Williams v. Beemiller, No. 06-4958 (2d Cir. 2008)

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06-4958-cv W illiams v. Beemiller UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT _______________ August Term, 2007 (Argued: April 30, 2008 Decided: May 28, 2008) Docket No. 06-4958-cv _______________ DANIEL WILLIAMS and EDWARD WILLIAMS, Plaintiffs-Appellees, v. BEEMILLER, INC., doing business as Hi-Point, CHARLES BROWN , MKS SUPPLY , INC., and INTERNATIONAL GUN -A-RAMA , Defendants-Appellants, KIMBERLY UPSHAW, JAMES NIGEL BOSTIC, CORNELL CALDWELL, and JOHN DOE TRAFFICKERS 1 10, Defendants. _______________ Before: STRAUB and RAGGI, Circuit Judges, and STEIN , District Judge.* _______________ 1 2 3 4 Appeal from an order of the United States District Court for the Western District of New York (William M. Skretny, Judge), entered September 26, 2006, overruling DefendantsAppellants objections to the June 29, 2006 Order by Magistrate Judge Leslie G. Foschio that granted Plaintiffs-Appellees motion to remand. We conclude that we have jurisdiction to The Honorable Sidney H. Stein, United States District Judge for the Southern District of New York, sitting by designation. * 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 review this order because the Magistrate Judge lacked the requisite authority to enter it, and the District Court erroneously reviewed the order under a clearly erroneous or contrary to law standard applicable only to non-dispositive matters. Vacated and remanded. _______________ 30 ( Beemiller ), Charles Brown ( Brown ), MKS Supply, Inc. ( MKS ), and International Gun- 31 A-Rama ( Gun-A-Rama ), appeal from an order of the United States District Court for the 32 Western District of New York (William M. Skretny, Judge), entered September 26, 2006, 33 denying Defendants-Appellants objections to the June 29, 2006 order by Magistrate Judge 34 Leslie G. Foschio granting plaintiffs motion to remand the case to New York State Supreme 35 Court. This appeal raises the issues of whether we have jurisdiction to review a magistrate 36 judge s order remanding a case to state court and whether a magistrate judge s authority to hear JAMES W. GRABLE , JR. (Vincent E. Doyle III, Connors & Vilardo, LLP, Buffalo, New York; Jonathan E. Lowy, Elizabeth S. Haile, Brady Center to Prevent Gun Violence, Legal Action Project, Washington, D.C., on the brief), Connors & Vilardo, LLP, Buffalo, New York, for Plaintiffs-Appellees. SCOTT C. ALLAN (John F. Renzulli, on the brief), Renzulli Law Firm LLP, White Plains, New York, for Defendant-Appellant Beemiller, Inc. d/b/a Hi-Point Firearms. Scott L. Braum (Timothy R. Rudd, Scott L. Braum & Associates, Ltd., Dayton, Ohio; Thomas J. Drury, Hedwig M. Auletta, Damon & Morey, LLP, Buffalo, New York, on the brief), Scott L. Braum & Associates, Ltd., Dayton, Ohio, for Defendant-Appellant Brown. Jeffrey M. Malsch (Anthony P. Pisciotti, on the brief), Pisciotti, Malsch & Buckley, P.C., White Plains, New York, for Defendant-Appellant MKS Supply, Inc. James J. Duggan (Troy S. Flascher, on the brief), Lustig & Brown, LLP, Buffalo, New York, for Defendant-Appellant International Gun-A-Rama, Inc. _______________ STRAUB, Circuit Judge: Defendants-Appellants Beemiller, Inc., doing business as Hi-Point Firearms 2 1 and determine pretrial matters under the Federal Magistrates Act includes the power to decide a 2 motion to remand a case to state court. See 28 U.S.C. § 636(b)(1)(A); see also Fed. R. Civ. P. 3 72(a) & Advisory Committee Notes, 1983 Addition (noting that Rule 72(a) addressing district 4 court-ordered referrals of non-dispositive matters under § 636(b)(1)(A)). For the reasons set 5 forth below, we conclude that it does not. Accordingly, we vacate the District Court s order and 6 remand the case to the District Court for proceedings consistent with this opinion. 7 8 FACTUAL AND PROCEDURAL BACKGROUND 9 This case arises from a drive-by shooting that occurred on August 16, 2003. While 10 playing basketball in his neighborhood, Plaintiff-Appellee Daniel Williams was shot and injured 11 by Defendant Cornell Caldwell. The police soon apprehended Caldwell, who eventually pleaded 12 guilty to attempted assault in the first degree in Erie County Court in the State of New York. On 13 July 28, 2005, Daniel Williams and his father commenced this action in New York State 14 Supreme Court for the County of Erie. Plaintiffs alleged that Beemiller, MKS, and Gun-A- 15 Rama had negligently sold or distributed the firearm used by Caldwell to shoot Williams and 16 thus contributed to his injuries. 