Court Opinion

ID: 4173541
Source: CourtListenerOpinion
Date Created: 2017-06-01 15:04:53.778476+00
Date Added: 2024-06-11T14:55:00.535518
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

JOHN PRESTON, DIRECTLY AND DERIVATIVELY,
  AS SHAREHOLDER OF ELECTROMAGNETICS
 CORPORATION, A DELAWARE CORPORATION,
 CONTINUUM ENERGY TECHNOLOGIES, LLC, A
   DELAWARE LIMITED LIABILITY COMPANY,
             Plaintiffs-Appellees

                           v.

  CHRISTOPHER NAGEL, IDL DEVELOPMENT,
                    LLC,
            Defendants-Appellants
           ______________________

                      2016-1524
                ______________________

    Appeal from the United States District Court for the
District of Massachusetts in No. 1:15-cv-13592-WGY,
Judge William G. Young.
                ______________________

                 Decided: June 1, 2017
                ______________________

      JOSEPH M. CACACE, Todd & Weld LLP, Boston,
MA, argued for plaintiffs-appellees. Also represented by
HOWARD M. COOPER.

       KEVIN PAUL MARTIN, Goodwin Procter LLP, Bos-
ton, MA, argued for defendants-appellants. Also repre-
2                                         PRESTON   v. NAGEL

sented by ROBERTO M. BRACERAS; MICHAEL GAVIN STRAPP,
DLA Piper US LLP, Boston, MA.
               ______________________

    Before DYK, TARANTO, and HUGHES, Circuit Judges.
HUGHES, Circuit Judge.
    The district court remanded this case to state court
for a lack of subject-matter jurisdiction. Because 28
U.S.C. § 1447(d) bars review of the district court’s deci-
sion to remand, we dismiss this appeal.
                             I
    Plaintiffs (collectively, Preston) filed a complaint
against Defendants (collectively, Nagel) in Massachusetts
Superior Court alleging fifteen state-law claims. Nagel
answered the complaint and filed eleven counterclaims
under the Declaratory Judgment Act seeking declarations
of non-infringement of several patents held by plaintiff
Electromagnetics Corporation. Nagel also removed the
case to the United States District Court for the District of
Massachusetts under 28 U.S.C. § 1441, the general re-
moval statute, and 28 U.S.C. § 1454, the patent removal
statute. Preston moved to remand. The court determined
that it lacked subject-matter jurisdiction because Pres-
ton’s state-law claims did not arise under federal law and
Nagel’s patent counterclaims did not present a justiciable
case or controversy under Article III. It therefore re-
manded the case to Massachusetts Superior Court. Nagel
timely appealed.
                             II
                             A
   Nagel seeks review of the district court’s decision to
remand this case. Under 28 U.S.C. § 1447(d), “[a]n order
remanding a case to the State court from which it was
removed is not reviewable on appeal or otherwise,” sub-
PRESTON   v. NAGEL                                          3

ject to statutory exceptions not applicable here. This
reviewability bar “applies equally to cases removed under
the general removal statute, § 1441, and to those removed
under other provisions.” Kircher v. Putnam Funds Tr.,
547 U.S. 633, 641 (2006). Because § 1447(d) is to “be read
in pari materia with § 1447(c),” it “preclude[s] review only
of remands for lack of subject matter jurisdiction and for
defects in removal procedure.” Powerex Corp. v. Reliant
Energy Servs., Inc., 551 U.S. 224, 229–30 (2007); see
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711–12
(1996); Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S.
336, 345–46 (1976). As the district court found no proce-
dural flaws, [J.A. 131–34], we must determine if it “relied
upon a ground that is colorably characterized as subject-
matter jurisdiction.” Powerex, 551 U.S. at 234. If it did,
“appellate review is barred by § 1447(d).” Id.
    Here, the district court remanded the case because it
found that it lacked subject-matter jurisdiction over
Preston’s state-law claims and that Nagel’s patent coun-
terclaims did not present an Article III case or controver-
sy because they failed to satisfy the immediacy
requirement of MedImmune, Inc. v. Genentech, Inc., 549
U.S. 118, 126–27 (2007). 1 At oral argument, Preston
conceded that this was a remand based on subject-matter
jurisdiction.      Oral    Argument      at   13:10–13:21,
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
16-1524.mp3. Thus, § 1447(d) facially controls, and we
are precluded “from second-guessing the district court’s

