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Supreme Court Holds that Decision Declining Supplemental Jurisdiction Is Appealable Despite § 1447(d) — But Likely Only Because No One Challenged Thermtron

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From Carlsbad Technology, Inc. v. HIF BIO, Inc., 129 S. Ct. 1862 (May 4, 2009):

In this case, we decide whether a federal court of appeals has jurisdiction to review a district court's order that remands a case to state court after declining to exercise supplemental jurisdiction over state-law claims under 28 U.S.C. § 1367(c). The Court of Appeals for the Federal Circuit held that appellate review of such an order is barred by § 1447(d) because it viewed the remand order in this case as resting on the District Court's lack of subject-matter jurisdiction over the state-law claims. We disagree and reverse the judgment of the Court of Appeals.

***

Appellate review of remand orders is limited by 28 U.S.C. § 1447(d), which states:

"An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to section 1443 of this title shall be reviewable by appeal or otherwise."

This Court has consistently held that § 1447(d) must be read in pari materia with § 1447(c), thus limiting the remands barred from appellate review by § 1447(d) to those that are based on a ground specified in § 1447(c). See Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 345-346, 96 S. Ct. 584, 46 L. Ed. 2d 542 (1976); see also Powerex Corp. [v. Reliant Energy Services, Inc., 551 U.S. 224, 229, 127 S. Ct. 2411, 168 L. Ed. 2d 112 (2007)]; Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711-712, 116 S. Ct. 1712, 135 L. Ed. 2d 1 (1996); Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127, 116 S. Ct. 494, 133 L. Ed. 2d 461 (1995). *

[Footnote]* We do not revisit today whether Thermtron was correctly decided. Neither the brief for petitioner nor the brief for respondents explicitly asked the Court to do so here, and counsel for both parties clearly stated at oral argument that they were not asking for Thermtron to be overruled….We also note that the parties in Powerex, Quackenbush, and Things Remembered did not ask for Thermtron to be overruled.

One type of remand order governed by § 1447(c) -- the type at issue in this case -- is a remand order based on a lack of "subject matter jurisdiction." § 1447(c) (providing, in relevant part, that "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded"). The question presented in this case is whether the District Court's remand order, which rested on its decision declining to exercise supplemental jurisdiction over respondents' state-law claims, is a remand based on a "lack of subject matter jurisdiction" for purposes of §§ 1447(c) and (d). It is not.

***[W]hether a court has subject-matter jurisdiction over a claim is distinct from whether a court chooses to exercise that jurisdiction. ***

With respect to supplemental jurisdiction in particular, a federal court has subject-matter jurisdiction over specified state-law claims, which it may (or may not) choose to exercise. See §§ 1367(a), (c). A district court's decision whether to exercise that jurisdiction after dismissing every claim over which it had original jurisdiction is purely discretionary. ***

***§§ 1367(a) and (c) provide a basis for subject-matter jurisdiction over any properly removed state claim…. We thus disagree with the Court of Appeals that the remand at issue here "can be colorably characterized as a lack of subject matter jurisdiction." ***

When a district court remands claims to a state court after declining to exercise supplemental jurisdiction, the remand order is not based on a lack of subject-matter jurisdiction for purposes of §§ 1447(c) and (d).

Two observations: (1) Not only does the majority opinion observe that the parties failed to request that Thermtron be reconsidered, but Justices Stevens and Scalia explicitly questioned the viability of the decision’s rationale, and Justice Breyer and Souter “suggest that experts in this area of the law reexamine the matter with an eye toward determining whether statutory revision is appropriate.” Themtron is toast. (2) The odds that a District Court will ever be reversed for abuse of discretion in ordering a remand in circumstances when there are no federal claims and no independent basis for federal jurisdiction are minuscule. What is the point?

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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