Reply Brief — Brookshire Bros. Holding, Inc. v. Day-Co Productions, Inc., 129 S. Ct. 2865 (2009) (No. 08-1233)

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30 i (4) FILED

JUN 8 - 2003

No. 08-1233 sie

| _SUPREME COURT, U.S.

IN THE

Supreme Court of the United States

BROOKSHIRE BROTHERS HOLDING, INC. ET AL,

PETITIONERS

Vv.

DAYCO PRODUCTS, INC. ET AL, RESPONDENTS

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Fifth Circuit

REPLY BRIEF FOR PETITIONERS

JOHN A. JEANSONNE, JR. DAVID B. SALMONS

JEANSONNE & REMONDET Counsel of Record

Post Office Box 91530 ROBERT V. ZENER

Lafayette, LA 70509 BINGHAM MCCUTCHEN, LLP

(337) 235-2011 2020 K Street, N.W.

Washington, D.C. 20006

MICHAEL H. SCHWARTZBERG (202) 373-6000

VAMVORAS &

SCHWARTZBERG

1111 Ryan Street

Lake Charles, LA 70601

(337) 433-1621

Counsel for Petitioners

TABLE OF CONTENTS

Page

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I. THE COURT SHOULD GRANT REVIEW

AND RECONSIDER ITS PRIOR DECISION IN

Io ekcisdndn cecck vabtcnidacviiheansateiesboereveres 2

II. SECTION 1452(b) FURTHER SUPPORTS

GRANTING THE PETITION ..................:0000-2022.-. 4

A. The Factors Relied Upon By The District

Court Constitute “Equitable Ground[s]” Un-

te ics eid caticanticbietssivescccencesss. 5

B. Section 1452(b) Applies To All Remands Of

Cases Removed Under Section 1452(a),

Even If The Case Has Lost Its Relationship

hia ciinecinks Setdsteetmnestbttcaswenness 7

C. The Court Should Grant Review, Or At A

Minimum, Vacate And Remand To Permit

The Court Of Appeals To Consider Section

1452(b)’s Bar On Its Jurisdiction..................... 10

ay os a csneestinndnlanenin 11

TABLE OF AUTHORITIES

Pape(s)

CASES

Allied Signal Recovery Trust v. Allied Signal, Inc.,

FB se, ee passim

Carlsbad Technologies, Inc. v. HIF Bio, Ine.,

__ U.S. __, 129 S. Ct. 1862 (May 4, 2009).......... passim

Doddy v. Oxy USA, Inc.,

Ba ee. |! passim

Landry v. Exxon Pipeline Co.,

Po 5

Roell v. Withrow,

SPEEA ek ssitreecarrsarncceesnccscesscccesses 10

Thermtron Products, Inc. v. Hermansdorfer,

GD Tria i elitetsrreciceressceessesssesees passim

Things Remembered, Inc. v. Petrarca,

ee RS ee 6,9

Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544

be 1-2

STATUTES AND OTHER AUTHORITIES

20 UE ee oreinnin nce... 8,9

USS Se ...........................-. 5,7

28 U.S.C. § 1334(b) ..eeeessee- ae 1, 4,7, 8

SUSE 6 __........................... 7,8

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iii

Be A Rs RIED ciaitea ices inistesaprsessdvseneesimeancnsoannads 2,5, 6

eae Selects s cuss scsinabseinnle scdtanaceweaesasapenmeelicabeauiemen 3

eas Oe PN iis ip ctsisicarisrorstiacteyieiiocinincunmieiaied 2, 10

RE ese SEE ca riiitahiniissersicisenereanactnel passim

is Ae PE ericsinsin sip sates oseavanpinctidanapsiturscavinanns 4,6,7,8

Be eee Ae NE iki enstevissnisvedncreniseivociocasitenaiveeiae passim

3 Collier on Bankruptcy § 362.03[3][d] (15th ed.

BND scheint sania ninephactalcdaaicach caacateieessenansleh 1

H.R. Ren. No. 595, 95th Cong, (19°77).....c.sersessoosscsscosesseseees 9

1978 U.S. Code Cong. & Adm. News 5787, 6013.............. 9

REPLY BRIEF FOR THE PETITIONERS

This Court’s decision in Carlsbad Technologies,

Inc. v. HIF Bio, Inc., _ U.S. __, 129 S. Ct. 1862 (May

4, 2009) (No. 07-1437), makes clear the need for this

Court to timely reconsider its holding in Thermtron

Products, Inc. v. Hermansdorfer, 423 U.S. 336, 345-

46 (1976), and to restore the clear bar on appellate

review of district court remand orders Congress in-

tended with the plain terms of 28 U.S.C. § 1447(d).

