Class action defendants often remove their case to federal court whenever possible. Plaintiffs almost invariably seek to remand the action to state court. Whether a federal district court order remanding an action to state court may be reviewed on appeal thus is important to any defendant. Because the focus of this article is on appellate review of district orders granting motions to remand a lawsuit to state court, removal and remand are not discussed here; discussions of each may be found in separate articles. Also, special rules apply to cases removed to federal court under CAFA (Class Action Fairness Act of 2005), and those are discussed in a separate article.
If an action is remanded to state court, the plaintiff commonly will assert that appellate review is barred by 28 U.S.C. § 1447(d). However, 28 U.S.C. § 1447(d) precludes review of remand orders only when the case is remanded for reasons stated in § 1447(c). Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 350 (1976). A remand order that is not based on statutory grounds is reviewable because there “is no indication whatsoever that Congress intended to extend the prohibition against review to reach remand orders entered on grounds not provided by the statute.” Id. If, for example, the district court remands the action to state court based on the mistaken belief that state courts have concurrent jurisdiction over the subject matter of the dispute, then the matter is reviewable on appeal because that basis for remand is not among the statutory grounds of 28 U.S.C. § 1447(c).
A plaintiff may seek to insulate the remand order from review by referencing 28 U.S.C. § 1447(c) in the order. While that move may strengthen the plaintiff’s case, it does not serve as a talisman to bar appellate review. In the Ninth Circuit, for example, the appealability of a remand order is subject to de novo review. The Circuit Court is not bound by the lower court’s characterization of its bases for remanding a case to state court. Ferrari, Alvarez, Olsen & Ottoboni, v. Home Ins. Co., 940 F.2d 550, 553 (9th Cir. 1991) (“We determine the basis of authority for remand by examining the substance of the remand order.”).
The Fourth Circuit similarly rejects a superficial analysis of the basis underlying a remand order: Even if the lower court’s order explicitly references § 1447(c), the Fourth Circuit states that the inquiry does not end because
powerful policy considerations and persuasive decisional authority support our power – and responsibility – to look past contextually ambiguous allusions and even specific citations to § 1447(c) to determine by independent review of the record the actual grounds or basis upon which the district court considered it was empowered to remand.
Mangold v. Analytic Services, Inc., 77 F.3d 1442, 1450 (4th Cir. 1996).
The Supreme Court has held that “only remand orders issued under § 1447(c) and invoking the grounds specified therein – that removal was improvident and without jurisdiction – are immune from review under § 1447(d).” Thermtron, at 346. Thus, section 1447(d) precludes review only of remands based on (1) a timely-raised defect in removal procedure, or (2) lack of subject matter jurisdiction. Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995); Thermtron, at 343-44. “The Supreme Court has repeatedly held . . . that the broad prohibition in §1447(d) “must be read in pari materia with § 1447(c), so that only remands based on grounds specified in § 1447(c) are immune from review under §1447(d).” Things Remembered, at 127; Snod-grass v. Provident Life & Acc. Ins. Co., 147 F.3d 1163, 1165-66 (9th Cir. 1998).
Thus, the belief that remand orders are “nonappealable” is mistaken. A defendant must carefully examine the basis for the district court order remanding the matter to state court in order to determine whether appellate review may be available.