‘not subject
to challenge in the court of appeals by appeal, by mandamus
or otherwise’”); Tillman v. CSX Transportation, Inc., 929
F.2d 1023, 1026 (Sth Cir. 1991) (“incantation” of the phrase,
“lacks subject matter jurisdiction” has “magical effect”).’ In
so doing, the Fifth Circuit resolved a question posed in
Thermtron, but did so in a way that conflicts with both the
logic of Thermtron and, as the Fifth Circuit recognized,
numerous “decisions of other circuits” -- indeed, it directly
conflicts with the decisions of seven other Circuits.
In Thermtron, this Court held that Congress intended
§ 1447(d) to immunize only those remands listed in
§ 1447(c), and did not “intend[] to extend carte blanche
authority to the district courts to revise the federal statutes
governing removal by remanding cases on grounds that seem
justifiable to them but which are not recognized by the
controlling statute.” 423 U.S. at 351. In discussing the
ramifications of the majority’s approach, the Thermtron
dissent hypothesized a case in which the district court
“state[s] that it finds no jurisdiction, using the rubric of
§ 1447(c), but the papers plainly demonstrate such a
conclusion to be absurd.” /d. at 357 (Rehnquist, J.,
dissenting). In that situation, the dissent argued, “([i]f the
Court’s grant of certiorari and order of reversal in this case
are to have any meaning, it would seem that such avenues of
attack should clearly be open to potential opponents of orders
of remand.” Jd. This case squarely presents the problem
identified by the now-Chief Justice, and the Fifth Circuit’s
” See also Smith v. Texas Children’s Hosp., 172 F.3d. 923, 925-26 (Sth
Cir. 1999); Soley v. First Nat'l Bank of Commerce, 923 F.2d 406, 408 (Sth
Cir. 1991).
sn oss a Sa ar aaa
14
refusal to review the district court’s order is thus at odds with
Thermtron.
Seven courts of appeals have followed the logic of
Thermtron and rejected an approach that gives conclusive
effect to the district court’s characterization of its own order.
In Mangold v. Analytic Services, Inc., 77 F.3d 1442 (4th Cir.
1996), for example, plaintiff brought a tort suit against a
government contractor and a federal official in state court.
The case was removed to federal court, and, shortly
thereafter, the claims against the federal official were
dismissed. After determining that the remaining defendant
was not entitled to any immunity from suit, the district court
remanded the case to state court. The remand order stated
explicitly that “[w]ithout the federal defendant there is no
longer any basis for federal jurisdiction because diversity
does not exist among the remaining parties”; it also stated
expressly that the action is remanded “pursuant to 28 U.S.C.
§ 1447(c).” Id. at 1452 (Phillips, J., opinion of the court with
respect to subject matter jurisdiction).
Despite the district court’s invocation of § 1447(c), the
Fourth Circuit exercised jurisdiction over the appeal and
vacated the remand order. Explicitly rejecting the Fifth
Circuit’s magic words approach,’ the majority held that
“powerful policy considerations and persuasive decisional
* The dissent in Mangold expressly invoked the Fifth Circuit’s magic
words approach, arguing that the words in the district court’s order “‘are
indeed magic ones: the order_is proof against review_even if it merely
‘purports’ to remand on the ground quoted.”” /d. at 1456 (Michael, J.,
dissenting) (quoting Richards, 812 F.2d at212n.1). The dissent argued that
“where, as here, a district court ordered remand (even erroneously) using the
magic words of § 1447(c), review of that order was prohibited under
§ 1447(d).” Id. at 1458
15
authority support our power — and responsibility — to look
past contextually ambiguous allusions and even specific
citations to § 1447(c) to determine by independent review of
the record the actual grounds or basis upon which the district
court considered it was empowered to remand.” /d. at 1450
(emphasis in original). The majority emphasized that
“neither the citation of § 1447(c) nor the failure to cite it as
presumed authority for a remand is conclusive of the real
question: whether one of its two grounds is the actual basis
being invoked as authority for remand.” Jd.°
The Second Circuit’s decision in Carvel v. Thomas and
Agnes Carvel Foundation, 188 F.3d 83 (2d Cir. 1999), is to
the same effect. In that case, a foundation brought suit in
state court against the trustee of a decedent’s estate to enjoin
the distribution of certain property of the estate. The trustee
removed the case to federal court. In remanding the case to
state court, the district court “explicitly stated that it lacked
jurisdiction” to decide the claims concerning the estate
property, id. at 85, and it concluded expressly that it “lacks
subject matter jurisdiction over every claim for relief other
than the claims for declaratory judgment.” Jn re Thomas and
Agnes Carvel Foundation, 36 F. Supp. 2d 144, 152
(S.D.N.Y. 1999). When the trustee sought review, the
Second Circuit took jurisdiction, notwithstanding the district
court’s reliance on lack of subject matter jurisdiction. The
Second Circuit observed that the district court had based its
° See also Borneman vy. United States, 213 F.3d 819, 825 (4th Cir.
2000) (reviewing and reversing district court’s remand order despite district
court’s remand pursuant to § 1447(c) for lack of subject matter jurisdiction
and despite the Fourth Circuit’s concession that “if we are to accept [the
district court’s] conclusion, § 1447(d) would, at first blush, appear to bar us
from reviewing the district court’s order”), cert. denied, 121 S. Ct. 759
(2001).
16
opinion on Princess Lida of Thurn & Taxis v. Thompson, 305
U.S. 456 (1939), which the court of appeals viewed as an
abstention case. 188 F.3d at 85-86. The Second Circuit thus
decided that, notwithstanding the district court’s
characterization of its own order, the remand was actually
esed on abstention, not jurisdiction, and thus was
reviewable. Id. at 86.
Numerous other circuits have adopted the same
approach. The Tenth Circuit, for example, citing liberally
from the majority opinion in Mangold, see supra, has held
that “[mJere mention of § 1447(c) or the ‘magic words’ of
subject matter jurisdiction, however, do not automatically
render a remand order nonreviewable under § 1447(d).”
Flores v. Long, 110 F.3d 730, 732 (10th Cir. 1997); see also
Dalrymple v. Grand River Dam Auth., 145 F.3d 1180, 1184
(10th Cir. 1998) (“An explicit reference to § 1447(d) does
not automatically render a remand order nonreviewable .. . .
In order to evaluate the reviewability of the district court’s
remand orders, we must independently review the record to
determine the actual grounds upon which the district court
believed it was empowered to remand.”); Archuleta v.
Lacuesta, 131 F.3d 1359, 1362 (10th Cir. 1997) (“A district
court’s assertion that it lacks jurisdiction, and even explicit
references to § 1447(c), does not automatically render a
remand order nonreviewable under § 1447(d).”). And, in Jn
re TMI, 940 F.2d 832 (3d Cir. 1991), the Third Circuit
reviewed a remand order even though the district court had
declared the underlying jurisdictional statute unconstitutional
and then remanded for lack of subject matter jurisdiction
pursuant to § 1447(c). 940 F.2d at 848.
The Sixth Circuit, the Ninth Circuit, and the Eleventh ©
Circuit have similarly rejected a magic words approach. See,
.
17
e.g., Baldridge v. Kentucky-Ohio Transp., Inc., 983 F.2d
1341, 1349 (6th Cir. 1993) (“[lJooking behind the face of the
order” to determine the basis of the remand); see also id. at
1350-51 (Celebrezze, J., dissenting) (“The mere incantation
of the mantra ‘§ 1447’ should not be enough to preclude
review if it appears to this court that this is not a § 1447
order. I do not believe the majority would disagree. Hence,
this court must attempt to determine the justifications
supporting the order to determine if they are consistent with a
§ 1447 order.”); Kunzi v. Pan American World Airways, Inc.,
833 F.2d 1291, 1294 (9th Cir. 1987) (looking past the district
court’s explicit citation to 1447(c) and analyzing the hearing
transcripts and “[cJonsidering the entire record” before
dismissing the appeal); Poore v. American-Amicable Life
Insurance Co. of Texas, 218 F.3d 1287, 1291-92 (11th Cir.
