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D ock e t 97-5812

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. e du/thir dc ir c uit_1998/253Filed October 27, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-5812

IN RE: U.S. HEALTHCARE,

Petitioner

On Petition for a Writ of Mandamus
to the United States District Court for the District of New Jersey (Related to D.C. Civ. No. 97-02787)

Argued October 5, 1998

BEFORE: SLOVITER, GREENBERG, and COWEN, Circuit Judges

(Filed: October 27, 1998)

Carl D. Buchholz (argued) Angela M. Heim

Rawle & Henderson
Ten Lake Center Executive Park
401 Route 73 North Marlton, New Jersey 08053

Attorneys for PetitionerKeith G. Von Glahn (argued)

Adam J. Adrignolo Wilson, Elser, Moskowitz
Edelman & Dicker LLP 2 Gateway Center 12th floor Newark, New Jersey 07102

Attorneys for Respondents Samuel Kasoff, M.D., New York Medical College, Westchester County (improperly pled as Westchester County Medical Center), M. Valsamis, M.D., Deborah L. Benzil, M.D. and University Pathology, P.C., erroneously designated as Pathology Faculty Practice, P.C. at

W.C.M.C.

William F. Sutton

Post & Schell
1800 JFK Boulevard
19th Floor Philadelphia, PA 19103

Attorneys for Respondents Paul F. Engstrom

Fox Chase Center
Center of the American Onicologic Hospital and Arthur S. Palchafsky, M.D.

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter is before the court on a petition for a writ of mandamus filed by U.S. Healthcare. The plaintiff in the underlying action, Donald Eric Hoyt, filed a compla int in the Superior Court of New Jersey, which he characte rized

2as an action for "medical malpractice," against U.S

.

Healthcare and various physicians and entities. Pri or to any of the other defendants being served with a summons and complaint in accordance with New Jersey practice, U .S.
Healthcare removed the matter to the district court pursuant to 28 U.S.C. S 1441(b) and (c) on the grou nd that Hoyt's claims against it arose under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. S 1101 et seq., so that they were within the distri ct court's original jurisdiction. See 28 U.S.C. S 1331. The no tice of removal asserted that even though Hoyt framed the c ase as a negligence action, it was "removable pursuant to the complete preemption exception to the well-pleaded complaint rule," citing 29 U.S.C. S 1132(a)(1)(B) a nd Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542 (1987). In addition, the notice of removal ass erted that Hoyt's claims "relate to" an employee benefit plan under 29 U.S.C. S 1144, and thus ERISA preempts the m. After U.S. Healthcare removed the action, it filed cross claims against the other defendants and a countercl aim against Hoyt advancing subrogation rights under Hoy t's employer's ERISA plan which covered Hoyt for medica l
benefits.

Following the removal, the case was assigned to a d istrict judge but, in accordance with procedure in the Dist rict of New Jersey, was assigned further to a magistrate ju dge for pretrial proceedings. The parties, however, did not consent to the magistrate judge exercising the jurisdiction of a district judge as provided in 28 U.S.C. S 636(c). N either Hoyt nor any other party made a motion to remand th e case to the state court. Nevertheless, the magistra te judge on his own motion on October 17, 1997, remanded the case to the Superior Court of New Jersey on the ground t hat the district court lacked subject matter jurisdiction. See 28 U.S.C. S 1447(c). In remanding the action, the magi strate judge clearly regarded the remand order as nondispo sitive pursuant to 28 U.S.C. S 636(b)(1)(A), Fed. R. Civ. P. 72(a), and District of New Jersey Local Rule 72.1. As far as we can ascertain from the district court docket, the d istrict court treated the remand as effective immediately b ecause the court closed the case on October 17, 1997,

3notwithstanding Local Rule 72.1(c)(1)(C) which prov ides

that:

The Clerk shall take no action with respect to a Magistrate Judge's order of remand or for tr ansfer of venue until 15 days from the filing of such an order. In the event that a notice of appeal from such an order is filed within such 15-day period, the Clerk s hall take no action until the appeal is decided by the Ju dge.1

Subsequently, without seeking relief in the distric t court, U.S. Healthcare filed a petition for a writ of mand amus requesting that we vacate the order of remand. The petition's thrust was that the action could not be remanded because no party had made a motion to remand within 30 days after the filing of the notice of removal as r equired by 28 U.S.C. S 1447(c) in the case of a defect in the removal procedure. Moreover, U.S. Healthcare claimed that t he district court had subject matter jurisdiction. Upo n receiving the petition we ordered the filing of ans wers and subsequently we ordered the parties to submit brief s.

U.S. Healthcare has filed a brief asserting that th e magistrate judge "did not have the authority to rem and this
case to state court" and that "the district court h ad subject matter jurisdiction over the case at the time it wa s remanded through [its] counterclaim and, as such, t he magistrate judge's failure to consider this fact wa s an abuse of discretion." Hoyt has not filed a brief in these proceedings but certain of the defendants in the un derlying action have filed a brief asserting that (1) a magi strate judge does have the authority to remand a case to a state court; (2) 28 U.S.C. S 1447(d) precludes this court from

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1. It appears that the district court adopted Local Rule 72.1(c)(1)(C) at least in part in response to DeCastro v. Awacs, 940 F. Supp. 692 (D.N.J. 1996), which held that a magistrate judge could rem and a case as a nondispositive order and that, notwithstanding 28 U .S.C. S 1447(d), a district court may hear an appeal from a remand ord er under 28 U.S.C. S 636(b)(1)(A), but that under Hunt v. Acromed Corp ., 961 F.2d 1079 (3d Cir. 1992), once the court sends a certified copy o f the remand order to
the state court the district court could not review the remand decision. See also Campbell v. International Bus. Machs., 912 F. Supp. 116 (D.N.J. 1996).

4reviewing the order of remand on the merits; and (3 ) 28

U.S.C. S 636(b)(1)(A) afforded U.S. Healthcare a me chanism to appeal the remand order to the district court so that U.S.
Healthcare cannot obtain mandamus relief.2

II. DISCUSSION

Initially we consider whether we should characteriz e the order of remand as dispositive or nondispositive in asmuch as 28 U.S.C. SS 636(b)(1)(A) and (B) draw a sharp distinction between dispositive and nondispositive matters in determining a magistrate judge's powers.3 28 U.S .C. S 636(b)(1)(A) provides that a magistrate judge may "hear and determine any pretrial matter pending before th e court, except a motion for injunctive relief, for judgment on the pleadings, for summary judgment, . . . to dismiss o r to permit maintenance of a class action, to dismiss fo r failure to state a claim upon which relief can be granted, and to involuntarily dismiss an action." Thus, in general, a magistrate judge, without the consent of the partie s, has the power to enter orders which do not dispose of t he case. The district court may reconsider any pretrial matt er "where it has been shown that the magistrate judge' s order is clearly erroneous or contrary to law." A magistr ate judge, without the consent of the parties, may "conduct he arings, including evidentiary hearings and . . . submit to a judge of the court proposed findings of fact and recommendat ions for the disposition, by a judge of the court, of an y" of the dispositive motions we described above.

It is clear that 28 U.S.C. S 636(b)(1)(A) does not in terms preclude a magistrate judge from hearing and determ ining
a motion to remand a case to a state court. Neverth eless, because a remand order is dispositive insofar as proceedings in the federal court are concerned, the order is the functional equivalent of an order of dismissal for purposes of that section. While we recognize that a fter a remand a case may go forward in the state court, st ill the

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2. Hoyt filed a letter joining in the opposition of the participating respondents to the granting of the petition.

3. Of course, we deal with a situation in which the magistrate judge cannot exercise consent jurisdiction under 28 U.S.C . S 636(c).

