In Re: FMC Corp

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit
3-24-2000
In Re: FMC Corp
Precedential or Non-Precedential:
Docket 99-5220, 99-5302, 99-5328 and 99-5329
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Recommended Citation
"In Re: FMC Corp" (2000). 2000 Decisions. Paper 64.
http://digitalcommons.law.villanova.edu/thirdcircuit_2000/64
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Filed March 23, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 99-5220, 99-5302, 99-5328 and 99-5329
IN RE:
FMC CORPORATION PACKAGING SYSTEMS DIVISION,
Petitioner in No. 99-5220
(D.C. Civ. No. 98-cv-05762)
IN RE: MEDTRONIC, INC.
Petitioner in No. 99-5302
(D.C. Civ. No. 99-00818)
MARY ANNE NELSON; MICHAEL NELSON
v.
MEDTRONIC INC.; SYNCHROMED; "A" DOE, "B" DOE,
"C" DOE, "D" DOE, "E" DOE, "F " DOE, "G" DOE,
"H" DOE, "I" DOE, "J" DOE, "K" DOE, AND "L" DOE,
(fictitious names actual names being unknown)
Medtronic, Inc.,
Appellant in No. 99-5328 and
No. 99-5329
(D.C. No. 99-cv-00818)
Appeal from the United States District Court
for the District of New Jersey
District Judge: Honorable Alfred J. Lechner, Jr.
Argued
February 1, 2000
Before: MANSMANN, NYGAARD and RENDELL,
Circuit Judges.
(Filed March 23, 2000)
Wayne A. Graver, Esquire (Argued)
Richard J. Sexton, Esquire
Lavin, Coleman, O'Neil, Ricci,
Finarelli & Gray
8000 Midlantic Drive
Suite 201 South
Mount Laurel, NJ 08054
COUNSEL FOR FMC PACKAGING
SYSTEMS DIVISION
John P. Lavelle, Jr., Esquire
(ARGUED)
Hangley, Aronchick, Segal
& Pudlin
20 Brace Road, Suite 201
Cherry Hill, NJ 08034
OF COUNSEL:
R. Lawrence Purdy, Esquire
Mason, Edelman, Borman & Brand
3300 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4140
COUNSEL FOR MEDTRONIC, INC.
2
John F. McLaughlin, Esquire
(ARGUED)
Philip G. Auerbach, Esquire
Auerbach, Melody & Cox
231 Maple Avenue
Post Office Box Y
Red Bank, NJ 07701
COUNSEL FOR MARY ANNE AND
MICHAEL NELSON
OPINION OF THE COURT
MANSMANN, Circuit Judge.
These consolidated appeals require that we clarify our
position with respect to the scope of the District Court's
authority to remand, sua sponte, cases removed to the
federal courts pursuant to the Federal Removal Statute, 28
U.S.C. S 1441 et seq. (the Act). Specifically, we address
whether a District Court exceeds its authority under
section 1447(c) of the Act when it raises, sua sponte, a
procedural defect in the petition for removal and remands
the case on that basis. Because we are convinced that such
sua sponte action falls outside the scope of section 1447(c),
we conclude that the District Court lacked grounds upon
which to remand these cases. We will, therefore, reverse the
orders of the District Court remanding these actionsfiled
against Medtronic and FMC.
I.
On January 15, 1999 Mary Anne and Michael Nelson
filed a personal injury action against Medtronic in the
Superior Court of New Jersey. Medtronic received formal
service of the summons and complaint on February 8,
1999. On February 24, 1999 Medtronic filed a notice of
removal, on diversity grounds, in the United States District
Court for the District of New Jersey.
At a status conference held in mid-March, 1999, the
District Court, acting sua sponte, announced that it
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intended to remand the matter to the state court due to a
procedural defect in the notice of removal. According to the
District Court, the notice of removal was deficient under the
terms of 28 U.S.C. S 1446(b)1 in that it did not contain a
specific statement establishing that the matter has been
removed "within thirty days from receipt or otherwise."
(emphasis added). Counsel for Medtronic noted that the
notice of removal stated that Medtronic was served with the
summons and complaint on February 8, 1999. Counsel
clarified that this service effected Medtronic'sfirst receipt of
the complaint. The plaintiffs did not contest this assertion
and did not move for remand, although they stated that
they did not object. The parties were given the opportunity
to brief the issue of remand.
On March 31, 1999, the District Court entered an order
remanding the case to the Superior Court of New Jersey.