2000) (reviewing remand order even though the order was
based on the district court’s determination that “it lacked
diversity jurisdiction because the amount in controversy did
not meet the jurisdictional minimum set forth in 28 U.S.C.
§ 1332”).
Leading treatises confirm that the Fifth Circuit’s
approach is out of step with the more flexible approach
adopted by the other circuits. Professors Wright, Miller, and
Cooper have noted, for example, that “[a]ppellate courts
frequently look beyond the district court’s citation . . . to
Section 1447(c); instead, they engage in independent review
of the actual grounds upon which the district court justified
its decision to remand.” 14C Charles A. Wmnight, et al.,
Federal Practice and Procedure § 3740, at 533-40 (3d ed.
1998). And Professor Moore has noted that the “Fifth Circuit
has taken a strict approach” to the review of remand orders.
16 James Wm. Moore, et al., Moore’s Federal Practice
§ 107.44[2}[c], at 107-227 (3d ed. 2000); see also id. at 107-
18
227 n.41.1 (citing Smith v. Texas Children’s Hospital, 172
F.3d 923. (Sth Cir. 1999), for the proposition that the “Fifth
Circuit will not look beyond language of the remand order to
surrounding circumstances to determine whether remand was
based on substantive decision on merits’’).
In short, the Fifth Circuit’s reliance on magic words as
conclusive in determining the reviewability of remand orders
is in direct conflict with the approach adopted by seven other
Circuits, and cannot be reconciled with Thermtron and its
progeny. Review by this Court is thus appropriate and
necessary.
B. The Fifth Circuit’s Refusal to Review a Remand
Order Issued after the District Court Exercised
Subject Matter Jurisdiction over the Case Conflicts
with Numerous Decisions of Other Courts of
Appeals.
The Fifth Circuit’s application of the magic words
doctrine in this case was critical because an independent
review of the district court’s actions compels the conclusion
that the order was reviewable.
Once the district court by word or action acknowledges
jurisdiction, a subsequent remand for lack of subject matter
jurisdiction — based for example on the amendment of the
complaint or the addition or deletion of a party — is
reviewable. See, e.g., In re Amoco Petroleum Additives Co.,
964 F.2d 706, 709 (7th Cir. 1992); see also Baldridge, 983
F.2d at 1348 (explaining that if a district court “thought that
the removal had been jurisdictionally proper but that
jurisdiction had ‘vanished’ when [a party] dropped out, the
remand — even though based on a finding of lack of
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19
jurisdiction — would be reviewable.”); Survival Systems of the
Whittaker Corp. v. United States District Court for the
Southern District of California, 825 F.2d 1416, 1418 (9th
Cir. 1987) (“[R]emand could not possibly have been based
on section 1447(c); removal had not been ‘without
jurisdiction,’ since five of [plaintiff's] claims were held to be
preempted by federal law. The statutory preclusion of review
under section 1447(d) is therefore not applicable.”); Poore,
218 F.3d at 1291-92 (remand order was reviewable because
district court premised its conclusion that it lacked subject
matter jurisdiction on a damages limitation contained only in
the amended complaint).'° Such a remand is necessarily a
reviewable “Cohill remand” — now a remand pursuant to 28
U.S.C. § 1367(c)(3)"' — in which the district court utilizes its
discretion to dismiss state claims after federal claims asserted
in the complaint have been dismissed.
In this case, after plaintiff voluntarily amended her
complaint to add a federal TILA claim, the district court
dismissed that claim with prejudice. As the Fifth Circuit
acknowledged, a dismissal with prejudice could only have
been entered if the district court had subject matter
jurisdiction over the amended complaint. Pet. App. 11a-12a.
Thus, the only reasonable way to square the district court’s
dismissal of the TILA claim with the remand for lack of
' The Fifth Circuit is the lone Circuit to hold to the contrary. See
Linton v. Airbus Industrie, 30 F.3d 592, 599 (Sth Cir. 1994) (remand for
lack of subject matter jurisdiction not reviewable even if district court
thought it had jurisdiction at the time of removal and then remanded only —
after a subsequent event caused jurisdiction to be “lost”).
' Section 1367(c)(3) provides, in part, that a district court “may
decline to exercise supplemental jurisdiction over a claim if. . . the district
court has cismissed all claims over which it has original jurisdiction.”
steko
20
subject matter jurisdiction is to hold that the district court
thought it had subject matter jurisdiction as a result of the
federai TILA claim, and thought it lost that jurisdiction
because the TILA claim was dismissed.
As other courts of appeals have made clear, remands in
such cases are reviewable. Judge Easterbrook’s unanimous
opinion in Jn re Amoco is directly on point. In that cese, an
employment dispute alleging state law claims was removed ~
to federal court on the theory that the suit required
interpretation of a collective bargaining agreement and thus
was within federal law. Without explanation, the district
court initially denied a motion to remand but then, after the
employee’s union dropped out as co-plaintiff, granted a
motion to reconsider and remanded for lack of subject matter
jurisdiction. The Seventh Circuit held the remand order
reviewable, noting that “[t]he only way to make the orders
consistent is to assume that the judge believed that so long as
the union was a plaintiff, there was federal-question
jurisdiction, which vanished when the union dropped out. If
that was indeed the court’s approach, then we may review the
order by mandamus.” 964 F.2d at 709; see also Engelhardt
v. Paul Revere Life Insurance Co., 139 F.3d 1346, 1350-51
(11th Cir. 1998) (because “[t]he district court demonstrated
its belief that it had original subject matter jurisdiction over
the ERISA claim by expressly retaining jurisdiction over the
issue of statutory attorney’s fees and interest,” the court’s
“subsequent remand of the related state law claim was
necessarily a decision not to exercise supplemental
jurisdiction under § 1367(c)(3)”); Executive Software North
America, Inc. v. United States District Court for the Central
District of California, 24 F.3d 1545, 1549 (9th Cir. 1994)
(“[W]e have held that asserting original jurisdiction over at
least one of the claims removes the possibility that a remand
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21
order is issued pursuant to section 1447(c). Accordingly, the
remand order in this case is reviewable.”) (internal citation
and quotation omitted); Survival Systems, 825 F.2d at 1418
(holding that a remand order was reviewable because
“remand could not possibly have been based on section
1447(c) .. . since five of [plaintiff's] claims were held to be
preempted by federal law”).
The Fifth Circuit’s reliance on the magic words doctrine
to deny review despite the district court’s dismissal of the
TILA claim with prejudice is flatly inconsistent with these
cases. Because access to federal courts should not turn on
the fortuity of geography, this Court should grant the petition
in this case. -
C. The Fifth Circuit’s Approach Conflicts with
Numerous Decisions of this Court and the Courts of
Appeals Holding in Analogous Contexts that a
District Court’s Characterization of its Own Actions
Is Not Conclusive of the Reviewability of Those
Actions.
The Fifth Circuit’s approach also conflicts with
abundant precedent from this Court and the courts of appeals
in analogous contexts that “[t]he label attached by the
District Court to its own opinion does not, of course, decide
for us the jurisdictional issue,” and that the appellate court
must “determin{e] the question of appealability of the trial
court’s action not by the name the court gave [its decision]
but by what in legal effect it actually was.” United States v.
Sisson, 399 U.S. 267, 279 n.7 (1970) (internal quotation
omitted) (alteration in Sisson).
22
In Sullivan v. Finkelstein, 496 U.S. 617 (1990),
respondent asked this Court to dismiss an appeal filed by the
Secretary of Health and Human Services on the ground that
there was no “final judgment.” This Court denied
respondent’s request, despite the fact that “the District Court
did not caption its order as a ‘judgment,’ much less a ‘final
judgment.’” /d. at 628 n.7. The Court stated unequivocally
that “(t]he label used by the District Court of course cannot
control the order’s appealability in this case.” /d.
