Case Information
*3 CALLAHAN, Circuit Judge:
We confront two jurisdictional issues. First, we consider
whether the district court’s transmittal of its
sua sponte
order
remanding this civil action to a state court based solely on
the notice of removal deprives federal courts of jurisdiction.
Second, we consider whether review of the remand order is
barred by 28 U.S.C. § 1447(d). We determine that the
transmittal of the remand order does not deprive federal
courts of jurisdiction and that review in this case is not
barred by § 1447(d). The district court’s requirement that a
notice of removal prove subject matter jurisdiction is
contrary to
Dart Cherokee Basin Operating Co., LLC v.
Owen
s,
I
On February 24, 2020, the Academy of Country Music (Academy) filed a lawsuit in a California Superior Court alleging that Continental Casualty Company (Continental) breached an insurance policy by denying coverage for a claim asserted against it by a former executive. On April 1, 2020, Continental removed the case to the U.S. District Court for the Central District of California. The Notice of Removal stated that the parties were diverse; the amount in controversy exceeded $75,000, exclusive of interest and *4 costs; and that prior to the commencement of the action, [1] Parallel citations are omitted throughout this opinion. Academy had made a demand on Continental for an amount in excess of $75,000.
On April 10, 2020, the district court issued a sua sponte order remanding the case to state court. The order’s critical paragraphs read:
The Court is not satisfied that Defendant has
satisfied its burden to show that the amount
in controversy meets the jurisdictional
requirement. Defendant makes no attempt to
calculate damages, nor does
it offer
evidentiary support as to the existence and
amount of punitive damages. The Court is
unable to find a plausible allegation that the
amount in controversy has been met. That
Plaintiff’s Complaint alleges damages “in an
amount exceeding the Court’s jurisdictional
limit” is not persuasive, given that this likely
refers to the jurisdictional limit of $25,000
for unlimited civil cases in California state
court. There is nothing from which the Court
could conclude that this reference to the
“jurisdictional
limit”
refers
to
the
jurisdictional limit for diversity jurisdiction.
The fact that Plaintiff, at one time, made a
settlement demand in excess of $75,000 does
not alter the result that the amount in
controversy has not been established. A
settlement demand is “relevant evidence of
the amount in controversy if it appears to
reflect a reasonable estimate of the plaintiff's
claim,” but it is not dispositive.
Cohn v.
Petsmart, Inc
., 281 F.3d 837, 840 (9th Cir.
CAD . OF C OUNTRY M USIC V . C ONTINENTAL C AS . C O 2002). Here, Defendant offers no evidence to
suggest that Plaintiff’s demand reasonably
estimates the value of its claims. “The
removal statute is strictly construed against
removal jurisdiction, and the burden of
establishing federal jurisdiction falls to the
party invoking the statute.”
California ex rel.
Lockyer v. Dynegy, Inc.
,
The same day that the district court issued its sua sponte remand order it transmitted a certified copy of that order to the Los Angeles County Superior Court.
On April 27, 2020, Continental filed a motion to alter or amend the April 10 order pursuant to Federal Rule of Civil Procedure 59(a). The motion was supported by a declaration of one of Continental’s claims professionals affirming the underlying policy’s $2 million limit. It was also supported by a stipulation that the litigation concerned “(i) damages in the amount of $621,824.65; (ii) prejudgment interest of $85,681.17; and (iii) attorneys’ fees and costs of $562,893.95, for a total amount of $1,270,399.77.”
On June 1, 2020, the district court denied the motion. The district court stated that its sua sponte order was a determination that it lacked subject matter jurisdiction and that review of its decision was precluded by 28 U.S.C. § 1447(d). On June 8, 2020, Continental filed a timely notice of appeal.
II
There are two challenges to our jurisdiction in this
appeal. First, did the district court’s transmittal of its remand
order to the state court deprive us, as well as the district
court, of jurisdiction?
See Seedman v. U.S.D.C
., 837 F.2d
*6
413 (9th Cir. 1988). Second, if the transmittal of the remand
order does not deprive the courts of jurisdiction, is review
prohibited by 28 U.S.C. § 1447(d)? These are questions of
law which we review de novo.
