Laura Flam v. Marshall Flam , 788 F.3d 1043 ( 2015 )


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  •                     FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    LAURA J. FLAM, AKA Mrs. Gale,                   No. 12-17285
    Plaintiff-Appellee,
    D.C. No.
    v.                         1:12-cv-01052-
    AWI-DLB
    MARSHALL S. FLAM, M.D.,
    Defendant-Appellant.                 OPINION
    Appeal from the United States District Court
    for the Eastern District of California
    Anthony W. Ishii, Senior District Judge, Presiding
    Argued and Submitted
    January 14, 2015—San Francisco California
    Filed June 8, 2015
    Before: Diarmuid F. O’Scannlain and Richard R. Clifton,
    Circuit Judges and Jed S. Rakoff,* Senior District Judge.
    Opinion by Judge O’Scannlain
    *
    The Honorable Jed S. Rakoff, Senior District Judge for the U.S.
    District Court for the Southern District of New York, sitting by
    designation.
    2                          FLAM V. FLAM
    SUMMARY**
    Magistrate Judges
    The panel reversed the district court’s judgment
    remanding a removed case to state court following a
    magistrate judge’s grant of a motion for remand.
    The panel held that a remand order made under 
    28 U.S.C. § 1447
    (c) is not within the power of a magistrate judge to
    issue under 
    28 U.S.C. § 636
    . Following the functional
    approach adopted by the Third, Sixth, and Tenth Circuits, the
    panel held that a motion to remand is a dispositive motion
    because remand orders put litigants out of federal court.
    Thus, a magistrate judge presented with a motion for remand
    should provide a report and recommendation to the district
    court. The panel held that 
    28 U.S.C. § 1447
    (d) did not bar
    review of the magistrate judge’s order.
    The panel remanded the case to the district court with
    instructions to consider the motion to remand in the first
    instance or to request that the magistrate judge prepare a
    report and recommendation regarding the motion.
    COUNSEL
    Wiley R. Driskill, Campagne, Campagne, & Lerner, Fresno,
    California, argued the cause on behalf of the defendant-
    appellant Dr. Marshall Flam. With him on the briefs was
    **
    This summary constitutes no part of the opinion of the court. It has
    been prepared by court staff for the convenience of the reader.
    FLAM V. FLAM                          3
    Thomas E. Campagne, Campagne, Campagne, & Lerner,
    Fresno California.
    William S. Ryden, Jaffe and Clemens, Beverly Hills,
    California, argued the cause on behalf of the plaintiff-
    appellant Ms. Laura Flam. With him on the brief was Mark
    E. Mahler, Jaffe and Clemens, Beverly Hills, California.
    OPINION
    O’SCANNLAIN, Circuit Judge:
    We must decide whether a magistrate judge is empowered
    to issue an order remanding a removed case to state court, and
    whether such an order, once made, may be reviewed by the
    district court.
    I
    This case began with a dispute related to the division of
    pension assets after a divorce. Laura Flam filed suit in Fresno
    County Superior Court in June 2012, alleging that Dr.
    Marshall Flam failed to perform certain duties related to her
    portion of a pension account. The account was held jointly by
    the two before their divorce but, while Ms. Flam received a
    separate account as part of the divorce proceedings, Dr. Flam
    remained the pension fund’s trustee. Ms. Flam alleges that
    Dr. Flam failed to provide her with certain account statements
    required by law, and also contends that he breached his
    spousal fiduciary duties by failing to inform her when he
    transferred the pension account’s assets from one brokerage
    house to another in 2007.
    4                      FLAM V. FLAM
    Dr. Flam timely removed the case to the Eastern District
    of California based on federal question jurisdiction, arguing
    that Ms. Flam’s lawsuit is governed by the Employee
    Retirement Income Security Act, 
    29 U.S.C. § 1001
     et. seq.
    (“ERISA”). Ms. Flam subsequently moved to remand the
    case to state court. The magistrate judge assigned to the case
    then issued an order remanding the case to state court. Dr.
    Flam timely filed a motion for reconsideration of the removal
    order by the district court, as allowed by Eastern District of
    California Local Rules. E.D. Cal. Local Rule 303.
    The district court refused to entertain the motion for
    reconsideration, however. The court reasoned that 
    28 U.S.C. § 1447
    (d), which states in part that “[a]n order remanding a
    case to the State court from which it was removed is not
    reviewable on appeal or otherwise,” barred any review of the
    magistrate judge’s order. It explained that 
    28 U.S.C. § 1447
    (d) barred review because “the Magistrate Judge’s
    remand order was issued, . . . the case was closed, . . . [and]
    certification was sent to the Fresno County Superior Court.”
    Dr. Flam appeals from the district court’s denial of
    reconsideration.
    II
    We have jurisdiction to review the district court’s order
    denying reconsideration because that decision is final under
    
