In Re: US Healthcare ( 1998 )

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
10-27-1998
In Re: US Healthcare
Precedential or Non-Precedential:
Docket 97-5812
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Recommended Citation
"In Re: US Healthcare" (1998). 1998 Decisions. Paper 253.
http://digitalcommons.law.villanova.edu/thirdcircuit_1998/253
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Filed October 27, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-5812
IN RE: U.S. HEALTHCARE,
Petitioner
On Petition for a Writ of Mandamus
to the United States District Court
for the District of New Jersey
(Related to D.C. Civ. No. 97-02787)
Argued October 5, 1998
BEFORE: SLOVITER, GREENBERG, and COWEN,
Circuit Judges
(Filed: October 27, 1998)
Carl D. Buchholz (argued)
Angela M. Heim
Rawle & Henderson
Ten Lake Center Executive Park
401 Route 73 North
Marlton, New Jersey 08053
Attorneys for Petitioner
Keith G. Von Glahn (argued)
Adam J. Adrignolo
Wilson, Elser, Moskowitz
Edelman & Dicker LLP
2 Gateway Center 12th floor
Newark, New Jersey 07102
Attorneys for Respondents
Samuel Kasoff, M.D., New York
Medical College, Westchester
County (improperly pled as
Westchester County Medical
Center), M. Valsamis, M.D.,
Deborah L. Benzil, M.D. and
University Pathology, P.C.,
erroneously designated as
Pathology Faculty Practice, P.C. at
W.C.M.C.
William F. Sutton
Post & Schell
1800 JFK Boulevard
19th Floor
Philadelphia, PA 19103
Attorneys for Respondents
Paul F. Engstrom
Fox Chase Center
Center of the American
Onicologic Hospital
and Arthur S. Palchafsky, M.D.
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. INTRODUCTION
This matter is before the court on a petition for a writ of
mandamus filed by U.S. Healthcare. The plaintiff in the
underlying action, Donald Eric Hoyt, filed a complaint in
the Superior Court of New Jersey, which he characterized
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as an action for "medical malpractice," against U.S.
Healthcare and various physicians and entities. Prior to any
of the other defendants being served with a summons and
complaint in accordance with New Jersey practice, U.S.
Healthcare removed the matter to the district court
pursuant to 28 U.S.C. S 1441(b) and (c) on the ground that
Hoyt's claims against it arose under the Employee
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.
S 1101 et seq., so that they were within the district court's
original jurisdiction. See 28 U.S.C. S 1331. The notice of
removal asserted that even though Hoyt framed the case as
a negligence action, it was "removable pursuant to the
complete preemption exception to the well-pleaded
complaint rule," citing 29 U.S.C. S 1132(a)(1)(B) and
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct.
1542 (1987). In addition, the notice of removal asserted
that Hoyt's claims "relate to" an employee benefit plan
under 29 U.S.C. S 1144, and thus ERISA preempts them.
After U.S. Healthcare removed the action, it filed cross
claims against the other defendants and a counterclaim
against Hoyt advancing subrogation rights under Hoyt's
employer's ERISA plan which covered Hoyt for medical
benefits.
