Opposition Brief — BIC Corp. v. Carney

No. 96-694

In The .

Supreme Court of the United States

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October Term, 1996

c =»

Ve ee ee er

BIC CORPORATION,

Petitioner,

VS.

ROBERT CARNEY and SHEILA CARNEY,

Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Eighth Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

PAUL L. REDFEARN

DANIEL R. BROWN

REDFEARN & BROWN, P.C.

Attorneys for Respondents

1125 Grand Avenue

Suite 814

Kansas City, Missouri 64106

(816) 421-5301

Of Counsel:

MICHAEL W. MANNERS

WELCH, MARTIN, ALBANO &

MANNERS

311 West Kansas

Independence, Missouri 64050

(816) 836-8000

utz

— (800) 3 APPEAL * (800) 5 APPEAL ¢ (800) BRIEF 21 3 late

ervices, inc.

He UOT RS RRM

i

QUESTION PRESENTED FOR REVIEW

Whether a district court’s order remanding a case to state

court is reviewable on appeal when the remand order is based

on a lack of diversity and subject matter jurisdiction, which is a

ground specified in 28 U.S.C. § 1447(c).

—————————e

li

PARTIES TO THE PROCEEDINGS

Respondents adopt the list of parties to the proceedings

contained in the Petition.

iii

TABLE OF CONTENTS

Page

Question Presented for Review .................... i

Parties to the Be asain pein ea ii

UNI asec co iii

I ss co es ne 20 5 iv

EAS eee cae l

teetent Of Surisdiction ......................... l

Statutory Provisions Involved ..................___ ]

UME 3002, ... 00... 4

Reasons for I 6

I. Federal appellate courts have consistently held that

remand orders based upon the grounds stated in

28 U.S.C. § 1447(c) are immune from review

under 28 U.S.C. § 1447(d) and remand orders

based upon grounds outside of 48 U.S.C.

§ 1447(c) are subject to appellate review. ..... 7

Ii. The remand order at issue is based solely on a

lack of subject matter jurisdiction rather than on a

federal constitutional issue and there is no conflict

in the circuits concerning the reviewability of

remand orders that turn on federal constitutional

MOR ties ha fo skc boosh vi ccc, 9

iv

Contents

Page

Ill. The interlocutory effect of Mo. Rev. Stat.

§ 537.762 does not result in an impermissible

destruction of federal removal jurisdiction.

PEE PCT TET LCE EEE EC EE ee ee oe 17

eT OS PPR TE yer ee Fret Tes eepee 20

TABLE OF CITATIONS

Cases Cited:

Aydell v. Stern, 677 F. Supp. 877 (M.D. La. 1988) ... 19

Baldridge v. Kentucky-Ohio Trans., Inc., 983 F.2d 1341

Geet Ras BPE. sKi inc tecies a veuess bd araenies ee

Bregman v. Alderman, 955 F.2d 660 (11th Cir. 1992)

ee POEs Se ey PE er erry a ae Wet eae 8

Carnegie-Mellon University v. Cohill, 484 U.S. 343

CESS <6 0b reek Nol Coen ie en Sateen baie des 9

Doe v. Cutter Biological, 774 F. Supp. 1001 (E.D. La.

COPE) vice keeugicakasnvados cakieeneeienniwe. 19

Farm Credit Bank of St. Paul v. Finstrom, 888 F.2d 559

eet Rie Re wks 60 nese eh hee ee eee en bee ps 9

Glasser v. Amalgamated Workers Union Local 88, 806

Fea Rae CE es AE 450d dik aa behets 8, 14, 17

Contents

Gravitt v. Southwestern Bell Tel. Cv.. 430 U.S. 723, 97

S. Ct. 1439, 52 L. Ed. 2d 1 Yd 9 3 TRS 9

Hansen v. Blue Cross of California, 891 F.2d 1384 (9th

RM WUD ia OOo to kea hick i teauurek on. 8,

Higgins v. Pittsburgh-Des Moines, Co., 635 F. Supp.

ROO ete Bs SOD oo is kas

In Re Business Men’s Assur. Co. of America, 992 F.2d

Wee SOU Se RE oes ois cca wckcls hota 7,

In Re lowa Mfg. Co., 747 F.2d 462 (8th Cir. 1984) ...

In Re Life Ins. Co. of North America, 857 F.2d 1190

Pe ED sa ed econo tr sc eo ee 9,

a Ei att ee ee oe ee a ee oe ee yee ee ae

In Re Shell Oil Co., 932 F.2d 1523 (Sth Cir. 1991) ...

In Re TMI Litigation Cases Consolidated II, 940 F.2d

Sm Le Gay NUPEE ho koa bok eR ee,

SPSS RO SS aS Se 8.8 82 2.8 OO 6 MS 6: SO SOU GSO 456 6 OO 8S 6

Machinsky v. Johnson & Johnson Medical, Inc., 868 F.

