Shell Oil Co., In re

• Decision Date: 28 May 1991
• Docket Number: No. 91-2044,91-2044
• Parties: In re SHELL OIL COMPANY, Castle & Cooke, Inc., Dole Fresh Fruit Company, Standard Fruit Company, Standard Fruit & Steamship Company, and Dow Chemical Company, Petitioners.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1523

932 F.2d 1523

In re SHELL OIL COMPANY, Castle & Cooke, Inc., Dole Fresh Fruit Company, Standard Fruit Company, Standard Fruit & Steamship Company, and Dow Chemical Company, Petitioners.

No. 91-2044.

United States Court of Appeals Fifth Circuit.

May 28, 1991.

Rehearing and Rehearing En Banc Denied

July 29, 1991.

Tobi A. Tabor and James P. Cooney, Royston, Rayzor, Vickery & Williams, Houston, Tex., for Castle, Dole, Standard Fruit Co. and Standard F & S Co.

R. Burton Ballanfant, Atty., Shell Oil Co. and Jose Berlango, Hirsch, Glover, Robinson & Sheiness, Houston, Tex., for Shell Oil Co.

Charles S. Siegel, Baron & Budd, Dallas, Tex., for appellee.

Michael Samford and F. Walter Conrad, Baker & Botts, Houston, Tex., for Dow.

On Petition for Writ of Mandamus to the United States District Court for the Southern District of Texas.

Before POLITZ, DAVIS, and BARKSDALE, Circuit Judges.

BARKSDALE, Circuit Judge:

The petitioners, defendants in state court lawsuits consolidated after removal to the district court, seek a writ of mandamus concerning the district court granting the plaintiffs' remand motion. We GRANT the petition and VACATE the remand order.

I.

In a companion case, In re Shell Oil Co., et al., 932 F.2d 1518, discussed infra, we reviewed a similar remand order under the 1988 amendments to one of the removal statutes, 28 U.S.C. Sec. 1447, and held that the plaintiffs had waived their objection to the removal by failing to file a motion for remand within 30 days of removal. There, as here, the 28 U.S.C. Sec. 1441(b) bar to removal concerning a forum defendant is involved.

Between August 1988 and June 1989, the plaintiffs, 171 Costa Rican nationals, filed six separate lawsuits in Texas state court against Shell and others, alleging that a chemical manufactured and used by the defendants in Costa Rican banana plantations rendered them sterile. For diversity jurisdiction purposes, Shell is a citizen of Delaware (state of incorporation), and Texas (principal place of business). 28 U.S.C. Sec. 1332(c)(1).

On various dates between September 30, 1988, and August 3, 1989, the defendants timely removed the six cases to federal court on the basis of diversity jurisdiction, including alleging fraudulent joinder of Shell. Such joinder was charged in order to avoid Sec. 1441(b)'s prohibition against removal if a defendant is a citizen of the forum state. ¹ On January 9, 1990, the district court consolidated the cases. On May 3, 1990, the plaintiffs filed a motion to remand, arguing that the cases were removed in violation of Sec. 1441(b), on the ground that Shell was not fraudulently joined. On May 27, 1990, the defendants filed a response to the motion. The district court granted the motion to remand on June 26, 1990, holding that the defendants had not proved that Shell was fraudulently joined, and that the case was, therefore, improperly removed.

On July 6, 1990, the defendants filed a motion for reconsideration and to vacate the remand order; and supplements to the motion were filed on July 11, 17, and 31, September 28, and November 30, 1990. In the November 30 supplement, the defendants argued, for the first time, that the remand motion was untimely, pursuant to 28 U.S.C. Sec. 1447(c), because it was filed more than 30 days after removal. The district court denied the motion for reconsideration on December 14, 1990. On January 18, 1991, the defendants filed the petition for writ of mandamus, seeking reversal of the remand order and the order denying their motion for reconsideration. By order entered January 24, 1991, we stayed the remand order, pending ruling on the petition.

II.

A.

We must first determine whether we have jurisdiction to review the remand order. Our authority to review that order is limited by 28 U.S.C. Sec. 1447(d), which provides in pertinent part that "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise." ² However, 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 Sec. 1447(d)'s bar on reviewability is not applicable where the district court remands a case on grounds other than those authorized by Sec. 1447(c). At the time Thermtron was decided, Sec. 1447(c) provided for remand if "the case was removed improvidently and without jurisdiction." Section 1447(c) was amended after Thermtron was decided, and now 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.

