Lowe v. ( 1996 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
In Re: KATHERINE SUSAN LOWE,
No. 96-560
Petitioner.
On Petition for Writ of Mandamus.
(CA-95-134-1-D)
Argued: October 30, 1996
Decided: December 17, 1996
Before MURNAGHAN, NIEMEYER, and MOTZ, Circuit Judges.
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Petition for writ of mandamus granted by published opinion. Judge
Motz wrote the opinion, in which Judge Murnaghan and Judge Nie-
meyer joined.
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COUNSEL
ARGUED: Harvey Leroy Kennedy, KENNEDY, KENNEDY, KEN-
NEDY & KENNEDY, L.L.P., Winston-Salem, North Carolina, for
Petitioner. James Walker Williams, ROBERTS & STEVENS, P.A.,
Asheville, North Carolina, for Respondents. ON PLEADINGS: Har-
old L. Kennedy, III, KENNEDY, KENNEDY, KENNEDY & KEN-
NEDY, L.L.P., Winston-Salem, North Carolina, for Petitioner.
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OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
In this case, a federal district court attempted to reconsider its order
remanding a case to the state court, after entry of that order. The entry
of the remand order divested the federal court of jurisdiction, even
though no certified copy of the order was mailed to the state court.
Accordingly, we grant mandamus relief and direct that this case be
returned to the state court.
I.
In May 1995, Katherine Lowe sued her employer, Wal-Mart
Stores, and two Wal-Mart managers in the Superior Court of Bun-
combe County, North Carolina. Lowe alleged Wal-Mart wrongfully
discharged her in violation of public policy because she accused one
of the managers of sex discrimination; she further alleged that both
the corporation and the two managers tortiously interfered with her
contractual rights.
On June 15, 1995, Wal-Mart and the managers removed the case
to federal court pursuant to 28 U.S.C. § 1331 (1994) and 28 U.S.C.
§ 1441(c) (1994). Lowe urged the court to remand, pointing out that
one of the Wal-Mart managers was, like Lowe, a resident of North
Carolina, defeating complete diversity of citizenship. Agreeing that
there was incomplete diversity between the parties, and therefore that
the court lacked "jurisdiction over the subject matter of this contro-
versy," Magistrate Judge Davis (now retired) remanded the case back
to state court.1 The remand order was entered on the district court's
docket on August 25, 1995. Although the mailing certificate indicated
by means of a "cc:" notation that the district court clerk had sent a
copy of the order to the state court, the copy that the state court
received lacked the blue backing stating that it was"certified."
On March 7, 1996, another magistrate judge granted the motion for
reconsideration by Wal-Mart and the managers, which had been filed
August 23, 1995, and in which they asserted that joinder of the North
Carolina resident as a defendant was fraudulent. The magistrate judge
denied Lowe's motion to remand. Lowe amended her complaint, and
again filed a motion to remand, which the court again denied. Lowe
then moved to have the district court certify the issue for interlocutory
appeal. After the district court refused to do so, Lowe petitioned for
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1 We refer to the magistrate judge by name for the sake of clarity.
Legally, of course, the identity of an individual judge is immaterial.
2
a writ of mandamus to this court. She asks that we order the district
court to return her case to the state court.2
II.
Wal-Mart urges us to deny the petition for writ of mandamus,
reminding us that mandamus is a drastic remedy to be used only in
extraordinary circumstances. Mandamus is, in fact, a special remedy,
only warranted in exceptional cases. Kerr v. United States Dist.
Court, 426 U.S. 394, 402 (1976). However, the Supreme Court and
this court have long recognized that circumstances such as those
before us present a proper case for use of that remedy. That a court
operate solely within its statutory jurisdiction is one of the most fun-
damental premises of our judicial system. See Roche v. Evaporated
Milk Ass'n, 319 U.S. 21, 26 (1943) (noting that"traditional use of the
writ in aid of appellate jurisdiction both at common law and in the
federal courts has been to confine an inferior court to a lawful exer-
cise of its prescribed jurisdiction"). If Lowe cannot petition for man-
damus, she "has no other avenue of relief; [she] will be prejudiced in
a way not correctable on appeal since [she] will have been forced to
endure proceedings in a court that lacks jurisdiction." Seedman v.