See. Fee tek: Be TD occ

14, 17

19

15, 17

18

16, 17

vi

Contents

Page

Mangold vy. Analytic Services, Inc., 77 F.3d 1442 (4th

| Ee ORT TTT ee TS Pre eT errr ye 9

Matter of Shell Oil Co., 970 F.2d 355 (7th Cir. 1992)

PPO P EEE Te TEE EON ELIET EE Oe ee 19

National City Bank v. Coopers and Lybrand, 802 F.2d

es Cee GL) fn vcen dun wseahes bbs eeeaveee's 9

Nutter v. Monongahela Power Co., 4 F.3d 319 (4th Cir.

PPE cvicnRdadsaevet cereus sakwe acorns enteees 15

Pelleport Investors v. Budco Quality Theatres, Inc., 741

ete CED COR Me. SIS) i dbs oka bua Wen Roce CK as 9, 14

Power v. Norfolk Ry. Co., 778 F.2d 468 (E.D. Mo. 1991)

gia ok ad hea hs VERS Cae a Rh dana 18

Pulse One Com. v. Bell Atlantic Mobile Systems, 760

Py ee. Be GP. Ba BOR oo 655 Sis Chis kekeaves 18

Saylor v. General Motors Corp., 416 F. Supp. 1173 (E.D.

A: SRT) oat waeoks 4566 Os Nahi te ee eee aes 18

Soley v. First National Bank of Commerce, 923 F.2d

BOG SE: APE: oaks Fee ees Ea bees 15, 17

St. Paul Mercury Indemnity Co. v. Red Cab Co., 303

U.S. 283, 58 S. Ct. 586, 82 L. Ed. 845 (1938) .... 19

Thermtron Products, Inc. v. Hermansdorfer, 423 U.S.

336, 96 S. Ct. 584, 46 L. Ed. 2d 542 (1976) ...... 6, 7,8

vil

Contents

Page

Things Remembered, Inc. v. Pentraca, __ U.S. NaS e |

i Se EE ree ae oe ma

Thrapp v. Armstrong World Industries, Inc., 767 F. Supp.

ne Ce ea tat Pe ty ieee 18

Waco v. U.S. Fidelity & Guaranty Co., 293 U.S. 140

SOP wed Uo ire ae eh eh dca Oh eeu dace ek ka 9, 16

Woods v. Massachusetts Protective Ass’n, 34 F.2d 501

Seis We RUE ad be lls Oo oe veliws be oo ccc ks 19

Statutes Cited:

EF AE Eb” CES SA ae aglaw gels aa a l

EP a SE ec ae gs oe es 13

See I he cea ae i ee ean 10

Se eee RS er an 7 Ge 2

Se EN Bak, Be is oso ere o 2

Re BOOTIE che bese he cca: ACE OPE 10

Me a IE I ba oe 6a oe ak hoe eR ORs wok 5

y: ih Some By) en Ay By te Oe Fe Oe Oe FO, 18, 92, 13

46 Us. 1447(@) ..... 5, % oO. O 7, S, 9, 10, FZ. 34. 15. 16

——=— as

Vili

Contents

Page

Mo. Rev. Stat. § 537.762 .......... 4, 5, 7, 9, 10, 13, 17, 18

Rules Cited:

TURN COO TE OD a Ni-sescasixawWaswdeapeneaes 1, 6

rons Ct AEG TOES fis ile ee Soke Ss pnewee nl 6

|

Robert Carney and Sheila Carney, respondents, respectfully

request that certiorari be denied.

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

Eighth Circuit (App. 1a)* dismissing BIC Corporation’s appeal

pursuant to 28 U.S.C. § 1447(d) for lack of jurisdiction is

published at 88 F.3d 629 (8th Cir. 1996). The order of the United

States District Court for the Eastern District of Missouri

remanding this case to state court due to lack of diversity and

subject matter jurisdiction is unreported.

STATEMENT OF JURISDICTION

Although the jurisdiction of this Court is being invoked

under 28 U.S.C. § 1254, the Considerations Governing Review

on Certiorari specified in Rule 10 of the Rules of the Supreme

Court of the United States are absent and the decision of the

Eighth Circuit Court of Appeals is not in conflict with the

decision of any other United States Court of Appeals.

STATUTORY PROVISIONS INVOLVED

The federal diversity jurisdiction statute provides in part:

(a) The district courts shall have original

jurisdiction of all civil actions where the

matter in controversy exceeds the sum or

value of $50,000.00, exclusive of interest and

costs, and is between-

* All references herein to “App.” refer to the appendix filed by the

Petitioner.

2

(1) citizens of different states

28 U.S.C. § 1332(a)(1).

The federal statute governing actions removable provides

in part:

(a) Except as otherwise expressly provided

by Act of Congress, any civil action brought

in a state court of which the district courts of

ule United States have original jurisdiction,

may be removed by the defendant or the

defendants, to the district court of the United

States for the district and division embracing

the place where such action is pending. For

purposes of removal under this chapter, the

citizenship of defendants sued under

fictitious names shall be disregarded.