The sole basis for remand was the fact that the notice of
appeal failed explicitly to negate the possibility that
Medtronic had received notice of the action through
informal service of the initial pleading prior to the date of
formal service.2 In ordering the remand, the District Court
_________________________________________________________________
1. This section provides in part that:
The notice of removal of a civil action or proceeding shall be
filed
within thirty days after the receipt by the defendant, through
service
or otherwise, of a copy of the initial pleading setting forth the
claim
for relief . . . or within thirty days after the service of summons
upon the defendant if such initial pleading has then been filed in
court and is not required to be served on the defendant, whichever
period is shorter.
2. The consolidated petition for writ of mandamusfiled in the product
liability action captioned In re: FMC Corp., No. 99-5220, presents a
similar factual and procedural scenario. FMC was served with a
complaint in a state court action on December 2, 1998. On December
21, 1998, FMC filed a notice of removal on diversity grounds. At a status
conference on January 11, 1999, the District Court raised, sua sponte,
the issue of whether FMC's notice of removal had been filed in a timely
manner. Following briefing on the issue, it was clear that the petition
for
removal was timely filed, although this could not be ascertained from the
four corners of the removal petition. Nonetheless, the District Court
ordered, on March 1, 1999, that the action be remanded to a state court
in New Jersey. FMC's petition for writ of mandamus was filed on March
31, 1999.
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relied on the holding in Michetti Pipe Stringing, Inc. v.
Murphy Bros., Inc., 125 F.3d 1396, 1398 (11th Cir.), cert.
granted, 119 S. Ct. 401 (1998). There, the Court of Appeals
held that the period for removal begins to run when a
defendant receives a copy of the initial pleading through
any means, not strictly formal service of process. Medtronic
appealed the remand order on April 30, 1999.
Days after entry of the remand order, the Supreme Court
reversed the decision of the Court of Appeals in Michetti,
holding that "a named defendant's time to remove is
triggered by simultaneous service of the summons and
complaint, or receipt of the complaint, ``through service or
otherwise,' after and apart from service of the summons,
but not by mere receipt of the complaint unattended by any
formal service." Michetti Pipe Stringing, Inc. v. Murphy Bros.,
Inc., 526 U.S. 344, 119 S. Ct. 1322, 1324 (quoting 28
U.S.C. S 1446(b)) (emphasis added). This decision made
clear that the procedural defect identified by the District
Court in Medtronic's petition for removal is not, in fact, a
procedural defect.
On April 10, 1999, Medtronic filed in the District Court
a motion to withdraw the order of remand in light of the
Supreme Court's decision in Michetti. In an order dated
April 14, 1999, the District Court denied the motion,
stating that it no longer had jurisdiction to withdraw the
remand order and that, in any event, the decision in
Michetti did not apply retroactively to the order. Medtronic
appealed from the District Court's order denying the motion
to withdraw.
Due to uncertainty as to the appropriate mechanism for
appellate review, Medtronic, in an abundance of caution,
also filed a petition for a writ of mandamus compelling the
District Court to withdraw or reverse its remand order. This
petition was consolidated with both of Medtronic's appeals
and with the writ of mandamus filed by FMC. Medtronic
contends that: 1) a procedural defect in the notice of
removal must be raised in a motion by a party, not by the
District Court; 2) the order of remand, even if authorized by
statute, was not timely filed; and 3) because the Supreme
Court decision in Michetti established that the defect which
the District Court identified in Medtronic's petition for
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removal is not to be considered a defect, the motion to
withdraw the remand should have been granted. In its
petition, FMC argues solely that where it clarified for the
District Court that diversity existed and that the petition for
removal was timely filed, the District Court should not have
remanded the action.3 Because our holding with respect to
the District Court's authority to raise, sua sponte, a
procedural defect in the removal petition is alone a
sufficient ground upon which to reverse the orders of
remand, we need not and do not reach any other issue.
II.
We address first our jurisdiction to review the remand
orders entered by the District Court. The threshold
jurisdictional issue cannot be separated from the merits of
the defendants' challenge; our analysis of the relevant
statutory provisions both supports our jurisdiction and
compels our conclusion that the District Court exceeded its
authority in entering the remand orders.
A comprehensive statutory scheme addresses removal of
state court actions to federal court. 28 U.S.C.SS 1441-
1452. We highlight certain provisions of that scheme and
relevant caselaw in order to provide context for resolution of
the issue before us.
