In a move that may significantly impact defendants’ ability to appeal orders remanding removed cases to state court, the Supreme Court will decide whether a Court of Appeals has jurisdiction to review an order remanding a case in which the District Court has declined to exercise supplemental jurisdiction. Most Courts of Appeals have held that they have jurisdiction to review a remand order under such circumstances. In HIF Bio, Inc. v. Yung Shin Pharm. Indus. Co., 508 F.3d 659 (Fed. Cir. 2007), however, the Federal Circuit reached the opposite conclusion, declining to follow the reasoning of its sister Circuits. Dismissing the defendant’s appeal, the HIF Bio court found that the District Court’s remand order, which was based on its decision to decline supplemental jurisdiction in a removed case after dismissing the only federal claim in the complaint under Federal Rule of Civil Procedure 12(b)(6), was unreviewable. On October 14, 2008, the Supreme Court granted certiorari in HIF Bio to resolve the Circuit split and, perhaps, to clarify its own muddy jurisprudence on appellate review of remand orders.
HIF Bio arose from patent applications for anti-angiogenic and anti-cancer applications of a chemical compound in which certain defendants were named as the inventors. HIF Bio, Inc., 508 F.3d at 661. The plaintiffs were the assignees of two non-parties whom the plaintiffs asserted were the true inventors. The plaintiffs brought an action in California state court seeking declaratory judgments of inventorship and ownership of the inventions. The plaintiffs also asserted a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-68, as well as nine other state law claims. Id. at 662. The district court dismissed the plaintiffs’ RICO claim, holding that the plaintiffs had not adequately alleged a pattern of racketeering. The court further concluded that the declaratory judgment claims were state law claims. Pursuant to 28 U.S.C. § 1367 (c), the court declined to exercise supplemental jurisdiction over the plaintiffs’ state law claims, and remanded the case to state court. Id. One of the defendants appealed.
Under 28 U.S.C. § 1447 (d), “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise,” except in civil rights cases. The Supreme Court, however, has ruled that this provision must be read together with § 1447 (c), which requires a remand only where the District Court lacks subject matter jurisdiction or where a defendant fails to follow the correct removal procedure. Thus, despite its broad terms, § 1447 (d) has been construed to bar appellate review only of orders remanding for reasons set forth in § 1447 (c), namely, lack of subject matter jurisdiction or defects in the removal process.
In HIF Bio, the Federal Circuit concluded that a remand based on declining supplemental jurisdiction constituted a remand for lack of subject matter jurisdiction under § 1447 (c) and (d). HIF Bio, Inc., 508 F.3d at 667. The Court acknowledged that this conclusion conflicted with case law in the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits. Id. at 665.
The HIF Bio Court noted that its sister Circuits had relied primarily on a footnote in Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 108 S. Ct. 614, 98 L. Ed. 2d 720 (1988), in which the Supreme Court stated that “[Section] 1447 (c) . . . do[es] not apply to cases over which a federal court has pendent jurisdiction. Thus, the remand authority conferred by the removal statute and the remand authority conferred by the doctrine of pendent jurisdiction overlap not at all.” See HIF Bio, Inc., 508 F.3d at 665 (quoting Cohill, 484 U.S. at 355 n.11).
The Federal Circuit noted that a 2007 Supreme Court case had cast doubt on other Circuits’ interpretation of Cohill as permitting appellate review of remands made after a District Court declines to exercise supplemental jurisdiction. In Powerex Corp. v. Reliant Energy Servs., Inc., 127 S. Ct. 2411, 168 L. Ed. 2d 112 (2007), the Court noted in dicta that “[i]t 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).” Powerex Corp., 127 S. Ct. at 2418-19. The Court noted that those Sections had been amended since Cohill was decided, and that the Court had never ruled on whether “Cohill remands,” i.e., remand orders made after the District Court declined to exercise supplemental jurisdiction, “are subject matter jurisdictional for purposes of post-1988 versions of § 1447 (c) and § 1447(d).” Id. at 2419 n.4. The Federal Circuit concluded that this language from Powerex had undercut “the persuasive force of the decisions of the other Courts of Appeals relying on Cohill.” HIF Bio, Inc., 508 F.3d at 666.
The Powerex Court also held that where “the District Court relied upon a ground that is colorably characterized as subject-matter jurisdiction, appellate review is barred by § 1447(d).” Powerex Corp., 127 S. Ct. at 2418. Applying “this new perspective on the jurisdictional bar of § 1447 (d),” the HIF Bio Court held 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.” HIF Bio, Inc., 508 F.3d at 666, 667.
The notion that a remand order based on a discretionary decision to decline supplemental jurisdiction may be treated as a remand based on “lack of subject matter jurisdiction” is at least open to question. A District Court ordinarily retains subject matter jurisdiction over pendent state law claims even after it has dismissed all claims over which it has original jurisdiction. See Rosado v. Wyman, 397 U.S. 397, 402-04, 90 S. Ct. 1207 (1970). In addition, it is debatable whether § 1447 (c) and (d) were intended to be invoked at all after a District Court has dismissed federal claims over which it plainly did have jurisdiction. In any event, if the Supreme Court accepts the reasoning and conclusion of HIF Bio, a defendant’s ability to obtain appellate review of remand orders will be significantly curtailed.