Remand Orders in ERISA Cases: When Are They Reviewable in the 11th Circuit?
In Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336 (1976), the Supreme Court held that 28 U.S.C. §1447(d)’s prohibition against review of a federal district court order remanding a previously-removed case back to state court applied only to orders invoking §1447(c). This article discusses Thermtron Products and the later-reported federal cases addressing the quagmire of when an order remanding to state court a case arising under the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001, et seq. is reviewable in the 11th Circuit, notwithstanding the prohibitions.
ERISA Background
ERISA is a comprehensive federal law enacted by Congress to regulate employee welfare benefit plans. Section 514(a) of ERISA concerns “conflict preemption”; it provides that ERISA’s provisions “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” governed by ERISA. 29 U.S.C. §1144(a). The reach of ERISA conflict preemption under the “relate to” rubric is “deliberately expansive, and designed to ‘establish pension plan regulation as exclusively a federal concern.’” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46 (1987) (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)).
While ERISA conflict preemption is a state supremacy clause issue, ERISA “complete preemption” is a federal jurisdictional one. Metropolitan Life Ins. v. Taylor, 481 U.S. 58, 65 (1987). The 11th Circuit, in Butero v Royal Maccabees Life Ins. Co., 174 F.3d 1207 (11th Cir. 1999), articulated a four-part test for determining when state claims are completely preempted by ERISA:
[T]here is complete preemption when four elements are satisfied. First there must be a relevant ERISA plan. … Second, the plaintiff must have standing to sue under that plan. … Third, the defendant must be an ERISA entity.. .. Finally, the complaint must seek compensatory relief akin to that available under Section 1132(a); often this will be a claim for benefits due under a plan.
Id. at 1212 (citations omitted).
This means that, under ERISA’s exception to the “well-pleaded complaint” rule, complaints in state court may be removed, despite the absence of a federal question appearing on the face of the plaintiff’s “well-pleaded complaint,” if a defendant, upon removal, can show complete preemption.1 contrast, conflict preemption does not provide the jurisdictional basis for removal per se; “the fact that a plaintiff’s state claims may be preempted because they ‘relate to’ an ERISA plan under §514 does not necessarily mean that they will fit within the scope of ERISA’s §502 civil enforcement provision.”2 Accordingly, some state claims (excluding direct negligence and contract claims) may interfere with the plan’s administration or delivery of benefits without implicating ERISA’s civil enforcement scheme and may remain in state court for determination of the preemption issue. Gonzalez-Garcia v. Williamson-Dickie Mfg. Co., 99 F.3d 490, 491 (1st Cir. 1996).
The tug-of-war between §502 complete preemption (case may remain in federal court) and §514 conflict preemption (case may be remanded to state court) is significant in that cases removed to federal court “on the jurisdictional wings” of §502 complete preemption may be remanded, at least in part, if the district court concludes that at least some claims are only “conflict preempted” under §514. Those remand decisions create a plethora of appellate issues concerning reviewability, and do so to an even greater extent when they include dismissal of some, but not all, claims.
Federal Statutes Controlling Appellate Review of Remand Orders
Title 28 U.S.C. §1447(c) and (d) set forth the procedures and general nonreviewability of remand orders after a case has been removed from state to federal court. Section 1447(c) contains two general categories in “which a district court may – and in one case must – order a remand: when there is 1) a lack of subject matter jurisdiction or 2) a defect other than a lack of subject matter jurisdiction [such as removal].” Snapper, Inc. v. Redan, 171 F.3d 1249, 1252-53 (11th Cir. 1999) (emphasis added). Thus, pursuant to §1447(c),
[a] motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a) [28 U.S.C.A. § 1446(a)]. If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.
Id.
Under §1447(d), federal appellate courts are barred from reviewing remand orders issued under §1447(c) (lack of subject matter jurisdiction), whether by appeal, mandamus, or otherwise, even if the district court’s order is erroneous: “(d) An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise [, except when civil rights cases removed under §1443 are involved.]”
The rationale is that allowing federal appeal of remand orders would simply delay justice in state courts. See New v. Sports & Recreation, Inc., 114 F.3d 1092 (11th Cir. 1997).
Section 1447(d)’s language would, therefore, seemingly bar appellate review of any ERISA remand decision by a district court. The simplicity of the statutory language, however, is misleading. In fact, a number of judicially-created exceptions provide for appellate review of remand decisions. As a result, “‘straightforward’ is about the last word judges attach to §1447(d) these days. . . . ”3
History of Remand Order Reviewability
In 1976, the Supreme Court in Thermtron Products identified a narrow exception to the strict bar to appellate review of remand orders: A remand order may be reviewed on petition for writ of mandamus where the district court has remanded a case “on grounds not authorized by the removal statutes.” 423 U.S. at 336. The Court held that §1447(d)’s review prohibition applied only to remand orders rendered under the district court’s §1447(c) statutory authority and invoking the grounds for remand specified under §1447(c); remands based on grounds not appearing in §1447(c) were open to writ of mandamus review.