See Lively v. Wild Oats
Markets, Inc.
,
We have not always recognized the distinct natures of these two questions. However, we conclude that controlling case law holds that the district court’s transmittal of its remand order does not immunize that order from review. We further conclude that despite the district court’s characterization of its order, § 1447(d) does not bar our review because jurisdiction could not be determined when the district court issued its sua sponte order.
III
The distinction between federal court jurisdiction and
jurisdiction to review a remand order was suggested in
City
of Waco, Texas v. United States Fidelity & Guaranty Co
.,
The City appealed alleging that the dismissal of its action was contrary to the law of Texas. Id . The Fifth Circuit held “that, as no appeal lies from an order of remand, the cause was irrevocably out of the District Court, the action of that court in dismissing the city’s cross-action was moot, and its propriety could not be reviewed.” Id. at 142–43. The Fifth Circuit further stated that “all matters concerning the entire controversy, both those presented by the cross bill, and those presented by the main suit are now, because of the remand, pending in the State court and for its action, unaffected by the attempt of the Federal court to dismiss the City’s cross action.” Id. at 143.
The Supreme Court did not agree. It reasoned that “[i]f the District Court’s order stands the cross-action will be no part of the case which is remanded to the state court.” . Critically, the Court stated: “True, no appeal lies from the order of remand; but in logic and in fact the decree of dismissal preceded that of remand and was made by the District Court while it had control of the cause. Indisputably this order is the subject of an appeal; and, if not reversed or set aside, is conclusive upon the petitioner.” . In other *7 words, even accepting that the remand order was not reviewable, its issuance and the pendency of the underlying suit in state court did not deprive the Court of jurisdiction. [2] [2] The Supreme Court further stated: We are of opinion that the petitioner was entitled to have the Circuit Court of Appeals determine whether the dismissal of its cross-action against the Fidelity Company was proper. If the District Court erred on this point, which we do not decide, its action should be reversed. A reversal cannot affect the order of remand, but it will at least, if the dismissal of the petitioner’s . The distinction between federal court jurisdiction and review jurisdiction pursuant to § 1447(d) and its predecessors appears to have remained dormant until the Supreme Court decided Thermtron Products, Inc. v. Hermansdorfer , 423 U.S. 336 (1976). In Thermtron , the district court remanded an action to the state court because of its crowded docket. Id . at 340. Thermtron filed an alternate petition for writ of mandamus or prohibition with the Sixth Circuit, which held that it had no jurisdiction to review the removal order because of the prohibition against review in § 1447(d). Id . at 341–42
The Supreme Court held that the district court had “exceeded its authority in remanding on grounds not permitted by the controlling statute,” and that § 1447(d) was “not dispositive of the reviewability of remand orders in and of itself.” . at 345. The Court ruled that “only remand orders issued under § 1447(c) and invoking the grounds specified therein that removal was improvident and without jurisdiction are immune from review under § 1447(d).” [3] complaint was erroneous, remit the entire controversy, with the Fidelity Company still a party, to the state court for such further proceedings as may be in accordance with law.
[3] Sections 1447(c) and (d) state: (c) A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require CAD . OF C OUNTRY M USIC V . C ONTINENTAL C AS . C O at 346. Reviewing the history of § 1447, the Court found that “[t]here is no indication whatsoever that Congress intended to extend the prohibition against review to reach remand orders entered on grounds not provided by the statute.” . at 350. The Court held that “[b]ecause the District Judge remanded a properly removed case on grounds that he had no authority to consider, he exceeded his statutorily defined power; and issuance of the writ of mandamus was not barred by § 1447(d).” . at 351.
There is no mention in Thermtron of whether the district court transmitted its remand order to the state court. But the Court’s strong statement that a district court’s actions beyond that “recognized by the controlling statute” were reviewable certainly suggests that it would not countenance a district court evading review by immediately transmitting its remand order to the state court.
