Court Opinion

ID: 2717113
Source: CourtListenerOpinion
Date Created: 2014-08-11 16:01:01.455698+00
Date Added: 2024-06-11T12:54:25.162375
License: Public Domain

United States Court of Appeals
       for the Federal Circuit
                       ______________________

                      STATE OF VERMONT,
                        Plaintiff-Appellee,

                                     v.

     MPHJ TECHNOLOGY INVESTMENTS, LLC,
              Defendant-Appellant.
             ______________________

                             2014-1481
                       ______________________

    Appeal from the United States District Court for the
District of Vermont in No. 2:13-cv-00170-wks, Judge
William K. Sessions III.
    --------------------------------------------------------------------------

IN RE MPHJ TECHNOLOGY INVESTMENTS, LLC,
                  Petitioner.
            ______________________

                              2014-137
                       ______________________

    On Petition for Writ of Mandamus to the United
States District Court for the District of Vermont in No.
2:13-cv-00170-wks, Judge William K. Sessions III.
                 ______________________

                           ON MOTION
                       ______________________
2       STATE OF VERMONT   v. MPHJ TECHNOLOGY INVESTMENTS

Before PROST, Chief Judge, NEWMAN and HUGHES, Circuit
                        Judges.
NEWMAN, Circuit Judge.
                        ORDER
    MPHJ Technology Investments, LLC (“MPHJ”) peti-
tions this court for a writ of mandamus, and also appeals
from an order of the United States District Court for the
District of Vermont remanding this case to state court.
Because we lack jurisdiction to grant the requested relief,
we dismiss the petition and appeal.
                       BACKGROUND
    MPHJ owns several patents relating to network scan-
ner systems. MPHJ through subsidiary licensees wrote to
various business and non-profit organizations operating
in Vermont, requesting the recipient to confirm it was not
infringing MPHJ’s patents or, alternatively, to purchase a
license. If the offeror did not receive a response, a Texas
law firm sent follow-up correspondence stating that an
infringement suit would be filed.
    On May 8, 2013, the State of Vermont through the
Vermont Attorney General, filed suit against MPHJ in
Vermont state court. The State alleged MPHJ engaged in
unfair and deceptive trade practices under the Vermont
Consumer Protection Act, stating that the letters con-
tained threatening, false, and misleading statements.
The State filed this case seeking civil penalties and other
relief under state law.
     MPHJ removed the case to the United States District
Court for the District of Vermont on June 7, 2013, assert-
ing federal question jurisdiction and diversity jurisdiction.
The State moved to remand the case back to state court
for lack of subject matter jurisdiction. MPHJ opposed the
State’s motion to remand, and filed a motion to dismiss
for lack of personal jurisdiction and a motion for sanctions
STATE OF VERMONT   v. MPHJ TECHNOLOGY INVESTMENTS           3

under Rule 11 of the Federal Rules of Civil Procedure and
28 U.S.C. § 1927. The sanctions motion also requested
dismissal, asserting that the State’s complaint was frivo-
lous, that the complaint failed to plead that the alleged
conduct was both objectively and subjectively baseless,
and also that the complaint was preempted by MPHJ’s
right to enforce its patents.
    After a motions hearing on February 25, 2014, the
State—in response to concerns raised by the district court
at the motions hearing—filed a conditional motion to
clarify or amend its complaint, to eliminate the request
for a permanent injunction requiring MPHJ to stop
threatening Vermont businesses with patent infringe-
ment. MPHJ subsequently moved for summary judg-
ment.
    Without deciding any other motions, the district court
granted the State’s motion to remand. The district court
stated that the complaint did not raise a substantial
question of patent law, and that “the State is targeting
bad faith conduct irrespective of whether the letter recipi-
ents were patent infringers” or the patents were invalid.
State of Vermont v. MPHJ Tech. Invs., LLC, No. 13-cv-
00170, slip op. at 14 (D. Vt. Apr. 14, 2014). The court
pointed out that MPHJ’s preemption assertion was a
defense to its allegedly unfair and deceptive practices,
and that a defense cannot provide a basis for federal
subject matter jurisdiction. See Metro. Life Ins. v. Taylor,
481 U.S. 58, 63 (1987).
     MPHJ appeals the remand to state court, and has
filed a petition for a writ of mandamus.
                        DISCUSSION
    MPHJ argues that the district court abused its discre-
tion (1) in effectively denying its motion for sanctions; (2)
by refusing to decide the motion to dismiss for lack of
personal jurisdiction before deciding subject matter
4      STATE OF VERMONT   v. MPHJ TECHNOLOGY INVESTMENTS

