Harris v. Blue Cross/Blue Shield of Alabama, Inc., 91-7385

• Decision Date: 24 January 1992
• Docket Number: No. 91-7385,91-7385
• Citation: 951 F.2d 325
• Parties: Veronica Dianne HARRIS, Plaintiff-Appellant, v. BLUE CROSS/BLUE SHIELD OF ALABAMA, INC.; State Employees Insurance Board for the State of Alabama and fictitious parties, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 325

951 F.2d 325

Veronica Dianne HARRIS, Plaintiff-Appellant, v. BLUE CROSS/BLUE SHIELD OF ALABAMA, INC.; State Employees

Insurance Board for the State of Alabama and

fictitious parties, Defendants-Appellees.

No. 91-7385.

United States Court of Appeals, Eleventh Circuit.

Jan. 24, 1992.

William C. Elliott, Parnell, Crum & Anderson, P.A., Montgomery, Ala., for plaintiff-appellant.

Walter R. Byars, Steiner, Crum & Baker, Montgomery, Ala., for defendants-appellees.

Appeal from the United States District Court for the Middle District of Alabama.

Before KRAVITCH, ANDERSON and BIRCH, Circuit Judges.

ANDERSON, Circuit Judge:

Harris appeals the district court's grant of summary judgment in favor of appellees. At an earlier stage in the litigation, the district court had remanded the case to state court. Upon appellee's motion to reconsider the remand, however, the district court set aside its previous order and reasserted jurisdiction over the case. Thereafter, the court granted summary judgment. We questioned our jurisdiction to entertain this appeal given the earlier remand to state court and asked the parties to address the jurisdictional issue. We conclude that neither this court nor the district court has jurisdiction to review the remand order.

I. PROCEDURAL HISTORY

On July 6, 1990, appellant Veronica Dianne Harris brought this action in Alabama state court against appellees Blue Cross/Blue Shield of Alabama and the State Employees Insurance Board of Alabama. The complaint sought recovery for failure to provide notification of the lapse of her State employees' group health insurance coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). In addition, the complaint alleged several state-law claims including breach of contract, bad faith, and misrepresentation. On August 15, 1990, defendants-appellees filed their notice of removal. On August 27, Harris filed a motion to remand to state court. On September 14, Harris filed a motion in federal district court for leave to amend her complaint to delete her COBRA claim and to reassert her state-law claims for breach of contract, bad faith, and misrepresentation. On October 1, 1990, appellees filed their objection to Harris' motion to amend her complaint, claiming that the amendment was made simply to eliminate the federal claim in order to defeat federal jurisdiction. On October 30, 1990, the district court dismissed the COBRA claim and remanded the remaining claims to state court. In addition, on that day, a certified copy of the remand order was mailed to state court. On November 1, 1990, appellees filed a motion for reconsideration of the remand order. On December 7, 1990, the district court set aside its October 30 remand order and reasserted jurisdiction. Thereafter, on April 22, 1991, the district court granted summary judgment in favor of the appellees. On May 13, 1991, Harris filed a timely notice of appeal from the grant of summary judgment against her.

II. JURISDICTION

This case raises two jurisdictional issues: (1) whether this court has appellate jurisdiction to review the district court's order remanding to the state court and (2) whether the district court had jurisdiction to "reconsider" its order remanding the case to state court.

A. Appellate Review

Title 28 § 1447(d) generally forbids review of remand orders:

An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to section 1443 of this title shall be reviewable by appeal or otherwise. ¹

In Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976), the Supreme Court held that § 1447(d) prohibits review only of remand orders issued pursuant to § 1447(c). Section 1447(c) provides:

A motion to remand the case on the basis of any defect in removal procedure must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require payment of just costs and actual expenses, including attorney fees, incurred as a result of the removal. A certified copy of the order of remand shall be mailed by the clerk to the clerk of the State court. The State court may thereupon proceed with such case. ²

Thus, if the trial judge remands because the court "lacks subject matter jurisdiction," as specified in § 1447(c), his order is not subject to review in this court by appeal, mandamus, or otherwise.

In this case, the only federal claim involved notification under COBRA; the remaining claims were state-law claims. Therefore, this case involved the exercise of pendent jurisdiction. In Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), the Supreme Court established the test for determining whether the federal court has power to hear an entire case involving both federal and state claims. The Court stated that the district court has jurisdiction if the federal and state claims "derive from a common nucleus of operative fact" and are "such that [a plaintiff] would ordinarily be expected to try them all in one judicial proceeding." Gibbs, 383 U.S. at 725, 86 S.Ct. at 1138.