In Flam v. Flam , 788 F.3d 1043 (9th Cir. 2015), we addressed the merits of a remand order that had been transmitted to the state court. In Flam , a magistrate judge issued an order remanding the case to state court. Dr. Flam timely filed a motion for reconsideration of the removal order. The district court refused to entertain the motion, payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal. A certified copy of the order of remand shall be mailed by the clerk to the clerk of the State court. The State court may thereupon proceed with such case. (d) An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to section 1442 or 1443 of this title shall be reviewable by appeal or otherwise.
*9 explaining that 28 U.S.C. § 1447(d) barred review because “the Magistrate Judge’s remand order was issued, … the case was closed, … [and] certification was sent to the Fresno County Superior Court.” Id . at 1045. Nonetheless, we vacated the magistrate judge’s order, holding that because the remand order was dispositive of all federal proceedings, it was properly characterized as a dispositive motion under 28 U.S.C. § 636(b)(1)(A), and could not be issued by a magistrate judge. Id . at 1047. We could not have considered the merits of the magistrate judge’s order if the transmittal of the remand order to the state court had deprived us of jurisdiction.
Our opinion in
Flam
recognized that in
Seedman
,
In July 1986, Seedman filed an action in state court
against multiple defendants alleging eight causes of action
based primarily on an alleged breach of an agreement to buy
certain assets.
On November 6, 1986, the district court sua sponte remanded the case to state court on the ground that the removal petition was untimely. One month later, respondents filed a second removal petition claiming the earlier remand order was erroneous. The remand order had already been certified to the state court. Petitioner filed a motion for remand, but the court denied that motion, vacated its earlier remand order, and granted the second removal petition. The court concluded its initial order was based on a clerical error, and removal was proper. . at 413–14. Seedman filed a petition for a writ of
mandamus, asserting that the district court lacked jurisdiction to vacate its earlier remand order. . at 414.
In holding that the district court’s initial order was not reviewable, we clearly stated that we were construing § 1447(c). We held that the language of § 1447(d) “has been *10 universally construed to preclude not only appellate review but also reconsideration by the district court,” and that “[o]nce a district court certifies a remand order to state court it is divested of jurisdiction and can take no further action on the case.” Id . We held that “a second removal petition based on the same grounds does not ‘reinvest’ the court’s jurisdiction” because “[a]s the statute makes clear, if the remand order is based on section 1447(c) , a district court has no power to correct or vacate it.” Id . (emphasis added). We agree with this statement: if a remand order is based on § 1447(c), then § 1447(d) precludes review by any federal court.
But nothing in Seedman precludes review of remand orders that are not based on § 1447(c). The next paragraph in Seedman reads:
Respondent argues that our decision in
Bucy
v. Nevada Const. Co.
,
under section 1447(c)”—clarifies that we were not commenting on general federal jurisdiction. We further held in the following paragraph that Thermtron was of no assistance to respondent because “[h]ere the court’s order was based on § 1447(c) since the court determined that the removal had been improvidently granted because the petition was untimely.” . Thus, Seedman is not contrary to our implicit ruling in Flam , which is consistent with the relevant Supreme Court cases, that the transmittal of a remand order to the state court does not deprive a court of jurisdiction to review that order if review is not barred by § 1447(d).
The Third Circuit reached the same conclusion in Carlyle Investment Management, LLC v. Moonmouth Co. , 779 F.3d 214, 218 (3d Cir. 2015). It held that it had jurisdiction “because the District Court remanded due to the forum selection clause and not due to a § 1447(c) reason.” . Plaintiffs had argued that the act of mailing the remand order had divested the federal courts of jurisdiction. The Third Circuit held that the cases cited by the plaintiffs were “easily distinguishable because they involve remands under § 1447(c)” and that the court “retains jurisdiction over appeals of remand orders that are not made pursuant to § 1447(c).” .
Any other jurisdictional holding would be troubling.
The Supreme Court has not wavered from its position in Thermtron that § 1447(d) bars review only of remand orders made pursuant to § 1447(c). It would be contrary to the intent of Thermtron to hold that the limited avenue of review carefully crafted by the Supreme Court could be closed by the district court transmitting its remand order to a state court without notice to the parties. Nonetheless, we would so hold if our precedent or Supreme Court precedent so required, but as explained, they do not.
