The Week in Federal Appellate Jurisdiction: October 20–26, 2019

Last week had a plethora of interesting appellate-jurisdiction decisions and developments. The Seventh Circuit—creating a circuit split and overruling its prior decisions—held that district courts cannot re-certify an order under § 1292(b) and restart the clock for filing a petition to appeal. The Ninth Circuit held that courts of appeals have original jurisdiction to hear substantive due process challenges to the No Fly List. A new cert petition seeks review after the denial of a Rule 23(f) appeal. Plus appeals involving bankruptcy, discovery, mandamus, administrative review, arbitration, and class actions.

The Seventh Circuit held that district courts can no longer re-certify orders for § 1292(b) appeals to restart the 10-day window for petitioning to appeal

In Groves v. United States, the Seventh Circuit held that district courts cannot re-certify an order under 28 U.S.C. § 1292(b) to restart the window for petitioning to appeal. This is potentially a big deal: it runs contrary to decades of precedent and the position recommended by Wright, Miller & Cooper, and it creates a new circuit split.

The plaintiff in Groves sued the government after the IRS assessed a tax penalty against him. He argued that 28 U.S.C. § 2462’s catch-all statute of limitations barred the IRS from imposing the assessment. The district court eventually granted the government’s motion to strike this defense, holding that § 2462 did not apply to the tax assessment. But the district court thought that the issue warranted an immediate appeal and certified its decision under § 1292(b).

Under that statute, the plaintiff in Groves had ten days to seek permission to appeal from the Seventh Circuit. On the tenth day, a paralegal emailed the petition to appeal to the wrong email address. Upon learning of the error a few days later, the plaintiff informed the district court of the mistake and asked the court to re-certify its order. The district court agreed to do so, and the plaintiff filed his petition the next day.

On appeal, both sides agreed that the court had jurisdiction. Under the Seventh Circuit’s 1981 decision in Nuclear Engineering Co. v. Scott, district courts can re-certify an order for an interlocutory appeal to restart the time for petitioning to appeal.

But the Seventh Circuit overruled Nuclear Engineering Co. and held that the district court could not re-certify its order. The statute does not authorize the district court or the court of appeals to extend the ten-day deadline. But as the Seventh Circuit saw it, district courts do exactly that when they re-certify an order for an immediate appeal. The Nuclear Engineering approach “permits a district court to make an end-run around this limit with the fiction that recertifying an order isn’t the same thing as granting more time.” Doing so “is inconsistent with the statute’s imposition of a fixed jurisdictional deadline.”

The plaintiff’s petition was thus untimely. And that time limit was jurisdictional in nature; it came from a statute, and the court thus could not excuse noncompliance.

This is quite a development. Courts have long allowed district courts to re-certify orders for a § 1292(b) appeal to restart the filing window. Wright, Miller & Cooper (§ 3929) recommends this practice, contending that “the district court should have power to enter a new order, again certifying the matter for appeal, so long as it concludes that the statutory criteria continue to be satisfied. . . . The ten-day period serves its initial and direct purpose of preventing delay by cutting off the right to seek permission on the basis of the original order.” And the Seventh Circuit now disagrees with several other circuits that have allowed this practice.

Groves v. United States, 2019 WL 5481249 (7th Cir. Oct. 25, 2019), available at the Seventh Circuit and Westlaw.

The Ninth Circuit held that the courts of appeals have exclusive jurisdiction to review substantive due process claims against the TSA

In Kashem v. Barr, the Ninth Circuit held that only courts of appeals—not district courts—have original jurisdiction to decide a substantive due process-challenge to inclusion on the No Fly List.

The Kashem plaintiffs are on the No Fly List, and they challenged their placement on the list for a variety of reasons. The appellate-jurisdiction issue stemmed from argument that their placement on the list violated their substantive due process rights. (The plaintiffs also argued that (1) the criteria for placement on the list were unconstitutionally vague, and (2) the procedures for challenging placement on the list violated procedural due process.) The district court dismissed the substantive due process claim for lack of jurisdiction, and the plaintiffs appealed.