This case presents an appropriate vehicle for recon-

sidering Thermtron.

In addition, because this case was removed to fed-

eral court solely under 28 U.S.C. §§ 1834(b) and

1452(a), the court of appeals also lacked jurisdiction

under Section 1452(b)’s prohibition of review of re-

mand orders in removed bankruptcy-related cases

based on “on any equitable ground.” That question

too warrants this Court’s review, especially since

Fifth Circuit law exports the confusion and disrup-

tion of Thermtron’s mistaken rationale into the

bankruptcy context under Section 1452(b). See Part

II.B, infra. At the very least, the Court should grant

the petition, vacate the decision below, and remand

to permit the court of appeals to consider its lack of

jurisdiction under Section 1452(b).!

1 As respondents noted (Opp. 3 n.1), defendants Dayco and

Mark IV have petitioned for bankruptcy since the filing of the

petition for certiorari in this case. The remaining, non-

bankruptcy defendants filed their brief in opposition without

Dayco and Mark IV. Jd. The bankruptcy filing of the non-

responding defendants does not affect this Court's ability to act

on the petition. See 3 Collier on Bankruptcy § 362.03{3}(d]

(15th ed. 2002) (“[A] suit against a codefendant is not auto-

matically stayed by the debtor's bankruptcy filing.”); accord

Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir.

I THE COURT SHOULD GRANT REVIEW

AND RECONSIDER ITS PRIOR DECISION

IN THERMTRON

This Court in Carlsbad Technologies held that a

district court’s decision in a removed case to remand

after declining to exercise supplemental jurisdiction

under 28 U.S.C. § 1367(c) does not constitute a re-

mand for lack of subject matter jurisdiction under 28

U.S.C. § 1447(c), and therefore does not fall within

the bar on appellate review under 28 U.S.C.

§ 1447(d). The Court made clear that its holding

was compelled by the logic of its prior decision in

Thermtron, 423 U.S. at 345-46. See 129 S. Ct. at

1865-66 & n.1.

The Court noted that, although the holding in

Thermtron was inconsistent with the plain terms of

Section 1447(d), it had no occasion in Calrsbad

Technologies to “revisit ... whether Thermtron was

correctly decided,” because “[njeither the brief for pe-

titioner nor the brief for respondents explicitly asked

the Court to do so ..., and counsel for both parties

clearly stated at oral argument that they were not

asking for Thermtron to be overruled.” Id. at 1866

n.*, The Court further noted that no party in any of

its post- Thermtron cases has ever asked that Therm-

tron be reconsidered. Id. (“We also note that the

parties in Powerex, Quackenbush, and Things Re-

membered did not ask for Thermtron to be over-

ruled.”). Similarly, Justice Scalia’s concurring opin-

ion in Carlsbad Technologies emphasized that “nei-

1983). Nonetheless, in an abundance of caution, respondents

are contemporaneously moving in the bankruptcy court to mod-

ify the automatic stay to expressly exempt the proceedings in

this Court.

ther party [in Carlsbad Technologies] has asked us

to reconsider Thermtron, and we thus have no occa-

sion to revisit that decision here.” Jd. at 1868. Jus-

tice Scalia went on to explain that “Thermtron was

questionable in its day and is ripe for reconsidera-

tion in the appropriate case.” Id.; see also id. at 1869

(Breyer, J., concurring) (noting that decisions follow-

ing Thermtron show “something is wrong” and sug-

gesting that “experts in this area of the law reexam-

ine the matter with an eye toward determining

whether statutory revision is appropriate”).

The time has come for this Court to overrule

Thermtron. The text of 28 U.S.C. § 1447(d) is clear:

“An order remanding a case to the State court from

which it was removed is not reviewable on appeal or

otherwise.” By its terms, it applies to all remand or-

ders, and it reflects Congress’s considered judgment

that appeals of remand orders waste judicial re-

sources, needlessly delay the legal process, and exac-

erbate the interference with state judicial proceed-

ings necessarily occasioned by removal. The sole ex-

ception.to the appellate-review bar of Section 1447(d)

is limited to certain civil rights cases removed under

28 U.S.C. § 1443, and is not implicated here. As

then-Justice Rehnquist explained in his dissent in

Thermtron, Section 1447(d) “means what it says.”

423 U.S. at 354 (Rehnquist, J., dissenting). And

“Congress’ purpose in barring review of all remand

orders has always been very clear—to prevent the

additional delay which a removing party may

achieve by seeking appellate reconsideration of an

order of remand.” Id.