jurisdiction; and (3) in “effectively amending the Original
Complaint and then declining to exercise jurisdiction over
the complaint as amended, or in remanding the case . . .
without first deciding a controlling federal question of
preemption under the First Amendment and federal
patent law.” Def.’s Notice of Appeal para. 3, May 13,
2014.
                            A.
    We start with the issue of appellate jurisdiction over
this remand order. Section 1447(d) of Title 28 provides
that:
    An order remanding a case to the State court from
    which it was removed is not reviewable on appeal
    or otherwise[.]
    The Supreme Court has held that this provision ap-
plies only to remands based on the grounds specified in
§ 1447(c)—namely, a defect in removal procedure or lack
of subject matter jurisdiction. Thermtron Prods., Inc. v.
Hermansdorfer, 423 U.S. 336, 343–45 (1976). In Kircher
v. Putnam Funds Trust, the Court stated that “we have
relentlessly repeated that ‘any remand order issued on
the grounds specified in § 1447(c) [is immunized from all
forms of appellate review] . . . .’” Kircher, 547 U.S. 633,
640 (2006) (citing Thermtron, 423 U.S. at 351).
    Here the district court remanded on a ground provid-
ed in § 1447(c); that is, in the district court’s view the
complaint did not raise a claim or question of federal law
to give rise to federal jurisdiction. Section 1447(d) pre-
cludes this court from second-guessing the district court’s
jurisdiction determination regarding subject matter. If
the § 1447(d) bar applies, “review is unavailable no mat-
ter how plain the legal error in ordering the remand.”
Briscoe v. Bell, 432 U.S. 404, 413 n.13 (1977) (citing
Gravitt v. Sw. Bell Tel. Co., 430 U.S. 723 (1977)). In
making that determination, we look only to whether “the
STATE OF VERMONT   v. MPHJ TECHNOLOGY INVESTMENTS             5

District Court relied upon a ground that is colorably
characterized as subject-matter jurisdiction.” Powerex
Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224, 234
(2007). Here, the district court repeatedly stated the
position that “the Court does not have subject matter
jurisdiction.” We therefore lack jurisdiction to review the
remand decision.
                              B.
    MPHJ argues that § 1447(d) is “not even relevant” to
our review of the district court’s failure to address
MPHJ’s motions to dismiss for lack of personal jurisdic-
tion and for sanctions. Although § 1447(d) is not of itself
dispositive of the reviewability of a motion for sanctions,
the district court’s remand order dominates any proceed-
ings on this appeal.
    MPHJ cites the Supreme Court’s decision in Ruhrgas
AG v. Marathon Oil Co., 526 U.S. 574 (1999), as showing
that personal jurisdiction and subject matter jurisdiction
are distinct concepts, and that district courts have discre-
tion under certain circumstances to address personal
jurisdiction before turning to subject matter jurisdiction.
Id. at 588. However, Ruhrgas does not create an excep-
tion to the § 1447(d) bar.
                              C.
    MPHJ offers additional arguments, but none permits
this court to depart from § 1447(d), even if there were
legal error on the part of the district court in ruling that it
lacked jurisdiction. See Powerex, 551 U.S. at 236.
    Accordingly,
    IT IS ORDERED THAT:
   (1) The State of Vermont’s motion to dismiss is
granted. The petition and appeal are dismissed.
    (2) Each side shall bear its costs.
6      STATE OF VERMONT   v. MPHJ TECHNOLOGY INVESTMENTS

   (3) The State’s motions to take judicial notice are
granted.
    (4) The State’s motion to strike is moot.

                                   FOR THE COURT

                                    /s/ Daniel E. O’Toole
                                    Daniel E. O’Toole
                                    Clerk of Court