Court Opinion

ID: 9488784
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:55:38.737814+00
Date Added: 2024-06-11T17:53:06.177669
License: Public Domain

RYAN, Circuit Judge,
dissenting.
Because I conclude that the majority is mistaken about the nature of the district court’s order, and incorrectly interprets and applies controlling and indeed settled Sixth Circuit precedent, I respectfully dissent. Additionally, I think the majority’s reinterpretation of this court’s dispositive precedents has the practical effect of changing the settled scope of the existing exceptions to 28 U.S.C. § 1447(d)’s appellate bar.
I.
This court has held repeatedly that the appellate bar to section 1447(c) remand orders applies only to cases where the remand was based on either of the two statutory grounds set forth therein: on a defect in removal procedures, or on a lack of subject matter jurisdiction at the time of removal. See, e.g., Page v. City of Southfield, 45 F.3d 128, 131 (6th Cir.1995), which holds that section 1447(d) does not bar appellate review of a remand order where the district court exceeds its statutory authority by remanding a case sua sponte for procedural defects; see also, Van Meter v. State Farm Fire and Casualty Co., 1 F.3d 445, 449 (6th Cir.1993); and Regis Associates v. Rank Hotels Ltd., 894 F.2d 193, 194 (6th Cir.1990). Thus, where the grounds for remand fall outside the scope of section 1447, as where the district court reaches a non-jurisdictional issue when deciding to remand a case, this court has jurisdiction to review that order. Bal-dridge v. Kentucky-Ohio Transp., Inc., 983 F.2d 1341, 1344 (6th Cir.1993); see also, In re Glass Molders, Pottery, Plastics & Allied Workers Int’l, 983 F.2d 725, 727 (6th Cir.1993).
*1258These cases, and others, follow the Supreme Court’s explicit holding that “only remand orders issued under § 1447(c) and invoking the grounds specified therein — that removal was improvident and without jurisdiction — are immune from review.” Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 346, 96 S.Ct. 584, 590, 46 L.Ed.2d 542 (1976).
We have interpreted, discussed, and applied Thermtron on numerous occasions. We have established Thermtron to mean “that a remand order is reviewable on appeal when it is based on a substantive decision on the merits of a collateral issue as opposed to just matters of jurisdiction.” Regis Associates, 894 F.2d at 194. Regis Associates involved the interpretation of a forum-selection clause. The district court had remanded the case to state court upon plaintiffs motion, finding that the defendant had waived his right to remove the case to federal court by virtue of some explicit language of the governing contract. On appeal, the plaintiff contended that section 1447(d) precluded review of remand orders. This court rejected the argument, finding instead that Thermtron and its progeny permitted review of the lower court’s order.
Directly on point to the issues in this case is In re General Motors Corp., 3 F.3d 980 (6th Cir.1993), which involved procedural facts similar to those we confront here. The plaintiffs originally sued GM in state court alleging a variety of claims, one of which was based on a federal statute. GM removed the case to federal court and subsequently moved for summary judgment. The district court dismissed the claim arising under the federal statute, holding that it did not provide for a private right of action. Id. at 982. The court then remanded the remaining claims to state court because it concluded that it no longer had subject matter jurisdiction. Id.
On appeal, we held that the decision to remand after a lower court decides that a federal statute provides no private right of action falls within the Thermtron exception to the section 1447(d) appellate bar. Id. at 983. We concluded that because the district court’s order divested it of subject matter jurisdiction after defendants had properly removed the case from state court, its order was “not issued pursuant to section 1447(c), and this court had jurisdiction to review that order.” Id.
Similarly, we held that a district court’s remand order based on a dismissal of a claim that originally had formed the basis for removal to federal court was a final decision for purposes of 28 U.S.C. § 1291 and appellate review was not precluded by section 1447(d). In re Romulus Community Sch., 729 F.2d 431, 434 (6th Cir.1984). We reasoned that the substantive decision exception to section 1447(d) was justified because “[djenying finality to the dismissal [in a ease such as this] would insulate the [district court’s] order from appellate review.” Id. at 440 (citing and applying Waco v. United States Fidelity & Guar. Co., 293 U.S. 140, 55 S.Ct. 6, 79 L.Ed. 244 (1934)).