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2 Lowe additionally asks that we order the district court to award her
attorney's fees pursuant to 28 U.S.C. § 1447(c) (1994), which provides
in relevant part that, "[a]n order remanding the case may require payment
of just costs and any actual expenses, including attorney fees, incurred
as a result of the removal." The statute thus provides the district court
with discretion to award fees when remanding a case. Magistrate Judge
Davis did not do so in his remand order and Lowe does not assert that
he abused his discretion in failing to order fees. She does ask us to order
the district court to award fees now. Even if § 1447(c) empowered us to
require the district court to award fees at this juncture, we would decline
to do so. There is no evidence of bad faith by either party. Although bad
faith is not a prerequisite to an award of attorney's fees under § 1447(c),
the very case on which Lowe relies for this proposition notes that there,
though the defendant's removal was not necessarily in bad faith, a "cur-
sory examination . . . would have revealed" a lack of federal jurisdiction.
See Husk v. E.I. Du Pont De Nemours & Co., 842 F. Supp. 895, 899
(S.D. W. Va. 1994). As evidenced by the significant proceedings in this
court and the court below, the issues in this case are not similarly obvi-
ous.
3
United States Dist. Court, 837 F.2d 413, 414 (9th Cir. 1988) (per
curiam).
In sum, Lowe's petition alleges that the district court had no juris-
diction to reconsider its remand order. Remedying this type of unlaw-
ful exercise of jurisdiction, when it occurs, is a traditional, appropriate
use of the writ. See, e.g., Three J Farms, Inc. v. Alton Box Bd. Co.,
609 F.2d 112, 116 (4th Cir. 1979), cert. denied 445 U.S. 911 (1980)
(granting writ); Seedman, 837 F.2d at 414 (granting writ); In re La
Providencia Dev. Corp., 406 F.2d 251, 253 (1st Cir. 1969) (granting
writ).
III.
Since mandamus is a proper remedy if we find that the district
court acted beyond its jurisdiction, we turn to the principal issue in
this appeal: whether the district court exceeded its jurisdiction when
it reconsidered its remand order, after the entry of that order but
before the clerk sent a certified copy of the order to the state court.
A federal statute governs this question, 28 U.S.C.§ 1447(c) and (d)
(1994). Subsection (c) provides in pertinent part:
If at any time before final judgment it appears that the dis-
trict court lacks subject matter jurisdiction, the case shall be
remanded. An order remanding the case may require pay-
ment of just costs and any actual expenses, including attor-
ney fees, incurred as a result of the removal. A certified
copy of the order of remand shall be mailed by the clerk to
the clerk of the State court. The State court may thereupon
proceed with such case.
28 U.S.C. § 1447(c). Subsection (d) provides the bar to reviewing
such remand orders:
An order remanding a case to the State court from which it
was removed is not reviewable on appeal or otherwise . . . .
§ 1447(d).
4
Indisputably, "otherwise" in § 1447(d) includes reconsideration by
the district court. See Three J Farms, 609 F.2d at 115 ("Unquestion-
ably, the statute not only forecloses appellate review, but also bars
reconsideration of such an order by the district court."); La Providen-
cia, 406 F.2d at 253 ("Both [district and appellate court review] are
foreclosed; nothing could be more inclusive than the phrase ``on
appeal or otherwise.'").
There are a few exceptions to the general rule that remand orders
are not reviewable. For example, remand orders in civil rights cases
are reviewable, see 28 U.S.C. §§ 1443, 1447(d), and remand orders
in certain other cases are reviewable under the rationale set forth in
Thermtron Products v. Hermansdorfer, 423 U.S. 336, 345-52 (1976).