    28 U.S.C. § 1291
    . See Harmston v. City & County of San
    Francisco, 
    627 F.3d 1273
    , 1278 (9th Cir. 2010). We do not
    review the magistrate judge’s remand order itself, but instead
    review the merits of the district court’s legal determination
    that the magistrate’s order was not reviewable.
    FLAM V. FLAM                          5
    III
    In order to decide the questions presented by this case, we
    must resolve two issues. First, we must determine whether a
    remand order made under 
    28 U.S.C. § 1447
    (c) is within the
    power of a magistrate judge to issue under 
    28 U.S.C. § 636
    .
    Second, we must determine whether 
    28 U.S.C. § 1447
    (d) bars
    review of a magistrate court’s remand order even if such an
    order is beyond the power of a magistrate judge to issue.
    Because the answer to the first question informs the answer
    to the second, we address each in turn.
    A
    1
    “The Federal Magistrates Act, 
    28 U.S.C. §§ 631
    –39,
    governs the jurisdiction and authority of federal magistrates.”
    United States v. Reyna-Tapia, 
    328 F.3d 1114
    , 1118 (9th Cir.
    2003) (en banc). The Act “provides that certain matters (for
    example, non-dispositive pretrial matters) may be referred to
    a magistrate judge for decision, while certain other matters
    (such as case-dispositive motions [and] petitions for writs of
    habeas corpus) may be referred only for evidentiary hearing,
    proposed findings, and recommendations.” 
    Id.
     (footnotes
    omitted).
    The textual basis for the distinction between dispositive
    and non-dispositive motions is found in 
    28 U.S.C. § 636
    (b)(1). Section 636(b)(1)(A) states 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 quash an indictment or information made by the defendant,
    6                       FLAM V. FLAM
    to suppress evidence in a criminal case, 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.” 
    28 U.S.C. § 636
    (b)(1)(A). In
    turn, 
    28 U.S.C. § 636
    (b)(1)(B) provides that “a judge may
    also designate a magistrate judge” to submit “findings of fact
    and recommendations for the disposition” of any items
    expressly excepted from the magistrate’s authority by
    
    28 U.S.C. § 636
    (b)(1)(A). The matters listed in 
    28 U.S.C. § 636
    (b)(1)(A) are dispositive while, in general, other matters
    are non-dispositive. See Fed. R. Civ. P. 72; see also
    12 Charles Alan Wright et. al., Federal Practice & Procedure
    § 3068.2 (2d ed. 2015).
    Though the list contained in 
    28 U.S.C. § 636
    (b)(1)(A)
    appears to be exhaustive—after all, the statute empowers a
    magistrate judge to “hear and determine” any pretrial matter
    “except” those listed—the Supreme Court has identified some
    judicial functions as dispositive notwithstanding the fact that
    they do not appear in the list. See, e.g., Gomez v. United
    States, 
    490 U.S. 858
    , 873–74 (1989) (holding that jury
    selection is more akin to a dispositive matter and so could not
    be conducted by a magistrate). To determine whether a
    motion is dispositive, we have adopted a functional approach
    that “look[s] to the effect of the motion, in order to determine
    whether it is properly characterized as ‘dispositive or non-
    dispositive of a claim or defense of a party.’” United States v.
    Rivera-Guerrero, 
    377 F.3d 1064
    , 1068 (9th Cir. 2004)
    (quoting Maisonville v. F2 America, Inc., 
    902 F.2d 746
    , 747
    (9th Cir. 1990)); see also S.E.C. v. CMKM Diamonds, Inc.,
    