After the district court in Thermtron Products had remanded the case to state court, citing concerns about its overcrowded docket, the defendants petitioned the Sixth Circuit Court of Appeals to issue a writ of mandamus directing the district court to retain jurisdiction over the case. Citing §1447(d), the Sixth Circuit held that it lacked jurisdiction to review the remand decision. The Supreme Court disagreed and reversed. The Court recognized that §1447(d) must be read in pari materia with §1447(c), providing the grounds on which a district court can remand a case to state court. Thus, remands based on grounds specified in §1447(c) were the only grounds insulated from review under §1447(d). Because the district court’s ground for remand—the congested state of a district court’s docket—in Thermtron Products was not based on §1447(c), the Supreme Court held that §1447(d) did not bar appellate review of that decision.
Cases Construing §1447(d)
• The General Rule Is Remand Nonreviewability—Or Is It?
Beginning with the exception carved out in Thermtron Products, the jurisprudence surrounding §1447(d) has grown increasingly complex. Post-Thermtron Products, federal courts have ruled in divergent ways. For example, a remand based on district court refusal to exercise ancillary federal jurisdiction over nonfederal elements of a case once the federal claims dropped out of the case has been held to be within the scope of §1447(c) and not reviewable.4 In contrast, it has been frequently held that a remand based on district court refusal to exercise pendent jurisdiction over state law claims may not be within the scope of §1447(c) and, therefore, may be reviewable. Some courts have reached this result where a plaintiff has abandoned his or her federal claims after removal, where the district court dismissed the federal claims, where some but not all of the plaintiff’s state law claims were deemed preempted by federal law, and where the district court simply determined that the state law claims would be better heard in state court.5 Some courts have held that, inasmuch as §1447(c) applies only to cases removed under §1441, a remand issued in a case removed under another statute is outside the purview of §1447(c) and, therefore, reviewable.
Accordingly, another exception has developed to support appellate review of remand decisions, known as the “matter of substantive law exception” to §1447(d). This doctrine “allows the courts of appeals to review those remands to state court that are based on determinations of the substantive rights of the parties.” Aquamar, S.A. v. Del Monte Fresh Produce N.A., Inc., 179 F.3d 1279, 1285 (11th Cir. 1999). Courts addressing the reviewability of a partial dismissal and partial remand order have followed a two-step consideration: first, of 28 U.S.C. §1447(d) and separableness; and second, of 28 U.S.C. §1291 finality and appealability.6
• The 11th Circuit Has Strictly Construed §1447(d) and “Separableness” to Reduce Turmoil and Advance Predictability
The 11th Circuit has chosen to narrowly apply Thermtron Products, mitigating otherwise decisional uncertainty. In Glasser v. Amalgamated Workers Union Local 88, 806 F.2d 1539 (11th Cir. 1987), in considering the applicability of §1447(c) to remand orders based on preemption, the 11th Circuit concluded that precedent precluded review. The district court in Glasser had remanded the action to state court. The 11th Circuit concluded that precedent precluded appellate review of the remand order rendered under §1447(c) on the basis that it lacked §502 ERISA complete preemption jurisdiction because: “It is firmly established that section 1447(d) prohibits appellate review of any remand order, such as this one, issued on the ground that the district court lacks jurisdiction; review of such a remand order is forbidden even where the order is erroneous.”
Id. at 1540.
Glasser found the “matter of substantive law” doctrine inapplicable, by construing the district court’s ERISA preemption decision as turning on a jurisdictional, not substantive, analysis. Thus, under the Glasser decision, if the “substance” of the analysis ultimately resulting in remand is a jurisdictional one under ERISA’s §502(a) complete preemption doctrine, triggering no substantive inquiry into a claim’s merits, appellate review of that remand decision in the 11th Circuit would be barred.7
The 11th Circuit has confirmed this narrow construction of the “matter of substantive law exception” in Calderon v. Aerovias Nacionales de Colombia, 929 F.2d 599, 602 (11th Cir. 1991), where the district court rejected the argument that the plaintiffs’ claims, though ostensibly brought under state law, were completely preempted by the Warsaw Convention and warranted removal under §1441 on that basis. The district court remanded the claims to state court. On appeal, the 11th Circuit reaffirmed that the “matter of substantive law exception” did not open appellate review because “the substantive law decision related to the question of jurisdiction; the remand order did not affect the substantive rights of the parties.”8
The ERISA case of In re Loudermilch, 158 F.3d 1143 (11th Cir.1998), advances this 11th Circuit §1447(d) jurisprudence. There, the district court made a seemingly substantive determination that the plaintiff’s state law claims were not preempted by ERISA, and then remanded the case to state court. The 11th Circuit rejected the defendant’s argument that appellate review was proper because the district court’s decision to remand was based on a substantive interpretation of ERISA: the district court’s “[r]ejection of [the defendants’] preemption argument was merely a step towards the conclusion that the court lacked jurisdiction.”
