Remand and Appellate Review When a District Court Declines to Exercise Supplemental Jurisdiction Under 28 U.S.C. 1367(c)

Abstract:     
Under 28 U.S.C. Section 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. Section1367(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 Section 1447(c) and (d)."

Then, in HIF Bio, Inc. v. Yung Shin Pharmaceuticals Industrial Co., the United States Court of Appeals for the Federal Circuit, relying on Powerex, became the first circuit to hold that Cohill remands fall within Section 1447(c) and (d) and therefore are not subject to appellate review. The HIF Bio court reasoned that "because every Section 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 for 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. First, this Article argues that a district court's decision to decline to exercise supplemental jurisdiction is not the type of post-removal event that results in a jurisdictional defect and thereby renders a Cohill remand unreviewable on appeal. More specifically, this Article contends that the HIF Bio court erred in concluding that it lacked jurisdiction over the appeal in that case because (1) the Federal Circuit misunderstood the language of Section 1367 and confused the existence of judicial power with the discretionary decision whether to exercise such power, and (2) the Federal Circuit incorrectly applied the Powerex test to the remand order in HIF Bio. Second, this Article asserts 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 Section 1447(c) and are unreviewable under Section 1447(d). Finally, this Article examines the consequences of any decision that Cohill remands are based on a lack of subject matter jurisdiction and that they are immune from appellate review under Section 1447(c) and (d) - consequences that the Federal Circuit failed to consider. This Article concludes by suggesting that Congress should repeal Section 1447(d) and permit unrestricted appellate review of remand orders.

Keywords: remand, appellate review, supplemental jurisdiction, 1447(c), 1447(d), 1367, HIF Bio, Powerex Corp

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