17 Claiming diversity jurisdiction and relying upon 28 U.S.C. § 1441(a) (b), Beemiller and 18 Brown removed the case to federal court on November 23, 2005. Shortly thereafter, written 19 consents to removal were filed on behalf of MKS and Gun-A-Rama. Written consents were 20 never filed on behalf of the remaining defendants. Citing defendants failure to obtain the 21 requisite consent to removal from all defendants, Plaintiffs moved for remand of the action to 22 state court and for the award of costs and expenses, pursuant to 28 U.S.C. § 1447(c). 23 On January 4, 2006, the District Court referred all non-dispositive pretrial matters to the 3 1 Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1)(A). On June 29, 2006, the Magistrate Judge 2 entered a decision and order granting Plaintiffs motion for remand and determining that the 3 Plaintiffs were entitled to an award of costs. In doing so, the Magistrate Judge concluded that a 4 motion for remand [is] not dispositive as it resolves only the question of whether there is a 5 proper basis for federal jurisdiction to support removal and does not reach a determination of 6 either the merits of a plaintiff s claims or defendant s defenses or counterclaims. [A 201] 7 However, the Magistrate Judge also acknowledged contrary authority on the issue and invited 8 the District Court to treat the decision and order as a report and recommendation, if the District 9 Court deemed it appropriate. On July 14, 2006, Defendants-Appellants timely submitted 10 objections to the Magistrate Judge s order. In relevant part, Defendants-Appellants argued that 11 the District Court should review the order de novo as a report and recommendation on a 12 dispositive motion. 13 On September 26, 2006, the District Court entered an order denying Defendants- 14 Appellants objections. Upon finding that a motion for remand is considered non-dispositive, 15 the District Court reviewed the decision and order of the Magistrate Judge and concluded that it 16 was neither clearly erroneous [nor] contrary to law under Federal Rule of Civil Procedure 17 72(a). 18 On October 26, 2006, Defendants-Appellants timely filed a notice of appeal with this 19 Court. On January 23, 2007, Plaintiffs-Appellees moved, inter alia, to dismiss the appeal 20 pursuant to 28 U.S.C. § 1447(d), which prohibits appellate review of an order remanding a case 21 to state court. On April 12, 2007, a panel of this Court denied the motion and directed the 22 parties to further brief the following issues: 1) whether, under 28 U.S.C. § 636(b)(1)(A) and 4 1 Fed. R. Civ. P. 72, a motion to remand a case to state court is a dispositive matter upon which a 2 magistrate judge is unauthorized to rule without de novo review by the district court; 2) whether 3 28 U.S.C. § 1447(d) bars an appeal of a district court s order reviewing a magistrate judge s 4 remand order under a clear-error-and-contrary-to-law standard of review; and 3) whether 5 resolution of either of these two questions is dependent on resolution of the other. 1 We now 6 consider these issues. 7 8 9 DISCUSSION I. Jurisdiction to Review Remand Order 10 Before turning to the merits of Defendants-Appellants appeal, we must determine 11 whether we have jurisdiction to hear this case. A subsection of the remand statute provides that 12 [a]n order remanding a case to the State court from which it was removed is not reviewable on 13 appeal or otherwise . . . . 28 U.S.C. § 1447(d). However, the Supreme Court has held that 14 [s]ection 1447(d) is not dispositive of the reviewability of remand orders in and of itself. That 15 section and § 1447(c) must be construed together. Thermtron Prods., Inc. v. Hermansdorfer, 16 423 U.S. 336, 345 (1976), abrogated on other grounds by Quackenbush v. Allstate Ins. Co., 517 17 U.S. 706, 715 (1996). Section 1447(c) provides, in relevant part: 18 19 20 21 22 23 A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. 28 U.S.C. § 1447(c). In interpreting these two provisions together, the Supreme Court The panel also granted the motion to dismiss the appeal as it pertained to the District Court s award of attorneys fees, relying, in part, on the concession by Defendants-Appellants that such an award was not a final order immediately appealable under 28 U.S.C. § 1291. 