Similarly, in Liberty Mutual Insurance Co. v. Wetzel,
424 U.S. 737 (1976), the court of appeals had taken
jurisdiction over an appeal, reasoning that because the district
court had “made the recital required by Fed. R. Civ. Proc.
54(b) that final judgment be entered on the issue of liability,
and that there was no just reason for delay, the orders thereby
became appealable as a final decision pursuant to 28 U.S.C.
§ 1291.” Id. at 742. This Court disagreed, holding that the
district court’s recitation was not conclusive of appealability:
“[D]espite the fact thai the District Court undoubtedly made
the findings required under the Rule had it been applicable,
those findings do not in a case such as this make the order
appealable pursuant to 28 U.S.C. § 1291.” Jd. at 742-43.
In Sampson v. Murray, 415 U.S. 61 (1974), the district
court issued orders preventing discharge of a probationary
employee pending review of her termination. Although the
district court labeled its order as a temporary restraining
order (“TRO”), see 415 U.S. at 67 n.8, which would
normally be unreviewable, this Court held that the order was
reviewable because the order was, in the Court’s judgment,
actually a preliminary injunction. /d. at 87-88. See also
Carson v. American Brands, 450 U.S. 79 (1981) (holding
that this Court has jurisdiction to review a district court’s
23
refusal to accept a consent decree that would have imposed
affirmative obligations on employer because that refusal was
effectively a denial of an injunction reviewable under
§ 1292(a)(1)).
The courts of appeals have uniformly followed suit. For
example, in San Francisco Rea’ Estate Investors v. Real
Estate Investment Trust of America, 692 F.2d 814 (lst Cir.
1982), the court of appeals took jurisdiction of an appeal
despite the district court’s characterization of its order as a
TRO. Whiting for a unanimous panel, then-judge Breyer
stated that “the use of the ‘temporary restraining order’ label
by a district court does not defeat appealability if the order is
in substance a preliminary injunction.” Jd. at 816; see also In
re Slimick, 928 F.2d 304, 308 (9th Cir. 1990) (“It is irrelevant
that the court designated the first disposition an order and the
later disposition a judgment. Appealability tums on the
effect of the ruling, not the label assigned to it by the tral
court.”); Nguyen Da Yen v. Kissinger, 528 F.2d 1194, 1199
n.4 (9th Cir. 1975) (reviewing “discovery order” and noting
that “appealability turns not on labels but on the substantial
impact of the order’’); Spates v. Manson, 619 F.2d 204, 209
n.3 (2d Cir. 1980) (Friendly, J.) (“It is clear that nothing turns
on the use of the word ‘judgment’ or the statement that
“summary judgment be and is hereby entered in favor of the
Plaintiffs in accordance with the Court’s Memoranda of
Decision.’ ... Appealability turns on what has been ordered,
not on how it has been described.”’). .
The Fifth Circuit’s refusal to look beyond the district
court’s characterization of its own order cannot be reconciled
with this unbroken line of cases and thus merits this Court’s
review.
24
D. The Fifth Circuit’s Magic Words Approach Cannot
Be Justified By Precedent or Policy.
In the face of the uniformity among the cases of this
Court and the courts of appeals, the Fifth Circuit’s magic
words approach cannot be sustained. As members of this
Court have observed, “it make[s] little sense to rest
reviewability vel non on the tag the trial court elects to place
on its ruling.” Things Remembered, Inc., 516 U.S. at 134
(Ginsburg, J., concurring) (internal quotation and citation
omitted). Such an approach facilitates manipulation by the
parties and the district courts and, at the very least, creates
the perception of unfairness and abuse. As the Court noted
in Sampson v. Murray, “(a] district court, if it were able to
shield its order from appellate review merely by [its]
designati{on]”” would have “virtually unlimited authority over
the parties.” 415 U.S. at 86-87. Cf Thermtron, 423 US. at
351 (Congress did not “intend[{] to extend carte blanche
authority to the district courts to revise the federal statutes
governing removal”).
The Fifth Circuit was unconvinced that its decision
would engender these severe consequences, noting that it
“seriously doubt[ed]” that federal courts would abuse the
power to render their orders unreviewable. Petitioners need
not take issue with the court’s analysis, cf. Sykes v. Texas Air
Corp., 834 F.2d 488, 492 n.15 (Sth Cir. 1987) (“[w]e do not
mean to suggest that federal district courts are prone to
manipulate legal doctrine’”’), to note that it is beside the point.
The key question is “whether rules of appellate jurisdiction
that give incentives for manipulation are wise.” /d. In
determining the scope of appellate jurisdiction, this Court has
consistently recognized that giving conclusive effect to a
district court’s label is profoundly unwise. The Fifth
25
Circuit’s contrary conclusion in the context of § 1447(d)
cannot stand.
None of the other justifications offered by the Fifth
Circuit remotely justifies the magic words approach. The
Fifth Circuit sought, for example, to sidestep the serious
consequences of its approach by stating that “Congress struck
the balance of competing interests in favor of judicial
economy.” Pet. App. lla (internal citation and quotation
omitted). The Fifth Circuit’s assessment of the congressional
interests is, however, incomplete at best. As this Court made
clear in Cohill, although Congress intended to preclude
review of remands issued pursuant to § 1447(c), Congress
intended to permit review of discretionary (i.e., non-Section
1447(c)) remands, notwithstanding any concerns over
judicial economy.” Indeed, review of discretionary remands
is Critical to judicial economy, because it ensures that district
courts, before exercising their discretion to remand state
claims once the original basis of federal jurisdiction has been
eliminated, have properly considered the effect of
proceedings already conducted by the federal court. See City
of Chicago v. International College of Surgeons, 522 U.S.
156, 173 (1997) (holding that § 1367(c) “reflects the
understanding” that a district court deciding whether to
exercise supplemental jurisdiction must consider, among
other things, “judicial economy”); see also Cohill, 484 U.S.
'? The courts of appeals have unanimously held that discretionary
remands — whether pursuant to 28 U.S.C. § 1367(c)(3) or (prior to the
enactment of that statute) pursuant to Cohill — are reviewable. See, e.g., in
re U. S. Healthcare, Inc., 193 F.3d 151, 159 (3d Cir. 1999), cert. denied,
120 S. Ct. 2687 (2000); Engelhardt, 139 F.3d at 1350-51; St. John v.
International Association of Machinists and Aerospace Workers, 139 F.3d
1214, 1216-17 (8th Cir. 1998); see also Things Remembered, Inc.,516U.S.
at 130 (Kennedy, J., concurring) (citing cases).
26
at 350 n.7 (citing “judicial economy” as one of the factors to
be considered in deciding whether to remand state claims
following the dismissal of all federal claims). Allowing a
discretionary remand order to evade the appellate review
mandated by the Supreme Court and Congress when the face
of the order makes clear that the district court
mischaracterized the basis for remand flouts, rather than
furthers, congressional intent.
Moreover, the Fifth Circuit’s opinion is itself antithetical
to considerations of judicial economy, as even the Fifth
Circuit realized. See Pet. App. 12a n.6. The Fifth Circuit’s
application of the magic words doctrine forced the court to
hold that the district court’s dismissal of the TILA claims
was null and void and that Monogram could again remove
the case to federal court. Jd. The Fifth Circuit thus permitted
remand while concluding expressly that the case was
immediately removable. That approach not only is illogical
(thus demonstrating the flaws in the magic words approach),
it triggered an entirely unnecessary set of filings and
briefings.
