United States Court of Appeals Fifth Circuit 

## FILED March 31, 2006 Charles R. Fulbruge III Clerk UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

____________ No. 06-00009

____________ JAMES WALLACE; REBECCA WALLACE; SANDRA QUILLIN; DELLARENE HODGES; RAPHAEL ORGERON; DIANNE ORGERON; Individually & On Behalf of All Ot hers Similarly Situated, Pl aint iffs-Respondents,

versus
LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION; ET AL, Defendants,

LOUISIANA CITIZENS PROPERTY INSURANCE CO RPORATION; ANPAC LOUISIANA INSURANCE COMPANY; LOU I SIANA FARM BUREAU CASUALTY INSURANCE CO; LOUISIANA FARM BUREAU MUTUAL INSURANCE CO,

Defendants-Petitioners.

Petition for Leave to Appeal Under 28 U.S.C. § 1453(c)

Before SMITH, GARZA, and PRADO, Circuit Judges. EMILIO M. GARZA, Circuit Judge:1 Petitioners also mo ve fo r a stay of t he district court’s remand order, pending the

outcom e of this appeal. Each of th e defendants adopts the Farm Bureau’s arguments as to § 1453(c)(3) and § 1441(d)(1)(B). We do not discuss the other issues raised since these were not addressed by the district court in t he remand order. S ee In re Shell Oil Co. , 932 F.2d 1518, 1521 (5th Cir. 1991) (noting that on appeal we review the order entered by the district court ). -2- Loui siana Farm Bureau M utual Insurance Company, Louisiana Farm Bureau Casualty Insurance Com

pany (“Farm Bureau”), Loui siana Cit izens Property Insurance Corporation (“LCPIC”), an d ANPAC Loui siana Insurance Company (“ANPAC”) (collectively “Petitioners”) peti tion fo r this court to accept th eir appeal under 28 U.S.C. § 1453(c)(1), contending th at the district court erred in remanding th e underlying case to state court, because it wa s properly removed to federal district court under 28 U.S.C. § 1441(e)(1)(B). 1 I The Insurers listed above are defendants in the action below (“the Wallace action”), a class action brought in Loui siana State court by individuals (“Plaintiffs”) who incurred flo od damage due to Hurricane Katrina. Farm Bureau (on behalf of themselves and the other defendants) removed to th e United States District Court for the Eastern District of Loui siana, asserting th at subject mat ter jurisdiction over th e cas e existed under § 1441(e)(1)(B). Thi s section, part of the Multiparty, Multiforum Trial Jurisdiction Act (“MMTJA”), provides, in part: [A] defendant in a civil action in a State court may remove the action to the district court . . . if

. . . th e defendant is a party to an action which is or could have been brought . . . under section 1369 in a United States district court and arises from the same accident as th e action in State court, even if the action to be removed could not have been brought in a district court as an original matter. 28 U.S.C. § 1441(e)(1)(B). Petitioners contend that they meet the requirements of § 1441(e)(1)(B) because th ey are parties to a separate class action based on 28 U.S.C. § 1369 (the Chehardy action”)2 28 U.S.C. § 1369(a) provides:

(a) The district courts shall have original jurisdiction of any civ il action involving minimal diversity between adverse parties th at arises from a single accident, where at least 75 natural persons have died in the accident at a discrete location, if )) (1) a defendant resides in a State and a substantial part of the accident took place in another State or oth er lo cation, regardless of whether th at defendant is also a resident of th e State where a substantial part of the accident took place; (2) any two defendants reside in differ e nt States, regardless of whether such defendants are also residents of the same State or States; or (3) substantial parts of the accident took place in different States.
3 28 U.S.C. § 1369(b) provides: (b) Limit ation of jurisdiction of district courts. )) The district court shall abstain from hearing any civil action described in subsection (a) in which )) (1) the substantial majo rity of all plaint iffs are citizens of a single State of which the primary defendants are also citizens; and (2) the claims asserted with be governed primarily by the laws of that State. -3- which arises from th e same accident (Hurricane Katrina) as the inst ant case. 2 Specifically, Petitioners

are defendants in a currently-pending class action suit in the Unit ed St ates Di strict Court f or the Middle District of Loui siana, Chehardy, et al. v. Louisiana Ins. Comm., et al. In the W allace action, th ey aver th at because th e District Court fo r the Middle District may exercise subject mat ter jurisdiction under 28 U.S.C. § 1369(a) over the Chehardy suit, a case th at also deals wit h insurance cl aims flowing from Hurricane Katrina, the District Court for the Eastern District may exercise supplemental subject matter jurisdiction over the Wallace suit under § 1441(e)(1)(B). The district court remanded to state court, reasoning th at the mandatory abstention provisions of § 1369(b) did not permit the suit to be heard in federal court. 3 Farm Bureau now ask this court to accept consideration of th eir appeal, arguing on the merit s th at the district court erred when it read § 1369(b)’s limitations into the removal statute of § 1441(e)(1)(B). II Generally, th e p ower of th e federal courts to review a remand order is limited. 28 U.S.C.4 This additional ground fo r the exercise of appellate jurisdiction was raised by