The Ninth Circuit held that it, not the district court, had original jurisdiction to address a substantive due process claim that challenges an order of the Transportation Security Administration. Under 49 U.S.C. § 46110(a), someone challenging a TSA order “may apply for review of the order by filing a petition for review in the United States Court of Appeals for the District of Columbia Circuit or in the court of appeals of the United States for the circuit in which the person resides or has its principal place of business.” The Ninth Circuit had previously held that § 46110 did not bar suit in the district court when inclusion on the No Fly List was determined by the Terrorist Screening Center. But the procedures subsequently changed to give the TSA Administrator final say over inclusion on the list. And that meant the courts of appeals had original jurisdiction to hear substantive due process challenges to the list.

The Ninth Circuit noted the potential awkwardness of an original proceeding in the court of appeals:

We recognize that vesting original jurisdiction in the courts of appeals may present practical difficulties in some cases. Judicial review of No Fly List orders may entail factfinding and case management responsibilities that district courts are best equipped to perform.

But the statute said what it said. The plaintiffs could thus petition the court of appeals to review their substantive due process claims. (Although this petition normally must be filed within 60 days, the statute gives the courts of appeals discretion to allow a later filing if there are reasonable grounds for doing so. And everyone agreed that the plaintiffs had reasonable grounds for not yet filing a petition in the court of appeals.)

Kashem v. Barr, 2019 WL 5303288 (9th Cir. Oct. 21, 2019), available at the Ninth Circuit and Westlaw.

The Third Circuit held that it could review claims for violations of bankruptcy’s automatic stay regardless of whether bankruptcy proceedings are ongoing

In In re Healthcare Real Estate Partners, LLC, the Third Circuit held that it had jurisdiction to review a claim for violations of an automatic bankruptcy stay even though the underlying bankruptcy proceedings were still ongoing.

Simplifying a fair bit, the dispute in Healthcare Real Estate Partners began when investors in certain funds brought an involuntary bankruptcy proceeding against the manager of those funds. The fund manager did not receive notice of the proceeding, which went uncontested. The investors accordingly succeeded in having the fund manager removed. A new fund manager was appointed, and this new manager dissolved the funds. Upon eventually learning of these events, the old fund manager sought to vacate the bankruptcy court’s order. But the investors had already gotten what they wanted—dissolution of the funds—so they sought to voluntarily dismiss their petition.

Eventually the bankruptcy court agreed to dismiss the petition. But it retained jurisdiction to resolve a the old fund manager’s claim under 11 U.S.C. § 303(i), which allows claims for damages due to the bad-faith filing of a bankruptcy petition. The old fund manager also sought damages under § 362(k), alleging that the investors violated bankruptcy’s automatic stay by switching fund managers without a court order. But the bankruptcy court dismissed this § 362(k) voluntary-stay claim, holding that it had retained jurisdiction only to address the § 303(i) bad-faith-filing claim. The old fund manager appealed the dismissal of its § 362(k) voluntary-stay claim to the district court, which affirmed. The old fund manager then sought further review in the Third Circuit.

The Third Circuit ultimately concluded that the bankruptcy court erred in dismissing the § 362(k) voluntary-stay claim. But before doing so, it had to assure itself of appellate jurisdiction. Bankruptcy proceedings were still ongoing—the bankruptcy court had not yet resolved the § 303(i) bad-faith-filing claim. The investors accordingly argued that the district court’s decision on the § 362(k) voluntary-stay claim was not final or appealable.

But the Third Circuit held that it was. The action seeking damages for violation of the automatic stay was separate from the bankruptcy case in which it arose. The claim stood on its own, and its dismissal was accordingly a final order in both the bankruptcy court and the district court.

In re Healthcare Real Estate Partners, LLC, 2019 WL 5382946 (3d Cir. Oct. 22, 2019), available at the Third Circuit and Westlaw.

The Eleventh Circuit reiterated that it had jurisdiction to review the denial of a motion to quash a § 1782 discovery order

In In re Application of Victoria, LLC, the Eleventh Circuit held that it had jurisdiction to review the decision in a 28 U.S.C. § 1782 proceeding. A § 1782 proceeding is used to obtain discovery for use in a foreign or international proceeding. The appellate jurisdiction issue arises only because discovery orders are normally not appealable. But a § 1782 proceeding is brought solely to obtain discovery; once the district court decides the discovery issue, the proceeding is over. The decision in a § 1782 proceeding is thus final and appealable.