The rationale of Thermtron has corrupted this

area of the law and has resulted in “a hodgepodge of

jurisdictional rules that have no evident basis even

in common sense.” Carlsbad Technologies, 129 S. Ct.

at 1868 (Scalia, J., concurring). Such confusion was

predicted by then-Justice Rehnquist in Thermtron

itself. See 423 U.S. at 356 (Rehnquist, J., dissenting)

(“Nor is it any more than a naive hope to suppose, as

the Court apparently does, that the effect of today's

decision will be limited to the unique circumstances

of this case.”). Further delay in revisiting Thermtron

will not bring any greater clarity, and will instead

only cause more waste and disruption to litigants

and courts. It is time to restore the clarity reflected

in the plain terms of Section 1447(d), overrule

Thermtron, and hold that Section 1447(d) bars ap-

pellate review of all district court remand orders.

The court of appeals’ decision in this case relied

squarely on this Court’s rationale in Thermtron in

holding that it has jurisdiction over the appeal of the

remand order in this case. See Pet. App. 3a-5a. This

case is therefore an appropriate one in which to re-

consider Thermtron.

Il. SECTION 1452(b) FURTHER SUPPORTS

GRANTING THE PETITION

The court of appeals also lacked appellate juris-

diction to review the district court’s remand order

because this case was removed to federal court under

28 U.S.C. § 1452(a) solely because it was related to a

bankruptcy proceeding. Section 1452(b) makes clear

that the district court may remand such a case on

“any equitable ground,” and that any such remand

order “is not reviewable by appeal or otherwise.” 28

U.S.C. § 1452(b).

Respondents concede (Opp. 4) that this case was

removed under Section 1452(a) solely because it was

“related to” a bankruptcy proceeding under 28

U.S.C. § 1334(b). Their arguments that Section

1452(b) nonetheless does not bar appeal of the re-

mand order are unpersuasive and do not obviate the

need for this Court’s review.

A. The Factors Relied Upon By The District

Court Constitute “Equitable Ground[s]”

Under Section 1452(b)

Respondents assert (Opp. 16) that the district

court’s reliance on the discretionary supplemental-

jurisdiction factors of 28 U.S.C. § 1367(c) removes

this case from the coverage of Section 1452(b) be-

cause the Section 1367(c) factors are not entirely

identical to the equitable factors lower courts have

identified in remanding cases under Section 1452(b).

That argument is unavailing.

Respondents ignore entirely the factors courts

have developed under Section 1452(b) that are simi-

lar to the factors identified in Section 1367(c). See

Pet. 4 (identifying such “equitable” factors as “the

extent to which state law issues predominate over

bankruptcy issues”; “the difficulty or unsettled na-

ture of the applicable state law”; “the jurisdictional

basis, if any, other than [§ 1334”; and “the presence

of a related proceeding commenced in state court’)

(citing Landry v. Exxon Pipeline Co., 260 B.R. 769,

801-02 (M.D. La. 2001)). The actual factors the dis-

trict relied on in this case, moreover, correlate

closely to equitable factors courts have identified

under Section 1452(b). See Pet. App. 16a (district

court remand order noting the “complex issues of

State law” presented by the underlying product lhi-

ability claims; the lack of any federal claim or any

connection to the bankruptcy proceedings; the fact

that “the suit ... contains only issues of State law’;

and “the interest of comity” as grounds for remand).

Moreover, the relevant question is not the exact

overlap of the factors, but whether the district court

remanded “on any equitable ground.” Here, the fac-

tors the district court actually relied upon are all

properly characterized as “equitable ground[s}.” In-

deed, respondents do not contest that the factors re-

lied upon by the district court are all permissible

“equitable” factors on which district courts can re-

mand a case under Section 1452(b).

As Justice Ginsburg explained in her concurring

opinion in Things Remembered, Inc. v. Petrarca, 516

U.S. 124, 132 (1995), Section 1452(b)’s reference to

remands on “any equitable ground” are “capacious

words” that are not limited to the traditional distinc-

tions between law and equity, but instead include ail

appropriate grounds. Several courts of appeals have

relied upon Justice Ginsburg’s formulation to hold a

broad range of grounds are “equitable” and therefore

non-appealable under Section 1452. See Pet. 15-16

(collecting cases). Indeed, if the failure to timely re-

move is an equitable ground under Section 1452(b),

as Justice Ginsburg concluded in Things Remem-

bered, it necessarily follows that the discretionary

factors under Section 1367(c) relied upon by the dis-

trict court here are equitable grounds. Respondents

do nothing to rebut this conclusion.?