    729 F.3d 1248
    , 1260 (9th Cir. 2013) ((“[W]here the denial of
    a motion to stay is effectively a denial of the ultimate relief
    sought, such a motion is considered dispositive, and a
    FLAM V. FLAM                          7
    magistrate judge lacks the authority to ‘determine’ the
    matter.” (citation omitted)).
    Other courts of appeals have considered whether a
    remand motion is dispositive under 
    28 U.S.C. § 636
    (b)(1)(A)
    and have adopted a similar approach. For example, the Sixth
    Circuit engaged in a “functional analysis of the [remand]
    motion’s potential effect on litigation.” Vogel v. U.S. Office
    Products Co., 
    258 F.3d 509
    , 514–15 (6th Cir. 2001).
    Similarly, the Second Circuit explained that it was following
    the approach adopted by the Third, Sixth, and Tenth Circuits
    by “analyz[ing] the practical effect of the challenged action
    on the instant litigation” to determine whether a motion is
    dispositive. Williams v. Beemiller, Inc., 
    527 F.3d 259
    , 265 (2d
    Cir. 2008). We employ the functional approach required by
    our precedent and adopted by our sister circuits.
    2
    Each of our sister circuits to consider the question has
    held that a motion to remand is a dispositive one, and
    therefore concluded that a remand order is beyond the power
    of a magistrate judge to issue. Williams, 
    527 F.3d at 266
    ;
    Vogel, 
    258 F.3d at 517
    ; First Union Mortg. Corp. v. Smith,
    
    229 F.3d 992
    , 996 (10th Cir. 2000); In re U.S. Healthcare,
    
    159 F.3d 142
    , 146 (3d Cir. 1998). The essential reasoning of
    those cases is that because such a remand order is “dispositive
    insofar as proceedings in the federal court are concerned,” a
    motion to remand is a dispositive order under 
    28 U.S.C. § 636
    (b)(1)(A). In re U.S. Healthcare, 
    159 F.3d at 145
    . Since
    such an order “preclusively determines the important point
    that there will not be a federal forum available to entertain a
    particular dispute,” these courts have reasoned that a
    magistrate judge lacks the power to issue it. 
    Id.
    8                       FLAM V. FLAM
    We have previously held that remand orders possess
    “important elements of finality, at least with respect to federal
    court proceedings, because [they] put the parties ‘effectively
    out of federal court.’” Harmston, 
    627 F.3d at
    1278–79
    (emphasis in original) (quoting Cal. Dept. of Water Res. v.
    Powerex Corp., 
    533 F.3d 1087
    , 1094 (9th Cir. 2008)). Our
    recognition that remand orders put litigants out of federal
    court accords with other courts of appeals’ observations that
    the effect of a remand order is to end all federal proceedings.
    We therefore agree with our sister circuits. Because a
    
    28 U.S.C. § 1447
    (c) remand order is dispositive of all federal
    proceedings in a case, we hold that a motion to remand is
    properly characterized as a dispositive motion under
    