28 U.S.C. § 1441(a).

The federal statute governing procedure after removal

provides in part:

(c) A motion to remand the case on the basis

of any defect in removal procedure must be

made within 30 days after the filing of the

notice of removal under § 1446(a). If at any

time before final judgment it appears that the

district court lacks subject matter

jurisdiction, the case shall be remanded.

28 U.S.C. § 1447(c)

The federal statute governing procedure after removal also

provides:

3

(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 § 1443 of this title shall be reviewable by

appeal or otherwise.

28 U.S.C. § 1447(d).

The Missouri statute providing for interlocutory dismissal

of a retailer whose liability is based solely on his status as a

seller in the stream of commerce provides, in part:

Motion to dismiss, defendant whose

liability is as seller in stream of commerce

requirements, procedure — order of

dismissal to be interlocutory

1. A defendant whose liability is based

solely on his status as a seller in the stream

of commerce may be dismissed from a

products liability claim as provided in this

section.

2. This section shall apply to any products

liability claim in which another defendant,

including the manufacturer, is properly

before the court and from whom total

recovery may be had for plaintiff’s claim.

3. A defendant may move for dismissal

under this section within the time for filing

an answer or other responsive pleading unless

permitted by the court at later time shown.

4

6. No order of dismissal under this section

shall operate to divest a court of venue or

jurisdiction otherwise proper at the time the

action was commenced. A defendant

dismissed pursuant to this section shall be

considered to remain a party to such action

only for such purposes.

7. An order of dismissal under this section

shall be interlocutory until final disposition

of plaintiff’s claim by settlement or judgment

and may be set aside for good cause shown

at anytime prior to such disposition.

Mo. Rev. Stat. § 537.762 (1987) (full text at App. 14a).

STATEMENT OF THE CASE

Robert Carney and Sheila Carney filed their Petition for

Damages against BIC Corporation and Clifford Massie d/b/a

Massie One Stop in The Circuit Court of the City of St. Louis

on July 28, 1994. In that civil action, plaintiffs sought damages

for the wrongful death of their two year-old son under theories

of strict liability and negligence in connection with the

defendant’s design, manufacture and sale of butane lighters. BIC

Corporation is a New York Corporation with its principal place

of business in Connecticut. Clifford Massie is a resident of

Missouri, as are respondents Robert and Sheila Carney.

Therefore, diversity of citizenship did not exist.

On February 23, 1995, Clifford Massie, d/b/a/ Massie One

Stop and respondents Robert and Sheila Carney, entered into a

stipulation for interlocutory dismissal in which defendant Massie

remained a party for purposes of venue and jurisdiction pursuant

to Mo. Rev. Stat. § 537.762 (1987). App. lla. On March 3,

5

1995, BIC Corporation removed the civil action to the United

States District Court for the Eastern District of Missouri,

contending that diversity of citizenship existed and that removal

was proper under 28 U.S.C. § 1446. Respondents Robert and

Sheila Carney filed their Motion for Remand on March 9, 1995,

pursuant to 28 U.S.C. § 1447(c) on the grounds that diversity of

citizenship warranting removal did not exist because the

dismissal of Clifford Massie d/b/a Massie One Stop was

interlocutory, and Massie remained a party for purposes of venue

and jurisdiction pursuant to Mo. Rev. Stat. § 537.762. On July

14, 1995, the Honorable Donald J. Stohr, Judge of the United

States District Court for the Eastern District of Missouri, entered

an order remanding the civil action to the Circuit Court of the

City of St. Louis. App. 8a.

BIC Corporation filed its Petition for Mandamus with the

United States Court of Appeals for the Eighth Circuit on August

21, 1995. The Petition for Mandamus was denied on November

2, 1995. App. 13a. BIC Corporation filed a Notice of Appeal

on August 14, 1995, seeking to overturn the remand order of

July 14, 1995. On July 8, 1996, the Eighth Circuit Court of

Appeals dismissed BIC’s appeal pursuant to 28 U.S.C. § 1447(d)

for lack of jurisdiction, holding that the remand order was based

solely upon the district court’s conclusion that removal

jurisdiction did not exist and that the district court’s

consideration of Mo. Rev. Stat. § 537.762 was in no way separate

from the jurisdictional determination. App. 6a. The Court of

Appeals concluded that the district court made no determinations

concerning substantive rights of the parties, that the remand order

fell squarely within 28 U.S.C. § 1447(d) and, therefore, was

not subject to review on appeal. App. 6a-7a.

a

6

REASONS FOR DENYING THE WRIT

Rule 10 of the Rules of the Supreme Court of the United

States provides that review on a writ of certiorari is not a matter

of right, but of judicial discretion, to be granted only for

compelling reasons. Section (a) of the Rule indicates that the

character of the reasons the court considers includes where a

United States court of appeals has entered a decision in conflict

with the decision of another United States court of appeals on

the same important matter. In this case, appellate review has

been, and is being sought of a remand order based solely upon

a lack of diversity and subject matter jurisdiction. Remand

orders issued under 28 U.S.C. § 1447(c) and invoking the

grounds specified therein — that the court lacks subject matter

jurisdiction— are immune from review by appeal or otherwise

pursuant to 28 U.S.C. § 1447(d). Thermtron Products, Inc. v.

