Appealing remands—both abstention-based and in bankruptcy—plus cert petitions on discovery appeals and appeals in consolidated actions.
March 2, 2021
Last week saw only two decisions of note, both involving appeals from remand orders. The Fifth Circuit held that § 1447(d) does not bar appellate review of abstention-based remand orders. And the Ninth Circuit dealt with an appeal from a bankruptcy remand that, while technically marking the end of an action, was too related to an ongoing bankruptcy proceeding to be deemed final. Plus two recent cert petitions of note: one asking if discovery appeals under Perlman require a privilege claim, and one suggesting that Hall v. Hall should apply only prospectively.
- The Fifth Circuit on Remand Appeals & Abstention
- New Cert Petition on Discovery Appeals Under Perlman
- New Cert Petition on Post-Hall Appeals From Pre-Hall Judgments
- The Ninth Circuit on Appealing Bankruptcy Remands
The Fifth Circuit on Remand Appeals & Abstention
In Grace Ranch, L.L.C. v. BP America Production Co., the Fifth Circuit held that it could review a discretionary, abstention-based remand despite § 1447(d).
Simplifying a bit, Grace Ranch started as an environmental suit in Louisiana state court. The defendants removed on diversity grounds. But the district court eventually remanded the case back to state court. The district court invoked the Burford abstention doctrine, which allows courts to abstain when a case involves difficult issues of state law and might disrupt state efforts to implement a coherent policy. The district court in Grace Ranch thought that Louisiana courts would better resolve the environmental issues in the case. The defendants then appealed.
28 U.S.C. § 1447(d) says that the courts of appeals lack jurisdiction—“by appeal or otherwise”—to review remand orders. (The statute contains a few exceptions to this bar that aren’t relevant to the present discussion.) The Supreme Court has held, however, that this bar applies only to remands authorized by § 1447(c): remands (1) due to a lack of federal jurisdiction or (2) on a timely motion pointing out a defect other than a lack of subject-matter jurisdiction.
Interpreting an earlier version of § 1447(c), the Supreme Court held in Quackenbush v. Allstate Insurance that the statute did not bar appeals from abstention-based remands. At that time, § 1447(c) authorized remands “on the basis of any defect in removal procedure.” Congress subsequently amended that subsection. Instead of speaking of defects “in removal,” the amended statute authorized remands on “any defect other than lack of subject matter jurisdiction.” This change in language has required the courts to reexamine Quackenbush’s holding. After all, “if ‘defect’ is read broadly to mean any nonjurisdictional reason for remand, then amended section 1447(c) would cover remands for all jurisdictional and nonjurisdictional reasons—that is, every remand (including abstention-based remands). And if section 1447(c) covers every remand, then section 1447(d) would bar appellate review of every remand.”
In Grace Ranch, the Fifth Circuit joined every other circuit in holding that § 1447(d) still did not bar appeals from abstention-based remands. “Defect,” the court pointed out, means deficiency. And abstention “does not reflect anything deficient—that is, lacking—with the removal; abstention instead involves a discretionary assessment of how hearing a case would impact the delicate state/federal balance.” If Congress intended for a broader coverage of reasons for remand, “it would have been clearer to say ‘any remandable ground,’or more simply, ’any basis’ or ‘any ground.’”
The Fifth Circuit also noted the potential conflict between a broader reading of § 1447 and the 30-day limit for raising non-jurisdictional removal issues. “One of the most common nonjurisdictional remands is sending state law claims, in federal court via supplemental jurisdiction, back to state court.” Those remands almost always come more than 30 days after removal. A broader reading of § 1447 would bar review of these remands, too. But no one questions that courts of appeals may review these remands.
Thanks to Dana Livingston for sending me this case.
Grace Ranch, L.L.C. v. BP America Production Co., 2021 WL 716626 (5th Cir. Feb. 24, 2021), available at the Fifth Circuit and Westlaw.
New Cert Petition on Discovery Appeals Under Perlman
Appellate review of discovery orders normally must wait until after a final judgment. But some exceptions exist. The primary exception is the contempt option. When a court orders privilege claimants to disclose information, they can disobey the order and risk being found in contempt. If found in contempt, they normally can immediately appeal that contempt ruling. And in that appeal, privilege claimants can challenge the underlying discovery order.
Perlman appeals are another option. They normally involve a privilege claimant’s objection to a discovery order directed to someone other than the claimant. The privilege claimant does not have the contempt option, as the court isn’t asking anything of the claimant. And the third party will often comply with the discovery order rather than risk the contempt necessary to take an appeal. Perlman allows the privilege claimant to immediately appeal the discovery order directed to a third party.
Last summer, the Ninth Circuit dismissed a company’s appeal from a discovery order directed to one of its officers because there was no claim of privilege. The company argued only that it had an “ownership interest” in the documents that the officer would produce. The Ninth Circuit held that this was insufficient for a Perlman appeal. Those appeals require a claim of privilege, the court explained, as Perlman exists to protect the confidentiality of allegedly privileged information.
The company in that case has now petitioned for cert. The petition contends that the courts have split on whether Perlman requires a claim of privilege. Some courts require that an appellant have only a substantial interest in the material at issue. Others, like the Ninth Circuit, require a claim of privilege.
The case is Doe Co. v. United States. The response is due March 24, 2021.
