U.S. Supreme Court Rejects “Post-Removal Event” Theory for Appealing Remands

The U.S. Supreme Court has given a strict reading to 28 U.S.C. § 1447(d) to bar appellate consideration of the substance of most remand orders, rejecting an exception that had developed in some of the circuits.

In Powerex Corp. v. Reliant Energy Services, Inc., 127 S. Ct. 2411 (U.S. June 18, 2007), one of the defendants removed the case based on the theory that it was a “foreign state” for purposes of the Foreign Sovereign Immunities Act (“FSIA”) and 28 U.S.C. § 1441(d) (which permits foreign states under the FSIA to remove). Plaintiffs successfully moved to remand, challenging whether that defendant really was a “foreign state.” Defendant appealed the remand order, and all parties and the Ninth Circuit apparently agreed that appellate jurisdiction existed because the bar to appeal of remand orders contained in 28 U.S.C. § 1447(d) only applied to remands based on a defect in subject-matter jurisdiction at the time of removal. Here, several other removing defendants had proper grounds to remove the whole case that were not part of the FSIA ruling, so the original removal was not defective.

After the Ninth Circuit reached the merits and affirmed, the Supreme Court granted certiorari but dismissed the case for lack of appellate jurisdiction. It held that there was no textual support in the statute for allowing appellate review of removals that were initially proper, and found that Congress specifically intended to bar review of remands even if based on defects in subject-matter jurisdiction that developed later. The Court found that the only task for an appellate court in this type of case is to determine whether the remand was colorably based on a defect in subject-matter jurisdiction, in which case it must dismiss the appeal.