Even worse, the Fifth Circuit’s approach triggered an
unseemly race to the courthouse. Relying on the Fifth
Circuit’s assurance that Monogram may “file another petition
based on the TILA claim once this claim is returned to state
court,” id., Monogram filed a second removal motion on the
morning after the Fifth Circuit’s opinion was issued, only to
learn shortly thereafter that plaintiff had obtained an ex parte
order from the state court dismissing the TILA claim the day
defore (i.e., on the day the Fifth Circuit’s opinion was
issued). That dismissal caused the district court to grant
plaintiff's subsequent motion to remand. Thus,
notwithstanding the Fifth Circuit’s expectation that
4
27
Monogram would ultimately have its claims resolved in
federal court, Monogram has once again had its case
remanded as part of plaintiff's continuing effort to deprive
Monogram of its statutory right to a federal forum. Congress
could not have intended the resolution of critical questions of
federal law to depend on who wins the post-appeal race to
the courthouse. See, e.g., Mobil Oil Exploration Co. v.
FERC, 814 F.2d 998, 1000 (Sth Cir. 1987) (per curiam)
(“Such races-to-the-courthouse distort the true intendment of
the statutory scheme.”’).
Equally unpersuasive is the Fifth Circuit’s attempt to
justify its result based on the statement in Thermtron that
only remand orders “issued under § 1447(c) and invoking the
grounds specified therein” are insulated from review. Pet.
App. 4a (internal citation and quotation omitted). That
language only poses, rather than answers, the question
presented in this petition, namely, how should a court of
appeals determine when an order is “issued under § 1447(c).”
As all of the other courts of appeals faced with the issue have
concluded, the proper way to make that determination is not
to rely on magic words used by the district court, but instead
independently to review the record to determine the actual
grounds of the district court’s decision. See also supra, at 13
(showing that the logic of Thermtron precludes reliance on
“magic words”).
In sum, the Fifth Circuit’s opinion creates a regime in
which a remand order that Congress made reviewable is
rendered non-reviewable simply because the district court —
wittingly or unwittingly — intoned the magic words of
§ 1447(c). That regime, is inconsistent with precedent,
congressional intent, and common sense, and thus merits this
Court’s review.
28
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted.
PAUL M. SMITH CARTER G. PHILLIPS*
IAN HEATH GERSHENGORN _ SIDLEY & AUSTIN
JENNER & BLOCK, LLC 1722 Eye Street, N.W.
601 Thirteenth Street, N.W. Washington, DC 20006
Washington, DC 20005 (202) 736-8000
(202) 639-6000
JEROLD S. SOLOVY ALAN S. KAPLINSKY
JENNER & BLOCK, LLC JEREMY T. ROSENBLUM
One IBM Plaza BALLARD SPAHR ANDREWS
Chicago, IL 60611 & INGERSOLL, LLP
(312) 222-9350 1735 Market Street
Philadelphia, PA 19103
(215) 665-8500
COLVIN G. NORWOOD
DAVID S. WILLENZIK
ANTHONY J. ROLLO
MCGLINCHEY STAFFORD
A Professional Limited
Liability Company
643 Magazine Street
‘New Orleans, LA 70130
(504) 586-1200
March 29, 2001 * Counsel of Record
APPENDICES
Appendix A
United States Court of Appeals,
Fifth Circuit.
Patricia HEATON, Plaintiff-Appellee,
v.
MONOGRAM CREDIT CARD BANK OF GEORGIA,
Defendant-Appellant.
No. 99-31341.
Nov. 2, 2000.
Appeal from the United States District Court for the
Eastern District of Louisiana.
Before DUHE, EMILIO M. GARZA and DeMOSS,
Circuit Judges.
~ DUHE, Circuit Judge:
Monogram Credit Card Bank of Georgia (“Monogram”)
appeals the district court’s order remanding this case to state
court pursuant to 28 U.S.C. § 1447(c). Because Congress has
specifically excluded this type of remand order from appellate
review, we conclude that we lack jurisdiction and therefore
DISMISS Monogram’s appeal.
BACKGROUND
We summarize only the facts relevant to the issues in
dispute in this appeal. Monogram, a Georgia credit card
bank, issued a credit card to Patricia Heaton (“Heaton”) to
finance purchases from a retail store called Campo
Appliances. Heaton brought a class action lawsuit in state
2a
court, alleging that Monogram charged late fees on the card
in excess of the limit provided under the Louisiana Consumer
Credit Law (“LCCL”), La. R.S. 9:3527. Heaton also alleged
breach of contract.
Monogram removed the suit. It argued that there was a
basis for federal subject matter jurisdiction because Heaton’s
claims were completely preempted by Section 27 of the
Federal Deposit Insurance Act (“FDIA”), 12 U.S.C. § 1831d.
Section 27 of the FDIA authorizes federally-insured “state
banks” (as defined under Section 3(a)(2) of the FDIA, 12
U.S.C. § 1813(a)(2)) to charge late fees permitted by the laws
of their home states. Georgia law provides for a higher late
fee limit than the LCCL. Monogram also argued that the
parties were diverse and, pursuant to Jn re Abbott
Laboratories, 51 F.3d 524 (5th Cir. 1995), Heaton’s demand
for attorney’s fees under the LCCL caused the amount in
controversy to exceed $75,000.
Heaton sought remand, arguing that Monogram could not
invoke complete preemption because it was not a “state
bank” under the definition contained in Section 3(a)(2) of the
FDIA. Section 3(a)(2) defines state banks as those which are
“engaged in the business of receiving deposits” and which are
incorporated under state law. Part of Heaton’s argument was
that because Monogram accepts deposits only from its parent
company and not from its customers, it could not be engaged
in the business of receiving deposits. She also contended that
In re Abbott Laboratories was inapplicable, and therefore the
court lacked diversity jurisdiction.
Judge Porteous denied Heaton’s motion, concluding that
under the plain language of the FDIA, Monogram was a
“state bank.” He also cited a letter from the Federal Deposit
3a
Insurance Corporation (“FDIC”) in which the FDIC stated
that it considered Monogram to be a state bank. Therefore,
Heaton’s claims were completely preempted.' Less than a
week after the denial of remand, the case was re-assigned to
Judge Barbier. Judge Barbier denied Heaton’s petition for an
interlocutory appeal of the denial of remand, finding that
there was no “substantial ground for difference of opinion as
to whether the defendant is a state bank.” Heaton v.
Monogram Credit Card Bank of Georgia, No. 98-1823 (E.D.
La. Nov. 25, 1998) (minute entry denying permission to
appeal).
Thereafter, Heaton moved to amend her petition to assert a
federal claim under the Truth in Lending Act (“TILA”),
specifically 15 U.S.C. § 1637(c)(3)(B). This claim was not
related to the credit card late fees. A magistrate judge denied
this motion, but Judge Barbier vacated the magistrate judge’s
order and allowed Heaton to assert the TILA claim.
Later, Heaton discovered that Monogram had participated
in the preparation of the FDIC letter that Judge Porteous had
cited in his order denying the motion to remand. Heaton then
moved for a reconsideration of her motion. Judge Barbier
granted the motion and remanded the case to state court,
citing 28 U.S.C. § 1447(c). The judge rejected Monogram’s
argument that Heaton had waived her objection to the earlier
denial of remand by amending her petition to add the TILA
claim. On the same day that he signed the remand order,
Judge Barbier granted Heaton’s voluntary motion to dismiss
' The judge’s order did not address the question of diversity
jurisdiction.
ene eee
4a
that claim with prejudice, and noted the dismissal in a
footnote in the remand order.
In granting the motion to remand, Judge Barbier concluded
that Monogram was not a “state bank” because it was not
“engaged in the business of receiving deposits” under Section
3(a)(2). He reasoned that because Monogram only receives
deposits from its parent company, under a plain reading of the
FDIA, it could not be engaged in the business of receiving
deposits from its customers. As a result, the judge concluded
that “this Court does not have federal question jurisdiction,
and there is no federal preemption.” Heaton v. Monogram
Credit Card Bank of Georgia, No. 98-1823 (E.D. La. Nov.