Following the removal, the case was assigned to a district
judge but, in accordance with procedure in the District of
New Jersey, was assigned further to a magistrate judge for
pretrial proceedings. The parties, however, did not consent
to the magistrate judge exercising the jurisdiction of a
district judge as provided in 28 U.S.C. S 636(c). Neither
Hoyt nor any other party made a motion to remand the
case to the state court. Nevertheless, the magistrate judge
on his own motion on October 17, 1997, remanded the case
to the Superior Court of New Jersey on the ground that the
district court lacked subject matter jurisdiction. See 28
U.S.C. S 1447(c). In remanding the action, the magistrate
judge clearly regarded the remand order as nondispositive
pursuant to 28 U.S.C. S 636(b)(1)(A), Fed. R. Civ. P. 72(a),
and District of New Jersey Local Rule 72.1. As far as we
can ascertain from the district court docket, the district
court treated the remand as effective immediately because
the court closed the case on October 17, 1997,
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notwithstanding Local Rule 72.1(c)(1)(C) which provides
that:
The Clerk shall take no action with respect to a
Magistrate Judge's order of remand or for transfer of
venue until 15 days from the filing of such an order. In
the event that a notice of appeal from such an order is
filed within such 15-day period, the Clerk shall take no
action until the appeal is decided by the Judge.1
Subsequently, without seeking relief in the district court,
U.S. Healthcare filed a petition for a writ of mandamus
requesting that we vacate the order of remand. The
petition's thrust was that the action could not be remanded
because no party had made a motion to remand within 30
days after the filing of the notice of removal as required by
28 U.S.C. S 1447(c) in the case of a defect in the removal
procedure. Moreover, U.S. Healthcare claimed that the
district court had subject matter jurisdiction. Upon
receiving the petition we ordered the filing of answers and
subsequently we ordered the parties to submit briefs.
U.S. Healthcare has filed a brief asserting that the
magistrate judge "did not have the authority to remand this
case to state court" and that "the district court had subject
matter jurisdiction over the case at the time it was
remanded through [its] counterclaim and, as such, the
magistrate judge's failure to consider this fact was an abuse
of discretion." Hoyt has not filed a brief in these
proceedings but certain of the defendants in the underlying
action have filed a brief asserting that (1) a magistrate
judge does have the authority to remand a case to a state
court; (2) 28 U.S.C. S 1447(d) precludes this court from
_________________________________________________________________
1. It appears that the district court adopted Local Rule 72.1(c)(1)(C) at
least in part in response to DeCastro v. Awacs, 940 F. Supp. 692 (D.N.J.
1996), which held that a magistrate judge could remand a case as a
nondispositive order and that, notwithstanding 28 U.S.C. S 1447(d), a
district court may hear an appeal from a remand order under 28 U.S.C.
S 636(b)(1)(A), but that under Hunt v. Acromed Corp., 961 F.2d 1079 (3d
Cir. 1992), once the court sends a certified copy of the remand order to
the state court the district court could not review the remand decision.
See also Campbell v. International Bus. Machs., 912 F. Supp. 116 (D.N.J.
1996).
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reviewing the order of remand on the merits; and (3) 28
U.S.C. S 636(b)(1)(A) afforded U.S. Healthcare a mechanism
to appeal the remand order to the district court so that U.S.
Healthcare cannot obtain mandamus relief.2
II. DISCUSSION
Initially we consider whether we should characterize the
order of remand as dispositive or nondispositive inasmuch
as 28 U.S.C. SS 636(b)(1)(A) and (B) draw a sharp
distinction between dispositive and nondispositive matters
in determining a magistrate judge's powers.3 28 U.S.C.
S 636(b)(1)(A) provides that a magistrate judge may "hear
and determine any pretrial matter pending before the court,
except a motion for injunctive relief, for judgment on the
pleadings, for summary judgment, . . . to dismiss or to
permit maintenance of a class action, to dismiss for failure
to state a claim upon which relief can be granted, and to
involuntarily dismiss an action." Thus, in general, a
magistrate judge, without the consent of the parties, has
the power to enter orders which do not dispose of the case.
The district court may reconsider any pretrial matter
"where it has been shown that the magistrate judge's order
is clearly erroneous or contrary to law." A magistrate judge,
without the consent of the parties, may "conduct hearings,
including evidentiary hearings and . . . submit to a judge of
the court proposed findings of fact and recommendations
for the disposition, by a judge of the court, of any" of the
dispositive motions we described above.
It is clear that 28 U.S.C. S 636(b)(1)(A) does not in terms
preclude a magistrate judge from hearing and determining
a motion to remand a case to a state court. Nevertheless,
because a remand order is dispositive insofar as
proceedings in the federal court are concerned, the order is
the functional equivalent of an order of dismissal for
purposes of that section. While we recognize that after a
remand a case may go forward in the state court, still the
_________________________________________________________________
2. Hoyt filed a letter joining in the opposition of the participating
respondents to the granting of the petition.