2 Respondents emphasize (Opp. 15) that the district court

did not mention Section 1452 in its remand order and instead

expressly relied on Section 1367(c). But, again as explained by

Justice Ginsburg in her concurring opinion in Things Remem-

bered, “it ‘makefs] little sense’ to rest reviewability vel non on

the tag the trial court elects to place on its ruling.” 516 U.S. at

134, quoting Sykes v. Texas Air Corp. 834 F.2d 488, 492 (5th

Cir. 1987). Accordingly, regardless of how the district court

characterizes the basis for its remand order, appellate review is

B. Section 1452(b) Applies To All Remands Of

Cases Removed Under Section 1452(a), Even

If The Case Has Lost Its Relationship To

Bankruptcy

Respondents, relying on the Fifth Circuit’s deci-

sion in Doddy v. Oxy USA, Inc., 101 F.3d 448 (5th

Cir. 1996), argue that “where, as here, a case is

removed under § 1452(a) and the bankruptcy-related

claims are later dismissed, ... ‘the court’s remand

authority switches from that under § 1452 to that

under § 1367.” Opp. 17 (quoting Doddy, 101 F.3d at

455). That reading of Section 1452 makes no sense.

The relevant grant of federal court jurisdiction is

contained in 28 U.S.C. § 1334. It grants district

courts original but not exclusive jurisdiction over “all

civil proceedings ... arising in or related to cases

under title 11.” 28 U.S.C. § 1334(b) (emphasis

added). Section 1452(a) permits a party to “remove

any claim or cause of action ... if [the] district court

has jurisdiction of such claim or cause of action un-

der section 1334.” 28 U.S.C. § 1452(a) (emphasis

added). Section 1452(b) then provides that “[t]he

court to which such claim or cause of action is re-

moved may remand such claim or cause of action on

any equitable ground.” 28 U.S.C. § 1452(b) (empha-

ses added).

Under a plain reading of those provisions, all of

the claims in this case were within the district

court’s jurisdiction under § 1334 at the time of re-

moval, because they were part of a “civil proceeding

... related to” TCI’s bankruptcy case. See Allied

Signal Recovery Trust v. Allied Signal, Inc., 298 F.3d

barred by Section 1452(b) whenever the district court remands

a case removed under Section 1452(a) on any equitable ground.

263, 267 (8d Cir. 2002) (noting that even if district

court had jurisdiction under 28 U.S.C. § 1331 or

some other jurisdictional provision, it had jurisdic-

tion over entire case under Section 1334(b), includ-

ing “Title 11 claims” and “state law claims because

they were related to a Title 11 claim”). Because all

of the claims were removed under § 1452(a), they

were all subject to remand under § 1452(b), even

though post-removal events eliminated the remain-

ing claims’ relationship to the bankruptcy proceed-

ings. That is true, moreover, even if the district

courts would also have jurisdiction over those claims

under the supplemental jurisdiction provisions of

Section 1367 or under some other jurisdictional pro-

vision. Under the plain terms of § 1452, any claim

removed under § 1452(a) may be remanded under

§ 1452(b) for “any equitable ground.” That is pre-

cisely what happened here.

It makes no sense, and undermines Section

1334(b), to divide up claims removed to federal court

under Section 1452(a) into “bankruptcy-related”

claims and “supplemental jurisdiction” claims, each

with different standards for remand and different

jurisdictional rules for appeals. Under the reasoning

of Doddy, non-bankruptcy related claims that are

removed along with bankruptcy-related claims are

governed by the supplemental jurisdiction statute,

28 U.S.C. § 1367. Even if a district court decided to

remand the bankruptcy-related claims to state court

“on any equitable ground” under Section 1452(b),

Section 1367(c)’s discretionary factors would govern

the district court’s discretion to remand the supple-

mental claims, and its decision as to those claims

would be subject to appeal under Carlsbad Tech-

nologies. See Doddy, 101 F.3d at 455.

That is a gross distortion of Congress’s clear in-

tent—reflected in the plain terms of Section

1452(b)—to grant district court’s broad discretion to

order remands, and to bar appellate review of such

orders, in all cases removed from state court because

of their relatedness to a bankruptcy proceeding. The

confusion and disruption caused by this Court’s

Thermtron holding should not be permitted to infect

the clear terms of Section 1452(b) in remands in

bankruptcy-related cases. Yet, that is precisely what

will happen under the Fifth Circuit’s reasoning in

Doddy.

