Carlsbad v. HIF Bio

Carlsbad Technology, Inc., v. HIF BIO, Inc., et al. (5/4/09)
556 US _ (2009)
http://www.supremecourtus.gov/opinions/08pdf/07-1437.pdf

Question Presented:
“Whether a federal court of appeals has jurisdiction to review a district court’s order that remands a case to state court after declining to exercise supplemental jurisdiction over state-law claims under 28 U. S. C. §1367(c).”

Facts:
HIF Bio filed a patent dispute claim in 2005 against Carlsbad Technology in California state court. Carlsbad removed the case pursuant to § 1141(c) and then filed a motion to dismiss the only federal claim, a RICO action.
“The District Court also declined to exercise supplemental jurisdiction over the remaining state-law claims pursuant to 28 U. S. C. §1367(c)(3), which provides that a district court “maydecline to exercise supplemental jurisdiction over a claim” if “the district court has dismissed all claims over which it has original jurisdiction.” The District Court then remanded the case to state court as authorized by this Court’s decision in Carnegie-Mellon Univ. v. Cohill, 484 U. S. 343 (1988).
Carlsbad appealed to the United States Court of Appeals for the Federal Circuit, arguing that the District Court should have exercised supplemental jurisdiction over the state-law claims because they implicate federal patent-law rights. 508 F.3d 659, at 663. The Court of Appeals dismissed the appeal, finding that the remand order could “be colorably characterized as a remand based on lack of subject matter jurisdiction” and, therefore, could not be reviewed under §§1447(c) and (d), which provide in part that remands for “lack of subject matter jurisdiction” are “not reviewable on appeal or otherwise.” See id., at 667.”

Procedural Posture:
“The Court of Appeals for the Federal Circuit held that appellate review of such an order is barred by §1447(d) because it viewed the remand order in this case as resting on the District Court’s lack of subject matter jurisdiction over the state-law claims. The US Supreme Court disagreed and reversed the judgment of the Court of Appeals.”

Holding:
Such remand orders are not based on a lack of subject matter jurisdiction. “The question presented in this case is whether the District Court’s remand order, which rested on its decision declining to exercise supplemental jurisdiction over respondents’ state law claims, is a remand based on a “lack of subject matter jurisdiction” for purposes of §§1447(c) and (d). It is not.”

Important Dicta:
“With respect to supplemental jurisdiction in particular, a federal court has subject-matter jurisdiction over specified state-law claims, which it may (or may not) choose to exercise. See §§1367(a), (c). A district court’s decision whether to exercise that jurisdiction after dismissing every claim over which it had original jurisdiction is purely discretionary.”

“As a result, “the district court’s exercise of its discretion under §1367(c) is not a jurisdictional matter. Thus, the court’s determination may be reviewed for abuse of discretion, but may not be raised at any time as a jurisdictional defect.” 16 J. Moore et al., Moore’s Federal Practice §106.054, p. 106–27 (3d ed. 2009).”

“When a district court remands claims to a state court after declining to exercise supplemental jurisdiction, the remand order is not based on a lack of subject-matter jurisdiction for purposes of §§1447(c) and (d).”

“Stare decisis compels the conclusion that the District Court’s remand order is reviewable notwithstanding §1447(d)’s unambiguous contrary command. The Court’s adherence to precedent in this case represents a welcome departure from its sometimes single-minded focus on literal text.”

Title 28 U. S. C. §1447(d) states that “an order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.” The statute provides a single exception—not remotely implicated in this case—for certain civil rights cases removed under §1443. See §1447(d). As then-Justice Rehnquist understatingly observed in his Thermtron dissent, it would not be “unreasonable to believe that 28 U. S. C. §1447(d) means what it says.”

“This mess—entirely of our own making—does not in my view require expert reexamination of this area of the law, see post, at 2 (BREYER, J., concurring). It requires only the reconsideration of our decision in Thermtron—and a welcome return to the Court’s focus on congressionally enacted text.”

“Consequently, while joining the majority, I suggest that experts in this area of the law reexamine the matter with an eye toward determining whether statutory revision is appropriate.”

Likely future importance or unanswered question:
Contrary to §1447’s clear terms, the Supreme Court has inconsistently applied this statute using it to forbid or permit review of district courts. This decision allows review of district courts’ discretionary powers in remanding cases to state court not based on subject matter jurisdiction, declining to exercise supplemental jurisdiction.

Critical analysis
Failure to exercise supplemental jurisdiction over this case, which is authorized by the statute since only state law claims remained, is not barred by §1447. The Supreme Court attempts to clarify this jurisdictional matter and once again corrects the 9th Circuit’s analysis, contrary to the plain language of the statute. This clarification permits review, notwithstanding lack of subject matter jurisdiction, of failure to exercise supplemental jurisdiction over the claims. Abuse of discretion is always a difficult hurdle to overcome, but perhaps the patent law claims may rise to the federal court’s level of review because of its broad importance.