Sykes v. Texas Air Corp., 86-2975

• Decision Date: 23 December 1987
• Docket Number: No. 86-2975,86-2975
• Citation: 834 F.2d 488
• Parties: 127 L.R.R.M. (BNA) 2152, 56 USLW 2365 Norman SYKES, et al., Plaintiffs-Appellees, v. TEXAS AIR CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 488

834 F.2d 488

127 L.R.R.M. (BNA) 2152, 56 USLW 2365

Norman SYKES, et al., Plaintiffs-Appellees, v. TEXAS AIR CORPORATION, Defendant-Appellant.

No. 86-2975.

United States Court of Appeals, Fifth Circuit.

Dec. 23, 1987.

R. Michael Moore, A.J. Harper, II, Fulbright & Jaworski, Houston, Tex., for defendant-appellant.

Tom F. Coleman, Jr., Tom F. Coleman & Associates, Houston, Tex., for plaintiffs-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before CLARK, Chief Judge, GEE, and RUBIN, Circuit Judges.

GEE, Circuit Judge:

Texas Air Corporation removed this case from the state courts of Texas on the ground that it was related to a case in bankruptcy. The district court held that there was no bankruptcy jurisdiction and remanded the case to the state courts. Texas Air asks us to review the district court's decision. Because we cannot, we dismiss the appeal.

A. Facts and Prior Proceedings

The plaintiffs are airline pilots who were employed by Continental Airlines at the time that it began bankruptcy proceedings in 1983. Continental rejected its collective bargaining agreement with the Air Line Pilots Association ("ALPA") (the plaintiffs' union) during the course of the bankruptcy case. The pilots then sued Texas Air, Continental's parent corporation, in Texas state court as third-party beneficiaries of a "side letter agreement" ¹ between ALPA and Texas Air.

Texas Air removed the pilots' suit to federal district court. Texas Air asserted that it was entitled to some sort of indemnification ² by Continental should the pilots' suit prove successful, and that there was original federal jurisdiction (and thus removal jurisdiction) because this potential effect on the Continental estate made the state-court action "related to" the Continental bankruptcy proceeding within the meaning of 28 U.S.C. Sec. 1334(b). ³ The district court disagreed, ruling that there was no federal jurisdiction because the case was not "related to" the Continental bankruptcy and remanding it to state court. ⁴

B. Appellate Jurisdiction: The Problem

Texas Air's first task is to establish that we have jurisdiction to review the district court's order. Section 1452 governs both removals to the federal bankruptcy courts and the scope of appellate review of decisions to remand or not:

(a) A party may remove any claim or cause of action in a civil action[,] other than a proceeding before the United States Tax Court or a civil action by a governmental unit to enforce such governmental unit's police or regulatory power, to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.

(b) The court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground. An order entered under this subsection remanding a claim or cause of action, or a decision to not remand, is not reviewable by appeal or otherwise.

28 U.S.C. Sec. 1452. We have already held in general terms that there is no appeal from a remand order under Sec. 1452(b) and its same-language predecessor statute. See In re Rayburn Enterprises, 781 F.2d 501, 502 (5th Cir.1986) (Sec. 1452); In re Compton, 711 F.2d 626, 627 (5th Cir.1983) (pre-1984 Amendments bankruptcy removal section codified at 28 U.S.C. Sec. 1478).

Texas Air urges us to accept the reading of former Sec. 1478(b), now Sec. 1452(b), ⁵ found in Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir.1984). In Pacor, the Third Circuit was asked to review a district court's remand for want of bankruptcy jurisdiction. The court first held that the remand order was appealable under the "collateral order doctrine." Id. at 990. Next, it considered whether the general rule in 28 U.S.C. Sec. 1447(c)-(d) ⁶ of non-reviewability of district court remands for want of jurisdiction applies to bankruptcy cases removed under Sec. 1452(a). The court pointed out that at the time Sec. 1452 was enacted, it allowed removals from any court (not just state courts as in Sec. 1441) by any party (not just defendants as in Sec. 1441) to the pre-Marathon * ⁷ bankruptcy courts (and not the federal district courts as in Sec. 1441). Because of "needless conflict and inconsistencies" that a contrary interpretation would create, the court concluded that Sec. 1447(c) applies to 28 U.S.C. Sec. 1441 removals only and not to bankruptcy removals, the latter being governed exclusively by Sec. 1452. Id. at 991. Finally, the Third Circuit turned to Sec. 1452(b) and applied its analytical knife: Because subsection (b) mentions only remands based on "equitable" grounds, and because the denial of reviewability applies to "order[s] entered under this subsection," the court held that while remand orders based on equitable grounds were unreviewable, remand orders based on other grounds (such as lack of jurisdiction) were fully reviewable in the Court of Appeals. Id. at 993.

