991 F.3d 1059
9th Cir.2021Background
- Academy of Country Music sued Continental Casualty in California state court for breach of an insurance policy.
- Continental removed to federal court asserting complete diversity and that the amount in controversy exceeded $75,000.
- The district court sua sponte remanded the case the same day, concluding the Notice of Removal did not prove the amount in controversy, and the clerk certified/mailed the remand to state court.
- Continental filed a Rule 59 motion with evidence (policy $2M limit and a stipulation showing damages exceeding $75,000); the district court denied the motion, citing 28 U.S.C. § 1447(d) as precluding review.
- Continental appealed to the Ninth Circuit, which considered (1) whether the transmittal of the remand order divested federal courts of jurisdiction and (2) whether § 1447(d) barred review of the remand.
Issues
| Issue | Plaintiff's Argument (Academy) | Defendant's Argument (Continental) | Held |
|---|---|---|---|
| Whether mailing/certification of a remand order to state court divests federal appellate and district courts of jurisdiction to review the remand | Transmittal makes remand unreviewable and divests federal courts of control | Transmittal does not prevent federal courts from reviewing orders that are not protected by §1447(d) | Transmittal does not deprive federal courts of jurisdiction to review a remand that is not barred by §1447(d) |
| Whether 28 U.S.C. § 1447(d) bars review of this remand | Remand was a §1447(c) remand and thus unreviewable | Remand rested on a non-colorable application of §1447(c); §1447(d) does not bar review of remands not grounded in a colorable §1447(c) basis | §1447(d) bars review only when remand is based on a colorable §1447(c) ground; here the remand was not colorable, so review is permitted |
| Whether the district court properly required the Notice of Removal to "prove" the amount in controversy and remanded sua sponte without allowing supplementation | Notice failed to prove amount; remand justified | Under Dart Cherokee and Arias a notice needs only plausible allegations; defendant must get an opportunity to submit evidence if jurisdiction is questioned | District court erred: a notice need only plausibly allege amount; defendant must be given a fair opportunity to prove the amount; sua sponte remand without that opportunity was improper |
Key Cases Cited
- City of Waco v. United States Fidelity & Guaranty Co., 293 U.S. 140 (1934) (federal courts retain jurisdiction to review antecedent orders entered before remand)
- Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336 (1976) (§1447(d) does not bar review of remands based on grounds outside §1447(c))
- Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224 (2007) (appellate review may look behind district court's characterization to confirm it was colorable)
- Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (2014) (notice of removal requires only a plausible allegation of amount in controversy; evidentiary proof only if contested)
- Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996) (abstention-based remand stays can be treated as appealable final decisions when they put litigants effectively out of federal court)
- Arias v. Residence Inn by Marriott, 936 F.3d 920 (9th Cir. 2019) (district court must give removing defendant opportunity to prove amount in controversy when the allegation is questioned)
- Lively v. Wild Oats Markets, Inc., 456 F.3d 933 (9th Cir. 2006) (appellate courts may determine whether a district court exceeded §1447(c) authority)
- Flam v. Flam, 788 F.3d 1043 (9th Cir. 2015) (transmittal of remand does not prevent appellate review of non-§1447(c) errors)
- Seedman v. U.S.D.C., 837 F.2d 413 (9th Cir. 1988) (remand under §1447(c) divests federal courts of authority to vacate after certification)
- County of San Mateo v. Chevron Corp., 960 F.3d 586 (9th Cir. 2020) (confirms limited scope of review under Powerex and Thermtron)