Hermansdorfer, 423 U.S. 336 (1975). There is no conflict in

the federal courts of appeal over the reviewability of remand

orders. Since this Court’s decision in Thermtron, federal

appellate courts, including the Eighth Circuit Court of Appeals,

have consistently reviewed remand orders which affect the

substantive rights of the parties apart from any jurisdictional

decision because those remand orders are based upon grounds

outside of 28 U.S.C. § 1447(c). The remand order now under

consideration is not based upon a district court’s determination

that a federal statute is unconstitutional, but rather is based solely

upon a lack of diversity and subject matter jurisdiction. The

remand order decides no issues that affect the substantive rights

of the parties. It is precisely the type of remand order that

Congress intended, through the enactment of 28 U.S.C.

§ 1447(d), to not be reviewable by appeal or otherwise.

Remand always results in a reduction of federal jurisdiction,

and every statute or rule of law that precludes removal due to

its interlocutory effect would constitute an unconstitutional

7

attempt to oust federal jurisdiction if BIC’s reasoning is

followed.

The Missouri statute in question neither increases, nor

decreases, federal jurisdiction. If diversity jurisdiction does

not exist at the time of filing, the application of Mo. Rev. Stat.

§ 537.762 does nothing to create diversity. If diversity does

exist at the time of filing, the application of Mo. Rev. Stat.

§ 537.762 does nothing to destroy diversity. The interlocutory

effect of dismissal of the retailer under Mo. Rev. Stat. § 537.762

is no different than the effect of various other procedural rules

that likewise have been held not to create diversity and removal

jurisdiction.

I.

FEDERAL APPELLATE COURTS’ HAVE

CONSISTENTLY HELD THAT REMAND ORDERS

BASED UPON THE GROUNDS STATED IN 28 U.S.C.

§ 1447(c) ARE IMMUNE FROM REVIEW UNDER 28

U.S.C. § 1447(d) AND REMAND ORDERS BASED UPON

GROUNDS OUTSIDE OF 28 U.S.C. § 1447(c) ARE

SUBJECT TO APPELLATE REVIEW.

Remand orders issued under 28 U.S.C. § 1447(c) are not

reviewable by appeal or writ of mandamus. This is true whether

or ni that order might be deemed erroneous by an appellate

court. Thermtron Products, Inc. v. Hermansdorfer, 423 U.S.

336, 96 S. Ct. 584, 46 L. Ed. 2d 542 (1976). In Re Business

Men’s Assur. Co. of America, 992 F.2d 181 (8th Cir. 1993). As

long as a district court’s remand is based on a timely raised

defect in removal procedure or on lack of subject matter

jurisdiction— the grounds for remand recognized by 28 U.S.C.

§ 1447(c)— a court of appeals lacks jurisdiction to entertain an

appeal of the remand order under 28 U.S.C. § 1447(d). Things

8

Remembered, Inc., v. Petraca, __ U.S. __, 116 S. Ct. 494 (1995);

Thermtron, supra. See, e.g., Gravitt v. Southwestern Bell Tel.

Co., 430 U.S. 723, 97 S. Ct. 1439, 52 L. Ed. 2d 1 (1977) (remand

order plainly within the bounds of 1447(c) and hence

unreviewable by the Court of Appeals, by mandamus or

otherwise); Hansen v. Blue Cross of California, 891 F.2d 1384

(9th Cir. 1989) (district court’s decision that insurance plan was

not subject to ERISA was not apart from the question of subject

matter jurisdiction and remand order based upon lack of subject

matter jurisdiction was immune from review under 28 U.S.C.

§ 1447(d)); Glasser v. Amalgamated Workers Union Local 88,

806 F.2d 1539 (11th Cir. 1986) (district court expressly based

its decision to remand on lack of subject matter jurisdiction,

remand order did not affect substantive rights of the parties and

State court was free to consider merits of preemption argument);

Baldridge v. Kentucky-Ohio Transp., Inc., 983 F.2d 1341 (6th

Cir. 1993) (order remanding wrongful discharge action to state

court on ground of lack of jurisdiction was not reviewable;

district court’s findings were purely jurisdictional, and thus

defendants could raise merits of preemption defense in state

court); Bregman vy. Alderman, 955 F.2d 660 (11th Cir. 1992)

(where district court indicated that basis of its order to remand

was a lack of subject matter jurisdiction, even if erroneous, it

was within the bounds of 1447(c) and review was barred by

1447(d)).