22, 1999) (minute entry ordering remand). The judge also
found diversity lacking, and noted that “if there is any doubt
as to federal subject matter jurisdiction, the court should
resolve the doubt in favor of remand.” /d.
Monogram appealed. Heaton moved to dismiss the appeal
for lack of appellate jurisdiction.
DISCUSSION
We begin with 28 U.S.C. § 1447(d), which provides: “An
order remanding a case to State court from which it was
removed is not reviewable on appeal or otherwise.”
Notwithstanding this broad language, the Supreme Court has
explained that this provision is to be interpreted in pari
materia with § 1447(c), such that only remand orders issued
under § 1447(c) and “invoking the grounds specified therein”
are immune from review. /Thermtron Prods., Inc. v.
Hermansdorfer, 423 U.S. 336, 345-46, 96 S. Ct. 584, 590, 46
L. Ed. 2d 542 (1976), abrogated on other grounds by
Quackenbush y. Allstate Ins. Co., 517 U.S. 706, 116 S. Ct.
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1712, 135 L. Ed. 2d 1 (1996); Smith v. Texas Children’s
Hosp., 172 F.3d 923, 925 (Sth Cir. 1999). Lack of subject
matter jurisdiction is one basis for remand under § 1447(c).
A § 1447(c) remand is not reviewable on appeal even if the
district court’s remand order was erroneous. Thermtron, 423
USS. at 343, 96 S. Ct. at 589; Smith, 172 F.3d at 925; Giles v.
NYLCare Health Plans, Inc., 172 F.3d 332, 336 (Sth Cir.
1999). “Reviewable non-§ 1447(c) remands constitute a
natrow class of cases, meaning we will review a remand
order only if the district court ‘clearly and affirmatively’
relies on a non-§ 1447(c) basis.” Copling v. Container Store,
Inc., 174 F.3d 590, 596 (Sth Cir. 1999); Giles, 172 F.3d at
336. The justification for this rule is “to prevent delay in the
trial of remanded cases by protracted litigation of
jurisdictional issues.” Thermtron, 423 U.S. at 351, 96 S. Ct.
at 593. As a result, we have stated that “the district court is
the final arbiter of whether it has jurisdiction to hear the
case.” Smith, 172 F.3d at 925.
A plain and common sense reading of the Judge Barbier’s
remand order reveals that he stated a § 1447(c) basis for
remand. The judge specifically concluded that “this Court
does not have federal question jurisdiction” and that “there is
nc federal preemption.” He also specifically mentioned that
doubt as to whether there is subject matter jurisdiction should
be resolved in favor of remand. He then invoked § 1447(c) in
ordering the remand. Even if Judge Barbier’s conclusions
that Monogram was not a state bank and that there was
therefore no preemption were erroneous, we cannot review
his remand order.
Monogram argues, however, that despite the clear
language of the remand order, the true basis for the order was
28 U.S.C. § 1367(c)(3). Monogram thus concludes that we
6a
have jurisdiction in this case because remand orders pursuant
to § 1367(c) are subject to appellate review. Hook v.
Morrison Milling Co., 38 F.3d 776, 780 (Sth Cir. 1994).
Under § 1367(c3), a district court may decline in its
discretion to exercise supplemental jurisdiction over
supplemental (formerly “pendent’’) state law claims when the
court has dismissed all claims giving rise to original
jurisdiction. | Monogram asserts that Judge Barbier’s
dismissal of Heaton’s federal TILA claim, which he noted in
his remand order, was the predicate for the remand of what
Judge Barbier considered to be remaining state law claims.
Heaton’s addition of the TILA claim, according to
Monogram, formed an independent basis for federal question
jurisdiction, and Judge Barbier’s dismissal of the claim with
prejudice demonstrated that he thought he had subject matter
jurisdiction over that claim. Therefore, Monogram argues
that the remand order was necessarily pursuant to
§ 1367(c)(3), and Judge Barbier simply mislabeled the order
as one pursuant to § 1447(c).
In making this argument, Monogram relies on our decision
in Bogle v. Phillips Petroleum Co., 24 F.3d 758 (Sth Cir.
1994). In that case, a panel of this Court stated:
The critical distinction for determining appealability is the
presence of federal subject matter jurisdiction prior to the
order of remand. In a Section 1447(c) remand, federal
jurisdiction never existed, and in a non-Section 1447(c)
remand, federal jurisdiction did exist at some point in the
litigation, but the federal claims were either settled or
dismissed.
Id. at 762. Monogram asserts that because the TILA claim
conferred federal question jurisdiction on the district court,
federal jurisdiction “did exist at some point” in the suit and
therefore the remand could not have been based on § 1447(c).
7a
We reject Monogram’s argument. In Bogle, the district
court’s remand order concluded that ““[t]his case does not
contain a federal claim.”” /d. However, the court also went
on to discuss the discretionary factors set forth in Carnegie-
Mellon University v. Cohill, 484 U.S. 343, 108 S. Ct. 614, 98
L. Ed. 2d 720 (1988), which district courts should consider in
remanding supplemental state law claims. Therefore, because
the remand order in Bogle was at first glance somewhat
ambiguous, our elucidation of the grounds for remand was
required in order to determine the district court’s reasons for
remanding. We concluded that the district court’s discussion
of the discretionary factors did not taint its conclusion that
subject matter jurisdiction was lacking, and therefore
§ 1447(c) formed the basis for the order. Bogle, 24 F.3d at
762.
In the instant case, however, we see no ambiguity
whatsoever in Judge Barbier’s remand order. Although brief,
the order clearly and affirmatively stated a § 1447(c) reason
for remand, because Judge Barbier concluded that he lacked
subject matter jurisdiction. His citation of § 1447(c) is
clearly not a “mislabeling” of the basis for remand. Nowhere
in the order did the judge discuss the discretionary factors sei
forth in Carnegie-Mellon, nor did he cite § 1367(c)(3) or anv
othr basis for remand.’ In Smith, this Court initizity
reviewed the first of two remand orders in that case. Because
? But see Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 336 (Sth
Cir. 1999) (where the remand order was reviewable on appeal because “[t]he
court specifically noted that ‘this is an appealable order because the basis of
my ruling is an exercise of discretion to remand pendent state law claims.’”);
and Hook v. Morrison Milling Co., 38 F.3d 776, 780 (Sth Cir. 1994) (the
remand order was reviewable because “[t}he district court below made clear
that it was remanding Hook’s state law negligence claim, i.e., her only
remaining claim, pursuant to its discretion.”).
8a
the district judge granted summary judgment against the
plaintiff on some of her claims but remanded a remaining
state law claim, the Court interpreted the order as a
discretionary remand of pendent state law claims. Smith v.
Texas Children’s Hosp., 84 F.3d 152, 154 (Sth Cir. 1996).
On remand to the federal district court, the district judge
entered a second order remanding the case to state court.
Despite our interpretation of the first remand order, the
second remand order stated: “This court does not and has
never had jurisdiction over Smith’s claim.” The judge then
ordered the remand pursuant to § 1447(c). Smith v. Texas
Children’s Hosp., 172 F.3d 923, 925 (Sth Cir. 1999). On the
appeal of this second order, we concluded that the order did
not affirmatively state a non-§ 1447(c) ground for remand,
and therefore § 1447(d) barred appellate review. Jd. at 927.
Likewise, in the instant case, even if Judge Barbier’s
conclusion that he lacked subject matter jurisdiction was
clearly erroneous, he did not state a non-§ 1447(c)} ground for
remand and we cannot review his order.