The Thermtron doctrine holds that remand orders that do not rely on
factors enumerated in § 1447(c), i.e., a "defect in removal procedure"
or the "lack[ ] [of] subject matter jurisdiction," are not subject to the
§ 1447(d) bar to review. See Thermtron, 423 U.S. at 345-52. See also
Mangold v. Analytic Servs., 77 F.3d 1442, 1450-51 (1996) (Phillips,
J., concurring specially and delivering opinion for court on jurisdic-
tion) (detailing current Thermtron jurisprudence). None of these
exceptions are applicable here. This is not a civil rights case and the
Thermtron doctrine does not apply here because this case was
remanded for a reason authorized by § 1447(c)-- lack of subject mat-
ter jurisdiction.
The only question remaining, then, is to identify when a court's
decision to remand becomes unreviewable. Lowe claims that the dis-
trict court lost jurisdiction to reconsider its remand order when it filed
or entered that order. Wal-Mart asserts that the district court still
retains jurisdiction to reconsider its remand order and will not lose
jurisdiction until it sends a certified copy of its order to the state court.
Subsection 1447(d) provides only that a remand "order" may not
be reviewed; it does not condition reviewability on any other event.
Thus, the plain language of subsection (d) indicates that a court may
not reconsider its decision to remand, as soon as it formalizes that
decision in an "order." Subsection 1447(c) supports this interpreta-
tion. It directs the district court clerk to mail a"copy" of the remand
order to the state court, certainly implying that the order itself, the
5
document § 1447(d) tells us is unreviewable, is in existence before the
time of the mailing.3
The general rule prohibiting review of remand orders has been a
part of American jurisprudence for at least a century. See Thermtron,
423 U.S. at 343. In discussing a statutory predecessor of § 1447(d),
the Supreme Court noted that the intent of such a rule is "to suppress
further prolongation of the controversy by whatever process." In re
Pennsylvania Co., 137 U.S. 451, 454 (1890). Thus, this nonreviewa-
bility rule rests on a "policy of not permitting interruption of the liti-
gation of the merits of a removed cause by prolonged litigation of
questions of jurisdiction of the district court to which the cause is
removed." United States v. Rice, 327 U.S. 742, 751 (1946). "Removal
in diversity cases, to the prejudice of state court jurisdiction, is a priv-
ilege to be strictly construed;" for this reason, in deciding whether to
remand, "[t]he district court has one shot, right or wrong." La
Providencia, 406 F.2d at 252-53. This policy is, of course, entirely
consistent with a rule that remand orders become nonreviewable as
soon as entered.
"Logic also indicates that it should be the action of a court (enter-
ing an order of remand) rather than the action of a clerk (mailing a
certified copy of the order) that should determine the vesting of juris-
diction." Van Ryn v. Korean Air Lines, 640 F. Supp. 284, 285 (C.D.
Cal. 1985). To hold otherwise would impermissibly elevate substance
over form. One party should not arbitrarily receive a second opportu-
nity to make its arguments due to a clerical error. In sum, the plain
language of the statute, the policy behind it, and logic all support the
conclusion that § 1447 divests a district court of jurisdiction upon the
entry of its remand order.
Our case law is totally in accord with this interpretation of § 1447.
In our only case directly addressing the question, Three J Farms, we
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3 We recognize that in Thermtron, the Supreme Court relied on an in
pari materia approach to interpreting § 1447 rather than examining the
plain language of each subsection, as we do here. See Thermtron, at 345-
52. However, we believe that our analysis, while focusing on the plain
language of the statute, nonetheless respects the Supreme Court direction
that subsections (c) and (d) be "construed together." Id. at 345.
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concluded that "the entry of the order of remand" on the date of the
entry of that order "divested the district court of all jurisdiction in this
case and precluded it from entertaining any further proceedings of any
character, including the defendants' motion to vacate the original
remand order." Three J Farms, 609 F.2d at 115.
Wal-Mart claims Three J Farms is not controlling here and that
more recent out-of-circuit case law supports Wal-Mart's view that the
district court did have jurisdiction to reconsider its remand order. It
is true that in Three J Farms the district court did, in fact, forward a
certified copy of its order to the state court and so that case is not fac-
tually identical to the case at hand. Nevertheless, we have no reason
to believe that the Three J Farms court did not mean exactly what it
said, i.e. "the entry of the order of remand" divested the federal court
of jurisdiction. 609 F.2d at 115 (emphasis added).