Remand orders based on non jurisdictional grounds which

are outside the basis specified in 28 U.S.C § 1447(c) are not

immune from appellate review. Thermtron, 423 U.S. at 345-346,

96 S. Ct. at 590-591; Hansen, supra at p. 1387. Thus, appellate

review of remand orders has been allowed in the following

circumstances, all of which are outside the grounds stated in

1447(c): where review is authorized by another statute, Jn Re

Resolution Trust Corp., 888 F.2d 57, 58-59 (8th Cir. 1989); where

there is a substantive ruling of law apart from the jurisdictional

9

determination that binds the state court, Pelleport Investors, Inc.,

v. Budco Quality Theaters, Inc., 741 F.2d 273 (9th Cir. 1984);

Waco v. U.S. Fidelity & Guaranty Co., 293 U.S. 140 (1934); In

Re Life Ins. Co. of North America, 857 F.2d 1190, 1993 (8th

Cir. 1988); where the district court’s discretion to remand

pendant state claims is involved, Carnegie-Mellon University v.

Cohill, 484 U.S. 343 (1988); where the court has discretion to

remand after dismissal of a party that destroys diversity, Mangold

v. Analytic Services Inc., 77 F.3d 1442 (4th Cir. 1996).

But where remand orders are issued under 28 U.S.C.

§ 1447(c), and they invoke the grounds specified therein, they

are immune from review under 28 U.S.C. § 1447(d). Farm Credit

Bank of St. Paul v. Finstrom, 888 F.2d 559 (8th Cir. 1989); Jn Re

Shell Oil Co., 932 F.2d 1523 (5th Cir. 1991 ); National City Bank

v. Coopers and Lybrand, 802 F.2d 990 (8th Cir. 1986).

Il.

THE REMAND ORDERAT ISSUE IS BASED SOLELY

ON A LACK OF SUBJECT MATTER JURISDICTION

RATHER THAN ON A FEDERAL CONSTITUTIONAL

ISSUEAND THERE IS NO CONFLICT INTHE CIRCUITS

CONCERNING THE REVIEWABILITY OF REMAND

ORDERS THAT TURN ON FEDERAL CONSTITUTIONAL

ISSUES.

As stated in the district court’s remand order of July 14,

1995, (App. 8a), “the propriety of removal turns on the

interpretation of subsections 6 and 7 of § 537.762”. After stating

that it was not persuaded by BIC’s contention that the statute

was an impermissible attempt by state law to defeat removal

jurisdiction, the district court concluded that “the interlocutory

nature of the dismissal pursuant to § 537.762 renders the

voluntary-involuntary dismissal distinction insignificant in this

10

context and makes a removal relying on the dismissal improper.”.

App. 9a.

By so stating, the district court concluded that the retailer,

Defendant Clifford Massie, remained a party for purposes of

jurisdiction and venue and, therefore, diversity jurisdiction did

not exist pursuant to 28 U.S.C. § 1332 that would entitle BIC to

removal under 28 U.S.C. § 1441(b). Pursuant to 28 U.S.C.

§ 1447(c), the district court concluded that it lacked subject

matter jurisdiction and remanded the case to the Circuit Court

of the City of St. Louis.

At page 8 of the Petition for Writ of Certiorari, petitioner

sets out the basis for its argument that there is a conflict in the

circuits and substantial uncertainty in the law concerning the

reviewability of remand orders that turn on federal constitutional

issues. BIC first contends that the Eighth Circuit Court of

Appeals “squarely rejected BIC’s argument that the district

court’s remand order was reviewable because the district court

gave the Missouri statute a construction that violates the

Supremacy Clause.” Next, at page 8, BIC argues that “the

Eighth Circuit treated BIC’s argument as addressing ‘the merits’

and held that it could not consider the issue because under 28

U.S.C. § 1447(d) it lacked jurisdiction to review the remand

order.” BIC conclude's by stating at page 9 that “The Eighth

Circuit thus rejected the constitutional issue exception as a basis

for review of remand orders.”

Review of the opinion reveals however, that the Eighth

Circuit Court of Appeals, rather than rejecting BIC’s

constitutional argument, simply chose not to address the merits

of BIC’s argument, leaving BIC free to challenge the

constitutionality of Mo. Rev. Stat. § 537.762 in the state court

proceedings after remand.

11

There was no need to invoke what BIC refers to as the

“constitutional issue exception” because the basis of the district

court’s remand order was clearly a lack of diversity and a lack

of subject matter jurisdiction. As stated inthe Eighth Circuit’s

Opinion (App. 6a):

The remand order in the present case does

not come within the Thermtron exception,

because it was based on a ground specified

in 28 U.S.C. § 1447(c) — the district court’s

determination that it lacked subject matter

jurisdiction to hear the action. After noting

that the stipulated dismissal provided that,

| in accordance with Mo. Rev. Stat.

) § 537.762(6), Massie would remain a party

in the action for purposes of venue and

jurisdiction, the district court concluded

that the dismissal of Massie did not create

| removal jurisdiction based upon diversity

: of citizenship and remanded the present

| case to Missouri state court. Thus, the

remand order was based solely upon the

district court’s conclusion that removal

| jurisdiction did not exist. Although the

district court applied Mo. Rev. Stat.

| § 537.762(6), in reaching this conclusion,

| its consideration of § 537.762(6) was in no

| way separate from the jurisdictional

determination. . .. Thus, the remand order

falls squarely within 28 U.S.C. § 1447(d)

and is foreclosed from appellate review

(emphasis added).