As a predicate to the exercise of pendent jurisdiction, however, the federal claim "must have substance sufficient to confer subject matter jurisdiction on the court." Id., (citing Levering & Garrigues Co. v. Morrin, 289 U.S. 103, 53 S.Ct. 549, 77 L.Ed. 1062 (1933)). In other words, the federal claim must be a "substantial" one. A federal court will not have jurisdiction over a federal question that is "plainly unsubstantial either because [it is] obviously without merit, or 'because its unsoundness so clearly results from the previous decisions of [the Supreme Court] as to foreclose the subject and leave no room for the inference that the questions sought to be raised can be the subject of controversy.' " Levering & Garrigues Co. v. Morrin, 53 S.Ct. at 550, (citing Hannis Distilling Co. v. Baltimore, 216 U.S. 285, 288, 30 S.Ct. 326, 327, 54 L.Ed. 482 (1910)). See also Hagans v. Lavine, 415 U.S. 528, 536-37, 94 S.Ct. 1372, 1378-1379, 39 L.Ed.2d 577 (1974) (collecting many of the Supreme Court statements on the topic of substantiality); 13B C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3564 (1984 & Supp.1991).

In its October 30 order, the district court filed a memorandum opinion and order dismissing the COBRA claim with prejudice and remanding the remaining claims to state court. The court noted that the only federal claim alleged was failure to provide notice for lapse of plaintiff's health insurance policy as provided in 29 U.S.C.A. § 1161 et seq. The order then observed that the provisions of 29 U.S.C. § 1161 et seq. are part of the Employee Retirement Income Security Act ("ERISA") and § 1003(b) of ERISA provides that the provisions of ERISA do not apply to government plans as defined in 29 U.S.C. § 1002(32). ³ Accordingly, the district court found that "plaintiff's claim under § 1161 ... is clearly barred" because the plan at issue is a government plan within the meaning of this statute. The district court continued:

This Court, therefore, lacks federal question jurisdiction under 28 U.S.C. § 1331, and is of the opinion that Plaintiff's Complaint in this cause is due to be dismissed with prejudice as to [the count alleging the § 1161 claim]. Plaintiff's remaining State law claims, having been removed to this Court, will be remanded pursuant to 28 U.S.C. § 1447(c) to the Circuit Court of Macon County, Alabama.

In essence, the order states that the district court believed that appellant's claim under § 1161, as presented in the complaint, was not a substantial federal question sufficient to confer jurisdiction. ⁴ The district court's order, therefore, made a jurisdictional ruling rather than a ruling on the merits.

Appellees argue that the district court made a ruling on the merits and that this court can review the remand order under the exception to the nonreviewability rule that the Supreme Court recognized in Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976). In Thermtron, the district court judge had remanded a case to state court because of the federal court's overcrowded docket, despite the presence of subject matter jurisdiction. The Supreme Court reviewed this remand order because it rested on grounds not contained in § 1447(c). The Court held that "only remand orders issued under § 1447(c) and invoking the grounds specified therein ... are immune from review under § 1447(d)." 423 U.S. at 346, 96 S.Ct. at 590.

In Waco v. United States Fidelity & Guaranty Co., 293 U.S. 140, 55 S.Ct. 6, 79 L.Ed. 244 (1934), the third party defendant removed the case to federal court on the basis of the third party defendant's diversity. The district court dismissed the third party action. With the diversity of citizenship thus removed, the district court remanded the case to state court. The Court stated:

True, no appeal lies from the order of the remand; but in logic and in fact the decree of dismissal preceded that of remand and was made by the District Court while it had control of the cause. Indisputably this order is the subject of an appeal; and, if not reversed or set aside, is conclusive upon the petitioner.

293 U.S. at 143, 55 S.Ct. at 7. The Court cautioned, however, that "[a] reversal cannot affect the order of remand, but it will at least, if the dismissal of the petitioner's complaint was erroneous, remit the entire controversy ... to the state court." Id. For cases citing Waco, see Pelleport Investors v. Budco Quality Theatres, 741 F.2d 273 (9th Cir.1984) (ruling on forum selection clause reviewable) and Clorox...