IV
A. 28 U.S.C. § 1447(d) bars review only of a remand
order that is based on a colorable § 1447(c) ground. In Thermtron the Supreme Court explained its limitation of the bar to review in § 1447(d) as follows:
There is no doubt that in order to prevent delay in the trial of remanded cases by protracted litigation of jurisdictional issues, United States v. Rice , 327 U.S. 742, 751 [(1946)], Congress immunized from all forms of appellate review any remand order issued on the grounds specified in § 1447(c), whether or not that order might be deemed erroneous by an appellate court. But we are not convinced that Congress ever intended to extend carte blanche authority to the district courts to revise the federal statutes governing removal by remanding cases on grounds that seem justifiable to them but which are not recognized by the controlling statute.
In
Powerex
, 551 U.S. 224, the Supreme Court further
expounded on its holding in
Thermtron
. It explained that in
Thermtron
it “held that § 1447(d) should be read
in pari
materia
with § 1447(c), so that only remands based on the
grounds specified in the latter are shielded by the bar on
review mandated by the former.”
Id
. at 229. The Court
reviewed the evolution of the statute and accepted that
Ҥ 1447(d) permits appellate courts to look behind the
district court’s characterization.” . at 233 (citing
Kircher
v. Putnam Funds Tr.
,
We anticipated, and have subsequently applied,
Powerex
. In
Lively
, 456 F.3d 933, Wild Oats removed a
personal injury action to the district court, alleging that,
[4]
The Supreme Court determined that in light of its opinion in
Moses
H. Cone Memorial Hospital v. Mercury Construction Corp.
,
because the parties were completely diverse and the amount
in controversy exceeded $75,000, diversity jurisdiction
existed.
Id.
at 936. The district court remanded the case to
state court for lack of subject matter jurisdiction, holding that
removal was improper because Wild Oats, a California
*13
citizen and local defendant, violated the forum defendant
rule contained in 28 U.S.C. § 1441(b), and that this
constituted a jurisdictional defect. . at 936–37. On appeal,
we reaffirmed that we had “jurisdiction to decide whether a
district court has the power to do what it did [in issuing a
remand order], although we cannot examine whether a
particular exercise of power was proper.” . at 938 (quoting
N. Cal. Dist. Council of Laborers v. Pittsburg-Des Moines
Steel Co.
,
We explained:
Lively is correct that if the district court remanded under its § 1447(c) authority, we would lack jurisdiction to review the order. . . . Rather than assuming the existence of this authority, as Lively would have us do, we must determine its veracity—we must determine whether the district court had the authority under § 1447(c) to remand. Stated differently, the question raised on appeal is not whether the district court’s remand order was correct, but whether the district court exceeded the scope of its § 1447(c) authority by issuing the remand order in the first place. Such an inquiry is well within our jurisdictional bounds—because it “takes aim at the district court’s authority to issue the remand order, we have jurisdiction.” In re Ford Motor Co./Citibank ,264 F.3d 952 , 965 (9th Cir. 2001); see also N. Cal. Dist. Council of Laborers v. Pittsburg-Des Moines Steel Co. ,69 F.3d 1034 , 1038 (9th Cir. 1995).
In
Atlantic National Trust LLC v. Mt. Hawley Insurance
Co.
,
More recently, we reiterated this scope of review in
County of San Mateo v. Chevron Corp.
,
When a district court bases its remand order on one of the grounds in § 1447(c)—i.e., the district court “remands based on subject matter jurisdiction [or] nonjurisdictional defects”—as opposed to, for example, based on a merits determination or concerns about a heavy docket, [ Atl. Nat’l Tr. , 621 F.3d] at 934–35, “review is unavailable no matter how plain the legal error in ordering the remand,” Briscoe v. Bell ,432 U.S. 404 , 413 n.13 (1977). “[R]eview of the District Court’s characterization of its remand as resting upon lack of subject-matter jurisdiction, to the extent it is permissible at all, should be limited to confirming that that characterization was colorable.” Powerex Corp. v. Reliant Energy Servs., Inc. , 551 U.S. 224, 234, (2007).
We are not alone in our reading of § 1447(d). In
Ellenburg v. Spartan Motor Chassis, Inc.