. Because the district court remanded solely on the basis of a

lack of subject matter jurisdiction under 28 U.S.C. § 1447(c),

12

appellate review is precluded by 28 U.S.C. § 1447(d), and there

was no authority to consider the numerous exceptions cited

previously that permit appellate review on grounds outside of

28 U.S.C. § 1447(c).

BIC relies heavily on In Re TMI Litigation Cases

Consolidated II, 940 F.2d 832 (3d Cir. 1991), to establish the

existence of a constitutional issue exception, and a conflict

among the circuits due to the Eighth Circuit’s failure to apply

that exception in this case. However, in TMI, the district court’s

remand order was based upon the court’s determination that the

Price-Anderson Amendments Act of 1988 was unconstitutional.

The reason for the Third Circuit’s decision to review the remand

order in 7M] is clearly stated at pages 844-845 of the opinion:

... We cannot conclude that, in the situation

presented here, Congress intended that

§ 1447(d) operate to prevent appellate review

of the district court order. We are confident

that the jurisdictional determination of the

district court, resting as it did upon the

conclusion that the entire statutory scheme

authorizing removal was unconstitutional,

was not the type of federal subject matter

jurisdiction decision intended to be

governed by the terms of or the policy

underlying § 1447(c) and 1447(d). Section

1447(d) therefore has no application. In

order to fall within sections 1447(c) and

1447(d), a remand order must be based

upon a finding that removal was not

authorized by Congress (emphasis added).

Also important to the Third Circuit’s decision to review in

TMI was the district court’s clearly expressed belief that there

—

Ware Ss eS Oe

13

was substantial ground for a difference of opinion concerning

the issue of constitutionality, and the fact that the district court

certified the question for immediate appeal pursuant to 28 U.S.C.

1292(b). TMI, supra at p. 847.

TMI allowed review because the district court, which clearly

had both federal question jurisdiction and removal jurisdiction,

triggered remand by declaring the Price- Anderson Amendments

Act of 1988 unconstitutional, and holding that Congress

exceeded its authority by creating a federal forum for public

liability actions. At page 835, the TMI/ court recognized that

the district court’s determination with respect to subject matter

jurisdiction rested not on any failure to satisfy the jurisdictional

requirements of the Amendments Act, but rather upon the court’s

conclusion that the Amendments Act itself was unconstitutional,

which were grounds clearly outside of 28 U.S.C. § 1447(c). The

district court’s decision had obvious binding implications in the

State court proceedings below if the appellate court refused to

review the remand order since the district court clearly had

jurisdiction pursuant to the express provisions of the federal

Statute and its decision could not be considered purely

jurisdictional.

In contrast to TMI, the remand order now under

consideration is not based upon either the district court’s or the

appellate court’s ruling of unconstitutionality, but rather upon

a lack of subject matter jurisdiction. The Eighth Circuit’s

opinion points out that the remand order was based solely upon

the district court’s conclusion that subject matter jurisdiction

was lacking and that the district court’s consideration of Mo.

Rev. Stat. § 537.762 was in no way separate from the

jurisdictional determination. Recognizing that the district court

made no determinations concerning the substantive rights of

the parities, and pointing out that it did not reach the merits of

BIC’s challenge to the remand order, the Eighth Circuit held

14

the remand order not reviewable under 28 U.S.C. § 1447(d),

and dismissed BIC’s appeal. The result is that the decision of

the district court was only jurisdictional, and neither the district

court nor the appellate court reached issues on the merits which

preclude BIC from raising the issue of constitutionality in the

State court proceeding on remand.

The issue of whether a district court’s determination in

connection with remand involves substantive issues binding on

the parties apart from the jurisdictional issue was discussed in

Hansen v. Blue Cross of California, 891 F.2d 1384 (9th Cir.

1989). In Hansen, at page 1388, the Ninth Circuit Court of

Appeals points out that in Pelleport Investors, Inc. v. Budco

Quality Theaters, Inc., 741 F.2d 273 (9th Cir. 1984) which it

also decided, it held the District Court’s remand order, involving

the enforceability of a forum selection clause, reviewable

because the District Court “reached a substantive decision on

the merits apart from any jurisdictional decision. At page 1388,

The Hansen court then went on to hold that the District Court’s

remand order, based upon the decision that the insurance plan

at issue was not subject to ERISA, was not reviewable on appeal

because “the district court’s decision that Hansen’s plan was

not subject to ERISA, rather than being apart from the question

of subject matter jurisdiction, was necessary to determine

whether such jurisdiction existed.”

While the Hansen court declined to decide whether a state

court would be required to invoke res judicata to determinations

involved in reaching the district court’s decision, that question

has been answered by numerous federal courts of appeal. Both

the issue of reviewability of remand orders, and the res judicata

effect of jurisdictional findings was discussed in Glasser v.

