Remand and Appellate Review when a District Court Declines to Exercise Supplemental Jurisdiction Under 28 U.S.C. § 1367(c)
Volume 81, No. 4, Winter 2008
By Deborah J. Challener & John B. Howell, III [PDF]

Under 28 U.S.C. § 1447(c) and (d), as well as Supreme Court precedent, remand orders in removed cases are immune from appellate review when they are based on a lack of subject matter jurisdiction. Until recently, all appellate courts that had addressed the issue had concluded that a district court’s discretionary decision to decline to exercise supplemental jurisdiction under 28 U.S.C. § 1367(c) and remand the supplemental claims does not constitute a remand for lack of subject matter jurisdiction and therefore is reviewable on appeal.

In 2007, however, the Supreme Court held in Powerex Corp. v. Reliant Energy Services, Inc. that where a district court characterizes a remand as subject matter jurisdictional and that characterization is colorable, the remand order is not subject to appellate review. Although the case did not involve the remand of supplemental claims, the Court stated the following in dictum: “It is far from clear . . . that when discretionary supplemental jurisdiction is declined the remand is not based on lack of subject-matter jurisdiction for purposes of § 1447(c) and § 1447(d).”

Then, in HIF Bio, Inc. v. Yung Shin Pharmaceuticals Industrial Co., [FN5] the United States Court of Appeals for the Federal Circuit, relying on Powerex, became the first circuit to hold that Cohill remands fall within § 1447(c) and (d) and therefore are not subject to appellate review. The HIF Bio court reasoned that “because every § 1367(c) remand necessarily involves a predicate finding that the claims at issue lack an independent basis of subject matter jurisdiction, a remand based on declining supplemental jurisdiction can be colorably characterized as a remand based on lack of subject matter jurisdiction.” On October 14, 2008, the Supreme Court granted certiorari in HIF Bio to resolve the circuit split created by the Federal Circuit.

This Article examines whether the HIF Bio decision was correct and ultimately concludes that it was not. Part II reviews the history of supplemental jurisdiction and § 1447(c) and (d). Part II also explains the relationship between § 1447(c) and (d) and explicates the pertinent Supreme Court and court of appeals precedent. Part III.A begins by explaining how some postremoval events can lead to remands for lack of subject matter jurisdiction under the current version of § 1447(c). Part III.B then argues that a district court’s decision to decline to exercise supplemental jurisdiction is not the type of postremoval event that results in a jurisdictional defect and thereby renders Cohill remands unreviewable on appeal. More specifically, Part III.B contends that the HIF Bio court erred in concluding that it lacked jurisdiction over the appeal in that case for two reasons. First, the Federal Circuit misunderstood the language of § 1367 and confused the existence of judicial power with the discretionary decision whether to exercise such power. Second, the Federal Circuit incorrectly applied the Powerex test to the remand order in HIF Bio. Part III.B concludes that the Supreme Court should reverse the Federal Circuit and hold that the Federal Circuit must review the remand order on the merits.

Part III.C argues that even if the Supreme Court determines that Cohill remands are remands for lack of subject matter jurisdiction, that does not automatically mean that they fall within § 1447(c) and are unreviewable under § 1447(d). Finally, Part III.D explores the consequences that will result if the Court (erroneously) concludes both that Cohill remands are based on a lack of subject matter jurisdiction and that they are immune from appellate review under § 1447(c) and (d).

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