Mandatory Stays & Remand Appeals
In City of Martinsville v. Express Scripts, Inc., a divided Fourth Circuit held that a court must stay proceedings—and not process a remand order—if the defendant appeals before the district court can send the remand order to the state court. The majority thought that the rule of Griggs v. Provident Consumer Discount Co.—particularly as the Supreme Court recently explained that rule in Coinbase, Inc. v. Bielski—required the district court to refrain from acting once the appeal was filed. Judge Wynn dissented, arguing that the majority was reading too much into Coinbase.
The Remand Appeal in City of Martinsville
The City of Martinsville litigation started in West Virginia state court. The defendants removed the action to federal court, arguing that subject-matter jurisdiction existed under the federal-officer-removal statute. But the district court determined that the statute did not apply and remanded the action.
28 U.S.C. § 1447(c) says that a copy of the remand order must be mailed to the state court. And according to the Fourth Circuit, the remand is not effective until that mailing. But the defendants in City of Martinsville filed their notice of appeal before the district court mailed the remand order. They then asked the district court to stay proceedings pending their appeal. The district court refused, and the defendants renewed their request for a stay in the Fourth Circuit.
(Side note: although remand orders are normally not appealable under § 1447(d), an exception exists when removal was based on the federal-officer-removal statute.)
The Majority: Must Stay
Dealing only with the request for the stay, a majority of the Fourth Circuit held that a stay was mandatory. The court framed the issue as one implicating the Griggs rule: because only one court should deal with an action at a time, the filing of a notice of appeal normally deprives the district court of jurisdiction over any matters involved in the appeal. The court also saw the Supreme Court’s recent decision in Coinbase as providing three “important clarifications” regarding the Griggs rule:
- When the appeal asks whether an action should go forward in the district court, the entire action is involved in the appeal.
- Automatic stays are automatic.
- The Griggs rule is a background principle that applies without congressional action.
The Fourth Circuit also said that that Coinbase’s automatic-stay rule applies generally, not just in the context of arbitration appeals (which was the context of Coinbase).
In City of Martinsville, the defendants were appealing whether the action should proceed in federal court. According to the majority, that made a stay mandatory.
The Dissent: May Stay
Judge Wynn dissented. He began with the premise that the decision of whether to grant a stay is within a district court’s discretion. And he argued that Coinbase concerned the specific context of arbitration, in which a relevant statute (the Federal Arbitration Act) requires a stay. Coinbase thus did not withdraw district courts’ longstanding discretion when it comes to staying proceedings.
City of Martinsville v. Express Scripts, Inc., 2025 WL 441758 (4th Cir. Feb. 10, 2025), available at the Fourth Circuit and Westlaw
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