Monogram relies on decisions of other circuits in asserting
that the “mere incantation” of § 1447(c) or the words of
subject matter jurisdiction does not automatically render the
remand order unreviewable. Further, Monogram urges us to
conduct an independent review of the remand order to
determine the “true” basis for the remand. However, we note
that in Bogle, looking at the face of the remand order we
stated: “The magic words ‘this case does not contain a
federal claim’ rendered the district court’s remand order
unreviewable.” Bogle, 24 F.3d at 762.°
> See also McDermott Int'l, Inc. v. Lloyds Underwriters of London,
944 F.2d 1199, 1201 n.1 (Sth Cir. 1991) (noting that the grounds for
reviewing remand orders have expanded, and admonishing district courts to
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Monogram also argues that we must apply our decision in
In re Digicon Marine, Inc., 966 F.2d 158 (5th Cir. 1992), and
conclude that we are not bound by Judge Barbier’s
“erroneous characterization” of his reasons for remanding.
However, Digicon Marine supports, rather than contradicts,
our holding today. In that case, the tnal court granted a
motion to remand based on the lack of authority to remove a
maritime case under 28 U.S.C. § 1441(b). /d. at 159. Later,
in an order denying reconsideration, it stated that the earlier
ruling was based upon a lack of subject matter jurisdiction.
Id. We concluded that “[d]espite the district court’s
description of the remand as one based on a lack of subject
matter jurisdiction in its order on reconsideration, the district
court’s original remand order clearly indicates on its face that
the remand was not based upon lack of original subject matter
jurisdiction...” /d. at 160. In the instant case, Judge Barbier
“take care to explain their reasons for remanding cases” because “the
availability and means of appellate review turns exclusively on the district
court’s reason for remand.”); Tillman v. CSX Transp., Inc., 929 F.2d 1023,
1026 (Sth Cir. 1991) (“Reviewability of a remand order depends entirely
upon the trial court’s stated grounds for its decision to remand.”); Richards
v. Federated Dep't Stores, Inc., 812 F.2d 211 & n.1 (Sth Cir. 1987) (the
remand order “is proof against review even if it merely ‘purports’ to remand
on the ground quoted.”); and /n re Merrimack Mut. Fire Ins. Co., 587 F.2d
642, 644 (Sth Cir. 1978) (“If . . . the remand order states that it is based on
1447(c) statutory grounds, it is immune from review by an appellate
court.”’).
Monogram suggests these decisions may be inapplicable because they dealt _
with cases originated before the December 1, 1990 effective date of § 1367.
However, the Supreme Court clearly approved discretionary remands of
pendent state law claims as early as 1988 in Carnegie-Mellon. Moreover,
because of our holding today that Judge Barbier’s order was based solely on
§ 1447(c) grounds, we see no reason why these cases are inapposite.
10a
did not discuss his reasons for remanding in any order outside
the remand order itself. Just as in Digicon Marine, in this
case we need only look to the face of the remand order to
determine his reasons for remanding. We cannot read the
remand order to say that the court “clearly and affirmatively”
relied on a non-§ 1447(c) basis as required by Copling v.
Container Store, Inc., 174 F.3d 590, 596 (Sth Cir. 1999) and
Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 336 (Sth
Cir. 1999). The face of the order clearly states a § 1447(c)
basis for remand.‘
We think adopting Monogram’s position that we interpret
the remand order as one pursuant to § 1367(c)(3) would
basically require us to conclude that Judge Barbier remanded
the case for the wrong reasons. That approach would
essentially amount to an appellate review of the order, which
Congress has clearly forbidden us to do under § 1447(d).
Monogram urges that “[p]ublic pelicy considerations strongly
militate in favor of allowing this appeal to be maintained.”
Appellant’s Reply Brief at 10. It argues that allowing district
courts to insulate their remand orders from appellate review
by “ironing the words ‘subject matter jurisdiction’” would
unleash “unreviewable mischief” and deny litigants their nght
of appeal of § 1367(c)(3) remand orders. /d. Although we
seriously doubt Monogram’s prediction, we think the “public
policy” decision is one for Congress to make, and one which
it has already made in the plain language of § 1447(d). In
* Moreover, we note that Digicon Marine points out that when a
remand is reviewable on appeal, a district court may reconsider and vacate
its own order. Digicon Marine, 966 F.2d 158, 160-61, quoting /n re Shell
Oil Co., 932 F.2d 1523, 1528 (Sth Cir. 1991). However, Monogram did not
seek a reconsideration or amendment of Judge Barbier’s order to reflect its
position that the order was really based on § 1367(c)(3).
lla
enacting § 1447(d), “Congress struck the balance of
competing interests in favor of judicial economy.” Smith,
172 F.3d at 925.°
We recognize that the merits of this case present significant
questions of law concerning the interpretation of the FDIA
and the ability of courts to “second-guess” the FDIC’s
determinations about whether financial institutions are “state
banks” under the FDIA. However, we note that because we
construe the remand order as jurisdictional in nature, the
district court’s determinations as to Monogram’s substantive
preemption defense will have no preclusive effect on the state
court. Smith v. Texas Children’s Hosp., 172 F.3d 923, 926
(Sth Cir. 1999).
We think Judge Barbier clearly intended to base his order
on § 1447(c). Having concluded that he lacked subject
matter jurisdiction over the case, however, Judge Barbier
lacked jurisdiction to grant Heaton’s motion for voluntary
dismissal with prejudice. Such a ruling is a judgment on the
merits. See Boudloche v. Conoco Oil Corp., 615 F.2d 687,
688 (Sth Cir. 1980). In Bogle, the district court remanded the
case because it believed that it lacked subject matter
jurisdiction, yet it granted the plaintiff a partial nonsuit with
prejudice of the claims that formed the basis of the
defendant’s removal petition. Bogle v. Phillips Petroleum
* See also Tramonte v. Chrysler Corp., 136 F.3d 1025, 1027 (Sth Cir.
1998) (“[T]he [Supreme] Court has recognized that § 1447(d) intends to
insulate from appellate review a district court’s determinations as to its
subject matter jurisdiction . . . .”); and Tillman v. CSX Transp., Inc., 929
F.2d 1023, 1024 (Sth Cir. 1991) (“The trial court brought its remand order
within the absolute immunity from review of 28 U.S.C. § 1447(c) by
expressly referring to a lack of jurisdiction as one of the bases of its decision
to remand.”).
12a
Co., 24 F.3d 758, 762 (Sth Cir. 1994). We held that order
was void and of no effect. We reach the same conclusion
here. The order dismissing Heaton’s TILA claim is void.°
CONCLUSION
Because we have concluded that we lack jurisdiction in this
case, we DISMISS Monogram’s appeal pursuant to 28 U.S.C.
§ 1447(d).
APPEAL DISMISSED.
° We realize that because of our holding today, Monogram may file
another petition for removal based on the TILA claim once this case is
returned to state court. We are aware that this result may conflict with the
policy of judicial economy embodied in § 1447(d). However, we are
constrained by the language of Judge Barbier’s remand order that he felt he
had no subject matter jurisdiction in this case, and therefore we can reach no
other result but that Judge Barbier was not empowered to render a ruling on
the merits.
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Appendix B
United States District Court
Eastern District of Louisiana
PATRICIA HEATON, on behalf of Civil Action No.
herself and all others similarly 98-1823
situated
V. Section “T” (2)
MONOGRAM CREDIT CARD
BANK OF GEORGIA
Oct. 7, 1998.
ORDER AND REASONS
PORTEOUS, District J.
Before the Court is 2 motion by plaintiff Patricia Heaton to
remand the above captioned case to the Civil District Court
for the Parish of Orleans due to a lack of subject matter
jurisdiction. After hearing oral arguments and reviewing the
record and memoranda submitted by the plaintiffs and
defendants, the court finds that it has subject matter
jurisdiction.
BACKGROUND
In October 1995, plaintiff entered into a credit card contract
with the defendant. Thereafter, defendant provided plaintiff
with a “Campo” credit card, allowing her to shop at Campo
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Appliances on credit. On May 11, 1998, plaintiff filed a class
action suit in state court alleging that defendant improperly
calculated and charged her “late fees” and alleging defendant
violated the Louisiana Consumer Credit Law by charging her
more than the statutorily allowed $15 late fee. On June 19,
1998, defendant timely removed this case to federal court
alleging diversity jurisdiction and federal question
jurisdiction.