5order for remand conclusively terminates the matter in the

federal court against the will of the party who rem oved the

case.

In considering this issue we point out that we must take into account "the potential for Art. III constraint s in permitting a magistrate to make decisions on dispos itive motions." United States v. Raddatz, 447 U.S. 667, 6 76, 100 S.Ct. 2406, 2412 (1980). Thus, in NLRB v. Frazier, 966 F.3d 812, 816 (3d Cir. 1992), in discussing 28 U.S. C. S 636(b)(1)(A) and (B) we indicated that the statut e:

distinguishes between regular pretrial matte rs, which a magistrate judge may decide, and those dispo sitive matters which have a preclusive effect on th e parties, about which the magistrate judge may only ma ke a recommendation to the court. Congress crafte d this distinction to assure that Article III judge s retain the ultimate adjudicatory power over dispositive motions.

An order of remand simply cannot be characterized a s nondispositive as it preclusively determines the im portant point that there will not be a federal forum availa ble to entertain a particular dispute. In our view, a magi strate judge may not, without the consent of the parties, decide
this critical issue at the core of the exercise of federal judicial power.

In determining this case it is helpful to consider a situation in which a plaintiff files parallel feder al and state actions seeking relief for the same alleged loss. W e do not think that anyone would argue seriously that a magi strate judge, without consent of the parties, could hear a nd determine a motion to dismiss the federal action, p redicated on an absence of subject matter jurisdiction, on th e theory that the motion is nondispositive because a paralle l action is pending in the state court.4 Yet in a practical sense an order of remand predicated on a lack of subject mat ter jurisdiction is no less dispositive than an order o f dismissal

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4. The situation we describe is not fanciful for ex perience shows that sometimes plaintiffs do initiate parallel federal a nd state actions. See, e.g., Mints v. Educational Testing Serv., 99 F.3d 1 253, 1255 (3d Cir. 1996).

6in the circumstances we describe as both orders hav e the

exact same effect by permitting the case to proceed in the state rather than the federal court. In sum, we bel ieve that even if it could do so, Congress never intended to vest the power in a non-Article III judge to determine the fundamental question of whether a case could procee d in a

federal court.

In reaching our result we recognize that while neit her the Supreme Court nor any court of appeals of which we are aware has addressed the issue before us, the distri ct court in DeCastro v. Awacs, Inc., 940 F. Supp. 692, 695 ( D.N.J. 1996) (citations omitted), surveyed district court cases and concluded that "the vast majority of the district c ourts, within [the District of New Jersey] and elsewhere, that have confronted this issue, have held that a motion to r emand is `non-dispositive,' and therefore, can be determined by a magistrate judge by final order in accordance with 28 U.S.C. S 636(b)(1)(A)." The DeCastro court in joini ng that majority pointed out that remand orders "are not am ong those [pretrial] orders specifically enumerated in 28 U.S.C. S 636(b)(1)(A) that a magistrate judge is without t he authority to issue." DeCastro, 940 F. Supp. at 695. The court also noted that Fed. R. Civ. P. 72(a) indicat es that a nondispositive matter is "not dispositive of a clai m or defense of a party." The DeCastro court indicated t hat a remand order does not dispose of a claim or defense as it merely transfers the case.

We certainly do not suggest that the district court cases DeCastro cited had no basis for their conclusion. Nevertheless we reject their conclusion because it is clear that as far as the federal courts are concerned, a remand order is dispositive of all the claims and defenses in the
case as it banishes the entire case from the federa l court. Moreover, a federal court is not concerned with the proceedings that follow a remand. Furthermore, as w e observed above, an order of remand is no less dispo sitive
than a dismissal order of a federal action for lack of subject matter jurisdiction where a parallel proceeding is pending
in the state court.