28 U.S.C. S 1441(a) provides that:
Except as otherwise expressly provided by Act of
Congress, any civil action brought in a State court of
which the district courts of the United States have
original jurisdiction, may be removed by the defendant
or the defendants, to the district court . . . embracing
the place where such action is pending.
Section 1446 sets forth the procedure for removing a case
to federal court, and section 1441 delineates procedures to
_________________________________________________________________
3. FMC's petition does not focus on the sua sponte nature of the District
Court's decision to remand or on the timeliness of the District Court's
order, although the facts would arguably support both of these
arguments. FMC's petition was filed prior to and does not reference the
Supreme Court's decision in Michetti.
6
be followed after an action has been removed. Section
1447(c) reads in part, as follows:
A motion to remand the case on the basis of any defect
in removal procedure must be made within 30 days
after the filing of the notice of removal under section
1446(a). If at any time before final judgment it appears
that the district court lacks subject matter jurisdiction,
the case shall be remanded.4
Section 1447(d), which addresses the reviewability of
orders to remand, narrowly limits our authority by
providing that, except for civil rights cases removed
pursuant to 28 U.S.C. S 1443: "[a]n order remanding a case
to the state court from which it was removed is not
reviewable on appeal or otherwise. . . ." In imposing this
bar, Congress intended to make the remand order of a
District Court final in order to avoid delay associated with
appellate review of decisions to remand. In furtherance of
this policy, section 1447(d) was interpreted, until 1976, to
preclude review of all remand orders, regardless of the
reason underlying the decision to remand.
In 1976, the Supreme Court's decision in Thermtron
Prod., Inc. v. Hermansdorfer, 423 U.S. 336 (1976), clarified
that the section 1447(d) bar operates to preclude review of
only those remand orders issued pursuant to section
1447(c). The Court held that these two sections must be
construed together and that "only remand orders issued
under S 1447(c) and invoking the grounds specified therein
. . . are immune from review under S 1447(d). Id. at 346.
Thermtron thus made clear that the seemingly unequivocal
language of section 1447(d) may, in some circumstances,
give way to permit appellate consideration of certain
categories of remand orders. One such category includes
remand orders issued outside the authority granted to
District Courts under section 1447(c). For reasons
explained herein, we find that the District Court exceeded
its authority under 1447(c) when it acted sua sponte to
_________________________________________________________________
4. It is important to recognize that this section provides for remand in
two categories of cases: (1) those where a motion identifies a "defect in
the removal procedure"; or (2) those where the District Court lacks
subject matter jurisdiction.
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remand these cases. Accordingly, our review of these
remand orders is not barred by the terms of section
1447(d).
After Thermtron, mandamus has regularly been invoked
to require federal courts to adjudicate claims not remanded
pursuant to S 1447(c). See, e.g., Airshields, Inc. v. Fullam,
891 F.2d 63 (3d Cir. 1989) (granting petition for writ of
mandamus directing the court to vacate a remand order
based on procedural defects not contemplated by section
1447(c)). The use of mandamus as the mechanism for
review stemmed from the Supreme Court's statement in
Thermtron that mandamus rather than appeal was
appropriate. The Supreme Court decision in Quackenbush
v. Allstate Insurance Co., 517 U.S. 706, 712 (1996),
however, establishes that resort to mandamus is not
necessary, because a remand order, although it does not
meet the traditional definition of finality, is"functionally
indistinguishable from the stay . . . found appealable in
Moses H. Cone" and should therefore be deemedfinal. Id. at
715. Here, as in Quackenbush and Cone , the order puts the
litigants "effectively out of court." The Supreme Court in
Quackenbush noted that in this sense, a remand order is
"clearly more final than a stay order." Id. at 714.
In a case similar to the one we consider here, the Court
of Appeals for the Seventh Circuit commented that:
Appeal rather than mandamus is the right route.
Although Thermtron stated that mandamus is essential
and appeal impermissible, Quackenbush reversed
that conclusion. 517 U.S. at 714-15. The Court
[in Quackenbush] observed that the[mandamus
requirement] of Thermtron had been based on
[an earlier] decision the Justices now deem
"superannuated." 517 U.S. at 715. A remand order
terminates the litigation in federal court and therefore
after Quackenbush is appealable as a "final decision"
under 28 U.S.C. S 1291 -- unless S 1447(d) forecloses
appeal . . . .
Benson v. SI Handling Systems, Inc., 188 F.3d 780, 782
(7th Cir. 1999). We have adhered to this reading of
Quackenbush: "Because the District Court's remand order
8
divest[s] the federal court of all control over the action . . .,
we . . . have jurisdiction under 28 U.S.C. S 1291." Pa.