    1    State-law claims may arise under federal law if a
federal issue is “(1) necessarily raised, (2) actually disput-
ed, (3) substantial, and (4) capable of resolution in federal
court without disrupting the federal-state balance ap-
proved by Congress.” Gunn v. Minton, 133 S. Ct. 1059,
1065 (2013) (citing Grable & Sons Metal Prods., Inc. v.
Darue Eng’g & Mfg., 545 U.S. 308, 313–14 (2005)).
4                                           PRESTON   v. NAGEL

jurisdiction determination regarding subject matter,”
Vermont v. MPHJ Tech. Invs., LLC, 763 F.3d 1350, 1353
(Fed. Cir. 2014), “no matter how plain the legal error in
ordering the remand,” Briscoe v. Bell, 432 U.S. 404, 413
n.13 (1977).
                              B
    Recognizing that § 1447(d) would ordinarily bar re-
viewability here, Nagel asks us to hold that an exception
exists “where, as here, defendants invoked § 1454 to
remove patent claims over which federal courts have
exclusive jurisdiction.” Appellants’ Br. at 17. In support,
Nagel relies on Osborn v. Haley, 549 U.S. 225 (2007), to
argue that the America Invents Act (AIA) overrides
§ 1447(d)’s bar. We disagree.
                              1
    In Osborn, the Supreme Court determined that re-
mands of certified Westfall Act cases are reviewable,
despite § 1447(d)’s bar on appellate review of remand
orders. Id. at 243. Under the Westfall Act, when federal
employees are sued for common-law torts that occurred in
the course of their official duties, the United States is
substituted as the defendant after the Attorney General
certifies that the employee had acted within the scope of
his or her federal employment. 28 U.S.C. § 2679(d)(1)–(2).
That certification “conclusively establish[es] scope of office
or employment for purposes of removal,” id. § 2679(d)(2),
and by extension, exclusive federal jurisdiction, Osborn,
549 U.S. at 231. Unlike the ordinary case, in which the
“federal district court undertakes a threshold inquiry” of
“whether complete diversity exists or whether the com-
plaint raises a federal question,” in a certified Westfall
Act case, “no threshold determination is called for” be-
cause “the Attorney General’s certificate forecloses any
jurisdictional inquiry.” Id. at 243. Thus, the Court con-
cluded that remands of certified cases are reviewable. Id.
at 244. The Court reasoned that the conclusive nature of
PRESTON   v. NAGEL                                        5

the Attorney General’s certification for removal purposes
“would be weightless” if a district court could “remand a
removal action on the ground that the Attorney General’s
certification was erroneous.” Id. at 242; see also Gutierrez
de Martinez v. Lamagno, 515 U.S. 417, 433 n.10 (1995)
(explaining that Congress adopted the Westfall Act lan-
guage making certification “conclusiv[e] . . . for purposes
of removal” to “foreclose needless shuttling of a case from
one court to another”).
    However, the Court defined this exception to the
§ 1447(d) bar narrowly to avoid “collid[ing] head on with
§ 1447(d), and with [prior] precedent.” Osborn, 549 U.S.
at 244. Noting that because appellate review is “scarcely”
permitted, it held that courts should review remand
orders ordinarily governed by § 1447(d) only “in the
extraordinary case in which Congress has ordered the
intercourt shuttle to travel just one way—from state to
federal court.” Id. at 243–44.
                             2
     According to Nagel, the AIA makes this case similarly
“extraordinary.” Congress included several provisions in
the AIA to strengthen federal courts’ jurisdiction over
patent claims in response to the Supreme Court’s decision
in Holmes Group, Inc. v. Vornado Air Circulation Sys-
tems, Inc., which held that the Federal Circuit lacked
jurisdiction to hear appeals from cases “in which the
complaint does not allege a claim arising under federal
patent law, but the answer contains a patent-law counter-
claim.” 535 U.S. 826, 827, 831–32 (2002). After Holmes
Group, some believed that only the state courts could hear
patent-law counterclaims in the same action as a plain-
tiff’s state-law claims. See, e.g., Green v. Hendrickson
Publishers, Inc., 770 N.E.2d 784, 793–94 (Ind. 2002)
(relying on Holmes Group to find that state courts have
jurisdiction to entertain copyright counterclaims with
reasoning that applies to patent counterclaims); Report of
6                                          PRESTON   v. NAGEL