1 5 1 concluded that only remand orders issued under § 1447(c) and invoking the grounds specified 2 therein that removal was improvident and without jurisdiction are immune from review under 3 § 1447(d). Thermtron, 423 U.S. at 346; see also Powerex Corp v. Reliant Energy Servs., Inc., 4 __ U.S. __, 127 S. Ct. 2411, 2415 16 (2007) (noting that § 1447(d) has been amended twice 5 since Thermtron and assuming that the amendments are immaterial to Thermtron s gloss on § 6 1447(d) ). Thus, § 1447(d) bars appellate review of a § 1447(c) remand order only if a district 7 court s remand is based on a timely raised defect in removal procedure or on lack of subject- 8 matter jurisdiction the grounds for remand recognized by § 1447(c). Things Remembered, 9 Inc. v. Petrarca, 516 U.S. 124, 127 28 (1995). 10 In contrast, if a remand order is based on non-§ 1447(c) grounds, § 1447(d) poses no bar 11 to our review. See Quackenbush, 517 U.S. at 712 15 (concluding that appellate jurisdiction, in 12 such circumstances, exists under 28 U.S.C. § 1291). We have applied this rule to allow our 13 review of remand orders where the plaintiff did not challenge the subject matter jurisdiction of 14 the district court and did not timely raise a defect in the removal procedure. See, e.g., Shapiro v. 15 Logistec USA, Inc., 412 F.3d 307, 312 13 (2d Cir. 2005) (finding jurisdiction to review district 16 court s remand order that was based on an untimely challenge under 28 U.S.C. § 1441(b), which 17 is a non-jurisdictional rule that prohibits removal to a forum in which a defendant is a citizen); 18 Carvel v. Thomas & Agnes Carvel Found., 188 F.3d 83, 85 86 (2d Cir. 1999) (finding 19 jurisdiction to review district court s remand order that was based on a prudential doctrine of 20 abstention not grounded in subject matter jurisdiction and where there was no assertion of a 21 procedural defect ). 22 We have not previously decided whether a magistrate judge s order remanding a case to 6 1 state court for lack of subject matter jurisdiction should be deemed a remand order properly 2 grounded in § 1447(c). Two of our sister circuits have concluded that such an order is not 3 grounded in § 1447(c) and thus § 1447(d) does not bar appellate review. See Vogel v. U.S. 4 Office Prods. Co., 258 F.3d 509, 517 19 (6th Cir. 2001); In re U.S. Healthcare, 159 F.3d 142, 5 146 (3d Cir. 1998). In U.S. Healthcare, the Third Circuit held that an order of a magistrate 6 judge that could not [have been] issued pursuant to section 1447(c) because of the magistrate 7 judge s lack of authority to issue it . . . is not insulated from review by section 1447(d). 159 8 F.3d at 146. The Sixth Circuit agreed with the Third Circuit s approach. See Vogel, 258 F.3d at 9 519. 10 In the analogous situation of a district court that has arguably exceeded its authority in 11 remanding a case to state court, other circuits have concluded that § 1447(d) does not bar 12 appellate review. In Illinois Municipal Retirement Fund v. Citigroup, Inc., 391 F.3d 844, 13 848 49 (7th Cir. 2004), the Seventh Circuit held that § 1447(d) did not bar its review of a 14 remand order issued by a district court arguably outside its authority due to contradictory orders 15 from the Judicial Panel on Multidistrict Litigation. In doing so, the Seventh Circuit 16 distinguished between the situation of a district court exceed[ing] its statutory authority by the 17 very issuance of a remand order and its merely issuing a flawed remand order on the merits. 18 Id. at 850. While acknowledging the lack of jurisdiction to review a remand order in the latter 19 situation, the court concluded that it had jurisdiction to review [the district] court s exercise of 20 authority and vacate the ineffective order in the former situation. Id. Similarly, in Tramonte v. 21 Chrysler Corp., 136 F.3d 1025, 1028 (5th Cir. 1998), the Fifth Circuit held that § 1447(d) did 22 not bar it from reviewing the limited question of whether the district court lacked authority to 7 1 enter the remand order because she was disqualified from handling the case under the federal 2 recusal statute. In doing so, the court concluded that it had jurisdiction because vacatur of the 3 remand order would . . . not constitute a review of the merits of that order . . . . Rather, [such 4 action is] an essentially ministerial task of vacating an order that the district court had no 5 authority to enter for reasons unrelated to the order of remand itself. Id. 6 We find the reasoning of our sister circuits persuasive. This appeal does not challenge 7 the merits of the remand order itself. Instead, Defendants-Appellants merely argue that the 8 District Court failed to apply the correct standard of review when considering their objections to 9 the Magistrate Judge s order remanding the case to state court. As a result, this appeal requires 10 us only to determine the scope of authority of a magistrate judge in this context. Because this 11 question does not require review of the merits of the remand order, we conclude that we have 12 jurisdiction over this appeal. 