Amalgamated Workers Union Local 88, 806 F.2d 1539 (11th

Cir. 1986). In rejecting appellant’s argument that the remand

order was reviewable on appeal, the Eleventh Circuit responded

as follows ai page 1540:

ee ee ee eT ie i ee eed

=

a

——

15

It is true that, as in Clorox and Pelleport, the

decision underlying the remand order

involved a conclusion of substantive law.

However, unlike in those cases, here the

substantive law decision related to the

question of jurisdiction; the remand order did

not affect the substantive rights of the

parties... . In particular, the court did not

reach the merits of the preemption

argument. The state court may in fact rule

that ERISA does not preempt appellee’s

state law claims and that appellees must

proceed, as appellants contend, under

subsection 1132(a)(1)(B) of ERISA ...

(emphasis added).

Findings of a district court made for the purpose of

determining federal jurisdiction have no preclusive effect on a

state court. See, e.g., Soley v. First National Bank of Commerce,

923 F.2d 406 (Sth Cir. 1991) (district court’s finding that

plaintiff’s claims were not within the boundaries of ERISA was

a jurisdictional finding that could be reviewed by state court);

In Re Business Men’s Assur. Co. of America, 992 F.2d 181 (8th

Cir. 1993) (where district court declined to rule whether ERISA

would control remanded action, remand order not reviewable

under 28 U.S.C. § 1447(d) where based on lack of federal

question jurisdiction); Baldridge v. Kentucky-Ohio Trans., Inc..

983 F.2d 1341 (6th Cir. 1993) (district court’s findings purely

jurisdictional and defendants not precluded from raising merits

of preemption defense in state court); Nutter v. Monongahela

Power Co., 4 F.3d 319 (4th Cir. 1993) (district court’s

jurisdictional findings regarding federal preemption in order

remanding workers’ compensation retaliation claim to state court

would have no preclusive effect in state court).

16

In many respects this case turns on issues similar to those

involved in Linton v. Airbus Industrie, 30 F.3d 592 (Sth Cir.

1994). In Linton, following removal on grounds of both diversity

of citizenship and federal question jurisdiction, stipulations were

entered into that had the effect of recognizing one of the plaintiffs

to be a “stateless” person, thereby destroying diversity. Also, a

previous ruling by the district court had rejected the Federal

Sovereign Immunities Act (FSIA) as a basis for federal question

jurisdiction. Even though the stipulations regarding citizenship

had been entered into post-removal, and the district court

wrongly concluded that the post-removal events destroyed

diversity, the remand order was held not reviewable pursuant to

28 U.S.C. § 1447(d) because it was based upon lack of subject

matter jurisdiction. At footnote 38 at page 599 of the Linton

decision, the court recognized that it did not matter whether the

stipulation was considered pre-removal or post-removal, the fact

remained that the remand was based upon lack of diversity and

subject matter jurisdiction and was not reviewable.

Another important aspect of Linton is the appellate court’s

conclusion, stated at page 598, that the district court’s finding

that FSIA was inapplicable to the defendants (which destroyed

federal question jurisdiction) was a jurisdictional finding that

had no preclusive effect and could be freely reviewed by the

state court upon remand, relying upon Waco v. United States

Fidelity & Guaranty Co., 293 U.S. 140, 55 S. Ct. 6, 79 L. Ed

244 (1934). The only consequence of the district court’s ruling

was that the defendants “must have the merits of their FSIA

claims determined by a state court rather than by a federal court.”

Linton, supra at 598.

The importance of what preclusive effect the district court

ruling will have on the state court upon remand has been a

common theme in the cases cited above. While in Jn Re Life

Ins. Co. of North America, 857 F.2d 1190, 1993 (8th Cir. 1988)

17

the Eighth Circuit held a remand order reviewable under a

preemption analysis, Baldridge v. Kentucky-Ohio Trans., Inc.,

983 F.2d 1341 (6th Cir. 1993) at page 1347 points out the fact

that In Re Life Ins. Co. of North America was decided before

recognition of the difference between complete preemption and

the preemption defense. In Jn Re Business Men’s Assur. Co. of

America, 992 F.2d 181 (8th Cir. 1993), a case decided after Jn

Re Life Ins. Co. of North America, supra, the Eighth Circuit

followed the preemption analysis of Hansen, Glasser, Baldridge,

Soley, and Linton by denying review of a remand order where

the district court concluded it did not have federal question

jurisdiction, and where the district court declined to rule whether

ERISA would control the remanded action, thus leaving that

decision to the state court. Even though the district court

considered whether the insurance plan in question was an ERISA

plan, the issue was considered only in the context of determining

the issue of federal question jurisdiction, and the state court

was free to decide the issue on remand.

In this case, the only effect of the district court’s ruling, as

well as that of the Eighth Circuit Court of Appeals, is the fact

that the case is to be tried, and BIC’s constitutional arguments

considered in state court.

iil.