3. Of course, we deal with a situation in which the magistrate judge
cannot exercise consent jurisdiction under 28 U.S.C. S 636(c).
5
order for remand conclusively terminates the matter in the
federal court against the will of the party who removed the
case.
In considering this issue we point out that we must take
into account "the potential for Art. III constraints in
permitting a magistrate to make decisions on dispositive
motions." United States v. Raddatz, 447 U.S. 667, 676, 100
S.Ct. 2406, 2412 (1980). Thus, in NLRB v. Frazier, 966
F.3d 812, 816 (3d Cir. 1992), in discussing 28 U.S.C.
S 636(b)(1)(A) and (B) we indicated that the statute:
distinguishes between regular pretrial matters, which a
magistrate judge may decide, and those dispositive
matters which have a preclusive effect on the parties,
about which the magistrate judge may only make a
recommendation to the court. Congress crafted this
distinction to assure that Article III judges retain the
ultimate adjudicatory power over dispositive motions.
An order of remand simply cannot be characterized as
nondispositive as it preclusively determines the important
point that there will not be a federal forum available to
entertain a particular dispute. In our view, a magistrate
judge may not, without the consent of the parties, decide
this critical issue at the core of the exercise of federal
judicial power.
In determining this case it is helpful to consider a
situation in which a plaintiff files parallel federal and state
actions seeking relief for the same alleged loss. We do not
think that anyone would argue seriously that a magistrate
judge, without consent of the parties, could hear and
determine a motion to dismiss the federal action, predicated
on an absence of subject matter jurisdiction, on the theory
that the motion is nondispositive because a parallel action
is pending in the state court.4 Yet in a practical sense an
order of remand predicated on a lack of subject matter
jurisdiction is no less dispositive than an order of dismissal
_________________________________________________________________
4. The situation we describe is not fanciful for experience shows that
sometimes plaintiffs do initiate parallel federal and state actions. See,
e.g., Mints v. Educational Testing Serv., 99 F.3d 1253, 1255 (3d Cir.
1996).
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in the circumstances we describe as both orders have the
exact same effect by permitting the case to proceed in the
state rather than the federal court. In sum, we believe that
even if it could do so, Congress never intended to vest the
power in a non-Article III judge to determine the
fundamental question of whether a case could proceed in a
federal court.
In reaching our result we recognize that while neither the
Supreme Court nor any court of appeals of which we are
aware has addressed the issue before us, the district court
in DeCastro v. Awacs, Inc., 940 F. Supp. 692, 695 (D.N.J.
1996) (citations omitted), surveyed district court cases and
concluded that "the vast majority of the district courts,
within [the District of New Jersey] and elsewhere, that have
confronted this issue, have held that a motion to remand is
``non-dispositive,' and therefore, can be determined by a
magistrate judge by final order in accordance with 28
U.S.C. S 636(b)(1)(A)." The DeCastro court in joining that
majority pointed out that remand orders "are not among
those [pretrial] orders specifically enumerated in 28 U.S.C.
S 636(b)(1)(A) that a magistrate judge is without the
authority to issue." DeCastro, 940 F. Supp. at 695. The
court also noted that Fed. R. Civ. P. 72(a) indicates that a
nondispositive matter is "not dispositive of a claim or
defense of a party." The DeCastro court indicated that a
remand order does not dispose of a claim or defense as it
merely transfers the case.
We certainly do not suggest that the district court cases
DeCastro cited had no basis for their conclusion.
Nevertheless we reject their conclusion because it is clear
that as far as the federal courts are concerned, a remand
order is dispositive of all the claims and defenses in the
case as it banishes the entire case from the federal court.
Moreover, a federal court is not concerned with the
proceedings that follow a remand. Furthermore, as we
observed above, an order of remand is no less dispositive
than a dismissal order of a federal action for lack of subject
matter jurisdiction where a parallel proceeding is pending
in the state court.
