Brookshire Bros. Holding, Inc. v. Dayco Products

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: Benavides
• Citation: Brookshire Bros. Holding, Inc. v. Dayco Products, 554 F.3d 595 (5th Cir. 2009)
• Decision Date: 06 January 2009
• Docket Number: No. 07-31154.,07-31154.
• Parties: BROOKSHIRE BROTHERS HOLDING, INC.; Brookshire Brothers Management, Inc.; Brookshire Brothers Ltd., Plaintiffs-Appellees, v. DAYCO PRODUCTS, INC.; Shell Chemical LP; Ticona Polymers, Inc.; Mark IV Industries Ltd.; Underwriters Laboratories, Inc., Defendants-Appellants.

554 F.3d 595

BROOKSHIRE BROTHERS HOLDING, INC.; Brookshire Brothers Management, Inc.; Brookshire Brothers Ltd., Plaintiffs-Appellees, v. DAYCO PRODUCTS, INC.; Shell Chemical LP; Ticona Polymers, Inc.; Mark IV Industries Ltd.; Underwriters Laboratories, Inc., Defendants-Appellants.

No. 07-31154.

United States Court of Appeals, Fifth Circuit.

January 6, 2009.

John A. Jeansonne, Jr. (argued), Jeansonne & Remondet, Lafayette, LA, Michael H. Schwartzberg, Vamvoras & Schwartzberg, Lake Charles, LA, for Plaintiffs-Appellees.

Deborah D. Kuchler, Charles Henderson Abbott, McGready Lewis Richeson, Laura E. Kraemer, Abbott, Simses & Kuchler, New Orleans, LA, for Dayco Products, Inc. and Mark IV Industries Ltd.

Paula W. Hinton, Lewis Cooper Sutherland, Vinson & Elkins, Houston, TX, Sandra Garza Rodriquez, Jennifer B. Poppe, Vinson & Elkins, Austin, TX, for Shell Chemical LP.

Paul M. O'Connor (argued), Seth Alan Moskowitz, Kasowitz, Benson, Torres & Friedman, New York City, Charles Michael Pisano, Barkley & Thompson, New Orleans, LA, for Ticona Polymers, Inc.

John F. Olinde (argued), Robert S. Rooth, Charles Donald Marshall, III, Chaffe, McCall, Phillips, Toler & Sarpy, New Orleans, LA, for Underwriters Laboratories, Inc.

Appeal from the United States District Court for the Western District of Louisiana.

Before HIGGINBOTHAM, BENAVIDES and STEWART, Circuit Judges.

BENAVIDES, Circuit Judge:

The defendants-appellants appeal the district court's remand of this case to Louisiana state court. The plaintiffs-appellees assert that this Court lacks jurisdiction to hear this appeal. We find that we possess jurisdiction over this appeal, REVERSE the ruling of the district court, and REMAND the case for further proceedings.

I. Background

This suit stems from the allegedly defective manufacture of flexible thermoplastic pipe ("flexpipe") used to connect underground storage tanks to above-ground dispensers at retail gas stations. Brookshire Brothers Holding, Inc., Brookshire Brothers Management, Inc., and Brookshire Brothers Ltd. (together, "Brookshire") brought this suit on August 15, 2003 against the manufacturer of the flexpipe systems and its insurers and the manufacturers of component parts and providers of raw materials used in the flexpipe systems (together, the "flexpipe defendants"), seeking damages stemming from the installation of flexpipe in sixty-five gas stations in Texas and three gas stations in Louisiana that are owned and operated by Brookshire.

On March 3, 2004, Total Containment, Inc. ("TCI"), the manufacturer of the flexpipe systems, filed for Chapter 11 bankruptcy, and on May 26, 2004, Commerce & Industry Insurance Co. ("C&I"), TCI's primary liability insurer, removed the instant suit to the U.S. District Court for the Western District of Louisiana on the basis that it "related to" the bankruptcy of TCI. Brookshire concedes that the case was properly removed and that the district court had jurisdiction over the suit at the time of removal.

The litigation in federal court lasted more than three years, generating more than 1,300 entries in the district court docket. The district court decided forty-one dispositive motions, fourteen Daubert motions, and seven other motions in limine. Discovery had closed and the parties were making final preparations for trial. Trial was originally set for October 17, 2005, but was continued four times. The most recent trial setting was February 11, 2008.

On July 17, 2007, Brookshire, TCI, and C&I filed a joint stipulation of dismissal, dismissing Brookshire's claims against TCI and C&I due to a settlement agreement, and on November 2, 2007, Brookshire moved to remand this suit to Louisiana state court. On November 27, 2007, the court granted Brookshire's motion to remand.

Brookshire argues that 28 U.S.C. § 1447(d) deprives this Court of jurisdiction to hear this appeal because the district court's order remanding this suit to Louisiana state court can be colorably characterized as being based on lack of subject matter jurisdiction under 28 U.S.C. § 1447(c). Alternatively, Brookshire argues that even if the order of remand was based on the district court's refusal to retain supplemental jurisdiction under 28 U.S.C. § 1367(c), appellate review is still barred by 28 U.S.C. § 1447(d). In the event that this Court finds that it does possess jurisdiction over this appeal, Brookshire asserts that the district court's refusal to exercise pendant jurisdiction was not an abuse of discretion. The remaining flexpipe defendants assert that this circuit's precedent is clear that this Court possesses jurisdiction over this appeal and that the district court abused its discretion in declining to exercise supplemental jurisdiction.