,
We may review a conceptual antecedent ruling even if it was an essential precursor to a remand order that is itself unreviewable under § 1447(d).
We read Supreme Court precedent and our precedent as holding that § 1447(d) precludes review only of a remand order based on one of the grounds in § 1447(c)—subject matter jurisdiction or nonjurisdictional defects—and that we may look behind the district court’s characterization of its order to determine whether its assertion of a § 1447(c) ground is colorable. CAD . OF C OUNTRY M USIC V . C ONTINENTAL C AS . C O
B. The district court’s remand order is not based on a
colorable § 1447(c) ground.
Despite the district court’s contrary assertions, it could
not make a ruling on subject matter jurisdiction. The district
court acted
sua sponte
based on only the notice of removal.
However, a shortcoming in a notice of removal concerning
the amount in controversy is not jurisdictional, at least not
until the movant has an opportunity to correct any perceived
deficiency in the notice. In
Dart Cherokee
,
Other than for cases under the Class Action Fairness Act
of 2005 (CAFA), we strictly construe the removal statute
against removal jurisdiction.
[5]
Hansen v. Grp. Health Coop.
,
[5]
In
Arias
, we noted that “no antiremoval presumption attends cases
invoking CAFA.” . at 922 (quoting
Dart Cherokee
,
Following Dart Cherokee , in Arias we held that “a district court may not remand the case back to state court without first giving the defendant an opportunity to show by a preponderance of the evidence that the jurisdictional requirements are satisfied.” Arias , 936 F.3d at 924. We explained:
The district court did not conclude that
Marriott’s allegations were implausible.
Instead, the district court stated that Marriott
failed to meet its burden of
proving
the
amount
in controversy.
In rejecting
.
Marriott’s assumed violation rates, the
district court cited a lack of “evidence
supporting [Marriott’s] assumptions.” But a
notice of removal “need not contain
evidentiary submissions.”
Dart Cherokee
,
defendant’s allegations of removal jurisdiction are challenged, the defendant’s showing on the amount in controversy may rely on reasonable assumptions.” at 922.
Here, the district court erred as a matter of law in requiring that the notice of removal “prove” subject matter jurisdiction. Furthermore, by acting sua sponte , and thereby refusing to allow Continental to offer proof to substantiate its allegations in the notice of removal that the amount in controversy exceeded $75,000, the district court denied Continental “a fair opportunity to submit proof,” which led us to vacate the remand orders in Ibarra and Arias . What the court should have done was to issue an order to show cause requiring the removing party to prove more than $75,000 was in controversy. Both sides agreed at argument that ample proof existed to establish that key jurisdictional element.
There is no question that Academy’s complaint made the
requisite plausible allegations concerning the amount in
controversy. Indeed, the Notice of Removal stated that the
“matter in controversy exceeds $75,000.”
[6]
It also stated that
a settlement demand had been made in excess of $75,000.
We have stated that a “settlement letter is relevant evidence
of the amount in controversy if it appears to reflect a
reasonable estimate of the plaintiff’s claim.”
Cohn v.
Petsmart, Inc
.,
The import of this is not that the district court’s
determination of subject matter jurisdiction was wrong
(although it clearly was), but that the court could not at that
stage of the litigation determine subject matter jurisdiction.
The district court erred as a matter of law in requiring that
the notice of removal “prove” subject matter jurisdiction
instead of containing plausible allegations of
the
jurisdictional elements.
Arias
,
refusing to allow Continental to supplement its notice of
removal, the district court’s order is not “colorable” or
“arguable” and may be reviewed.
See Powerex
, 551 U.S. at
234;
County of San Mateo
,
V
A district court’s order remanding a civil action to state
court deprives the removing party of access to a federal
court. Accordingly, the Supreme Court has recognized that
such orders, if otherwise reviewable, may be appealed.
Quakenbush
, 517 U.S. at 715. We conclude based on
precedent that the transmittal of the remand order to the state
court did not deprive us of jurisdiction.
See City of Waco
,
*20 County Superior Court that the district court has resumed jurisdiction over the action.
VACATED AND REMANDED.