This аppeal requires us to resolve a conflict between 1) a federal statute that gives federal tax claims first priority to a bankrupt company’s assets, 31 U.S.C. § 3713, and 2) a Puerto Rico “insurance company liquidation” statute with filing deadlines that can force those federal claims to the end of the priority queue. P.R.Laws Ann., tit. 26, § 4019(2). A special fеderal statute, governing federal preemption of state insurance laws, 15 U.S.C. § 1012(b), would require us to resolve the conflict in favor of Puerto Rico’s law — if that special federal statute applies. But, a recent Supreme Court case, interpreting that special law, indicates that it does not apply.
Department of Treasury v. Fabe,
— U.S. -,
I
Background
Puerto Rico’s law permits the Commonwealth’s Insurance Commissioner to act as trustee for an insolvent insurance company, to liquidate its assets, and to set a deadline for the filing of “proofs of claim” to thоse assets. P.R.Laws Ann., tit. 26, §§ 4002, 4019. In February 1987, the Insurance Commissioner began proceedings, in a Commonwealth court, to liquidate the assets of Island Program Designer, Inc. (“IPD”), a health maintenance organization. The Insurance Commissioner set May 19, 1988, as the filing deadline for “proofs of claim.”
On June 1, 1989, about one year after the filing deadline, the federal Intеrnal Revenue Service filed with the Insurance Commissioner a formal “proof’ of its claim against IPD for $53,000 (representing federal tax liens that the IRS, between 1982 and 1985, had asserted, and perfected, on IPD’s assets). In May 1991, the IRS intervened in the Commonwealth court liquidation proceedings. 26 U.S.C. § 7424. It asked for the $53,000, as to which a federal law gave it first priority. 31 U.S.C. § 3713. It аlso now tells us that, without a first priority, it will be unable to collect any of the money owed.
The Insurance Commissioner opposed the IRS claim on the ground that the IRS had missed the (May 19, 1988) deadline for filing formal proofs of claim. He pointed out that Puerto Rico’s insurance company liquidation statute says that claims for which proofs arе filed after the deadline shall not be paid until all timely-filed claims have been “paid in full with interest.” P.R.Laws Ann., tit. 26, § 4019(2). And, in his view, Puerto Rico’s priority system trumps the federal statute.
At this point, the IRS removed the case to federal court. 28 U.S.C. §§ 1441(b), 1444. The Insurance Commissioner asked the district court to “abstain” from deciding the legal issues, and to remand the case to the Commonwealth court. The district court then wrоte an opinion deciding the basic question and holding that Puerto Rico’s priority law, not the federal priority statute, governs. It also remanded the case to the Commonwealth court.
II
Appeal or Mandamus ?
We are not completely certain why the district court, having decided the major legаl issue in the case, decided to remand it. It may have done so as an administrative matter, to permit the Commonwealth court to enter a final judgment; or because it believed the controversy involved other legal issues that it should “abstain” from deciding; or simply because “remand” was the form of relief that the Insurance Commissioner had requested. Whatever the reason, the fact of remand raises a technical question about the form of review: Can the IRS simply appeal the remand order or must it seek a writ of mandamus?
The problem arises out of a Supreme Court case,
Thermtron Products, Inc. v. Her
*59
monsdorfer,
The IRS points out that several appeals courts have created an exception to
Therm-tron
for (and permitted аppeal of) reviewable remand orders that amount to “collateral orders.”
See, e.g., McDermott Int’l Inc. v. Lloyds Underwriters of London,
We are aware of arguments advanced for modifying, or finding exceptions to,
Therm-tron.
Commentators have argued that the Supreme Court should have departed from its earlier, nineteenth-century practice and found remand orders “final” (hence, in principle, appealable) because 1) they finally dispose of the
federal
proceedings; and, 2) there is little practical reason not to permit appeal of those remand orders that fall outside section 1447(d)’s statutory bar. 15A Charles A. Wright, Arthur R. Miller & Edward H. Cooper,
Federal Practice and Procedure
§ 3914.11, at 702-18 (2d ed. 1991). Critics have also pointed to anomalies. Suppose, for examplе, that a federal district court, wishing to abstain pending resolution of state proceedings, embodies its decision in a stay of federal proceedings. The stay is appealable.
Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp.,
Despite these difficulties, we do not believe we can find an exception that fits the present case. For one thing, the Supreme Court’s language is rather absolute. It says clearly that a remand order is not “final.” The Court rests its decision upon older cases that reflect the apparently then-common practice of appellate courts using mandamus, rather than appeal, to review the lawfulness of a lower court’s refusal to assert jurisdiction (of which a remand is one variety).
Wiswall,
For another thing, we do not believe it possible to apply a “collateral order” exception here.
See
cases cited at p. 59,
supra.
The “collateral order” doctrine permits parties to appeal (as “final decisions,” 28 U.S.C. § 1291) orders that “determine” a “disputed” and “important” issue “seрarate from the merits of the action,” which are “effectively unreviewable” on a later appeal.
Coopers & Lybrand v. Livesay,
Finally, and perhaps most importantly, we need not further complicate the law with additional exceptions because the case before us meets Thermtron’s criteria for the issuance of mandamus. This case, like
Thermtron,
involves the “traditional use of the writ [of mandamus] in aid of appellate jurisdiction to compel” a lower court “to exercise” its jurisdictional “authority when it is its duty to do so.”