Texas Air asks us to adopt Pacor 's reasoning and to hear this appeal. We are also directed to a footnote in our Court's decision in Browning v. Navarro, 743 F.2d 1069, 1076-77 n. 21 (5th Cir.1984), that appears to approve in dicta the distinction between the reviewability of equitable and other remands drawn in Pacor. ⁸

C. Appellate Jurisdiction: The Solution

We must dismiss the appeal. The reasoning of Pacor does not persuade us; even if it did we see no way around Rayburn and Compton.

The Pacor analysis turns on a sort of semantic crack in the statute rather than a sound appreciation of the strong congressional policy against review of remand orders. The congressional policy rests on the unique administrative problems inherent in such appeals: Except in the highly unlikely event that a district court is so unsure of itself that it stays its decision to remand, the entry of a remand order ends the proceeding in the federal court and the state (or other ⁹) court proceeding gets under way. If months or years later a federal Court of Appeals decides that the remand was improper, matters are thrown into confusion and the effort expended by the parties on the state court proceeding (along with a good deal of state judicial resources) is in jeopardy. And if the state case has proceeded to judgment, the subsequent re-removal is for naught as the parties are bound by res judicata. Cf. Parsons Steel v. First Alabama Bank, 474 U.S. 518, 106 S.Ct. 768, 88 L.Ed.2d 877 (1986) (relitigation exception to the Anti-Injunction Act, 28 U.S.C. Sec. 2283, allowing injunctions of state court proceedings "to protect or effectuate" federal judgments, does not alter obligation of federal courts to give "full faith and credit" to prior state court judgments, 28 U.S.C. Sec. 1738).

To be sure, any sort of interlocutory appeal can result in the nullification of proceedings at the trial level; but in the usual case the reviewing court has direct supervisory authority over the trial court, and thus interlocutory appellate determinations can either advance, simplify, or mercifully end the on-going proceedings below. In fact, the "collateral order doctrine" is partly predicated on the assumption that allowing certain types of interlocutory appeals will help to resolve cases more efficiently. Appellate review of remand orders, on the other hand, is necessarily inefficient because of its peculiar binary quality: Either the remand is affirmed, in which case the appeal itself was a waste because it had no effect on the on-going state case; or the remand is reversed, in which case progress made in the state court proceedings may be nullified and the parties forced to restart in federal court. ¹⁰ We recognize that the Supreme Court has allowed mandamus review of remand decisions under Sec. 1447, ¹¹ so an "administrative difficulties" rationale cannot alone sustain our reading of Sec. 1452. But Pacor allows full review under Sec. 1452 (not mere mandamus) without discussing or, for all the opinion shows, seriously considering problems of judicial administration.

The holding in Pacor also creates a strange anomaly between the bankruptcy rule under Sec. 1452 and the general rule under Sec. 1447 as construed 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 had remanded the case because its docket was crowded and injustice to the plaintiff would result from long delay before trial--in other words, the remand was on "equitable" grounds. The statute, however, speaks only of mandatory remands when the district court is without jurisdiction. ¹² The Supreme Court held that mandamus was available to reverse a remand order that was "equitable" and not based on jurisdiction as required by Sec. 1447.

Taken together then, the result of Pacor and Thermtron is this: For bankruptcy removals, only jurisdictional remands and not discretionary ones are reviewable; for all other removals, ¹³ only discretionary remands and not jurisdictional ones are reviewable. We cannot imagine that Congress actually intended such a perverse asymmetry, nor can we see how it furthers any conceivable congressional goal.

Nor is this anomaly merely unaesthetic; it creates the real possibility of confusion and manipulation. Both Sec. 1441 and Sec. 1452 literally apply to every case removed from state court by the defendant because of a related bankruptcy; what we may term "direct" removal jurisdiction exists under Sec. 1452 and its companion jurisdictional bankruptcy statute Sec. 1334, and "indirect" bankruptcy removal jurisdiction exists under Sec. 1441, which permits removal of any civil action of which the federal district courts would have original jurisdiction, including bankruptcy actions under Sec. 1334. In other words, there is in every bankruptcy case the potential for both "direct" Sec. 1452/Sec. 1334 removal and "indirect" Sec. 1441/Sec. 1334 removal. This inherent...