Split Sixth Circuit Panel Adheres to Prior Authority Applying Rooker-Feldman Doctrine to Interlocutory State-Court Order

In RLR Investments, LLC v. City of Pigeon Forge, Tenn., No. 20-6375 (6th Cir. July 13, 2021), a 2-1 panel holds that Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (2005) (Exxon), did not abrogate the circuit’s prior caselaw applying the Rooker-Feldman doctrine to state-court interlocutory orders. The Rooker-Feldman doctrine is a principle of the federal jurisdiction that bars lower federal courts from reviewing state-court judgments.

This case originated with a land dispute between a resort (RLR) and the Smoky Mountain vacation city. The city petitioned for an easement though RLR’s property for a pedestrian walkway. The conflict escalated to a state-court eminent domain lawsuit. “The [state] Circuit Court held a hearing and issued an order of possession (Order) granting the City everything the Petition sought.”

Before the state court could hold a valuation proceeding, though, RLR filed a suit in federal district court alleging an unlawful taking in violation of the Fifth and Fourteenth Amendments.  RLR sought (among other things) to enjoin the order of possession. The district court dismissed, holding “that it lacked subject-matter jurisdiction under the Rooker-Feldman doctrine. The court first held that the Rooker-Feldman doctrine still applies to interlocutory orders under Sixth Circuit precedent (Pieper v. Am. Arb. Ass’n, Inc., 336 F.3d 458 (6th Cir. 2003)) despite intervening Supreme Court case law (Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (2005)). Then, the court held that Rooker-Feldman applied here because it was clear that the source of RLR’s injury was the state court’s Order.”

The panel majority and the dissent clashed over the effect of Exxon on the prior circuit authority. The majority observes that the circuit’s 2002 decision in “Pieper offered a twist” on the Rooker-Feldman doctrine, which originated from cases “involv[ing] final judgments from the state’s highest court. Congress gave the Supreme Court jurisdiction over ‘[f]inal judgments . . . rendered by the highest court of a state,’ 28 U.S.C. § 1257, but at issue in Pieper was an interlocutory order of a state trial court.” Pieper adopted the majority view that even state-court interlocutory orders were insulated from federal district court review.

In Exxon, the Supreme Court held that Rooker-Feldman does not necessarily bar parallel state and federal actions over the same subject matter, and even entry of judgment in a state action does not ring an end to a federal action. It held that that Rooker-Feldman “is confined to cases of the kind from which the doctrine acquired its name: cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.”

The panel majority holds that even though the state-court order in this case is interlocutory, the action nevertheless in the heart of Rooker-Feldman. “By asking a federal court to declare a state-court order unconstitutional and prevent its enforcement, RLR impermissibly appealed the state court’s order to the federal district court . . . . [Thus] RLR asks for the type of review Rooker-Feldman forbids.”

Then reaching whether Pieper remains good law after Exxon, the panel adheres to its earlier caselaw. “Pieper has not been overruled by our en banc court. And the Supreme Court has not offered any ‘directly applicable’ analysis that is inconsistent with Pieper . . . . So Pieper binds us. We ask not whether we would decide Pieper the same way with fresh eyes, but whether the holding of Exxon mandates modification of Pieper.” The panel also notes that while other circuits have held that Exxon requires reconsideration of whether Rooker-Feldman applies to interlocutory state-court orders, “there is not unanimity.”

The panel majority concludes that Exxon did not change the fundamental principle that lower federal courts lack power to review state court orders. “That’s what happened here. RLR lost in state court and, dissatisfied with the result, asked the district court to come to the opposite conclusion and undo the state court’s Order. That’s not parallel litigation. RLR lost before it sought federal-court review, and RLR would not have had the injury it complained of but-for the state court’s Order.”

Judge Clay, dissenting, would hold that Exxon compels reconsideration of Pieper. “[I]n Exxon and Lance [v. Dennis, 546 U.S. 459 (2006) (per curiam)], the Supreme Court reiterated that Rooker-Feldman stems from § 1257’s limitation on the jurisdiction of the lower federal courts and established that the doctrine only applies when a lower federal court is faced with the same situation as in Rooker and Feldman: an appeal from a state court final judgment filed in federal district court.” The dissent points to post-Exxon authority in the First, Second, Third, Fourth, Fifth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits all refusing to extend the doctrine to state-court interlocutory orders.

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