That reasoning, moreover, conflicts with that of

the Third Circuit’s in Allied Signal, which rejected a

similar argument that the presence of alternative

jurisdictional grounds somehow limited the ability to

remand cases under Section 1452(b). The Third Cir-

cuit held that “[bjecause this is a bankruptcy case,

the additional presence of concurrent § 1331 jurisdic-

tion could not preclude our consideration of remand

as it presents itself in a bankruptcy case. The need

to avoid the time and expense of reviewing remands

in bankruptcy cases is substantial.” 298 F.3d at 267

n.4 (citing Things Remembered, 516 U.S. at 136

(Ginsburg, J., concurring)). Indeed, the language of

Justice Ginsburg’s concurring opinion in Things Re-

membered relied on by the Third Circuit is equally

applicable here. “Congress... meant to enlarge, not

rein in, federal trial court removal/remand authority

for claims related to bankruptcy cases,” and it

“wanted bankruptcy forum remands to be ‘unreview-

able.” 516 U.S. at 132 (Ginsburg, J., concurring,

quoting H.R. Rep. No. 95-595, p. 51 (1977), U.S.

Code Cong. & Adm. News 1978, pp. 5787, 6013.

Accordingly, the plain meaning of § 1452(b) con-

firms the lack of appellate jurisdiction, as does the

reasoning of other courts of appeals. See, e.g., Allied

Signal, 298 F.3d at 269 (holding that the remand of

a bankruptcy-related case “based on state law con-

cerns,” while not meeting “the criteria for remand

under § 1447(c) and for the non-reviewability provi-

sions of § 1447(d),” nonetheless “falls under § 1452(b)

... and is not reviewable”).

C. The Court Should Grant Review, Or At A

Minimum, Vacate And Remand To Permit

The Court Of Appeals To Consider Section

1452(b)’s Bar On Its Jurisdiction

As petitioners explained in the petition (Pet. 19-

20), they did not raise Section 1452(b)’s bar on appel-

late jurisdiction in the court of appeals, although

they did assert it as an independent basis for re-

mand before the district court. Because it is jurisdic-

tional in nature, however, the argument is not

waived. /d. Contrary to respondents’ suggestion

(Opp. 13-14 & n.5), the fact that the lack of jurisdic-

tion relates to the court of appeals and not the dis-

trict court does not alter the jurisdictional nature of

the defect or otherwise make it waivable. Appellate

courts, like all others, must assure themselves of

their jurisdiction, and can raise jurisdictional ques-

tions sua sponte, whether or not raised below. See,

e.g., Roell v. Withrow, 538 U.S. 580, 598 (2003) (be-

cause valid consent to permit magistrate judge order

is prerequisite to appellate jurisdiction, courts of ap-

peals may raise it swa sponte).

Moreover, respondents’ reliance on Doddy under-

mines their argument that the failure to raise the

argument below precludes this Court’s review. If, as

they assert, Fifth Circuit law is clear that Section

1452(b) remand authority somehow disappeared

once the bankruptcy-relatedness of the claims ended,

then it would have been futile to raise the argument

below, and this Court is free to review the Fifth Cir-

cuit’s settled law that conflicts with the plain terms

of Sections 1334 and 1452, as well as the reasoning

of the Third Circuit in Allied Signal.

If, however, the Fifth Circuit law is less than

clear, as suggested by its failure to follow Doddy (see

Pet. 18 n.7), then it would be appropriate for this

Court to grant the petition, vacate the decision be-

low, and remand the case either with instructions to

dismiss the appeal under Section 1452(b) or to per-

mit the court of appeals to consider its lack of juris-

diction under Section 1452(b) in the first instance.

In all events, the petition should be granted and

the court of appeals’ lack of jurisdiction under

Section 1452(b) should be resolved. Such review is

essential to vindicate Congress’s manifest intent,

embodied in § 1452(b), to permit removed bank-

ruptcy-related cases to proceed as quickly as possible

in State court once a district court orders remand

“on any equitable ground.”

CONCLUSION

For the reasons explained in the petition and

above, the petition for a writ of certiorari should be

granted. In the alternative, the case should be re-

manded with instructions to dismiss the appeal for

lack of jurisdiction, or to permit the court of appeals

in the first instance to consider its jurisdictional de-

fect under 28 U.S.C. § 1452(b).

Respectfully submitted,

JCHN A. JEANSONNE, JR. DAVID B. SALMONS

JEANSONNE & REMONDET Counsel of Recora