Remand to state court resulting from declining supplemental jurisdiction unreviewable on appeal

November 13, 2007
Post by Blog Staff

Addressing an issue of first impression, the Federal Circuit today held that a district court's decision remanding a case to state court on the basis of declining supplemental jurisdiction was unreviewable. The court determined that this decision was within the class of remands described in 28 U.S.C. § 1447(c). Because of this, review was barred by § 1447(d), and the court dismissed the appeal.

This decision puts the Federal Circuit in conflict with several other circuits, including the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits. The Federal Circuit explained its departure from the holdings of the other circuits by citing the Supreme Court's decision last Term in Powerex Corp. v. Reliant Energy Services, Inc., which cast doubt on the other circuits' reasoning. Given the circuit split, this case may be one that is ripe for Supreme Court review.

In September 2005, Plaintiffs HIF and BizBiotech filed a complaint against multiple defendants in California state court. In November 2005, one defendant, CTI, removed the action to federal court. In March 2006, the plaintiffs filed their first amended complaint, asserting twelve causes of action. The first and second causes of action sought a declaratory judgment for ownership and inventorship, respectively, of the invention at issue. The third cause of action asserted RICO violations, and the remaining causes of action related to various state claims, including claims of fraud and tortious interference.

The defendants filed various motions to dismiss and strike. The district court dismissed the RICO claim, and declined supplemental jurisdiction over the rights of inventorship and ownership of invention claims, which it held were state law claims, and also declined supplemental jurisdiction over the plaintiffs' nine other state law claims. Having declined supplemental jurisdiction over the state claims, the district court remanded the case to state court, after which CTI filed this appeal.

The Federal Circuit characterized the issue on appeal as one of first impression: whether a remand based on declining supplemental jurisdiction under § 1367(c) is within the class of remands described in § 1447(c), and thus barred from appellate review by § 1447(d). The court noted that several other appellate courts (namely the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits), relying on the Supreme Court's decision in Carnegie-Mellon Univ. v. Cohill, have held that review of a remand order based on declining supplemental jurisdiction is not barred by § 1447(d). In doing so, the courts relied upon a footnote in the Cohill case stating that "[§] 1447(c), as the dissent recognizes, do[es] not apply to cases over which a federal court has pendent jurisdiction. Thus, the remand authority conferred by the removal statute and the remand authority conferred by the doctrine of pendent jurisdiction overlap not at all."

Noting the trend among appellate courts to rely on Cohill for the proposition that § 1447(d) does not bar review of § 1367(c) remands, the Federal Circuit cited Justice Kennedy's concurrence in Things Remembered, Inc. v. Petrarca as introducing "a degree of uncertainty as to whether such reliance (upon the footnote in Cohill) was well placed. Specifically, Justice Kennedy stated that although the Court held in Cohill that "a district court may remand to state court a case in which . . . only pendent state-law claims remained," the Court "did not find it necessary to decide whether [§ 1447](d) would bar review of a remand on these grounds." In fact, the court noted that the Supreme Court's decision in Powerex Corp. v. Reliant Energy Services, Inc., "made the uncertainty introduced by Justice Kennedy's Things Remembered concurrence precedential." In Powerex, the Court stated that "[i]t is far from clear . . . that when discretionary supplemental jurisdiction is declined the remand is not based on lack of subject-matter jurisdiction for purposes of § 1447(c) and § 1447(d)." The Supreme Court also noted that the question was still open, stating: "[w]e have never passed on whether Cohill remands are subject matter jurisdictional for purposes of post-1988 versions of § 1447(c) and § 1447(d)."

CTI relied upon the Supreme Court's decision in Quackenbush v. Allstate Insurance Co. for the premise that § 1447(d) interposes no bar to appellate review of discretionary remands, by analogizing the Co

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