peti tioners and briefed by both parties. -4- 1447(d); T

hings Remembered, Inc. v. Petrarca , 516 U.S. 124, 127 (1995). Petitioners argue, howev er, that we may hear the appeal under 28 U.S.C. § 1453(c)(1), part of the recently enacted Class Action Fairness Act (“CAFA”), which states: Section 1447 shall apply to any removal of a case under this section, except that notwith standing section 1447(d), a court of appeals may accept an appeal from an order of a district court granting or denying a mo tion to remand a class action to the State court from which it was removed if application is made to the court of appeals not less than 7 days after entry of the order. We disagree th at § 1453(c)(1) confers appellate jurisdiction over the instant appeal. The plain language of this provision indicates th at it s terms apply “t o any r emo val of a case u nder this section ,” referring to § 1453, th e provision of CAFA which permi ts the removal of class actions. Furthermore, th e legislat ive hist ory of CAFA also indicates th at § 1453(c)(1) was enacted to ensure expeditious review of remand decisions in class action suits brought under the new legislat io n. S ee S.REP . N O . 109-14, at 49 (2005). The application of § 1453(c)(1) is therefore limited to the context of CAFA. Farm Bureau based their notice of removal solely on § 1441(e)(1)(B), a provision of the MMTJA. Not onl

y was t he notice of removal based on the MMTJA, but their opposition to the plaint iffs’ mo tion to remand expressly disavowed any reliance on CAFA. There is thus no nexus with CAFA th at would justify th e exercise of appellate jurisdiction under § 1453(c)(1). Accordingly, we lack appellate jurisdiction under § 1453(c)(1) and, therefore, do not reach the question whether to accept peti

tioner’s appeal. However, we may still possess appellate jurisdiction under 28 U.S.C. § 1291. 4 The Supreme Court has recognized “a narrow class of collat eral orders which do not meet th [e] definit io n of-5-

finalit y, but which are nevertheless immediat ely appealable under § 1291.” Q uackenbush v. Allstate Ins. Co. , 517 U.S. 706, 712 (1996). Though ordinarily, 28 U.S.C. § 1447(d) bars consideration of

a remand order, th e Supreme Court has inst ructed us th at the § 1447(d) limit ation on appellate review of remands “must be read in pari materia wit h § 1447(c).” Q uackenbush , 517 U.S. at 711-12. An “abstention-based remand order does not fall into either category of remand order described in § 1447(c), as it is not based on lack of subject mat ter jurisdiction or defects in removal procedure.” Id. at 712. We thus have jurisdiction to review the remand order if it was premised on abstention. See Schexnayder v. Entergy Louisiana, Inc. , 394 F.3d 280, 283 (5th Cir. 2004) (citing Quackenbush , 517 U.S. at 712). The district court based it s remand on§ 1369(b), stating th at “t his cou r t must abstain from exercising jurisdiction over” the Wallace action. The district court held that even if subject matter jurisdiction could be said to exist under § 1441(e)(1)(B), the abstention principles of § 1369(b) still applied and barred th e district court from hearing the case. Pl aint iffs argue that the remand was not abstention-based but rather based on a lack of subject mat ter jurisdiction and th at therefore it is not reviewable on immediat e appeal. They bolster their argument by pointing to a later order by t he district court, which suggested that its prior remand order was rooted in a lack of jurisdiction. Alt hough th e subsequent order states th at the remand was based on lack of subj ect matter jurisdiction, th e original remand order plainly refers to abstention under § 1369(b). S ee In re Digicon Marine, Inc. , 966 F.2d 158, 160 (5th Cir. 1992) (allowing appellate review of a remand order, explaining “[d]espite th e district court’s description of the remand as one based on a lack of subject mat ter j uri sdiction in its order on reconsideration, the district court’s original remand order clearly indicates on it s face th at th e remand was not based upon lack of original subject mat ter jurisdiction”).-6-

Section 1369(b) is an abstention provision. It assumes subject matter jurisdiction under § 1369(a), but abstains where th e “substantial majo rity” of the plaint iffs and the “primary defendants” are cit izens of th e same state and th e claims at issue are “governed primarily by the laws of th at State.” It does

n ot depri ve federal courts of subject matter jurisdiction, but rather, acts as a limitation upon the exercise of jurisdiction granted in § 1369(a). Abstention implies t hat th ere is subject mat ter jurisdiction but fo r som e other pol