And, in Baldridge, which the majority cites as support for its holding, we explicitly recognized that there is a “substantive decision” exception to the section 1447(d) appellate bar. We explained briefly the difference between the section 1447 appellate bar and the substantive decision exception to that bar:
“If the district court believed that the case was properly removed, but that the stipulation [affecting the amount in controversy] justified a remand, then we may review the order. If, however, the district court believed ... that jurisdiction was missing at the outset, then 28 U.S.C. § 1447(d) would block any review, even though we might disagree with that decision.”
Baldridge, 983 F.2d at 1348 n.10 (quoting In the Matter of Shell Oil Co., 966 F.2d 1130, 1132 (7th Cir.1992)). We explicitly recognized that where a case is remanded after it is properly removed from state court, the order is appealable because it is not “issued ‘under the authority of any statute,’ ” and thus it is not precluded from review under Thermtron. Id. at 1347 (quoting Beard v. Carrollton R.R., 893 F.2d 117, 121 (6th Cir.1989)). Even though we held in Baldridge that this court had no jurisdiction to review the remand order under the facts of that ease because the decision of the lower court was strictly jurisdictional, that is, one based on the question of federal preemption, we ex*1259plicitly stated that if the remand order had been based on some “post-removal, jurisdiction-defeating” event or decision, the order would have been reviewable. Id. at 1349. Simply stated, for the remand order to be unreviewable, “the district judge [must have determined] that jurisdiction had been lacking all along.” Id. at 1348.
Stated even more succinctly, where “a district court determines subject matter jurisdiction to have existed at the time of removal, yet remands for alleged lack of subject matter jurisdiction based on some post-removal event(s), the remand order is not a Section 1447(c) remand order and is reviewable.” Van Meter, 1 F.3d at 450 (citing Baldridge, 983 F.2d at 1348-49).
These precedents are clear. They reveal that the majority opinion does not appreciate the difference between a jurisdictional decision resulting in an order to remand, and a substantive decision defeating subject matter jurisdiction after proper removal. A jurisdictional decision examines the validity of “removal”; whereas a substantive decision examines the validity of a claim. State of Ohio v. Wright, 992 F.2d 616, 618 (6th Cir.1993) (ien banc). Although the purpose of the appellate bar is to promote judicial efficiency and to prevent protracted disputes, it is inapplicable “[w]here a district court bypasses the jurisdictional arguments and reaches the merits of [an issue].” Id at 622 (Jones, J., concurring) (citations omitted). That is, “where the specific issue is not whether a case was improvidently removed to a federal court because the federal court lacks subject matter jurisdiction, this court may entertain a direct appeal of the district court’s resolution of that issue.” Id.
II.
In this case, the district court’s determination that it lacked subject matter jurisdiction was made only after it decided that the plaintiff failed to state a claim under the Michigan Sales Commission statute. It dismissed the action for failure to plead an actionable claim, believing the plaintiff, on the facts pleaded, asserted the wrong statutory cause of action. Generally, dismissals for failure to state a claim are final decisions from which an appeal may be sought under 28 U.S.C. § 1291. The court’s decision to dismiss, sua sponte, was final and on the merits because it was a determination of the plaintiffs legal rights under the Michigan statute, “as distinguished from mere matters of practice, procedure, jurisdiction or form.” Fairmont Aluminum Co. v. Commissioner of Internal Revenue, 222 F.2d 622, 625 (4th Cir.), cert. denied, 350 U.S. 838, 76 S.Ct. 76, 100 L.Ed. 748 (1955).1 That is, the court did not hold that on the face of plaintiffs complaint — the appropriate legal standard — the amount in controversy was not met.