Our conclusion that a remand order is dispositive for
purposes of 28 U.S.C. S 636(b)(1) brings us to the two other
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issues implicated in these proceedings: (1) whether 28
U.S.C. S 1447(d) precludes us from granting relief; and (2)
whether U.S. Healthcare had an adequate remedy by a
procedure other than through mandamus. See In re
Chambers Dev. Co., 148 F.3d 214, 226 (3d Cir. 1998). If we
answer either question affirmatively we must deny the
petition.
With an exception not applicable here, 28 U.S.C.
S 1447(d) provides that an "order remanding a case to the
State court from which it was removed is not reviewable on
appeal or otherwise." We observed recently that while "this
bar to the reviewability of remand orders appears broad
and unyielding, the courts have carved various exceptions
from it and therefore will review certain remand orders."
Feidt v. Owens Corning Fiberglass Corp., ___ F.3d ___, 1998
WL 525440, at *2 (3d Cir. Aug. 24, 1998). In the leading
case of Thermtron Prods. Inc. v. Hermansdorfer, 423 U.S.
336, 346, 96 S.Ct. 584, 590 (1976), the Supreme Court
made it clear that only "remand orders issued under [28
U.S.C. S 1447(c)] and invoking the grounds specified therein
. . . are immune from review under S 1447(d)." It seems
evident that if an order of a district judge remanding a case
is not insulated from review unless issued for a reason set
forth in section 1447(c), i.e., a defect in removal procedure
or a lack of subject matter jurisdiction, then an order of a
magistrate judge that could not be issued pursuant to
section 1447(c) because of the magistrate judge's lack of
authority to issue it, is not insulated from review by section
1447(d). In the circumstances, we see no need to discuss
this point further as it is clear that section 1447(d) is not
a bar to U.S. Healthcare's petition.
Finally, we conclude that U.S. Healthcare has no realistic
remedy other than to seek a writ of mandamus in this
court under 28 U.S.C. S 1651. See Hahnemann Univ. Hosp.
v. Edgar, 74 F.3d 456, 461 (3d Cir. 1996). We recognize
that 28 U.S.C. S 636(b)(1)(A) provides that a "judge of the
[district] court may reconsider any pretrial matter under
this subparagraph (A) where it has been shown that the
magistrate's order is clearly erroneous or contrary to law."
The inadequacy of this provision in the context here is clear
in view of Local Rule 72.1(c)(1)(C) for it seems unlikely that
8
the district court would have granted relief on the ground
that the magistrate judge did not have jurisdiction to issue
an order of remand. After all, to do so it would have had to
recognize, as we plainly do, that Local Rule 72.1(c)(1)(C) is
invalid insofar as it deals with orders of remand. Thus, in
this case it cannot be said that mandamus is being used as
a substitute for appeal. In the circumstances, we conclude
that we should issue the writ of mandamus.5
III. CONCLUSION
For the foregoing reasons we will order that a writ of
mandamus be issued to the magistrate judge, directing him
to vacate the order of October 17, 1997, remanding the
case to the Superior Court of New Jersey. Of course, we
express no view on whether the district court has subject
matter jurisdiction in this case and thus our opinion does
not preclude the district court from remanding the case if
it should find that it lacks subject matter jurisdiction. The
parties will bear their own costs in these proceedings.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
5. The district court docket sheets in the underlying case show that the
file was closed on October 17, 1997, but they do not indicate that the
clerk of the court sent a certified copy of the order of remand to the
state
court. Thus, we are not concerned with the jurisdictional rule of Hunt v.
Acromed Corp., 961 F.2d 1079 (3d Cir. 1992), that once the district court
sends a certified copy of the remand order to the state court it loses
jurisdiction. See also Trans Penn Wax Corp. v. McCandless, 50 F.3d 217,
225 (3d Cir. 1995). Of course, we would not in any event hold that the
sending a certified copy of a remand order executed by a judicial officer
without power to issue the order would place the order beyond judicial
review.
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