PAS v. Travelers Ins. Co.

Decision Date14 October 1993
Docket NumberNos. 92-5510,92-5512,s. 92-5510
Citation7 F.3d 349
Parties, 17 Employee Benefits Cas. 1797, 4 NDLR P 252, Pens. Plan Guide P 23887T PAS v. TRAVELERS INSURANCE COMPANY, Petitioner and J.T. Baker, Inc. and Richardson-Vicks, Inc. Honorable John C. Lifland, United States District Judge for the District of New Jersey, Nominal Respondent. PAS v. TRAVELERS INSURANCE COMPANY; J.T. Baker, Inc. and Richardson-Vicks, Inc. Travelers Insurance Company, Appellant.
CourtU.S. Court of Appeals — Third Circuit

Zulima V. Farber, Public Advocate and William F. Culleton, Jr. (argued), New Jersey Dept. of the Public Advocate, Camden, NJ, for PAS, respondent/appellee.

Susan K. Hoffman (argued), Andrew R. Rogoff and Andrew E. Kantra, Pepper, Hamilton & Scheetz, Philadelphia, PA, and Francis X. Ryan, Green, Lundgren & Ryan, Haddonfield, NJ, for Travelers Ins. Co., petitioner/appellant.

John H. Widman (argued), McAleese, McGoldrick & Susanin, King of Prussia, PA, for J.T. Baker, Inc. and Richardson-Vicks, Inc.

Before: STAPLETON, ALITO and SEITZ, Circuit Judges.


SEITZ, Circuit Judge.


The historical facts in this case are undisputed. Plaintiff, a woman who uses the pseudonym "PAS," was hired by J.T. Baker, Inc., a subsidiary of Richardson-Vicks, Inc. (collectively "Baker") in 1987. Approximately six months after she was hired, plaintiff became disabled with bipolar disorder, 1 a disability which is apparently continuing. Plaintiff initially received disability benefits from a health insurance plan paid for by Baker and supplied through the Travelers Insurance Company ("Travelers"). Subsequently, Travelers terminated plaintiff's benefits under a policy provision that generally limits coverage for mental illnesses to two years.

Plaintiff brought a four-count action in the Superior Court of New Jersey seeking, inter alia, to have the policy provision under which her benefits were terminated declared void as contrary to New Jersey law and to have Travelers ordered to restore her coverage. Travelers and Baker removed the action to federal district court because it contained claims that they were undisputedly entitled to have resolved in a federal forum under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461.

Plaintiff concedes that Travelers and Baker are entitled to a federal forum for resolution of three of her four claims. However, plaintiff moved for a remand to state court of her claim that the termination of her insurance coverage violated two New Jersey statutes. See N.J.Stat.Ann. § 17:29B-4(7)(b) (West 1985); N.J.Stat.Ann. § 17B:30-12(d) (West 1985). Baker and Travelers opposed plaintiff's request for remand, arguing that remand was unwarranted because the two New Jersey statutes were preempted by ERISA.

In addressing plaintiff's motion for remand, the district court first concluded that the New Jersey statutes were not preempted by ERISA. Next, the court reasoned that, because it had only supplemental jurisdiction over the state law claim, it was free to exercise its discretion under 28 U.S.C. § 1367(c)(1) when deciding whether to remand that claim to state court. It thereupon concluded that, because the claim involved a "novel and complex issue of state law," it should be remanded to the Superior Court of New Jersey. (J.A. at 113).

Subsequently, the district court concluded that the state court action "[might] become dispositive of the [federal] litigation...." (J.A. at 127). Accordingly, it ordered that the federal action be administratively terminated "without prejudice to the right of the parties to reopen the proceedings at any time, for good cause shown...." (J.A. at 127).

Travelers filed a motion for reconsideration of the district court's order of remand. The district court denied that motion and Travelers thereupon filed both a notice of appeal and petition for a writ of mandamus. 2 This court ordered that Travelers' appeal and petition for mandamus be consolidated for disposition.

A. Bar of 28 U.S.C. § 1447(d)

We must first consider whether we have jurisdiction to entertain the appeal or the petition seeking a writ of mandamus directing the district court to vacate its remand order. The remanded claim is based on state law. The first jurisdictional issue is created by 28 U.S.C. § 1447(d), which provides:

(d) 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. [Section 1443 is not involved.]