Nurses Ass'n v. Pa. State Educ. Ass'n, 90 F.3d 797, 801 (3d
Cir. 1996).5 While we do not rule out our jurisdiction over
a petition for mandamus, where the order is, as the
decision in Quackenbush stated, "final," an appeal, with its
broader scope of review, would appear to be the preferred
route.
Having established that the section 1447(d) bar does not
apply to all remand orders and that if review is appropriate
it may be secured by appeal rather than mandamus, we
turn to the seminal question: Did the District Court exceed
its authority under section 1447(c) when it raised, sua
sponte, a procedural defect in the petitions for removal and
remanded these actions on that basis? This question is
seminal because in deciding it we will determine not only
whether we have jurisdiction over this appeal, but also the
propriety of the District Court's remand.
Although this precise question is one of first impression
for our court, we have addressed a closely-related question.
In Air-Shields, Inc. v. Fullam, 891 F.2d 63 (3d Cir. 1989), we
granted a petition for mandamus directing the District
Court to vacate a remand order entered based on the
Court's sua sponte identification of a procedural defect in
_________________________________________________________________
5. See also Wright, Miller & Cooper, Federal Practice & Procedure,
Jurisdiction 2d S 3914.11 (stating that remand terminating all
proceedings in a federal court is final; if appeal is barred it is by
S 1447(d), not for want of finality); In re Bethesda Mem. Hosp. Inc., 123
F.3d 1407, 1408 (11th Cir. 1997) (stating that:"Quackenbush holds that
a District Court's order to remand a case to state court is a final
judgment that can be reviewed on direct appeal); Eastus v. Blue Bell
Creameries, L.P., 97 F.3d 100, 103 (5th Cir. 1996) (holding that remand
order is reviewable after Quackenbush where it (1) puts litigants out of
federal court; (2) conclusively determines whether jurisdiction will be
exercised; (3) party's right to have matter litigated in federal court is
important; and (4) order cannot be reviewed if state court continues to
hear case); Gaming Corp. of America v. Dorsey & Whitney, 88 F.3d 536,
542 (8th Cir. 1996) (holding that after Quackenbush appeal rather than
mandamus is appropriate where by remand District Court surrendered
jurisdiction and there is no other opportunity to appeal decision in
federal court).
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the removal petition. Our focus, however, was solely upon
the timeliness of the remand order. In Air-Shields, we wrote:
Even if the district court's sua sponte action qualifies
as a motion under . . . . 28 U.S.C. S 1442(c), the
district court could only remand within 30 days of the
filing of the notice to remove . . . By remanding the
case for procedural defects after the thirty day limit
imposed by the revised Section 1447(c) had expired the
district court "exceeded its statutorily defined power."
891 F.2d at 65-66 (internal citations omitted) (emphasis
added). As a result, our review was "not limited by
subsection (d) of Section 1447;" and the petition for
mandamus was granted. Id. at 66. In Air-Shields, "[w]e did
not decide whether the District Court was ever permitted to
remand for a defect in the removal petition absent a motion
by a party." Liberty Mutual Ins. Co. v. Ward Trucking Co., 48
F.3d 742, 760 n.8 (3d Cir. 1995) (J. Becker, dissenting).
In Korea Exchange Bank v. Trackwise Sales, 66 F.3d 46
(3d Cir. 1995), we again considered a timeliness challenge
to a District Court's remand order. Some seven months
after the petition for removal was filed, the District Court,
acting sua sponte, remanded an action for failure to comply
with the requirements of 28 U.S.C. S 1441(b). After
concluding that the irregularity in the petition was a
procedural defect rather than a jurisdictional requirement,6
we considered the substance of 28 U.S.C. S 1447(c),
focusing as we did in Air-Shields on the timing of the
District Court's remand order. We wrote:
[I]t is clear under section 1447(c) that [the procedural]
irregularity must be the subject of a motion to remand
within 30 days after filing the notice of removal. We
have held that the 30-day time limit of section 1447(c)
applies not only to motions brought by a party, but also
to sua sponte orders of remand. See Air Shields, 891
F.2d at 65. It follows ineluctably that the District Court
in this case had no statutory authority to issue the
_________________________________________________________________
6. We clarified that "an irregularity in removal of a case to federal
court
is to be considered ``jurisdictional' only if the case could not initially
have
been filed in federal court." 66 F.3d at 50.