the Ad Hoc Committee to Study Holmes Group, Inc. v.
Vornado Air Circulation Systems, Inc., 12 Fed. Cir. B.J.
713, 715 (2003) (“Under Green, no federal court will have
jurisdiction to adjudicate patent claims asserted for the
first time in responsive pleadings when the plaintiff’s
claims arise under state law, absent diversity jurisdic-
tion.”). 2
    Members of Congress expressed that Holmes Group
could “lead to an erosion in the uniformity or coherence in
patent law that has been steadily building since the
[Federal] Circuit’s creation in 1982,” H.R. Rep. No. 109-
407, at 5 (2006), and therefore made three changes in the
AIA to address federal jurisdiction of patent claims: (1) 28
U.S.C. § 1338(a) was strengthened to clarify that state
courts had no jurisdiction over “any claim for relief arising
under any Act of Congress relating to patents”; (2) the
Federal Circuit’s exclusive jurisdiction was extended to
include cases with compulsory patent counterclaims, see
28 U.S.C. § 1295(a)(1); and (3) a provision was added to
permit a party to remove to federal court a case in which
any party asserts a patent claim, see 28 U.S.C. § 1454.
See Vermont v. MPHJ Tech. Invs., LLC, 803 F.3d 635,
643–44 (Fed. Cir. 2015).
                             3
    Nagel argues that the “Holmes Group fix” created the
one-way “intercourt shuttle” that Osborn described. By
depriving the state court of jurisdiction to hear patent
claims (including counterclaims) and by creating a re-
moval provision targeted at patent claims (and counter-
claims), Congress created a vehicle for a defendant’s
patent counterclaims to be heard in federal court along-

    2   The defendant-counterclaimant always had the
option to assert the patent claim in a separate action in
federal court.
PRESTON   v. NAGEL                                         7

side a plaintiff’s state-law claims. But nothing in the AIA
operates like the Attorney General’s certification under
the Westfall Act, which was “[o]f prime importance to [the
Supreme Court’s] decision” because it “foreclose[d] any
jurisdictional inquiry.” Osborn, 549 U.S. at 241, 243.
Rather, here the district court was still required to “un-
dertake a threshold inquiry” of “whether complete diversi-
ty exists or whether the complaint raises a federal
question.” See id. at 243. Having done so, the district
court concluded that it lacked subject-matter jurisdiction
because Preston’s claims arose under state law and Nagel
did not establish that the counterclaims satisfied the
Article III case-or-controversy requirement. Since the
district court’s task was that of the “typical case,” the
narrow exception of Osborn does not permit us to review
the district court’s remand decision.
    Nagel further argues that we must be able to review
the district court’s remand here to avoid a problem that
the Supreme Court identified as potentially “serious”: the
death knell of a claim subject to exclusive federal jurisdic-
tion without federal review. See Kircher, 547 U.S. at 645–
46. Because the state court must dismiss Nagel’s patent
counterclaims for lack of jurisdiction, see 28 U.S.C.
§ 1338(a), Nagel argues that he will have been deprived of
the opportunities to have his claims heard on the merits
in any forum and to challenge the district court’s allegedly
erroneous basis for remand. But Nagel’s concern rings
hollow here, where, unlike in Osborn, Nagel has an alter-
native way to present his patent claims on the merits in
federal court: a separate federal declaratory judgment
action. See Oral Arg. at 7:50–8:05 (conceding that Nagel
could have filed a new federal case rather than asserting
counterclaims). And any final decision in that case—
jurisdictional or on the merits—would be appealable here.
Therefore, assuming that the district court’s MedImmune
determination here was erroneous, Nagel has lost, at
most, the ability to have his declaratory judgment claims
8                                          PRESTON   v. NAGEL

heard with Preston’s state-law claims. That result does
not interfere with Congress’s primary objective in enact-
ing the “Holmes Group fix”—maintaining uniformity in
patent law. See H.R. Rep. No. 109-407, at 5.
    To the extent the AIA prefers that closely related
state-law claims and patent-law counterclaims be heard
together, 3 it does not follow that we have jurisdiction to
review remand decisions that require such claims to be
pursued in separate forums. “Absent a clear statutory
command to the contrary, we assume that Congress is
aware of the universality of th[e] practice of denying
appellate review of remand orders when Congress creates
a new ground for removal.” Kircher, 547 U.S. at 641 n.8
(quoting Things Remembered v. Petrarca, 516 U.S. 124,
128 (1995)) (alteration in original). Though hearing the
state-law and patent-law claims together may promote
important interests such as efficiency and avoiding incon-
sistent judgments, we are not persuaded that the AIA
commands us to favor these interests over § 1447(d) and
the presumption of remand non-reviewability.           Had
Congress sought to permit review of remands like the one
at issue here, it certainly knew how to do so. Id. (collect-
ing examples). Thus, we leave it to Congress to grant us
reviewability here if it sees fit.
                             III
    Because § 1447(d) prohibits our review of the district
court’s remand order, we dismiss the appeal for lack of
subject-matter jurisdiction.
                       DISMISSED

    3    E.g., H.R. Rep. No. 109-407, at 18 (statement of
Rep. Smith) (“The [removal] provision also promotes
administrative efficiencies by obviating the need for a
state litigant to file a second suit to address patent claims
in federal court.”).