Rather, the language of the order, cryptic as it otherwise is, clearly states that the plaintiff “may not avail himself of the provisions contained in [the Michigan Sales Commission statute],” but instead “must” bring his claim under the Michigan Wage and Fringe Benefits Act. To make this determination, the lower court held that the term “commissions” as expressed in the contract binding both parties, was “not a binding characterization under Michigan law.” Without inquiring into the meaning of the term under the explicit language of the contract governing the relationship of the parties before it, and without the benefit of having the issue addressed by the parties, the court determined sua sponte that “commissions” as used in the sales agreement was not really “commissions” but a “bonus plan” under Michigan law. To support its decision, the court cited a Michigan case wholly inapplicable to the facts of this case.
Having so concluded, the court found that it had no jurisdiction to hear plaintiffs remaining claims because, having been barred from bringing an action for treble damages under the plaintiffs statute of choice, the only possible causes of action left would only entitle him to relief of less than $50,000. The court explicitly stated that “whether plaintiff *1260brings a cause of action under the Wage and Fringe Benefits Act or for breach of an employment contract, the action would not satisfy the amount in controversy necessary to vest this court with diversity jurisdiction.” (Emphasis added.) Nowhere did the court express, nor can it reasonably be inferred from its order, that its decision to remand was based on a lack of subject matter jurisdiction at the time of removal. Therefore, contrary to the majority’s interpretation, the reference to the possibility of plaintiff amending his complaint in state court could only refer to the addition of a cause of action under the court’s statute of choice, and the deletion of plaintiffs choice. Consequently, I fail to see how the order — or its corresponding reasoning — could possibly be categorized as a jurisdictional decision.
III.
I am satisfied that there was subject matter jurisdiction at the time of removal; the amount in controversy would have been over $50,000 had plaintiff been permitted to proceed on his claim. Consequently, the district court’s remand was necessarily based on a post-removal event. The “matter” remanded to state court did not — and logically could not — include the cause of action under the Michigan Sales Commission statute. Because the court, in essence, stripped itself of jurisdiction by a substantive (and in my judgment erroneous) interpretation of Michigan statutory and contract law, its remand order is not subject to the section 1447(d) appellate bar.2 Thus, if the remand determination was based on anything other than a lack of removal jurisdiction, this court has jurisdiction to hear plaintiffs appeal.
Contrary to the majority’s assertions, the plaintiff does not appeal the district court’s remand order. Rather, Anusbigian appeals the substantive decision of the court holding that the Michigan Sales Commission statute is unavailable as authority for his claim. If review had been granted, this court would not have reviewed the remand order, but instead would have had to review de novo the decision to dismiss for failure to state a claim. That is, we would have had to treat the order as a Fed.R.Civ.P. 12(b)(6) motion. Simply stated, the district court’s order was not a jurisdictional decision.'
To be sure, section 1447(d) has not yet been interpreted to prohibit “review of remand orders so as to extinguish the power of an appellate court to correct a district court that has'not merely erred in applying the requisite provision for remand but has remanded a case on grounds not specified in the statute and not touching the propriety of the removal.” Thermtron, 423 U.S. at 351-52, 96 S.Ct. at 593.
I respectfully dissent.

. See also 27 Words and Phrases, 147: "The judgment is upon the merits when it amounts to a declaration of the law as to the respective rights and duties of the parties, based on the ultimate facts or state of facts disclosed by the pleadings, and evidence upon which the right of recovery depends, irrespective of formal, technical, or dilatory objections or contentions.”

. I note that the underpinnings of this case reveal a defendant playing troubling procedural games. This is a relatively small claim which plaintiff filed in state court almost three years ago. After defendant Chemlawn availed itself of the removal and transfer privileges granted to defendants in diversity cases, it now seeks completely to bar review for plaintiff's cause of action. The result of the court's order is that the litigants are back in state court, where they started three years ago.