II. Jurisdiction to Review the Order of Remand

Section 1447(d) states that "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise," 28 U.S.C. § 1447(d), but the Supreme Court has held that this prohibition applies only when an order of remand is based on one of the grounds specified in section 1447(c): lack of subject matter jurisdiction or a defect in removal procedure, see Schexnayder v. Entergy La., Inc., 394 F.3d 280, 283 (5th Cir.2004) (citing Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711-12, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996)). This Court has held that a clear and affirmative use of Section 1367(c) discretion to remand and not exercise supplemental jurisdiction does not involve either of the grounds specified in section 1447(c), and therefore is reviewable on appeal for an abuse of discretion. Regan v. Starcraft Marine, LLC, 524 F.3d 627, 631 (5th Cir.2008) (citing Thomas v. LTV Corp., 39 F.3d 611, 616 (5th Cir. 1994)).¹ Most of our sister circuits have similarly found that a remand order based on declining supplemental jurisdiction is not within the class of remands described in section 1447(c) and is thus not subject to the jurisdictional bar of section 1447(d). See, e.g., Trans Penn Wax Corp. v. McCandless, 50 F.3d 217, 223-24 (3d Cir. 1995) (citing precedents in the Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits). In support of that proposition, this and other circuits have cited the Supreme Court's statement in Carnegie-Mellon University v. Cohill, 484 U.S. 343, 355 n. 11, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988), that "[Section] 1447(c) ... do[es] not apply to cases over which a federal court has pendent jurisdiction. Thus, the remand authority conferred by the removal statute and the remand authority conferred by the doctrine of pendent jurisdiction overlap not at all." See Hook v. Morrison Milling Co., 38 F.3d 776, 780 (5th Cir.1994) (citing Cohill, 484 U.S. at 355 n. 11, 108 S.Ct. 614); McCandless, 50 F.3d at 223-24 (same).

The Supreme Court recently cast some doubt on the proposition that a remand order based on declining supplemental jurisdiction under section 1367(c) does not fall within the class of remands described in section 1447(c), stating in Powerex Corp. v. Reliant Energy Services, ___ U.S. ___, 127 S.Ct. 2411, 168 L.Ed.2d 112 (2007), that "[i]t is far from clear ... that when discretionary supplemental jurisdiction is declined the remand is not based on lack of subject-matter jurisdiction for purposes of § 1447(c) and § 1447(d)," and that the Court had "never passed on whether [such] remands are subject-matter jurisdictional for purposes of post-1988 versions of § 1447(c) and § 1447(d)." Id. at 2418-19 & n. 4 (citations omitted); see also Regan, 524 F.3d at 631 (noting the Supreme Court's recent comments but declining to address the issue). Brookshire points out that one circuit that had not addressed the issue prior to Powerex has cited that decision in support of the proposition that remand orders based on declining supplemental jurisdiction under section 1367(c) fall within the class of remands described in section 1447(c), specifically remands for lack of subject matter jurisdiction. In HIF Bio, Inc. v. Yung Shin Pharmaceuticals Industrial Co., 508 F.3d 659 (Fed.Cir.2007), the Federal Circuit found that "[b]y ... undercutting the persuasive force of the decisions of the other Courts of Appeals relying on Cohill, Powerex appears to reopen the question of whether § 1367(c) remands are barred from review under §§ 1447(c) and (d)." Id. at 666. The court went on to hold that "because every § 1367(c) remand necessarily involves a predicate finding that the claims at issue lack an independent basis of subject matter jurisdiction, a remand based on declining supplemental jurisdiction can be colorably characterized as a remand based on lack of subject matter jurisdiction. Accordingly, a remand based on declining supplemental jurisdiction must be considered within the class of remands described in § 1447(c) and thus barred from appellate review by § 1447(d)." Id. at 667.²

Although the Supreme Court has indicated that it considers it an open question whether a discretionary remand under section 1367(c) is based on a lack of subject matter jurisdiction, and is thus unappealable under section 1447(d), it is not an open question in this circuit. Powerex made clear that Cohill did not, as some courts seem to have found, settle the question, but it does not overrule or directly undermine the line of cases in this circuit holding that discretionary remands pursuant to section 1367(c) are appealable. See Cal. Dept. of Water Res. v. Powerex Corp., 533 F.3d 1087, 1091-92 (9th Cir.2008) (discussing HIF Bio and stating that "[t]he Federal Circuit's disagreement does not give a three-judge panel in this circuit license to overrule the binding, authoritative decision of a prior three-judge panel," and that "[s]imilarly, that the question remains unanswered by the Supreme Court does not relax our obligation to abide by stare decisis"). The Supreme Court in Powerex simply confirmed the rule in this circuit that "when a district court remands a...