The Fifth Circuit held that litigants can use § 1291 (and not a discretionary appeal under § 1453(c)) to appeal remands under CAFA’s local-controversy exception.
March 18, 2024
In Cheapside Minerals, Ltd. v. Devon Energy Production Co., the Fifth Circuit held that a remand under the Class Action Fairness Act’s local-controversy rule was an appealable final decision under 28 U.S.C. § 1291. That meant the appellant did not need to resort to a discretionary appeal under 28 U.S.C. § 1453(c).
The Remand in Cheapside Minerals
Cheapside Minerals stemmed from a dispute over oil-and-gas royalties. The plaintiffs filed a class-action in Texas state court, which the defendant removed to federal court. The district court subsequently remanded the action to state court, concluding that the case fell under the “local controversy” exception to the Class Action Fairness Act. The defendant then sought review by the Fifth Circuit.
§ 1447(d)’s Limit on Remand Appeals
Under 28 U.S.C. § 1447(d), many remand decisions are not reviewable. But not all; the rule has exceptions. One exception comes from the Class Action Fairness Act. 28 U.S.C. § 1453(c) provides that, notwithstanding § 1447(d), aggrieved litigants can petition a court of appeals for permission to appeal an order remanding a case that was removed under the Act.
Moreover, § 1447(d) does not apply to all remands. The Supreme Court has held that § 1447(d) must be read in the context of the rest of § 1447. So in Thermtron Products, Inc. v. Hermandsdorfer, the Court held that § 1447(d)’s prohibition on remand appeals applies only to remands authorized by the neighboring § 1447(c). And § 1447(c) authorizes remands due to either a lack of subject-matter jurisdiction or a procedural defect in removal. So if a district court remands an action for some other reason, § 1447(d) does not bar an appeal. And so long as the remand marked the end of the action, the remand can be reviewed via 28 U.S.C. § 1291.
Local-Controversy Remands & § 1291
Given the scope of § 1447(d), the Fifth Circuit held that orders remanding cases removed under the Class Action Fairness Act are appealable final decisions so long as the remand was not due to a lack of subject-matter jurisdiction or a defect in removal. And a remand under the local-controversy exception is neither. It’s instead an abstention-based remand. And § 1447(d) does not bar review of abstention-based remands. The remand was thus an appealable final decision under § 1291.
Cheapside Minerals, Ltd. v. Devon Energy Production Co., 2024 WL 886951 (5th Cir. Mar. 1, 2024), available at the Fifth Circuit and Westlaw