- Nos. 10-3017, 10-3018 (7th Cir. July 21, 2011)
- In Townsquare, Judge Posner, writing for the Seventh Circuit, discussed the intricacies of when the remand of a matter that has been removed from state court is unappealable. Synthesizing the variety of Supreme Court and Seventh Circuit decisions that bear on the issue, the court found that Regent, the defendant-appellant that had removed a state court action to the bankruptcy court, could not appeal the bankruptcy judge’s order remanding the case because the remand order constituted a “disavowal” of jurisdiction, rather than a “relinquishment” of jurisdiction. The complex analysis presented in court’s 19-page decision was necessitated, in part, by the Supreme Court’s decisions in Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996), and Carlsbad Technology, Inc. v. HIF Bio, Inc., 129 S.Ct. 1862 (2009). In these cases, the Supreme Court determined that section 1447(d) of title 28, which generally prohibits the appeal of remand orders, only applies to remand orders based on 28 U.S.C. § 1147(c). The Seventh Circuit noted that the Quackenbush line of cases seemed questionable, given that 28 U.S.C. § 1447(d) appears straightforward – the statute provides that, except with regard to certain civil rights cases, “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.” However, giving due regard for the state of the law, the Seventh Circuit conformed its analysis to the established precedents. First, it noted that in this case, after the dismissal of certain claims, the only claims remaining were claims arising under Indiana state law. Here’s where the decision gets complicated: if jurisdiction existed over those claims, it existed only as a matter of supplemental jurisdiction under 28 U.S.C. § 1367. The Seventh Circuit, noting the variety of conflicting authorities, assumed without deciding that bankruptcy courts can exercise supplemental jurisdiction. Then it explained that if the bankruptcy court exercised supplemental jurisdiction over the claims initially, and then remanded after dismissing the non-state law claims, that remand was a “relinquishment” of jurisdiction, which is not the equivalent of finding that the court never had jurisdiction over those claims. Under title 28, such a remand is understood as a remand “on any equitable ground,” and is appealable. However, the record did not indicate that the bankruptcy court had exercised jurisdiction over the state law claims as a matter of supplemental jurisdiction, and the appellant had not raised the issue below. Since the record indicated that the court had remanded because it considered the state law claims to fall outside of its subject matter jurisdiction, the remand was a “subject matter remand,” and not an “any equitable ground” remand. Thus, the remand decision was unreviewable. In other words, the remand order constituted a “disavowal” of jurisdiction, rather than a “relinquishment” of jurisdiction.
- Procedural context:
- Bankruptcy court order remanding action to Indiana state court was appealed to the District Court by the entity that initially removed the action. The District court affirmed the remand and this appeal followed.
- The plaintiff-appellee, Alan Brill, previously owned a number of media companies. During 2002, creditors forced several of Brill’s companies into chapter 11, and a 363 sale (auction) was held. Brill tried to purchase the companies at the auction, but Regent was the high bidder. Brill was particularly unhappy that Regent purchased his entities because he had previously engaged (pre-bankruptcy) in negotiations with Regent regarding the possible sale of the entities to Regent. After the bankruptcy, Brill sued Regent in Indiana state court on the grounds that Regent violated certain confidentiality agreements that it had entered into during the negotiations, which, among other things, precluded Regent from using information provided by Brill to Brill’s detriment. The suit also levied similar claims against certain professionals that were involved with the bankruptcy. Regent removed the Indiana suit under section 1452 of title 28. The claims against the bankruptcy professionals were subsequently dismissed (based on provisions of the confirmed plan that barred actions against the bankruptcy professionals), and the court then held that it lacked subject matter jurisdiction over the remaining state law claims against Regent. The court remanded on its own motion.
3311 in the system
1 Being Processed