The district court remanded the cases because it concluded that Shell was not fraudulently joined and, therefore, removal was improper under Sec. 1441(b). Although Shell is a citizen of the forum state, Texas, the district court had subject matter jurisdiction, because complete diversity existed between the parties. See Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806).

In the companion case, In re Shell Oil Co., et al., 932 F.2d 1518, we held that, although a remand order based upon Sec. 1441(b) may have been unreviewable under former Sec. 1447(c) if it concerned an "improvident removal," such an order, if based on an untimely motion to remand, is reviewable under amended Sec. 1447(c), which deleted the reference to "improvident removal," and now provides for remand "for lack of subject matter jurisdiction." ³ In the companion case, we held that Sec. 1447(d) did not bar review of the remand order in that case, which was based on Sec. 1441(b) and an untimely motion to remand. ⁴

Our holding in that case does not fully resolve the reviewability issue here, however, because, prior to the amendment of Sec. 1447(c), four of the six consolidated cases were filed and three were removed to federal court. Our authority to review the remand orders with respect to the cases pending prior to the amendment therefore depends upon whether Sec. 1447(c), as amended, is applicable to such cases.

The Judicial Improvements and Access to Justice Act, Pub.L. No. 100-702, Title X, Sec. 1016(b), 102 Stat. 4670 (Nov. 19, 1988), does not provide an effective date for the amendment to Sec. 1447(c). We join the other courts that have considered the effective date and hold that it took effect on November 19, 1988, the day the President signed the bill. See Leidolf by Warshafsky v. Eli Lilly & Co., 728 F.Supp. 1383, 1387 (E.D.Wis.1990) and cases cited therein; see also Siegel, Commentary on 1988 Revision, 28 U.S.C.A. Sec. 1447, at 55 (West Cum.Supp.1991). Amendments to procedural legislation are applicable to pending litigation "absent some contrary indications by Congress and absent any procedural prejudice to either party." Denver & Rio Grande Western Railroad Co. v. Brotherhood of Railroad Trainmen, 387 U.S. 556, 563, 87 S.Ct. 1746, 1750, 18 L.Ed.2d 954 (1967).

In applying this two-part test, we note that the legislative history for the amendment to Sec. 1447(c) reveals no indication that "improvident removal" should continue to serve as a basis for remand in cases pending at the time of the amendment. To the contrary, the Section-by-Section Analysis contained in H.R.Rep. No. 889, 100th Cong., 2d Sess. 72 (1988), reprinted in U.S.Code Cong. & Admin.News 1988, at 5982, 6033, supports application of the amendment to pending cases:

[Former] [s]ection 1447(c) ... appears to require remand to state court if at any time before final judgment it appears that the removal was improvident. So long as the defect in removal procedure does not involve a lack of federal subject matter jurisdiction, there is no reason why either State or Federal courts, or the parties, should be subject to the burdens of shuffling a case between two courts that each have subject matter jurisdiction. There is also some risk that a party who is aware of a defect in removal procedure may hold the defect in reserve as a means for forum shopping if the litigation should take an unfavorable turn. The amendment provides a period of 30 days within which remand must be sought on any ground other than lack of subject matter jurisdiction.

And, concerning the second prong of the test, we note that the plaintiffs did not move for remand until May 3, 1990, long after the effective date of the amendment. Neither party has argued that application of Sec. 1447(c), as amended, will result in prejudice; ⁵ and we can perceive none. We therefore conclude that it is appropriate to apply Sec. 1447(c), as amended, in determining our authority to review the remand order. But cf. Fowler v. Safeco Ins. Co. of America, 915 F.2d 616, 617 n. 2 (11th Cir.1990) (applying former version of Sec. 1447 to action initiated prior to 1988 amendments).

B.

We next consider the correctness of the district court's remand order. As in the companion case, the order was based on improper removal under Sec. 1441(b). In that case, we held that the presence of forum defendants in violation of Sec. 1441(b) is a "defect in removal procedure" within the meaning of the first sentence of Sec. 1447(c), thus making the 30-day time limit for remand motions applicable. ⁶ Because the plaintiffs in that case did not move for remand within the 30-day period, we held that they had waived their objection to the improper removal.

The defendants argue here, as they did in the companion case, that the plaintiffs waived their objections to removal by failing to comply with Sec. 1447(c)'s 30-day limit. This case, however, involves several factors that were not present in that case: (1) three of the consolidated cases were removed before, and three after, the effective date of the 1988 amendments; (2) the defendants did not bring the 30-day limit to the attention of the district court until they filed their third...