LAW AND ANALYSIS
The standard regarding removal and remand is set forth in
28 U.S.C. § 1447(c) which states that “[i]f at any time before
final judgment it appears that the district court lacks subject
matter jurisdiction, the case shall be remanded.”
Removal of cases initially filed in the state court is
governed by 28 U.S.C. § 1441. Section 1441(a) permits
removal of “any civil action brought in a state court of which
the district courts of the United States have original
jurisdiction.” United States Courts have original jurisdiction
of “all civil actions arising under the Constitution, laws or
treaties of the United States.” 28 U.S.C. § 1331. The
jurisdictional framework governing the removal of federal
question cases is centered on the well-pleaded complaint rule.
It is long-settled law that a cause of action “arises under”
federal law only when the plaintiff's well-pleaded complaint
raises issues of federal law. Gully v. First National Bank,
299 U.S. 109, 57 S. Ct. 96, 81 L. Ed. 70 (1936).
A state-created cause of action may arise under federal law
if the resolution of the dispute depends on the validity,
construction or effect of federal law, so long as the federal
question is a real and substantial issue. Shultis v. McDougal,
1Sa
225 U.S. 561, 569, 32 S. Ct. 704, 56 L. Ed. 1205 (1912), and
its resolution is an essential element of the plaintiff's case.
Gully, 299 U.S. at 112.
The Federal Deposit Insurance Act (FDIA) is implicated in
this case because the defendant is a state bank.' Title 12
U.S.C. § 1831d(a) states that, “[iJn order to prevent
discrimination against State-chartered insured depository
institutions, . . . if the applicable rate prescribed in this
subsection exceeds the rate such State bank . . . may,
notwithstanding any State constitution or statute which is
hereby preempted for the purposes of this section . . . take,
receive, reserve and charge on any loan . . . or other evidence
of debt, . . . at the rate allowed by the laws of the State...
where bank is located.” Defendant asserts that this provision
of the FDIA completely preempts claims alleging that credit
card late fees exceed the limit allowed by \ouisiana’s
Consumer Credit Law, thus establishing federal question
jurisdiction over plaintiffs claims.
The amount of interest Monogram charges its customers is,
not only a “real and substantial issue” in this case, it is at the
heart of the class action suit. And although plaintiff filed this
suit under Louisiana law, federal law clearly is implicated in
the claim. Given the plain language of the statute and
considering the FDIC’s position that Monogram is a “state
bank” within the meaning of the statute, this Court finds that
i ' Plaintiff argued that because defendant is a “credit card” bank under
: the laws of Georgia, it is not in the “business of receiving deposits” and is
4 therefore not a “state bank.” However, the Federal Deposit Insurance
: Corporation considers defendant a “state bank” under the provisions of
Section 3(a)(2) of 12 U.S.C. 1813(a)(2). (Doc. 15. Ex. A.).
l6a
this claim arises under federal law and that the FDIA
preempts the Louisiana Consumer Credit Law.’
As this Court finds federal question jurisdiction, it is
unnecessary to address plaintiff's arguments regarding the
applicability of attorneys fees to the named plaintiff in class
action suits to the amount in controversy for diversity
jurisdiction.
Accordingly,
IT IS ORDERED that the Plaintiffs Motion to Remand this
case to the Civil District Court for the Parish of Orleans is .
hereby DENIED.
New Orleans, Louisiana, this
7th day October, 1998.
G. Thomas Porteous, Jr.
United States District Judge
? Plaintiff, in oral argument, agreed that such a finding would confer
federal jurisdiction.
17a
Appendix C
Minute Entry
Barbier, J.
November 25, 1998
United States District Court
Eastern District of Louisiana
PATRICIA HEATON, on behalfof Civil Action
herself and all others similarly No. 98-1823
situated
versus
Section “J” (2)
MONOGRAM CREDIT CARD
BANK OF GEORGIA
Before the court is plaintiff's “Motion to Amend Order to
Include Statement Prescribed by 28 U.S.C. § 1292(B)” and
“Petition for Permission to Appeal” which are set for hearing
on November 25, 1998 at 9:30 a.m. on the briefs. Defendant
opposes the motion and petition. For the following reasons,
plaintiff's motion and petition are denied.
BACKGROUND AND FACTS
Plaintiff originally filed this class action suit in state court
alleging, in part, violations by defendant of the Louisiana
Consumer Credit Law due to excess late fee charges.
Defendant removed the action to federal court and plaintiff
attempted to have the case remanded to state court. In
denying the remand motion, Judge Porteous concluded that
18a
defendant was a state bank as defined by Section 3(a)(2) of
28 U.S.C. 1813(a)(2). As such, Judge Porteous found that
plaintiff's claim arises under federal law and that the Federal
Deposit Insurance Act, 12 U.S.C. § 1831(d), preempts the
Louisiana Consumer Credit Law. Plaintiff now seeks to
appeal this interlocutory order.
DISCUSSION
Title 28, § 1292(b) of the United States Code lists three
criteria which must be met before entry of an interlocutory
appeal is proper: 1) there must be a controlling question of
law involved; 2) there must be substantial ground for
difference of opinion on that question of law; and 3) an
immediate appeal must materially advance the ultimate
termination of the litigation. Aparicio v. Swan Lake, 643
F.2d 1109, 1110 n.2 (Sth Cir. 1981). Interlocutory appeals
should be granted only in exceptional situations where
allowing an appeal would avoid protracted and expensive
litigation. Clark-Dietz & Assoc. v. Basic Construction, 702
F.2d 67 (Sth Cir. 1983).
The court finds that an appeal is not proper in the present
case for two reasons. First, plaintiff has not shown that an
appeal will advance the ultimate termination of the litigation.
Plaintiff simply points out that if the appellate court were to
reverse this court, the case would be remanded. As pointed
out by defendant, however, there is another basis for federal
jurisdiction which was not resolved by this court which could
be asserted after appeal. Additionally, remand does not
amount to the termination of the litigation.
Further, the court concludes that plaintiff has not shown a
substantial ground for difference of opinion as to whether
19a
defendant is a state bank. Plaintiff cites no authority for the
contention that defendant is not a state bank.
Accordingly,
IT IS ORDERED that plaintiff's “Motion to Amend Order
to Include Statement Prescribed by 28 U.S.C. § 1292(b)” and
“Petition for Permission for Appeal” are denied.
20a
Appendix D
Minute Entry
Barbier, J.
November 22, 1999
United States District Court
Eastern District of Louisiana
PATRICIA HEATON, on behalf of Civil Action
herself and all others similarly No. 98-1823
situated
versus
Section “J” (2)
MONOGRAM CREDIT CARD
BANK OF GEORGIA
Before the Court is plaintiff's Motion for Reconsideration
(Rec. Doc. 78) of her Motion to Remand. Defendant opposes
the motion. The motion, set for hearing on November 10,
1999, is before the Court on briefs and oral argument.
In the motion, plaintiff moves to reconsider the court’s
earlier denial of her motion to remand. Plaintiff primarily
argues that defendant, Monogram Credit Card Bank of
Georgia, is not a “state bank” as defined in the Federal
Deposit Insurance Act (“FDIA”), 12 U.S.C. § 1813(a)(2),
and, therefore, federal question jurisdiction is not present and
federal preemption does not apply.
Defendant argues that plaintiff has waived any objection to
the earlier denial of the motion to remand, because she has
2la ea
since voluntarily amended her Complaint to assert a federal
question, namely, a claim under the Truth in Lending Act
(“TILA”).'
The Court, however, finds that no waiver has occurred in
this particular case. The cases relied upon by defendant are
distinguishable in that there had either been no objection to
jurisdiction to begin with, Sigmon v. Southwest Airlines Co.,
110 F.3d 1200, 1202-03 (Sth Cir. 1997), or there had been a
judgment on the merits, Kidd v. Southwest Airlines, Co., 891
F.2d 540, 546 (Sth Cir. 1990).