13 Having concluded that we have jurisdiction to consider the issue raised by this appeal, we 14 now turn to the question of whether a magistrate judge has the authority to remand a previously 15 removed case to state court. 16 17 18 II. Authority of a Magistrate Judge to Order Remand Defendants-Appellants argue that the District Court erred in failing to consider the 19 Magistrate Judge s remand order as a report and recommendation and, thus, in failing to review 20 the order de novo. In advancing this argument, Defendants-Appellants contend that a remand 21 order cannot reasonably be considered a mere pretrial matter within the meaning of 28 U.S.C. 22 § 636(b)(1)(A) or a nondispositive matter under Federal Rule of Civil Procedure because such 8 1 an order effectively terminates all proceedings in federal court. Section 636(b)(1)(A) provides: 2 3 4 5 6 7 8 9 10 11 12 28 U.S.C. § 636(b)(1)(A). In addition, Federal Rule of Civil Procedure 72(a) requires a district 13 court to consider a party s timely objections to a magistrate judge s order deciding a pretrial 14 matter not dispositive of a party s claim or defense and to modify or set aside any part of the 15 order that is clearly erroneous or is contrary to law. 16 [A] judge may designate a magistrate judge to hear and determine any pretrial matter pending before the court, except a motion for injunctive relief, for judgment on the pleadings, for summary judgment, to dismiss or quash an indictment or information made by the defendant, to suppress evidence in a criminal case, to dismiss or to permit maintenance of a class action, to dismiss for failure to state a claim upon which relief can be granted, and to involuntarily dismiss an action. A judge of the court may reconsider any pretrial matter under this subparagraph (A) where it has been shown that the magistrate judge s order is clearly erroneous or contrary to law. We review de novo questions of statutory interpretation, see Puello v. Bureau of 17 Citizenship and Immigration, 511 F.3d 324, 327 (2d Cir. 2007), as well as a district court s 18 interpretation of the Federal Rules of Civil Procedure, see Reiter v. MTA New York City Transit 19 Auth., 457 F.3d 224, 229 (2d Cir. 2006), cert. denied, 127 S. Ct. 1331 (2007). Given the possible 20 constitutional implications of delegating Article III judges duties to magistrate judges, see 21 Gomez v. United States, 490 U.S. 858, 863-64 (1989), we have generally avoided constitutional 22 issues in this area by construing the Federal Magistrates Act narrowly in light of its structure 23 and purpose, In re United States, 10 F.3d 931, 934 n.4 (2d Cir. 1993) (quoting Gomez, 490 24 U.S. at 864), cert. denied, 513 U.S. 812 (1994). Where, as here, a party argues that a district 25 court erroneously treated a matter referred to a magistrate judge as not dispositive and thus 26 failed to review de novo the decision by a magistrate judge in that matter, our sister circuits have 27 analyzed the practical effect of the challenged action on the instant litigation. See, e.g., Phinney 9 1 v. Wentworth Douglas Hosp., 199 F.3d 1, 5 6 (1st Cir. 1999) (stating, in dicta, that a magistrate 2 judge s imposition of discovery sanctions should be considered dispositive where such sanctions 3 fully dispose[] of a claim or defense and thus fall within the same genre as the enumerated 4 motions of § 636(b)(1)(A)); Rajaratnam v. Moyer, 47 F.3d 922, 923 24 (7th Cir. 1995) 5 (holding that the denial of an application for attorney s fees should be considered dispositive for 6 purposes of § 636(b)(1)(A) and reviewed de novo by the district court). In reaching these 7 conclusions, these courts considered the dispositive orders listed explicitly in § 636(b)(1)(A) to 8 be non-exhaustive. See, e.g., Phinney, 199 F.3d at 5 6 (concluding that the terms dispositive 9 and nondispositive as used in Rule 72 must be construed in harmony with the classification 10 limned in section 636(b)(1) and rejecting the proposition that dispositive motions are those 11 excepted motions specifically enumerated in section 636(b)(1)(A) . . . and no others ); see also 12 Gomez, 490 U.S. at 873-74 (concluding that jury selection in a felony trial is dispositive for 13 purposes of § 636(b)(1)(B), despite its absence from that provision, because it is more akin to 14 those precisely defined, dispositive matters enumerated therein than the nondispositive, 15 pretrial matter[s] governed by § 636(b)(1)(A) ). We agree that the list is non-exhaustive. 