The 11th Circuit’s “matter of substantive law” analysis would seemingly begin to break down when a district court enters an order of dismissal, triggered by ERISA §502 complete preemption for failure to state a claim for relief under ERISA, and then dismisses the remaining state law claims for lack of jurisdiction (declining to exercise jurisdiction over the remaining state law claims). As to the separableness between the order of dismissal of some claims and the order of remand of the remaining state law claims, the “separableness exception,” or “Waco doctrine,” would not appear to open review of these kinds of district court orders either.
The concept of a “separableness exception” originated in City of Waco v. United States Fidelity & Guar. Co., 293 U.S. 140, 143 (1934) (reviewing dismissal of cross-complaint) (emphasis added):
True, no appeal lies from the order of remand; but in logic and in fact the decree of dismissal preceded that of remand and was made by the District Court while it had control of the cause. Indisputably this order is the subject of an appeal; and, if not reversed or set aside, is conclusive upon the petitioner.
The Waco doctrine has allowed appellate courts to review district court orders that lead to, but are separate from, orders of remand and have a conclusive effect upon the ensuing state court action.9
In Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996), finding appellate review not barred under §1447(d) and then asking whether an abstention-based remand was reviewable under §1291,the Supreme Court reaffirmed the rule of finality and the “collateral order” exception:10
[A] decision is ordinarily considered final and appealable under §1291 only if it ends the litigation on the merits and leaves nothing for the court to do but execute the judgment. . . . We have. . . recognized, however, an arrow class of collateral orders which do not meet this definition of finality, but which are nevertheless immediately appealable under §1291 because they conclusively determine [a] disputed question that is completely separate from the merits of the action, effectively unreviewable on appeal from a final judgment,. . . and too important to be denied review.
Id. at 712 (internal quotation marks and citations omitted; emphasis added).
Under Waco and Quackenbush, what makes an otherwise nonreviewable order reviewable under §1291 is that it must “put the litigants effectively out of court.” Quackenbush, 517 U.S. at 712 (internal quotation marks omitted)). Yet, a remand order under 28 U.S.C. §1447(d) is generally non-reviewable because it decides solely that it lacks jurisdiction under §1447(c), or decides there are defects in removal, and the “matter of substantive law” exception does not make it reviewable. Under the “matter of substantive law” doctrine, however, the court of appeals may “review those remands to state court that are based on determinations of the substantive rights of the parties.” Aquamar, 179 F.3d at 1285. And therein lies the quandary.
The 11th Circuit has made sense out of this seeming incongruity between the “matter of substantive law” doctrine under Waco (concerning nonfinal orders) and the §1447(d) limitations (concerning remand orders) by explaining:
Unlike the “matter of substantive law exception” to section 1447(d), which allows courts of appeals to review only those remand orders that are based on substantive determinations of law, the Waco doctrine allows us to review a district court’s jurisdictional determinations.. . . The “matter of substantive law exception” and the Waco doctrine apply to different types of orders. The “matter of substantive law exception” applies to the review of a remand order itself,. .. that determines the substantive issues of the case in a way that is conclusive because it is unreviewable by the state court. The reason that the “matter of substantive law exception” does not apply to a remand based on a district court’s jurisdictional findings is that these findings have no conclusive effect upon the state court action…. When a district court enters an order to do something other than remand (such as dismissal of a claim or a party), and this order changes the contours of the state court action after remand, however, it does not matter whether the issue of law the court decided when it entered the order was jurisdictional or substantive; either way, the parties’ rights have been altered in a manner that the state court cannot revisit.11
That is precisely the analysis the 11th Circuit employed in Calderon v. Aerovias Nacionales de Colombia, 929 F.2d 599 (11th Cir. 1991). The court found the Waco doctrine did not apply to the district court decision to remand: “the substantive issue [wa]s intrinsic to the district court’s decision to remand for lack of subject matter jurisdiction.” Id. at 602. It reasoned that §1447(d), itself, “put the litigants effectively out of [federal] court,” and such a result was §1447(d)’s specific purpose. The 11th Circuit in Aquamar, 179 F.3d at 1285, again narrowly construed the “matter of substantive law exception” to conclude it did not apply “when ‘the substantive issue is intrinsic to the district court’s decision to remand for lack of subject matter jurisdiction.’” (quoting Calderon, 929 F.2d at 602).