icy reason, a court refrains from exercising that power to hear the m erits of a case. See England v. Louisiana State Bd. of Medical Examiners , 375 U.S. 411, 415-16 (1964) (observing th at abstention “accord[s] appropri ate deference to th e respective com petence of t he state and f ederal court systems” while “recogniz[ing] th at abstention does not, of course, invo lve the abdication of federal jurisdicti on ”). The only court to have parsed this relatively new statute al so reads 28 U.S.C. § 1369(b) as a mandatory abstention provision. Passa v. Derderian , 308 F.Supp. 2d 43, 56-57 (D.R.I., 2004). That court articulated the logic behind the abstention, explaining: Congress identified certain exceptional circumstances in disaster lit igation cases where th e state co urt’s int erest in hearing the matter outweighs the federal interest in mult idist rict, mult ifo rum consolidation)) namely, where the tragedy is s ufficiently lo cal in character as to sati sfy the tenets of § 1369(b)(1) and (2). In these cases, alt houg h juri sdiction is otherwise proper under § 1369(a), the text of § 1369(b) inst ructs di strict courts to abstain from hearing them. Id. at 57. Treating § 1369(b ) as an abstention provision thus comports with not only the plain language of the statute but also with the underlying rationale for abstention provisions generally. Because th e district court based it s remand on abstention principles, we have appellate jurisdiction to hear this appeal from the district court’s remand order under § 1291. III5 Alt hough this case com es to us as a peti

tion to accept the appeal, the parties sufficient ly address th e basis fo r the underlying appeal, thus allowing us to rule on the merit s. We waive th e requirements of Rules 3 and 4 of the Federal Rules of Appellate Procedure, governing the filing of a notice of appeal. FE D . R. APP . P. 2 (“[A] court of appeals may . . . suspend any provision of th ese rules in a particular case and order proceedings as it directs.”). -7- On t he meri

ts of th eir appeal, Petitioners argue that the district court erred by applying § 1369(b) to a case rem

oved under § 1441(e)(1)(B). 5 Alt hough the district court recognized that Farm Bureau removed under § 1441(e)(1)(B), the court did not determ ine whether the defendants met th e requirements of § 1441(e)(1)(B), inst ead stating th at even if the defendants could meet th ose requirements, th e abstention provisions of 1369(b) prevented the case from being heard in the federal courts. The district court misapplied mandatory § 1369(b) abstention to the exercise of supplemental jurisdiction established by § 1441(e)(1)(B). Section 1369(b) applies only to original jurisdiction under § 1369(a). By it s own terms, § 1369(b) limit s it s application to “any civil action described in subsection (a).” Subsection (a) sets out the prerequisites for original jurisdiction under the MMTJA. Thus, it is proper fo r a di stri ct court to abstain from hearing a case brought as an original matter under § 1369(a), when th e exceptions list ed in § 1369(b) apply. In contrast, § 1441(e)(1)(B) perm it s removal in th ose sit uations where original federal subj ect matter j uri sdiction does not exist. In so allowing, § 1441(e)(1)(B) establishes supplemental jurisdiction over the Wallace action, piggybacking jurisdiction o n t he di strict court’s original jurisdiction under § 1369(a) over the pending Chehardy action. When the requirements of § 1441(e)(1)(B) are met, defendants need not establish th e existence of independent subject mat ter jurisdiction under any other provision, including under § 1369(a), because supplemental jurisdiction has been established. Consequently, § 1369(b) is not

an independent bar to th e exercise of jurisdiction over a case removed pursuant to § 1441(e)(1)(B),6 28 U.S.C. § 1441(e)(5) provides:

An action removed under this subsection shall be deemed to be an action under section 1369 and an action in which jurisdiction is based on section 1369 of this ti tle fo r purposes of this section and sections 1407, 1697, and 1785 of this title. This sub-section does not requi re an opposite result from the one reached by this court today, as it merely provides th at, fo r th e purposes of certain procedural requirements (venue, service of process, and subpoenas), a case removed under § 1441(c)(1)(B) should be treated as if it were a § 1369 case. It does not trigger th e application of th e substantive requirements governing the exercise of original jurisdiction under § 1369. -8- as it applies only to the exercise of original jurisdiction under § 1369(a). 6 This reading of § 1441(e)(1)(B) is consistent wit h the purposes of the MMTJA. An earl y House Report explained the logic of the proposed legislation: Current effo rts to consolidate all state and federal cases related to a com mo n disaster are inco mplet e because current f ederal statutes restrict the ways in which consolidation can occur)) apparently wit hout an int ention to limit consolidation. For example, plaint iffs who reside in the same state as any one of the defendants cannot file th eir cases in federal court because of a lack of com plete diversity of cit izenship, even if all partie s to the l awsuit want the case consolidated. For those cases that cannot be brought into the federal system, no legal mechanism exists by which they can be consolidated, as state courts cannot transfer cases across state lines. In sum, full co nsolidation cannot occur in the absence of federal legislative redress. H.R. REP . N O . 106-276, at 7 (1999). As this report makes clear, t he MMTJA was designed to amelio rate th e restrictions on th e exercise of federal jurisdiction th at ult imat ely fo rced parti es in mult iple suits arising from th e sam e disaster to litigate in several fora. To hamstring the removal statute by mi sapplying the abstention provisions would undercut the MMTJA’s ultimate goal of consolidation. IV Therefore, we hold th ere is no jurisdiction to accept this appeal under 28 U.S.C. § 1453(c)(1); however, we exercise appellate jurisdiction over the appeal under 28 U.S.C. § 1291. Reaching the merit s, we VACATE th e order of remand and REMAND to the district court fo r further proceedings-9-

not inco nsist ent wit h this opinio n. We also DENY as moot the motio n to stay the district court’s remand order.