In re Application of Victoria, LLC, 2019 WL 5448537 (11th Cir. Oct. 24, 2019), available at the Eleventh Circuit and Westlaw.

The Seventh Circuit used mandamus to reverse an order requiring Commodity Futures Trading Commission officials testify in contempt proceedings

In In re Commodity Futures Trading Commission, the Seventh Circuit held that officials from the Commodity Futures Trading Commission could not be forced to testify in contempt proceedings against the Commission. The court did so via mandamus. It recognized that mandamus “is a drastic remedy, reserved for urgent needs.” But it saw urgency in the case because the “[t]he time taken away from [the officials’] official duties will be lost forever.” And the court saw “neither need nor justification for testimony by the Chairman, any Commissioners, or any members of the agency’s staff.”

In re Commodity Futures Trading Commission, 2019 WL 5382228 (7th Cir. Oct. 22, 2019), available at the Seventh Circuit and Westlaw.

The D.C. Circuit held that the EPA’s decision to reconsider auto emissions standards was not a final action subject to appellate review

In California ex rel. Brown v. EPA, the D.C. Circuit dismissed a challenge to the EPA’s decision to reconsider its auto-emissions rules. In 2012, the EPA adopted greenhouse-gas emission standards for model years 2022 to 2025. But after the change in administration, the EPA announced that it “would reconsider the appropriateness of, and conduct a rulemaking to potentially alter,” those standards. A coalition of states, environmental groups, and industry representatives filed suit to challenge this decision. But the D.C. Circuit has jurisdiction to review only “final action[s]” under the Clean Air Act. And this was not a final action. The agency had created only the possibility of a future change to emissions standards; it had not determined anyone’s rights or obligations.

California ex rel. Brown v. EPA, 2019 WL 5474018 (D.C. Cir. Oct. 25, 2019), available at the D.C. Circuit and Westlaw.

Cert denied on arbitration appeals

The Supreme Court denied cert in Katz v. Cellco Partnership. The case asked if district courts that orders arbitration must stay—not dismiss—the underlying action, an issue I’ve previously addressed on this site. The Supreme Court has been ducking this issue for years. And it appears that we’ll have to keep waiting for its resolution.

Cert petition asks the Supreme Court to address class-action ascertainability after the Tenth Circuit denied permission to appeal

A new cert petition asks the Supreme Court to address the if class-action certification requires a showing of “ascertainability”—a feasible way of determining who is part of the class. (For more on the issue, see Rhonda Wasserman’s recent article Ascertainability: Prose, Policy, and Process.) The petition also comes in an interesting procedural posture. The district court had certified a class of mineral owners, after which the defendant sought permission to appeal under Rule 23(f). That rule gives courts of appeals discretion to hear interlocutory appeals from class-certification decisions. And the Tenth Circuit denied the petition to appeal. Cert is sought from this denial.

The Supreme Court has not addressed whether it can review a class-certification decision after the court of appeals denied a Rule 23(f) petition. But the Court held in Dart Cherokee Basin Operating Co. v. Owens that it could review a Class Action Fairness Act remand even though the court of appeals had denied a discretionary appeal under 28 U.S.C. § 1453(c)(1). According to the Court, “[t]he case was ‘in’ the Court of Appeals because of [the defendant]’s leave-to-appeal application,” giving the Supreme Court jurisdiction under 28 U.S.C. § 1254 “to review what the Court of Appeals did with that application.” The Supreme Court also explained that the Tenth Circuit’s denial of the petition to appeal strongly suggested that the court of appeals agreed with the district court’s analysis. And the Tenth Circuit’s denial effectively established the law for that circuit.

Four justices dissented in Dart Cherokee Basin on the jurisdictional issue. And it wasn’t cleanly presented to the Court; neither party raised it, and only an amici argued that the case was not properly before the Court. But Dart Cherokee Basin’s reasoning would seem to apply equally to the denial of a Rule 23(f) petition. That being said, I have doubts about the Dart Cherokee Basin rule. I’ll be watching this one.

The case is Apache Corp. v. Rhea, No. 19-503. The response is due November 18, 2019.

Petition for a Writ of Certiorari, Apache Corp. v. Rhea, No. 19-503 (Oct. 15, 2019), available at the Supreme Court and Westlaw.