In Thermtron Prod., Inc. v. Hermansdorfer, 423 U.S. 336, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976), the Supreme Court interpreted the limitations in subsection 1447(d) to be restricted to cases remanded under § 1447(c). Cases may be remanded under § 1447(c) for (1) lack of district court subject matter jurisdiction or (2) a defect in the removal procedure. Clearly, the remand order here was not based on either such ground. Rather, the district court, in the exercise of its admitted discretion, remanded the claim under its supplemental jurisdiction found in 28 U.S.C. § 1367(c)(1): the claim raised a novel or complex issue of state law. Thus, the statutory bar to appellate review does not apply here. See Aliota v. Graham, 984 F.2d 1350, 1354-55 (3d Cir.1993); 1A Moore's Federal Practice p 0.169[2.-1]. The Eleventh Circuit has similarly concluded that remand orders premised on the district court's discretion under § 1367(c) are reviewable under the Thermtron logic. In re Surinam Airways Holding Co., 974 F.2d 1255, 1257 (11th Cir.1992).

B. Review by Direct Appeal or Mandamus

Travelers filed an appeal from the district court's order remanding plaintiff's claim to state court and a petition for a writ of mandamus. "A court of appeals may not 'engage in extraordinary review by mandamus "in aid of [its] jurisdiction" when it can exercise the same review by a contemporaneous ordinary appeal.' " United States v. Santtini, 963 F.2d 585, 590 (3d Cir.1992) (quoting Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 8 n. 6, 103 S.Ct. 927, 933 n. 6, 74 L.Ed.2d 765 (1983) (quoting 28 U.S.C. § 1651)). "Therefore, we must first determine whether an appeal is available to [Travelers] at this time and if not, whether a writ ... may issue on these facts." Id.

All parties (plaintiff, Baker and Travelers) agree that we have jurisdiction over Travelers' appeal. Nevertheless, we have a "special obligation" to decide the jurisdictional question for ourselves "even though the parties are prepared to concede it." Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541, 106 S.Ct. 1326, 1331, 89 L.Ed.2d 501 (1986); see Lewis v. International Bhd. of Teamsters, Local Union No. 771, 826 F.2d 1310, 1312 (3d Cir.1987). We turn to that jurisdictional analysis.

Early Supreme Court precedent provided that mandamus was the only avenue for review of a federal court order remanding a claim to a state court. See Railroad Co. v. Wiswall, 90 U.S. (23 Wall.) 507, 508, 23 L.Ed. 103 (1875). In Wiswall, the Court stated: "The order of the Circuit Court remanding the cause to the State court is not a 'final judgment' in the action, but a refusal to hear and decide. The remedy in such a case is by mandamus to compel action, and not by a writ of error to review what has been done." Id.

Travelers concedes that the district court's remand order is not a final order in the traditional sense. However, Travelers argues that the order is appealable under the collateral order doctrine which developed after Wiswall. See Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949) (establishing collateral order doctrine). 3 Nevertheless, years after the collateral order doctrine was first established, the Supreme Court cited Wiswall for the proposition that "an order remanding a removed action does not represent a final judgment reviewable by appeal." Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 352-53, 96 S.Ct. 584, 594, 46 L.Ed.2d 542 (1976). Thus, Thermtron indicates that the development of the collateral order doctrine did not nullify Wiswall's holding that review in such cases should be accomplished by mandamus.

We are aware that other courts of appeals have held that review in a case such as this should proceed by direct appeal rather than by mandamus. See, e.g., McDermott Int'l, Inc. v. Lloyds Underwriters, 944 F.2d 1199, 1203 n. 5 (5th Cir.1991). Nevertheless, we agree with those courts that have held that, when a district court exercises its discretion to remand claims to a state court, review is available, if at all, only through a mandamus proceeding. See, e.g., Westinghouse Credit Corp. v. Thompson, 987 F.2d 682, 684 (10th Cir.1993) ("Review of the remand of the pendent claims ... must be by mandamus."); In re Surinam Airways Holding Co., 974 F.2d 1255, 1257 (11th Cir.1992) ("[A]n order expressly remanding pursuant to § 1367(c) is reviewable. As in Thermtron, the appropriate basis for reviewing such an order is on petition for writ of mandamus." (citation omitted)); Corcoran v. Ardra Ins. Co., 842 F.2d 31, 35 (2d Cir.1988) ("Thermtron's explicit ruling that review must be by mandamus rather than appeal has recently been reinforced [by the Supreme Court].").

We conclude that the proper method for review is by petition for writ of mandamus. Accordingly, we shall dismiss Travelers' appeal. We next consider whether Travelers has satisfied the requirements for the issuance of the writ.

A. Requirements for Mandamus

Mandamus is authorized by the All Writs Act, 28 U.S.C. § 1651(a), which provides:

The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective...

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