# Opposition Brief — BIC Corp. v. Carney

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1997
- **Citation:** 519 U.S. 1077

## Text

No. 96-694

In The .

Supreme Court of the United States
—+>
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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_1721%3A3. Public record. Not legal advice.