THE INTERLOCUTORY EFFECT OF MO. REV.

STAT. § 537.762 DOES NOT RESULT IN AN

IMPERMISSIBLE DESTRUCTION OF FEDERAL

REMOVAL JURISDICTION.

In truth, it is the interlocutory nature of dismissal under

Mo. Rev. Stat. § 537.762 that BIC really complains of. Because

the dismissal was interlocutory, it did not constitute a voluntary

act which resulted in a final dismissal of a non-diverse defendant

18

sO as to give rise to removal jurisdiction. Machinsky v. Johnson

& Johnson Medical Inc., 868 F. Supp. 269 (E.D. Mo. 1994);

Saylor v. General Motors Corp., 416 F. Supp 1173 (E.D. Ky.

1976). In Machinsky, an interlocutory dismissal without

prejudice granted by the court to a retailer under the Mo. Rev.

Stat. § 537.762 (the statute now under consideration) was held

not to result in a final dismissal of the non-diverse defendant so

as to permit removal even though the plaintiff did not oppose

the motion to dismiss and suggested language to be used in the

order of dismissal.

Under the “voluntary-involuntary rule” adopted by the

Eighth Circuit, a case that is nonremovable on its initial

pleadings for lack of diversity can only become removable by

the plaintiff’s voluntary act that definitely and clearly indicates

his intention to abandon or discontinue the action as to the non-

diverse defendants. Jn Re lowa Mfg. Co., 747 F.2d 462 (8th Cir.

1984); Power v. Norfolk Ry. Co., 778 F.2d 468 (E.D. Mo. 1991).

The rationale of the voluntary-involuntary test is the prevention

of premature removals in cases where the issue of the resident

defendant’s dismissal has not been fully determined in the state

court. Machinsky, supra at p. 270; Saylor v. General Motors

Corp., 416 F. Supp. 1173 (E.D. Ky. 1976).

Because of their interlocutory nature, numerous other

procedural activities have been held not to constitute dismissal

of a non-diverse defendant so as to give rise to diversity and

removal jurisdiction See, e.g., Thrapp v. Armstrong World

Industries, Inc., 767 F. Supp. 822 (N.D. Tex. 1991) (“high-low”

settlement between plaintiff and non diverse defendant was not

an abandonment of action against non diverse defendant such

that action could thereafter be removed on grounds of diversity);

Pulse One Com. v. Bell Atlantic Mobile Systems, 760 F. Supp.

82 (D. Md. 1991) (summary judgment order removing non

diverse individual plaintiffs was interlocutory and not

19

sufficiently final to warrant removal); Doe v. Cutter Biological,

774 F. Supp. 1001 (E.D. La. 1991) (even though non diverse

defendants not served, case can nevertheless lack complete

diversity and cannot be removed); Aydell v. Sterns, 677 F. Supp.

877 (M.D. La. 1988) (plaintiff’s instruction in petition to

withhold service as to non diverse defendants was not a clear

and definite expression to terminate action against them so as

to warrant removal); Higgins v. Pittsburgh-Des Moines Co., 635

F. Supp. 1182 (S.D Tex. 1986) (non diverse defendant who was

involved in partial settlement remained interested party in case

and his liability needed to be submitted to jury, thus partial

settlement was not a final dismissal).

BIC has also contended that respondents may not be allowed

to “stipulate away” federal jurisdiction. Yet, federal courts have

held that as long as they occur before removal, amendments

and stipulations limiting the jurisdictional amount in controversy

can be effective to prevent removal. St. Paul Mercury Indemnity

Co., v. Red Cab Co., 303 U.S. 283, 58 S. Ct. 586, 82 L. Ed. 845

(1938); Matter of Shell Oil Co., 970 F.2d 355 (7th Cir. 1992);

Woods v. Massachusetts Protective Ass'n, 34 F.2d 501 (E.D. Ky.

1929).

The point is that the statute now under consideration is no

more impermissibly destructive of federal removal jurisdiction

than the other procedural activities referred to above. The statute

was enacted with a clear purpose in mind. It allows retailers

whose only source of liability is having placed the product in

the stream of commerce to avoid potentially expensive liti gation

while at the same time protecting innocent plaintiffs against the

possibility of insolvency of designers and manufacturers who

are the primary defendants. The retailers remain a party for

purposes of venue and jurisdiction and the dismissal is

interlocutory, subject to being set aside for good cause at any

time until final disposition. App.15a.

20

CONCLUSION

For the reasons previously stated, the petition for a writ of

certiorari should be denied.

Respectfully submitted,

PAUL L. REDFEARN

DANIEL R. BROWN

REDFEARN & BROWN, P.C.

Attorneys for Respondents

1125 Grand Avenue

Suite 814

Kansas City, Missouri 64106

(816) 421-5301

Of Counsel:

MICHAEL W. MANNERS

WELCH, MARTIN, ALBANO & MANNERS

311 West Kansas

Independence, Missouri 64050

(816) 836-8000