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Class Action Defense Cases-In re Mutual Fund Market-Timing: Seventh Circuit Holds That It Lacks Jurisdiction To Review District Court Order Remanding Class Action Lawsuits To State Court

Circuit Court Lacks Jurisdiction to Review Order Remanding Class Action Lawsuits to State Court under 28 U.S.C. § 1446(c) Seventh Circuit Holds

This appeal resolving three class action lawsuits arose as follows: Plaintiffs (investors in various mutual funds) filed putative class action lawsuits in state court that defense attorneys removed to federal court. Following district court orders remanding the class actions to state court, the Seventh Circuit held that it had jurisdiction to review the remand orders and reversed. The Supreme Court subsequently held that the district court erred in its conclusion that federal jurisdiction did not exist, see Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S.71 (2006), but that district court orders remanding class actions to state court – even if error under the Securities Litigation Uniform Standards Act of 1998 (SLUSA) – were not reviewable on appeal. In re Mutual Fund Market-Timing Litig., 495 F.3d 366, 367 (7th Cir. 2007) (citing Kircher v. Putnam Funds Trust, ___ U.S. ___, 126 S.Ct. 2145 (2006). Once the class actions were back in state court, defense attorneys filed new notice of removal arguing that Dabit was “a new ‘order’ that creates another opportunity for removal under 28 U.S.C. § 1446(b).” Id., at 367-68. The district court handling two of the three class actions disagreed, and again remanded the lawsuits to state court, id., at 368. Defense attorneys appealed, and the Seventh Circuit held that it lacked jurisdiction to review the remand orders.

The Seventh Circuit explained that § 1447(d) precludes appellate review of remand orders to the extent that the district court remands the complaint to state court under § 1447(c). In re Mutual Fund, at 368. That statute covers remand orders based on lack of jurisdiction or defects in the removal process. Id. (citing Powerex Corp. v. Reliant Energy Services, Inc., __ U.S. ___, 127 S.Ct. 2411 (2007)). In this case, the district court remanded the class actions to state court because the notices of removal were untimely, and because they were “successive and represented attempts to relitigate issued decided adversely to defendants.” Id. Whether the district court was mistaken was irrelevant: the Seventh Circuit held that the remand order fell within the scope of § 1447(c) thereby precluding appellate review. Id. Accordingly, the Circuit Court dismissed the appeal for lack of jurisdiction. Id., at 369.

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