As for out-of-circuit law, some of our sister circuits have stated that
a federal court's jurisdiction is not divested until its clerk mails a cer-
tified copy of the remand order to the state court, see, e.g., Trans
Penn Wax Corp. v. McCandless, 50 F.3d 217, 225 (3d Cir. 1995);
Browning v. Navarro, 743 F.2d 1069, 1078 (5th Cir. 1984); one cir-
cuit has indicated that "certification" divests the federal court of juris-
diction, Seedman, 837 F.2d at 414, and another has remarked that
reconsideration is universally prohibited "once the state court has
resumed jurisdiction." Federal Deposit Ins. Corp. v. Santiago Plaza,
598 F.2d 634, 636 (1st Cir. 1979). However, we are not bound by this
precedent and do not believe it consistent with the plain language or
purposes of § 1447(c) and (d), let alone our opinion in Three J Farms.
Moreover, the case upon which Wal-Mart primarily relies, Trans
Penn Wax, is a Thermtron case. Clearly, the Thermtron rationale does
not apply to this case because the remand here was based on a lack
of jurisdiction. Furthermore, the portion of Trans Penn Wax that Wal-
Mart cites for the proposition that reviewability doctrine has been lib-
eralized since Three J Farms refers to expansion in reviewability of
remands under the Thermtron doctrine. See Trans Penn Wax, 50 F.3d
at 226. Language in Trans Penn Wax indicating that the failure to
send a certified copy permits reconsideration is an alternative holding
at best, see id. at 227, and the case on which the Trans Penn Wax
7
court relies for its holding, Thomas v. LTV Corp., 39 F.3d 611 (5th
Cir. 1994), deals solely with a Thermtron issue.
Wal-Mart also relies on In re Shell Oil Co., 631 F.2d 1156 (5th Cir.
Unit A 1980), for the proposition that when a federal court fails to
mail a certified copy to the state court, the federal court retains juris-
diction. Not only did Shell Oil not address the mailing issue, but it,
too, rested its decision on Thermtron reasoning. See Shell Oil, 631
F.2d at 1157-58.
Wal-Mart is not on any firmer ground in asserting that in our recent
decision in Mangold v. Analytic Services, 77 F.3d 1442 (1996) (Phil-
lips, J., concurring specially and delivering opinion for court on juris-
diction), we held that even a remand for lack of subject matter
jurisdiction is reviewable under Thermtron. In fact, in Mangold, we
accepted without reservation the black letter law that if lack of juris-
diction were "the actual ground invoked, we may not review this
order even if it be manifestly, inarguably erroneous." Id. at 1450.
However, after a searching review of the record in Mangold, we
concluded that the district court had believed that it could exercise
jurisdiction, but remanded the case anyway because it thought the
state court could better address the issues involved. Id. at 1452-53.
We noted that the Mangold remand order was in response to a motion
to dismiss or grant summary judgment on the merits, not a motion to
remand. Id. at 1451. In contrast, here Magistrate Judge Davis issued
a remand order in response to Lowe's motion to remand. Magistrate
Judge Davis did (apparently incorrectly) note that Wal-Mart did not
object to the remand. But unlike the situation in Mangold, nothing
indicates Magistrate Judge Davis believed he had jurisdiction to hear
the case and that the remand was simply a discretionary act. Rather,
Magistrate Judge Davis based his order to remand squarely on a find-
ing that he "lack[ed] jurisdiction over the subject matter of this con-
troversy."
Accordingly, we hold that a federal court loses jurisdiction over a
case as soon as its order to remand the case is entered. From that point
on, it cannot reconsider its ruling even if the district court clerk fails
to mail to the state court a certified copy of the remand order.
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IV.
The petition for a writ of mandamus is granted and the case is
remanded to the district court with instructions that it be returned to
the state court.
WRIT OF MANDAMUS GRANTED
9