With respect to the merits of plaintiff's motion to remand,
the Court must determine whether Monogram, a “credit card”
bank chartered by the state of Georgia, is a “state bank”
within the meaning of the FDIA. Under the statute, a “state
bank” is defined as “any bank . . . which is engaged in the
business of receiving deposits . . . , and is incorporated under
the laws of any state... .” 12 U.S.C. § 1813(a)(2).
Because case law appears silent on this precise point,’ the
Court relies upon a reading of the plain language of the
statute and concludes that, although Monogram receives
“deposits” from its parent company, it is not engaged in the
“business of receiving deposits” from its customers.
: ' The Court notes that plaintiff has moved to voluntarily dismiss her
TILA claims, which the Court has granted.
? Monogram relies on Meriden Trust & Safe Deposit Co. v. Federal
Deposit Ins. Corp., 62 F.3d 449 (2d Cir. 1995), as authority for its argument
that it should be considered to be a “state bank” under the FDIA. However,
that case is distinguishable because the bank in that case was originally
chartered as a commercial bank, unlike Monogram which has never been
anything but a credit card bank.
22a
Accordingly, under the plain language of the statute,
Monogram is not a “state bank.” Therefore, this Court does
not have federal question jurisdiction, and there is no federal
preemption.
As for whether diversity jurisdiction is present, the Court
notes that plaintiff seeks an award of attorney’s fees not as a
separate element of damages, but rather as _ class
representative under La. C. Civ. P. Art. 595. This Court has
previously considered this same question and has held that
such attorney’s fees should not be aggregated and attributed
to the class representative for purposes of determining if the
requisite jurisdictional amount exists for diversity
jurisdiction. See Jones v. The Valvoline Co., 98-557, 1999
WL 319215 (E.D. La. May 20, 1999).
The Court is also cognizant of the well recognized principle
that, if there is any doubt as to federal subject matter
jurisdiction, the court should resolve the doubt in favor of
remand since it is presumed that a federal court lacks
jurisdiction until it has been demonstrated to exist. See, e.g.,
Naartex Consulting Corp. v. Watt, 722 F.2d 779, 792
(U.S.App.D.C.1983). Accordingly,
IT IS ORDERED that plaintiffs Motion for
Reconsideration is GRANTED and the above captioned
matter should be and is hereby REMANDED to Civil District
Court for the Parish of Orleans, pursuant to 28 U.S.C.
§ 1447(c).
23a
Appendix E
United States District Court
Eastern District of Louisiana
PATRICIA HEATON, on behalf of | Civil Action No.
herself and all others similarly 98-1823
situated c/w 99-2603
Plaintiff,
v. Section “J”
MONOGRAM CREDIT CARD
BANK OF GEORGIA Magistrate 1
Defendant.
ORDER
Considering Plaintiff's Motion to Dismiss with Prejudice,
IT IS HEREBY ORDERED that Plaintiff's claim under the
Truth in Lending Act is hereby dismissed with prejudice. All
other claims asserted by Ms. Heaton, including those asserted
under the Louisiana Consumer Credit Law, are hereby
reserved. ;
New Orleans, Louisiana, this 22 day of November, 1999.
JUDGE
24a
Appendix F
United States Court of Appeals,
Fifth Circuit.
No. 99-3134]
Jan. 5, 2001
Patricia HEATON, Plaintiff-Appellee,
MONOGRAM CREDIT CARD BANK OF GEORGIA,
Defendant-Appellant.
Appeal from the United States District Court for the
Eastern District of Louisiana.
ON PETITION FOR REHEARING EN BANC
(Opinion 11/2/00), 5th Cir., ; F.3d
Before Duhe, Emilio M. Garza and DeMoss, Circuit Judges.
PER CURIAM:
( ) Treating the Petition for Rehearing En Banc as a Petition
for Panel Rehearing, the Petition for Panel Rehearing is
DENIED. No member of the panel nor judge in regular
active service of the court having requested that the court be
polled on Rehearing En Banc (Fed. R. App. P. and Sth Cir. R.
35), the Petition for Rehearing En Banc is DENIED.
( X ) Treating the Petition for Rehearing En Banc as a
Petition for Panel Rehearing, the Petition for Panel Rehearing
25a
is DENIED. The court and a majority of the judges who are
in regular active service not having voted in favor (Fed. R.
App. P. and Sth Cir. R. 35), the Petition for Rehearing En
Banc is DENIED.
ENTERED FOR THE COURT:
United States Circuit Judge
Chief Judge King and Judge Benavides did not participate in
the consideration of the petition for rehearing en banc.
26a
Appendix G
Statutory Provisions Involved
UNITED STATES CODE ANNOTATED
TITLE 28. JUDICIARY AND JUDICIAL PROCEDURE
PART IV--JURISDICTION AND VENUE
CHAPTER 89--DISTRICT COURTS; REMOVAL OF
CASES FROM STATE COURTS
§ 1447. Procedure after removal generally
(a) In any case removed from a State court, the district court
may issue all necessary orders and process to bring before it
all proper parties whether served by process issued by the
State court or otherwise.
(b) It may require the removing party to file with its clerk
copies of all records and proceedings in such State court or
may cause the same to be brought before it by wnt of
certiorari issued to such State court.
(c) 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. An order remanding
the case may require payment of just costs and any actual
expenses, including attorney fees, incurred as a result of the
removal. A certified copy of the order of remand shall be
mailed by the clerk to the clerk of the State court. The State
court may tiiereupon proceed with such case.
27a
(d) An order remanding a case to the State court from
which it was removed is not reviewable on appeal or
otherwise, except that an order remanding a case to the State
court from which it was removed pursuant to section 1443 of
this title shall be reviewable by appeal or otherwise.
(e) If after removal the plaintiff seeks to join additional
defendants whose joinder would destroy subject matter
jurisdiction, the court may deny joinder, or permit joinder and
remand the action to the State court.
§ 1367. Supplemental jurisdiction
(a) Except as provided in subsections (b) and (c) or as
expressly provided otherwise by Federal statute, in any civil
action of which the district courts have original jurisdiction,
the district courts shall have supplemental jurisdiction over
all other claims that are so related to claims in the action
within such original jurisdiction that they form part of the
same case or controversy under Article III of the United
States Constitution. Such supplemental jurisdiction shall
include claims that involve the joinder or intervention of
additional parties.
(b) In any civil action of which the district courts have
original jurisdiction founded solely on section 1332 of this
title, the district courts shall not have supplemental
jurisdiction under subsection (a) over claims by plaintiffs
against persons made parties under Rule 14, 19, 20, or 24 of
the Federal Rules of Civil Procedure, or over claims by
persons proposed to be joined as plaintiffs under Rule 19 of
such rules, or seeking to intervene as plaintiffs under Rule 24
of such rules, when exercising supplemental jurisdiction over
28a
such claims would be inconsistent with the jurisdictional
requirements of section 1332.
(c) The district courts may decline to exercise supplemental
jurisdiction over a claim under subsection (a) if--
(1) the claim raises a novel or complex issue of State
law,
(2) the claim substantially predominates over the claim
or claims over which the district court has original
jurisdiction,
(3) the district court has dismissed all claims over which
it has original jurisdictic a, or
(4) in exceptional circumstances, there are other
compelling reasons for declining jurisdiction.
(d) The period of limitations for any claim asserted under
subsection (a), and for any other claim in the same action that
is voluntarily dismissed at the same time as or after the
cismissal of the claim under subsection (a), shall be tolled
while the claim is pending and for a period of 30 days after it
is dismissed unless State law provides for a longer tolling
period.
(e) As used in this section, the term “State” includes the
District of Columbia, the Commonwealth of Puerto Rico, and
any territory or possession of the United States. -
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.