    28 U.S.C. § 636
    (b)(1)(A), meaning that a remand order
    cannot be issued by a magistrate judge. Thus, a magistrate
    judge presented with a motion for remand “should provide a
    report and recommendation to the district court that is subject
    to de novo review . . . .” Williams, 
    527 F.3d at 266
    .
    B
    Yet, even if a remand order is beyond the power of a
    magistrate to issue, Dr. Flam is not entitled to the relief he
    seeks if 
    28 U.S.C. § 1447
    (d) bars review of the magistrate
    judge’s order. Ms. Flam contends that the district court
    correctly decided that it does just that.
    In relevant part, 
    28 U.S.C. § 1447
    (d) states that “[a]n
    order remanding a case to the State court from which it was
    FLAM V. FLAM                                 9
    removed is not reviewable on appeal or otherwise . . . .”1
    While we have read this statute broadly to “preclude not only
    appellate review but also reconsideration by the district
    court,” Seedman v. U.S. District Court for the Cent. District
    of Cal., 
    837 F.2d 413
    , 414 (9th Cir. 1988), we have also
    recognized that the rule is not without exceptions. For
    example, in Seedman, we explained that the Supreme Court
    had limited the scope of the general rule established by
    section 1447(d). 
    Id.
     More recently, we have recognized that
    “[a]lthough [the language of section 1447(d)] appears
    comprehensive, the Supreme Court has explained that the
    provision does not prohibit review of all types of remands.”
    Powerex, 
    533 F.3d at 1091
    .
    Most relevant here, in Thermtron Products, Inc. v.
    Hermansdorfer, the Court held that “[s]ection 1447(d) is not
    dispositive of the reviewability of remand orders in and of
    itself” because it and “§ 1447(c) must be construed together
    . . . .” 
    423 U.S. 336
    , 345 (1976), superseded by statute on
    other grounds by 
    28 U.S.C. § 1447
    (c).2 Thus, the Court
    1
    The statute goes on to except cases “removed pursuant to section 1442
    [and] 1443” and states that such cases “shall be reviewable by appeal or
    otherwise.” Section 1442 refers to suits against federal officers or
    agencies, and section 1443 refers to civil rights cases. See 
    28 U.S.C. §§ 1442
    –1443. Neither exception is implicated in this case.
    2
    Section 1447(c) states that “[a] motion to remand [a] 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” but that a remand
    based on lack of subject matter jurisdiction may be made at any time.
    
    28 U.S.C. § 1447
    (c). Though Congress has amended section 1447(c)
    several times since Thermtron, the Supreme Court has assumed that those
    amendments are “immaterial to Thermtron’s gloss on § 1447(d).”
    Powerex Corp. v. Reliant Energy Servs., Inc., 
    551 U.S. 224
    , 230 (2007).
    10                         FLAM V. FLAM
    explained, “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).” Id. at 346. For our part, we have interpreted
    the Court’s guidance to mean that where a “court lacked
    authority to remand under section 1447(c), section 1447(d)
    would not preclude review.” Kelton Arms Condo. Owners
    Ass’n, Inc. v. Homestead Ins. Co., 
    346 F.3d 1190
    , 1191 (9th
    Cir. 2003).
    Three of the four courts of appeals to consider whether a
    magistrate judge can issue a remand order have also
    considered whether 
    28 U.S.C. § 1447
    (d) bars review of a
    magistrate judge’s remand order, and each has concluded that
    it does not.3 The Third Circuit reasoned that it seemed
    “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) . . . 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 re
    U.S. Healthcare, 
    159 F.3d at 146
    . The Second and Sixth
    Circuits have also adopted that approach. See Williams,
    
    527 F.3d at
    262–64; Vogel, 
    258 F.3d at
    518–19.
    Like our sister circuits, we have already concluded that a
    magistrate judge cannot properly issue a remand order under
    We have done the same. See, e.g., Atlantic Nat’l. Trust LLC v. Mt. Hawley
    Ins. Co., 
    621 F.3d 931
    , 935 (9th Cir. 2010).
    3
    In the other case, First Union Mortg. Corp. v. Smith, 
    229 F.3d 992
    , 994
    (10th Cir. 2000), the court had no need to confront this question because
    the case involved one of 
    28 U.S.C. § 1447
    (d)’s exceptions.
    FLAM V. FLAM                       11
    
    28 U.S.C. § 636
    (b)(1)(A), and thus the magistrate judge in
    this case lacked the authority to remand the case to state
    court. See supra Part III.A.2. Because the magistrate lacked
    the authority to issue a remand order under section 1447(c),
    section 1447(d) poses no bar to review under our precedent.
    Kelton Arms, 
    346 F.3d at 1191
    ; see also Powerex, 
    533 F.3d at 1091
     (“‘[O]nly remands based on grounds specified in
    § 1447(c) are immune from review under § 1447(d).’”
    (quoting Things Remembered, Inc. v. Petrarca, 
    516 U.S. 124
    ,
    127 (1995))). The district court therefore erred when it
    concluded that it could not review the magistrate judge’s
    remand order.
    IV
    The judgment of the district court is REVERSED. The
    case is REMANDED to the district court with instructions to
    consider Ms. Flam’s motion to remand in the first instance or
    to request that the magistrate judge prepare a report and
    recommendation regarding that motion.