16 The question of whether a magistrate judge may order a case remanded to state court 17 under § 1447(c) is one of first impression in this Circuit. All three of our sister circuits that have 18 considered the matter have concluded that such orders are dispositive because they are 19 functionally equivalent to an order of dismissal for the purposes of § 636(b)(1)(A) and Rule 20 72(a). See Vogel, 258 F.3d at 514 17; First Union Mortgage Corp. v. Smith, 229 F.3d 992, 21 994 97 (10th Cir. 2000); U.S. Healthcare, 159 F.3d at 145 46. In U.S. Healthcare, the Third 22 Circuit stated that a remand order is dispositive insofar as proceedings in the federal court are 10 1 concerned and is thus the functional equivalent of an order of dismissal for the purpose of § 2 636(b)(1)(A). 159 F.3d at 145. The Third Circuit elaborated that: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 An order of remand simply cannot be characterized as nondispositive as it preclusively determines the important point that there will not be a federal forum available to entertain a particular dispute . . . . Id. at 145 46 (footnote omitted). The Sixth and Tenth Circuits agreed with the reasoning of the 22 Third Circuit. See Vogel, 258 F.3d at 517 (concluding that a remand order is the functional 23 equivalent of an order to dismiss and thus is dispositive . . . and can only be entered by district 24 courts ); First Union Mortgage Corp., 229 F.3d at 996 (concluding that [s]ection 636 and Rule 25 72 must be read, where possible, so as to avoid constitutional problems and holding that remand 26 order is a final decision or dispositive motion that must ultimately be made by the district court 27 in order to survive Article III scrutiny ). We now join them. [I]t is helpful to consider a situation in which a plaintiff files parallel federal and state actions seeking relief for the same alleged loss. We do not think that anyone would argue seriously that a magistrate judge, without consent of the parties, could hear and determine a motion to dismiss the federal action, predicated on an absence of subject matter jurisdiction, on the theory that the motion is nondispositive because a parallel action is pending in the state court. Yet in a practical sense an order of remand predicated on a lack of subject matter jurisdiction is no less dispositive than an order of dismissal in the circumstances we describe as both orders have the same effect by permitting the case to proceed in the state rather than the federal court. In sum, we believe that even if it could do so, Congress never intended to vest the power in a non-Article III judge to determine the fundamental question of whether a case could proceed in a federal court. 28 Because a § 1447(c) remand order determine[s] the fundamental question of whether a 29 case could proceed in a federal court, U.S. Healthcare, 159 F.3d at 146, it is indistinguishable 30 from a motion to dismiss the action from federal court based on a lack of subject matter 31 jurisdiction for the purpose of § 636(b)(1)(A). A motion to remand is not a pretrial matter 11 1 under § 636(b)(1)(A), and a magistrate judge presented with such a motion should provide a 2 report and recommendation to the district court that is subject to de novo review under Rule 72. 3 The Defendants-Appellants here are entitled to the District Court s de novo review of the 4 Magistrate Judge s report and recommendation regarding Plaintiffs-Appellants motion to 5 remand. 6 7 8 9 CONCLUSION For the foregoing reasons, we VACATE the order of the District Court overruling the Defendants-Appellants objections and REMAND the case for proceedings consistent with this 10 opinion. We express no view as to the merits of Plaintiffs-Appellants motion to remand under § 11 1447(c). 12

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