Opinion ID: 782278
Heading Depth: 2
Heading Rank: 4

Heading: The District Court's Remand Order

Text: 26 Turning now to the facts of the case before us, the district court focused on whether the substantive requirements necessary to sustain SLUSA removal, i.e., 15 U.S.C. § 78bb(f)(1)(A), were satisfied. The district court determined as a matter of law that the purported misrepresentations about fees ultimately charged to CMA clients, which were central to the state law claims in Spielman's complaint, were not made in connection with the purchase or sale of HOLDRS. Without this essential nexus, Spielman's state law claims were not within SLUSA's preemptive scope, thereby rendering SLUSA inapplicable and compelling remand, see 15 U.S.C. § 78bb(f)(3)(D). 27 Merrill Lynch maintains that the remand order never expressly addresses subject matter jurisdiction, but rather the district court interpreted the language in SLUSA's preemption and removal provisions when ordering remand. Therefore, Merrill Lynch contends, the district court remanded based on the language in SLUSA, not Section 1447(c). This position bears striking resemblance to the argument rejected by the Sixth Circuit in Things Remembered. Merrill Lynch's position fares no better here. 28 Things Remembered involved application and interpretation of 28 U.S.C. § 1452(b), the statutory provision applicable to removal and remand of bankruptcy actions. Section 1452(b) permits, but does not require, a district court to remand a bankruptcy action previously removed from state court. If the action is remanded, Section 1452(b) contains language expressly prohibiting appellate review of that remand order. On appeal of the district court's remand order, the Sixth Circuit, in an unpublished opinion, noted that Things Remembered sought removal pursuant to the general provision, 28 U.S.C. § 1441, as well as the bankruptcy removal provision, 28 U.S.C. § 1452(a), and that the notice of removal was untimely under both counterpart provisions, 28 U.S.C. §§ 1446 and 1452. The Sixth Circuit concluded that Section 1447(d) precluded appellate review, as did Section 1452(b), and sua sponte dismissed the appeal for lack of jurisdiction under both sections. See Petrarca v. Things Remembered, Inc., 65 F.3d 169, 1994 WL 814600 (6th Cir.1994) (unpublished opinion). 29 The Supreme Court agreed, instructing that [t]here is no reason §§ 1447(d) and 1452 cannot comfortably coexist in the bankruptcy context and gave effect to both provisions. Things Remembered, 516 U.S. at 124, 116 S.Ct. 494. The Court held that Section 1447(d) barred review of the remand order, irrespective of whether the initial removal had taken place under Section 1441(a), the general removal statute, or Section 1452(a), the bankruptcy removal statute. Id. at 128-29, 116 S.Ct. 494. The Supreme Court made clear that Section 1452(b)'s remand provision, without some expression about its exclusivity, does not ipso facto render it the exclusive, operative remand provision in the bankruptcy context. Id. By the same token, SLUSA's remand provision, which contains no expression of exclusivity, does not, as Merrill Lynch proposes, render it the exclusive and operative remand provision in the securities litigation context. 30 Nor does Section 1452(b)'s remand provision, which expressly precludes appellate review of remand orders issued thereunder, provide support for Merrill Lynch's position that Congress must explicitly state its intent to preclude appellate review. Adopting this position would turn the general rule that remand orders are not reviewable on its head and contravene the strong congressional policy against review of remand orders, Sykes, 834 F.2d at 490. 31 While we agree that the district court never used the words subject matter jurisdiction, federal question jurisdiction, or even jurisdiction when ordering a remand, such phrases are not necessary for our analysis. [R]eviewability of the remand order depends on the district court's basis for granting it, Pierpoint v. Barnes, 94 F.3d 813, 816 (2d Cir.1996), cert. denied, 520 U.S. 1209, 117 S.Ct. 1691, 137 L.Ed.2d 818 (1997), a basis which can be ascertained from the plain language used or, when contextually ambiguous, gleaned from a fair, independent reading of the remand order and record as a whole, see Mangold v. Analytic Servs., Inc., 77 F.3d 1442, 1450 (4th Cir.1996) (holding appellate court has power and responsibility to look past contextually ambiguous allusions and even specific citations to Section 1447(c) to determine by independent review of the record the actual grounds or basis upon which the district court considered it was empowered to remand); see also Transit Cas. Co. v. Certain Underwriters at Lloyd's of London, 119 F.3d 619, 623 (8th Cir.1997), cert. denied, 522 U.S. 1075, 118 S.Ct. 852, 139 L.Ed.2d 753 (1998) (interpreting contextually ambiguous remand order as based on lack of jurisdiction). 32 Our reading of the remand order convinces us that the remand could not have been predicated on anything other than the district court's determination that it lacked subject matter jurisdiction under SLUSA. To conclude, as Merrill Lynch urges, that the district court's ruling is based on any other reasoning necessarily reads the remand order with legal blinders. We agree that the district court did not expressly state whether its remand order was grounded in SLUSA's remand provision or the general remand provision. We do not think any ambiguity in this respect, however, compels a different conclusion or alters our analysis. Whether the district court's remand was impliedly predicated on SLUSA's remand provision or the general remand statute, we construe the remand as manifesting a perceived lack of subject matter jurisdiction under SLUSA, thereby precluding our appellate jurisdiction. 33 We also reject Merrill Lynch's proposal that this Court fashion[] an exception to the scope of the non-reviewability rule in section 1447(d) in cases where the decision to remand was based on a prior determination of substantive law, which refers to the district court's determination that Spielman's allegations do not satisfy the in connection with requirement for SLUSA preemption. The Ninth Circuit's Pelleport/Clorox doctrine, to which Merrill Lynch alludes, grants appellate review if the district court's remand decision is based on a resolution of the merits of some matter of substantive law apart from any jurisdictional decision. Clorox Co. v. United States Dist. Court for N. Dist. Of Cal., 779 F.2d 517, 520 (9th Cir.1985) (quoting Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273 (9th Cir.1984)) (internal quotation marks omitted) (emphasis added). 34 Merrill Lynch maintains that this Court should exercise appellate jurisdiction under the Pelleport/Clorox doctrine because the district court's remand decision was based on the resolution of a substantive legal question, i.e., the meaning of the phrase in connection with under SLUSA. Even if the Pelleport/Clorox doctrine were available to Merrill Lynch in some circumstances — an issue we do not decide in this case — it would not create appellate jurisdiction here. The district court's interpretation of in connection with was a necessary predicate to deciding the existence of subject matter jurisdiction under SLUSA. See Abada, 300 F.3d at 1118. We also find it persuasive that the Circuit in which the Clorox/Pelleport doctrine originated has commented on this very issue and concluded that [i]f deciding a substantive legal question is necessary to determine whether subject matter jurisdiction existed, the Clorox/Pelleport exception does not apply. Id.; see also Baldridge v. Kentucky-Ohio Transp., Inc., 983 F.2d 1341, 1349 (6th Cir.1993). 35 Because Spielman's complaint did not otherwise raise a federal question, SLUSA's preemption language would provide the only basis for federal question jurisdiction in this case. The district court's finding that SLUSA did not preempt the claim was tantamount to a finding that subject matter jurisdiction to proceed under SLUSA in federal court was lacking. The remand order, based on this finding, is not reviewable on appeal.