Supreme Court Reverses: Finding that the Federal Circuit has Appellate Jurisdiction to Review Remand to State Court

Carlsbad Tech v. HIF Bio (Supreme Court 2009) 07-1437-1.pdf

This involves the power of a federal appellate court to review a district court order to remand a case back to state court. In its opinion, the Federal Circuit held that it lacked such power. The Supreme Court has now reversed that decision and instead followed lead of the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits.

HIF first sued Carlsbad in California state court seeking a declaratory judgment of ownership and inventorship of various anti-angiogenesis drugs under California state law. The complaint also alleged various issues of slander, conversion, fraud, etc. The case was removed to federal court based on one federal RICO allegation. However, once that claim was dismissed, the district court refused to continue to exercise its supplemental jurisdiction to hear the remaining state claims — thus remanding the case back to state court. The Federal Circuit refused to review the remand for an abuse of discretion – instead finding that it lacked subject matter jurisdiction to hear the appeal.

The Federal Circuit’s outcome makes sense if you look at the statute. 28 U.S.C. §1447(d) says: ‘An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise . . . .’ However, the Supreme Court has clearly moved beyond the words of the statute in this situation. Here, the Supreme Court reversed — finding that the remand may be appealed in federal court.

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). The judgment of the Court of Appeals for the Federal Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.

On remand, the Federal Circuit will need to determine whether the remand was properly within the discretion of the lower court.

Although the decision was unanimous, the decision is accompanied by three concurring opinions by Justices Stevens, Scalia, and Breyer. Justice Stevens was honest about the court’s failure to follow the text of the statute: “If we were writing on a clean slate, I would adhere to the statute’s text.”

When the Federal Circuit’s decision was issued in 2007, I noted that “[t]his case would have a good shot of being granted certiorari. Its impact on patent law, however, is nil.” [Link]

10 thoughts on “Supreme Court Reverses: Finding that the Federal Circuit has Appellate Jurisdiction to Review Remand to State Court

  1. Thank you, John, may I have another?
    Thank you, John, may I have another?
    Thank you, Antonin, may I have another?
    Thank you, Anthony, may I have another?
    Thank you, David, may I have another?
    Thank you, Clarence, may I have another?
    Thank you, Ruth, may I have another?
    Thank you, Stephen, may I have another?
    Thank you, Samuel, may I have another?

  2. TPF,

    Yeah, I went out on a limb, and it broke.

    So much for looking at the language of the statute. It’s not the first time that a court has placed its case law above more recent statutes. I’ve had the identical thing happen to me — legislature amends statutes but past case law prevails over the more recent enactments. At least is my case, I lost 4-3 in the state’s highest court (I will not disclose which one because I was the named party) and 4-3 in my motion for reconsideration.

    On a more lighter note…because it was unanimous Supreme Court decision like eBay, I guess it is okay to become upset, to vent by bloviating over a period of years on the miscarriage of justice and how unconstitutional the Court’s action was, and to continue the bloviation on other threads of this blog whenever another opens up the door by merely uttering the word Constitution.

    But I won’t.

  3. My memory of Civ. Pro. is a bit fuzzy, but my understanding was that the decision to remand was unappealable only when the removal to federal court was improper in the first place.

  4. In Scalia’s concurrence: “The Court today does nothing more than accurately apply to the facts of this case our holding in Thermtron Products, Inc. v. Hermansdorfer, 423 U. S. 336 (1976) … . As the Court notes, neither party has asked us to reconsider Thermtron, and we thus have no occasion to revisit that decision here … .”

    Sounds like HIF Bio messed up and should have asked for Thermtron to be overruled. They probably still would have lost, but it looks like they would have at least gotten Scalia’s vote, maybe Stevens, and possibly more.

  5. Can the Federal Circuit get affirmed on anything?

    Their win percentage is probably lower than the 9th Circuit now.

  6. Finally! The decision makes sense esp reading Colorado River decisions of late; though Remand is not the same thing, it has similar equity, fair dealing, and wise use of courts’ resources, issues that flow from the SCOTUS decisions. I believe other courts will be reviewing similar Remand issues in light of this decision. The laws are after all to be ‘interpreted’ by the SCOTUS and if the Congress wants to ‘tighten up’ the laws to make their intent absolute, well then they have that right.

  7. TPF,

    Here’s what I said (in commenting on what WCG said):

    “Very astute observation. I went back and read the Federal Circuit opinion, and the panel was very careful to point out how it was applying the precedent in Powerex as accepting Kennedy’s view in the his concurrence in Things Remembered. So those who say the Federal Circuit is “defying” SCOTUS precedent are being a bit hasty here. And you may also be right that CJ Roberts is actually complementing the Federal Circuit for not simply accepting, without appropriate judicial thought, the view of the other circuits which may have been undermined. Frankly, an affirmance here of the Federal Circuit (or at least a comment that the Federal Circuit was at least right to question whether the view of the other circuits remained correct) would give it a huge (and necessary) shot of judicial confidence from SCOTUS.”

    Note that Justice Steven’s even said SCOTUS was deviating from the text of the statute. That tells you how much confidence (or frankly lack thereof) you should have in SCOTUS adhering to what a statute says (patent or otherwise). And the Federal Circuit shouldn’t always be blamed for the fact that the legal waters are “muddy” because of SCOTUS stirring them up. When it comes to IP law generally and patent law in particular, SCOTUS gets, at best, a D- in my book.

  8. As I recall, quite a few comments (by EG and WCG, no less) on the post about oral args suggested this would be an affirmance.

    link to patentlyo.com

    “Well, they don’t have a choice, right? They can’t say, I don’t like the Supreme Court rule so I’m not going to apply it, other than the Federal Circuit.” Guess not.

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