Erica Goldberg discusses Tuesday’s argument in Carlsbad Technology.

The Court engaged in a lively discussion during the February 24 oral argument in Carlsbad Technology, Inc. v. HIF Bio, Inc., as they debated how to resolve the jurisdictional dilemma presented. The Justices were perplexed by the possibility that a proper textual reading of the remand statute, 28 U.S.C. § 1447, prohibits appellate review of critical decisions like remands based on lack of subject-matter jurisdiction, but could nonetheless allow review of discretionary remands based on refusal to exercise supplemental jurisdiction.

This potential anomaly arose after the Court's decision in Thermtron Products, Inc. v. Hermansdorfer, limited the applicability of § 1447(d), which prohibits appellate review of remand orders, to the types of remands enumerated in § 1447(c). Because § 1447(c) mentions only defects and lack of subject-matter jurisdiction, the discretionary decision to refuse supplemental jurisdiction would be reviewable unless it is considered a dismissal for lack of subject-matter jurisdiction, as HIF Bio contends.

Justice Ginsburg began the questioning of Carlsbad's attorney, Glenn Rhodes, by noting "something odd" about Carlsbad's interpretation of § 1447(c) "“ namely, that appellate courts cannot review the "fundamental" decision that a complaint lacks subject-matter jurisdiction but can review discretionary refusals to exercise supplemental jurisdiction. "Why would a court of appeals overturn such a [discretionary] decision?" she wondered.

Justice Stevens proposed myriad solutions to this problem. He first suggested accepting the language of § 1447(d) at face value and not limiting it to the types of remands listed in § 1447(c). This would require a reversal of Thermtron, which didn't please Justice Ginsburg, but Chief Justice Roberts seemed comfortable with that idea. Mr. Rhodes attempted to explain that a reversal of Thermtron would lead to a chaotic situation in which a district court could simply refuse to exercise subject-matter jurisdiction or remand a case out of laziness, and that decision would not be subject to review. When Mr. Rhodes argued that Congress has twice amended § 1447(c) after Thermtron, implicitly accepting its reasoning, Justice Scalia joked, "Well, that's right, but what if we want to get rid of it?"

Next, Justice Stevens suggested creating a slight exception to Thermtron to hold that remands based on the discretionary refusal to exercise subject-matter jurisdiction are also not reviewable. Mr. Rhodes could respond only that he didn't know how such an apparently unprincipled reading of § 1447(d) would affect the jurisprudence.

Theodore Allison then took the floor on behalf of HIF Bio. He began by arguing that reading § 1447(d) broadly to prohibit all remands, not only those enumerated in § 1447(c), would achieve Congress's original intent in enacting a ban on review of remands. Mr. Allison cited the late Chief Justice Rehnquist's dissent in Thermtron, but Justice Ginsburg noted that this was a dissenting opinion written a long time ago.

Mr. Allison offered his own solution to this jurisdictional puzzle. Instead of overturning Thermtron, he asked for that case to be "updated" so that § 1447(d) would apply not only to those remands enumerated in § 1447(c), but also to all remands authorized by statute. Justice Souter was unconvinced, and he noted the clear stare decisis problem.

Mr. Allison then retreated to arguing that a refusal to assume supplemental jurisdiction should be construed as a dismissal for lack of subject-matter jurisdiction, which is listed in § 1447(c). But, as Justice Ginsburg noted during heavy questioning (and other Justices seemed to agree), these discretionary dismissals cannot honestly be attributed to a lack of subject-matter jurisdiction. As Justice Ginsburg observed: "If Congress conferred jurisdiction, it has it, and the Court can’t divest itself of that. It can, if Congress permits it, decline to exercise jurisdiction, but a court is not capable of divesting itself of jurisdiction."

During Mr. Rhodes's rebuttal, Chief Justice Roberts broached the prospect that if, on review, a district court is deemed to have abused its discretion in retaining supplemental jurisdiction, the court may never have had jurisdiction in the first place. Although Mr. Rhodes was stumped by this question, one possible answer may have been that improperly retaining jurisdiction was not the issue. Appellate review after remand would be based on the district court's refusal to exercise supplemental jurisdiction. Therefore, this refusal, even if an abuse of discretion, does not signify a lack of subject-matter jurisdiction.

Although the oral argument presented various ways to resolve this case, none of the Justices seemed perfectly satisfied with any solution. It will be interesting to see if the Court ambitiously overturns Thermtron, creates a narrow loophole for this fact pattern, or agrees with Carlsbad's textual argument but leaves the oddity noted by Justice Ginsburg unsolved.

Posted in Carlsbad Technology v. HIF Bio, Uncategorized