Roche,
Of course, even where a court of appeals has the “power” to issue mandamus, that relief is “discretionary.” 16 Charles A. Wright, Arthur R. Miller, Edward H. Cooper & Eugene Gressman,
Federal Practice and Procedure
§ 3933, at 213 (1977). Appellate courts typically exercise this discretion only in somewhat unusual instances,
In re Pearson,
Ill
Pre-emption
The IRS argues that the federal court was wrong not to retain the case and order payment of the $53,000 because federal law governs the case and requires that payment. The federal law in question is a statute, 31 U.S.C. § 3713, which says:
A claim of the United States Government shall be paid first when ... a person indebted to the Government is insolvent and ... an act of bankruptcy is committed.
The Insurance Commissioner agrees that this statute would entitle the United States to priority (and, apparently to payment) were it not for a Commonwealth statute that governs insurance company liquidations. That statute, as we have said, instructs the Insur- *61 anee Commissioner to set a deadline for presenting proofs of claims, аnd it adds:
Proofs of claim may be filed subsequent to the date specified, but no such claim shall share in the distribution of the assets until all allowed claims, proofs of which have been filed before said date, have been paid in full with interest.
P.R.Laws Ann., tit. 26, § 4019(2) (emphasis added).
These two statutes conflict. We cannot reconcile the federal statute with the Commonwealth statute (say, by reading it as limited to instances of compliance with state procedures), for the courts have consistently interpreted the federal statute as overriding state procedural requirements of the sort here at issue (at least where a trustee has appropriate notice of federal claims).
See, e.g., Brown v. Coleman,
The pre-emption inquiry here is more complicated, however, because the Insurance Commissioner argues that the Commonwealth’s law regulates insurance companies and (as we shall assume for argument’s sake) that IPD is an insurance company. A special federal statute says:
No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance ... unless such Act specifically relates to the business of insurance____
McCarran-Ferguson Act § 2(b), 15 U.S.C. § 1012(b).
This statute, if it were to apply, would compel the opрosite result: the Commonwealth’s priority system, not the federal system, would govern. The basic legal question before us, then, is whether or not the statute applies. Is the Commonwealth’s procedurally-linked priority rule a “law enacted ... for the purpose of regulating the business of insurance”? The district court, relying on the Sixth Circuit’s holding in
Fabe,
decided that the answer to this question was “yes.”
Fabe v. Department of Treasury,
The Supreme Court, in
Fabe,
considered separately individual provisions in a state insurance-company-liquidation statute, which provisions provided sequential priority for (1) administrative costs; (2) specified wage claims; (3) policyholders’ claims; (4) general creditors’ claims; and (5) government claims. The Court held that
some
of these priority provisions (all comprising parts of the larger statute) amounted to laws “enacted for the purpose of regulating the business of insurance,” but others did not. It said that “to the extent” a priority provision “regulates policyholders,” it “is a law enactеd for the purpose of regulating the business of insurance.”
Fabe,
— U.S. at-,
The Court then found that the state statute’s first priority for “the expense of administering the insolvency proceeding” was an insurance-rеgulating provision. It said that the provision “is reasonably necessary to further the goal of protecting policyholders” because, without such a provision, “liquidation could not even commence.” Id. In contrast, the Court found that the “preferences conferred upon employees [for wage claims] and other general creditors” were not insurance-regulating provisions. Id. The Court said that such preferences “do not escape pre-emption because their connection *62 to the ultimate aim of insurance is too tenuous.” Id.
The Court’s reasoning and examples lead us to conclude that the federal statute preempts the Commonwealth’s filing-deadline-related priority provision. The filing deadline (with its penalty of subordination for late claims) cannot be said to directly “regulate[ ] policyholders,” for it is neither directed at, nor necessary for, the protection of policyholders, as the Court required. The provision helps policyholders only to the extent that (and in the same way as) it helps all creditors. That is to say, by penalizing late-filers, the Commonwealth provision may bring about more speedy, orderly liquidation proceedings, thereby (perhaps) reducing the risks (and costs) of extending credit to the company.
Nor can one say that the Commonwealth’s filing deadline provision is necessary for the protection of policyholders. The Court in Fabe found that a priority for “administrative expense[s]” was necessary to protect policyholders, but, because without such a priority, liquidation might never occur. The Commonwealth’s filing deadline at issue here, however, is not necessary for a liquidation. Without it, liquidation would still prove manageable. At worst, the trustee’s job would beсome slightly more difficult. He would have to provide, for example, the United States with a first priority as long as he had, say, actual notice (or “constructive” notice through recording) of the claim, even if he did not have formal notice through a “proof of claim” filed directly in the liquidation proceeding. See eases cited at p. 61, supra. Relieving the trustee of the burdеn of searching for recorded liens provides policyholders with only indirect, speculative benefit of the kind that the Fabe Court found far too tenuous to prevent pre-emption. We conclude that the special federal pre-emption statute does not apply. Normal pre-emption rules do apply. And, federal law must govern.
The Insurance Commissioner makes one further argument. He says that, even if the district court was wrong about federal pre-emption, the court was still right to remand the case. He says the remand rested upon the district court’s authority to “abstain” from exercising its jurisdiction in order to allow the Commonwealth court to conduct further insuranсe company liquidation proceedings.
See Burford v. Sun Oil Co.,
The problem with this argument lies in the record before us.
Burford
holds that federal courts should abstain where further federal proceedings would likely decide a “difficult” statе law question or would disrupt state efforts to establish coherent and important state policy.
Burford,
For these reasons, the appeal is dismissed, and the petition for mandamus, setting aside the district court’s remand order, is
Granted.