Proposal for Practical Resolution
Under 11th Circuit precedent, if a district court has determined that 1) a claim under the exception to “the well-pleaded complaint rule” is completely preempted under §502; 2) dismissal is warranted because, despite multiple attempts to amend, a plaintiff has still failed to properly state a claim for relief under ERISA; and 3) all remaining state law claims should be remanded, then the 11th Circuit will likely conclude that appellate review is barred. Orders dismissing completely preempted claims under ERISA §502, by virtue of the exception to the “well-pleaded complaint” rule, for failure to state claims for relief under ERISA are not decisions turning on the claims’ merits. Rather, they are decisions turning on the exception to the “well-pleaded complaint rule” (providing that courts to look behind the allegations in order to determine whether the claims trigger §502 ERISA complete preemption). Thus, they trigger remand under §1447(c) of any remaining state law claims for lack of jurisdiction; further, that decision to remand, by virtue of being within the scope of §1447(c) and, therefore, deemed wholly non-reviewable, will likely remain unreviewable by operation of §1447(d).
Before weighing appellate review of an ERISA remand order, however, a litigant opposing a district court remand order should consider, in conjunction with appellate counsel, the type of review sought and the issues surrounding finality. Although there is authority for the general proposition that a remand order, once made, is not subject to district court reconsideration, an exception has been stated to the effect that, when a remand order is subject to appellate review by reason of being outside the district court’s authority under §1447(c), the district court has jurisdiction to review the order and vacate or reinstate it. Even if district courts in this circuit disagree on this point, practitioners should err on the side of caution and seek reconsideration from the district court on that basis to avoid inadvertent waiver of appellate issues. Because of the differences in finality between state and federal court, such a motion should be prepared in conjunction with an attorney knowledgeable in federal appellate jurisdictional requirements.
Even if a remand order falls within §1447(c)’s purview and is non-reviewable, there may be other means for review (or its practical equivalent). One district court has suggested that a remand within the scope of §1447(c) may, nonetheless, be reviewable if properly certified under 28 U.S.C. §1292(b).12 Second, even if the remand is deemed wholly non-reviewable by virtue of its being within the scope of §1447(c), the practical equivalent of review may be obtained if the remand was based upon dismissal of a party whose presence was the basis for removal in the first place. Several cases have stated that, although the remand order was not subject to review, the order of dismissal, if it necessarily preceded it, was reviewable.13
Finally, as described earlier in this article, the Supreme Court has specifically approved writ of mandamus proceedings as a means of obtaining review of a remand order outside the district court’s statutory authority under 28 U.S.C. §1447(c). Thermtron Products, Inc. v. Hermansdorfer. Even when a party seeking review of such an order does so by means of an appeal, the appellate court may (not shall), in its discretion, treat the appeal as a petition for writ of mandamus. Also, several reported cases have taken the view that, where a remand order is based on the district court’s decision about substantive law, apart from any jurisdictional analysis, the order is outside § 447(c)’s scope, and is appealable as a “collateral order” under 28 U.S.C. §1291. See, e.g., Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273 (9th Cir. 1984).
1 Traditionally, the plaintiff chooses the forum in which to bring his/her claim. However, one corollary to the well-pleaded complaint rule, which provides that “federal jurisdiction exists only when a federal question is presented on the face of the plaintiff’s properly pleaded complaint,” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987), is that Congress so completely occupies a particular area that any civil complaint raising a select type of claim is necessarily federal in character. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987); Belasco v. W.K.P. Wilson & Sons, Inc., 833 F.2d 277 (11th Cir. 1987). Regardless of whether a plaintiff attempts to “couch” his or her pleadings in state law claims, courts must look under a preemption analysis beyond the face of the complaint “to determine whether the real nature of the claim is federal, regardless of plaintiff’s [state law] characterization.” Danca v. Private Health Care Sys., Inc., 185 F.3d 1 (1st Cir. 1999) (quoting Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 397 n.2 (1981)).
2 Lancaster v. Kaiser Foundation Health Plan of Mid-Atlantic States, Inc., 958 F. Supp. 1137, 1143 (E. D. Va. 1997); see generally Metropolitan Life.