Our conclusion that a remand order is dispositive f or purposes of 28 U.S.C. S 636(b)(1) brings us to the two other

7issues implicated in these proceedings: (1) whether 28

U.S.C. S 1447(d) precludes us from granting relief; and (2) whether U.S. Healthcare had an adequate remedy by a procedure other than through mandamus. See In re Chambers Dev. Co., 148 F.3d 214, 226 (3d Cir. 1998) . If we answer either question affirmatively we must deny t he petition.

With an exception not applicable here, 28 U.S.C. S 1447(d) provides that an "order remanding a case to the
State court from which it was removed is not review able on appeal or otherwise." We observed recently that whi le "this bar to the reviewability of remand orders appears b road and unyielding, the courts have carved various exce ptions
from it and therefore will review certain remand or ders." Feidt v. Owens Corning Fiberglass Corp., ___ F.3d _ __, 1998 WL 525440, at *2 (3d Cir. Aug. 24, 1998). In the le ading case of Thermtron Prods. Inc. v. Hermansdorfer, 423 U.S. 336, 346, 96 S.Ct. 584, 590 (1976), the Supreme Cou rt made it clear that only "remand orders issued under [28 U.S.C. S 1447(c)] and invoking the grounds specifie d therein . . . are immune from review under S 1447(d)." It s eems evident that if an order of a district judge remand ing a case
is not insulated from review unless issued for a re ason set forth in section 1447(c), i.e., a defect in removal procedure or a lack of subject matter jurisdiction, then an o rder of a magistrate judge that could not be issued pursuant to section 1447(c) because of the magistrate judge's l ack of authority to issue it, is not insulated from review by section 1447(d). In the circumstances, we see no need to di scuss this point further as it is clear that section 1447 (d) is not a bar to U.S. Healthcare's petition.

Finally, we conclude that U.S. Healthcare has no re alistic remedy other than to seek a writ of mandamus in thi s court under 28 U.S.C. S 1651. See Hahnemann Univ. H osp. v. Edgar, 74 F.3d 456, 461 (3d Cir. 1996). We recog nize that 28 U.S.C. S 636(b)(1)(A) provides that a "judg e of the [district] court may reconsider any pretrial matter under this subparagraph (A) where it has been shown that the magistrate's order is clearly erroneous or contrary to law." The inadequacy of this provision in the context her e is clear in view of Local Rule 72.1(c)(1)(C) for it seems un likely that

8the district court would have granted relief on the ground

that the magistrate judge did not have jurisdiction to issue an order of remand. After all, to do so it would ha ve had to recognize, as we plainly do, that Local Rule 72.1(c )(1)(C) is
invalid insofar as it deals with orders of remand. Thus, in this case it cannot be said that mandamus is being used as a substitute for appeal. In the circumstances, we c onclude
that we should issue the writ of mandamus.5

III. CONCLUSION

For the foregoing reasons we will order that a writ of mandamus be issued to the magistrate judge, directi ng him to vacate the order of October 17, 1997, remanding the case to the Superior Court of New Jersey. Of course , we express no view on whether the district court has s ubject matter jurisdiction in this case and thus our opini on does not preclude the district court from remanding the case if it should find that it lacks subject matter jurisdi ction. The parties will bear their own costs in these proceedi ngs.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

___________________________________________________ ______________

5. The district court docket sheets in the underlyi ng case show that the file was closed on October 17, 1997, but they do no t indicate that the clerk of the court sent a certified copy of the ord er of remand to the

state court. Thus, we are not concerned with the jurisdic tional rule of Hunt v. Acromed Corp., 961 F.2d 1079 (3d Cir. 1992), that o nce the district court sends a certified copy of the remand order to the s tate court it loses jurisdiction. See also Trans Penn Wax Corp. v. McCa ndless, 50 F.3d 217, 225 (3d Cir. 1995). Of course, we would not in any event hold that the sending a certified copy of a remand order executed by a judicial officer without power to issue the order would place the or der beyond judicial
review.

9