Petition for a Writ of Certiorari (Redacted), In re Grand Jury Investigation, No. 20-1141 (Jan. 29, 2021), available at the Supreme Court and Westlaw.
New Cert Petition on Post-Hall Appeals From Pre-Hall Judgments
A new cert petition asks when pre-Hall judgments in consolidated actions became final.
In 2018’s Hall v. Hall, the Supreme Court held that actions consolidated with other actions retain their independent character. So the resolution of one action is final and appealable, regardless of whether the other actions remain pending. Hall left some unanswered questions. Among them was what would become of pre-Hall judgments that were not immediately appealable under then-applicable circuit law. Before Hall, several circuits held that a judgment in a single action was not final until all consolidated actions were resolved. Hall seemed to make those judgments final and appealable on the day they were entered. And that sudden finality could make any post-Hall attempts to appeal untimely.
Last fall, the Second Circuit decided the first (and, to my knowledge, only) case to involve this question. In Haynes v. World Wrestling Entertainment, Inc., the Second Circuit dismissed as untimely most of the appeals from five actions that had been consolidated in the district court. Before Hall—and relying on circuit law that Hall later abrogated—the Second Circuit had dismissed as premature appeals from two of those actions. The plaintiffs then waited until all five actions were resolved before again trying to appeal. The intervening decision in Hall meant that the appeals in four of those five actions were too late.
A new cert petition asks the Supreme Court to review this decision. Interestingly, it invokes the Alabama Supreme Court’s decision in Nettles v. Rumberger, Kirk & Caldwell, P.C. to argue that Hall should be prospective only—that is, it should apply to judgments in consolidated cases entered only after Hall.
The case is Haynes v. World Wrestling Entertainment, Inc. The response is due March 26, 2021. For more on the Second Circuit’s decision, see my post Post-Hall Appeals From Pre-Hall Judgments.
Petition for Writ of Certiorari, Haynes v. World Wrestling Entertainment, Inc, No. 20-1169 (Feb. 17, 2021), available at the Supreme Court and Westlaw.
The Ninth Circuit on Appealing Bankruptcy Remands
In In re Halvorson, the Ninth Circuit dismissed bankruptcy appeals from related actions, even though one action had been dismissed for a lack of jurisdiction.
Simplifying quite a bit, Halvorson started as a fraudulent-conveyance claim. Shortly after suit was filed, the debtor—who was a defendant in the fraudulent-conveyance claim—filed for bankruptcy. The debtor then purported to transfer the fraudulent-conveyance claim to the bankruptcy court. We’ll call this first action the “transferred action.” The debtor also sought a declaratory judgment that the conveyance at issue in the transferred action was not fraudulent. This was a separate action filed in the bankruptcy court, and we’ll call it the “original action.” The bankruptcy court eventually determined that the plaintiffs in the fraudulent-conveyance claim had acted with unclean hands. The bankruptcy court accordingly entered judgment for the debtor in both the transferred and original actions.
The district court subsequently determined that the fraudulent-conveyance claim had been improperly transferred. The bankruptcy court thus lacked jurisdiction to enter judgment in the transferred action. So the district court vacated the bankruptcy court’s decision in that action and remanded it for the bankruptcy court to dismiss. The district court also concluded that factual findings in the transferred action affected the bankruptcy court’s resolution of the original action. So the district court vacated that decision, too, and remanded it for further proceedings, which could include new factfinding and a retrial on the unclean-hands issue. Finally, the district court re-transferred the fraudulent-conveyance claim to the bankruptcy court. We’ll call this last action the “re-transferred action.”
The debtor appealed. But the Ninth Circuit held that it lacked jurisdiction over any aspect of the district court’s decision. Bankruptcy appeals from the district court can take several avenues. At issue in Halverson was jurisdiction under under 28 U.S.C. § 158(d)(1). Normally, remands for further bankruptcy proceedings are not final under § 158(d)(1). But not always. A remand can be final if all that remains on remand are ministerial or technical matters that are unlikely to produce another appeal. And when significant proceedings remand on remand, the Ninth Circuit evaluates finality using a four-factor test :
[I]f a district court remands a case for further proceedings, we apply a four-factor test that weighs (1) the need to avoid piecemeal litigation; (2) judicial efficiency; (3) the systemic interest in preserving the bankruptcy court’s role as the finder of fact; and (4) whether delaying review would cause either party irreparable harm.
(Quotation marks omitted.)
The district court’s remand of the original action in Halvorson was straightforward. The district court remanded that action for further proceedings, including possible factfinding and trial. In no sense of the term was that decision “final.”
The vacatur of the decision in the transferred action was more complicated. Technically, there were no further proceedings in that action. The district court had concluded that the bankruptcy court lacked jurisdiction due to an improper transfer, so there was nothing left to do except dismiss. But the district court had also re-transferred the fraudulent-conveyance action to the bankruptcy court. This re-transferred action was technically another action. But it was essentially the same litigation. And an immediate appeal would lead to piecemeal resolution of that litigation—once now and possibly again after the re-transferred action was resolved. The Ninth Circuit accordingly concluded that the vacatur of the transferred action was not final.
In re Halvorson, 2021 WL 689033 (9th Cir. Feb. 23, 2021), available at the Ninth Circuit and Westlaw.