3 In re Amoco Petroleum Additives Co., 964 F.2d 706, 708 (7th Cir. 1992).
4 Other types of remand orders barred from review under the authority of §1447(c) include: the untimeliness of the removal petition as its basis for remand, suits containing only state law claims removed on the basis of federal preemption but subsequently remanded upon finding that there was no preemption, and remands grounded on such matters as lack of removal jurisdiction as a consequence of federal statutory and constitutional provisions.
5 Types of remand orders not barred from review under the authority of §1447(c) include: remand based on a decision to abstain from deciding a difficult question of state law, remand based on the interpretation of a forum selection clause in a contract between the parties to the suit, remand based on waiver by the defendant of its right to remove the case, cases where the district court’s finding of waiver was based on the removing party’s participation in state court proceedings before removal.
6 E.g., Aquamar, S.A., v. Del Monte Fresh Produce N.A., Inc., 179 F.3d 1279, 1287 (11th Cir. 1999) (reviewing court must address two questions: whether §1447(d) bars consideration of appeal and whether dismissal of claims was “final order” within §1291); see also Powers v. Southland Corp., 4 F.3d 223, 224–25 (3d Cir. 1993) (because petition granting motion for relation-back amendment was separable, review was not barred by §1447(d); however, that portion of order granting amendment was not reviewable because it was not final within 1291); Aliota v. Graham, 984 F.2d 1350, 1352–53 (3d Cir.) (whether portion of order resubstituting defendants is reviewable involves two subquestions: whether barred by §1447(d) and whether final within meaning of §1291), cert. denied, 510 U.S. 817 (1993); Mitchell v. Carlson, 896 F.2d 128, 132-33 (5th Cir. 1990) (after determining resubstitution order was separable, appellate court must ask whether reviewable under §1291); Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 277 (9th Cir. 1984) (having concluded §1447(d) did not bar review of substantive decision, appellate court still must ask whether the order to be reviewed it is final order within §1291).
7 See New v. Sports & Recreation, Inc., 114 F.3d 1092 (11th Cir. 1997); see also Woodard v. STP Corp., 170 F.3d 1043 (11th Cir. 1999).
8 Calderon v. Aerovias Nacionales de Colombia, 929 F.2d at 602 (alterations in original) (quoting Glasser v. Amalgamated Workers Union Local 88, 806 F.2d 1539, 1540 (11th Cir.1986)).
9 See, e.g., Beauclerc Lakes Condominium Ass’n v. City of Jacksonville, 115 F.3d 934, 935 (11th Cir. 1997 ) (reviewing dismissal of federal claim that led to remand); Armstrong v. Alabama Power Co., 667 F.2d 1385, 1387 (11th Cir. 1982) (relying on Waco to review district court’s dismissal of United States as party prior to remand).
10 See Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949) (The collateral order doctrine embraces “that small class [of decisions] which finally determine claims of right separable from, and collateral to, rights asserted in an action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.”).
11 Aquamar, 179 F.3d at 1286 (emphasis supplied; bold in original; citations omitted); see Nutter v. Monongahela Power Co., 4 F.3d 319, 321 (4th Cir. 1993) (“Which portions of a remand order are severable is not entirely clear, although most decisions applying City of Waco have involved orders dismissing some party or claim.”).
12 Re TMI Coordinated Proceedings, 735 F. Supp. 640 (M.D. Pa. 1990). But see Dawson v. Orkin Exterminating Co., 736 F. Supp. 1049 (D.C. Colo. 1990) (refusing to certify remand order under §1292(b) on grounds that order was based on §1447(c) and, therefore, non-reviewable); Federal Sav. & Loan Ins. Corp. v. Frumenti Dev. Corp., 857 F.2d 665 (9th Cir. 1988) (holding remand order based on lack of subject matter jurisdiction to be within scope of §1447(c) and therefore nonreviewable notwithstanding certification by district court under §1292(b)).
13 See, e.g., Waco v United States Fidelity & Guaranty Co., 293 U.S. 140 (1934); Armstrong v. Alabama Power Co., 667 F.2d 1385 (11th Cir. 1982); Allen v. Ferguson, 791 F.2d 611 (7th Cir. 1986).
Dorothy F. Easley, M.S., J.D., is a board certified appellate attorney and in-house appellate counsel for Steven M. Ziegler, P.A., Hollywood. Admitted to the U.S. Supreme Court and 11th Circuit Court of Appeals, she works in both federal and state courts as an appellate practitioner concentrating in health and managed care law.
This column is submitted on behalf of the Appellate Practice Section, Jack J. Aiello, chair, and Jacqueline E. Shapiro, editor.