10
remand order after the 30-day period because the
defect was in the removal procedure rather than a lack
of subject matter jurisdiction, which could be raised at
any time. For the same reason, our review of the
remand order is not barred by section 1447(d).
Id. at 50-51 (internal citation omitted) (emphasis added).
The parties in Korea Exchange Bank did not challenge the
District Court's authority to raise a procedural defect sua
sponte and, with the exception of the single sentence
highlighted above, we did not address that aspect of the
case. We address that issue for the first time here.
While we are convinced that the decision in Korea
Exchange Bank does not resolve the issue now before us,
we recognize that the District Court read the emphasized
language in the quotation from Korea Exchange Bank above
to establish "unequivocally" that a timely sua sponte
remand on procedural grounds is authorized under section
1447(c). We cannot agree. As we have noted, our focus in
Korea Exchange Bank was solely on the timeliness of the
District Court's sua sponte remand. The single sentence
which the District Court lifts out of that case is best viewed
as dictum. We did not intend that sentence to dispose of an
important issue which we had yet to face head-on.
At the time of our decision in Korea Exchange Bank, four
of our sister Courts of Appeals had addressed the very
question that we face here, concluding that the language of
section 1447(c) does not authorize a District Court's sua
sponte remand of an action based on a defect in the
petition for removal, even where that remand is timely.7
Our failure in Korea Exchange Bank to reference those
decisions and to express any disagreement with the
reasoning supporting them militates heavily against the
conclusion that we intended, in a single sentence, to take
a contrary position.
_________________________________________________________________
7. See In re First National Bank of Boston , 70 F.3d 1184 (11th Cir.),
vacated as moot, 102 F.3d 1157 (1996) (District Courts are without
discretion to remand sua sponte for procedural defects within the 30-day
period after filing of removal notice); Page v. City of Southfield, 45
F.3d
128 (6th Cir. 1995) (same); In re Continental Casualty Co., 29 F.3d 292
(7th Cir. 1994) (same); and In re Allstate Insurance Co., 8 F.3d 219 (5th
Cir. 1995) (same).
11
In order to dispel any possible confusion flowing from the
language in Korea Exchange Bank, we now align ourselves
with the other Courts of Appeals which have considered
timely sua sponte remands. We hold that the District Court
exceeded its authority under section 1447(c) when it
remanded these actions, sua sponte, based on what it
identified as procedural defects in the petition for removal.
In formulating this holding, we adopt the reasoning
underlying the decision in In re Continental Casualty
Company, 29 F.3d 292 (7th Cir. 1994). There, the Court
concluded that a motion made by a party "is essential to a
remand under the first sentence of section 1447(c)." Id. at
294. In support of this conclusion, the Court wrote:
Ever since Ayers v. Watson, 113 U.S. 594 (1885), it has
been accepted that non-jurisdictional objections to
removal may be waived. The plaintiff has a right to
remand if the defendant did not take the right steps
when removing, but the plaintiff also may accept the
defendant's choice of a federal forum. Procedural
defects in removal are in this respect similar to the
lack of personal jurisdiction and other shortcomings
that may be waived or forfeited. Having found himself
in federal court after removal, the plaintiff may want to
stay there. A remand on the court's own motion may
deprive both sides of their preferred forum . . . .
Instead of trying to resolve procedural questions on its
own, only to find out that the answer does not matter,
the district judge should wait for the parties to reveal
whether they want to continue in federal court.
Id. at 294-95. We agree. We embrace, too, this Continental
Casualty caveat:
Sua sponte remands before the 30 days are up do not
upset the parties' expectations or require redoing
things in multiple forums, but they pose dangers of
their own. By acting without any motion, district
judges increase the risk of error -- both legal error and
error in understanding the parties' desires.
Id. at 295.
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III.
For the foregoing reasons, we conclude that the District
Court exceeded its statutory authority under section
1446(c) in entering the remand orders in these actions.
Accordingly, the bar to review by appeal set forth in 1447(d)
does not apply. Although FMC did not file a document
labeled "notice of appeal," its petition for mandamus
contains all of the information required under Fed. R. App.
P. 3. It may, therefore, be treated as a notice of appeal, see
Smith v. Barry, 502 U.S. 244 (1992), provided that it was
filed, as it was, within the 30-day limit set by Fed. R. App.
P. 4(a)(1). Because jurisdiction lies under 28 U.S.C. S 1291,
we will dismiss the petitions for mandamus filed by
Medtronic as moot and will reverse the orders of remand
entered by the District Court in each of the underlying
actions.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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