Eleventh Circuit Casts Doubt on “Matter of Substantive Law” Exception to Appellate Jurisdictional Bar of 28 U.S.C. § 1447(d)

In Vachon v. Travelers Home & Mar. Ins. Co., No. 20-12765 (11th Cir. Dec. 14, 2021), the Eleventh Circuit held that it lacked appellate jurisdiction over a remand order under 28 U.S.C. § 1447(d), rejecting application of the “matter of substantial law” exception. In a concurring opinion, two judges hold that they would have affirmed the remand order because removal was untimely under 28 U.S.C. § 1446(c)(1).

In 2013, plaintiff Vachon sued defendant Travelers Home and Marine Insurance Company – provider of his “uninsured/underinsured” auto insurance – in Florida state court. The case was originally unremovable to federal court because the coverage limits did not exceed the $75,000 minimum amount in controversy necessary to invoke diversity jurisdiction under 28 U.S.C. § 1332(a).

After prevailing at trial in 2020, the plaintiff invoked a state statute (Fla. Stat. § 624.155(b)(1)) that allowed additional recovery for bad faith. “Because the value of the action now ‘exceed[ed] the sum or value of $75,000,’ Travelers removed the lawsuit to federal court on May 26, 2020, based on diversity jurisdiction.” But the district court remanded the case as untimely, holding that the attempted removal came “more than one year after commencement of the action.” 28 U.S.C. § 1446(c)(1).

On appeal, the panel holds that it lacked appellate jurisdiction. Under 28 U.S.C. § 1447(d), “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.” This provision specifically withdraws appellate jurisdiction where the district court remands the two reasons identified in section 1447(c): “a lack of subject matter jurisdiction or a defect in removal procedure.” The remand for untimeliness here was “precisely the type of removal defect contemplated by [section] 1447(c).” Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 128 (1995).

“Travelers agrees that this Court ordinarily has no jurisdiction to consider an appeal from a remand order, but it argues that we have jurisdiction under the so-called ‘matter of substantive law’ exception to subsection (d) . . . . This judge-made exception permits appellate review of a remand order ‘that determines the substantive issues of the case in a way that is conclusive because it is unreview[1]able by the state court” . . . . It is unclear what aspect of ‘[t]he judicial Power of the United States,’ U.S.CONST. art. III, § 1, authorizes us to carve out exceptions to Congress’s lawful restriction of our jurisdiction.”

In any event, the panel finds the exception inapplicable. “Travelers contends that the district court determined substantive issues when it ‘calculat[ed] . . . the one-year removal period based entirely upon an interpretation of Florida law as to whether an amended pleading relates back to the filing date of the original claim,’ but the remand order did not mention the Florida relation-back rules.” Indeed, the issue was not argued at all in the district court. “Moreover, Travelers has not explained how the findings about the start-date of the removal period will have any effect on the litigation on remand.”

“We would lack jurisdiction even if the order contained some determination of substantive law because the matter of substantive law exception is inapplicable when ‘the substantive issue is intrin[1]sic to the district court’s decision to remand’ . . . . Assuming substantive Florida law played a part in the district court’s calculation of the removal period, any determination about that law ‘was merely a step towards the conclusion that” the removal was untimely . . . . So the substantive issue would have been intrinsic to the decision to remand.”

In a concurring opinion, Chief Judge Prior and Judge Lagoa state that even if the court had appellate jurisdiction, they would affirm the remand order anyway. “The plain meaning of section 1446 is clear: The one-year period for a defendant to remove an action to federal court begins when the plaintiff files his complaint in state court, not when he amends his complaint to add a new claim years later. Travelers filed its notice of removal six years too late.”

The concurrence notes that some district courts in the circuit had held that a bad-faith insurance claim is a separate claim under 28 U.S.C. § 1441(c) that triggers a new one-year period. “These district courts appear to have relied on an earlier version of the removal statute that permitted a defendant to remove the ‘entire case’ ‘[w]henever a separate and in[1]dependent claim or cause of action, which would be removable if sued upon alone, [was] joined with one or more otherwise nonremovable claims or causes of action’ . . . . But Congress repealed that provision in 2011 . . . .[a]nd the distinction the former provision drew between an ‘entire case’ and an individual ‘claim’ tends only to confirm that a claim is not the same as an action.”

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