Phoenix Container v. Florio, James ( 2000 )


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  • In the
    United States Court of Appeals
    For the Seventh Circuit
    No. 00-1466
    Phoenix Container, L.P.,
    and Yasar Samarah,
    Plaintiffs-Appellees,
    v.
    Ken Sokoloff, et al.,
    Defendants.
    Appeal of:
    James Florio
    Appeal from the United States District Court
    for the Northern District of Illinois, Eastern
    Division.
    No. 99 C 6630--Robert W. Gettleman, Judge.
    Argued November 30, 2000--Decided December 18,
    2000
    Before Flaum, Chief Judge, and Easterbrook
    and Rovner, Circuit Judges.
    Easterbrook, Circuit Judge. Exactly 30
    days after being served with process in a
    suit filed in state court, James Florio
    filed a notice of removal, asserting that
    complete diversity of citizenship among
    the parties brought the case within
    federal jurisdiction. See 28 U.S.C.
    sec.sec. 1332, 1441(a). All defendants
    joined Florio’s notice, an essential
    step. See Hanrick v. Hanrick, 
    153 U.S. 192
     (1894); Torrence v. Shedd, 
    144 U.S. 527
     (1892). This created a potential
    problem, however, because the other
    defendants were no longer entitled to
    remove the action. "The notice of removal
    of a civil action or proceeding shall be
    filed within thirty days after the
    receipt by the defendant, through service
    or otherwise, of a copy of the initial
    pleading setting forth the claim for
    relief upon which such action or
    proceeding is based". 28 U.S.C.
    sec.1446(b). Several defendants had been
    served with process before Florio, so
    their entitlement to remove had expired
    by the time Florio filed a notice of
    removal. The district court held that,
    unless every defendant is entitled to
    remove, then no defendant is entitled to
    remove. This application of the "first-
    served defendant rule" led the judge to
    remand the proceedings to state court. 
    83 F. Supp. 2d 928
     (N.D. Ill. 2000).
    Florio has filed this appeal to argue
    that the "first-served defendant rule" is
    incompatible with sec.1446(b). Florio
    reads "receipt by the defendant" to mean
    "receipt by the removing defendant"
    rather than "receipt by any defendant",
    for the latter dispenses with the
    definite article. On Florio’s reading
    only the removing defendant need meet the
    time requirement, though all defendants
    still must agree to the federal forum. He
    also relies on the holding of Murphy
    Brothers, Inc. v. Michetti Pipe
    Stringing, Inc., 
    526 U.S. 344
     (1999),
    that "receipt . . . through service or
    otherwise" means receipt through formal
    service, and not otherwise. If receipt
    "otherwise" sufficed, the Court
    concluded, a defendant’s time to remove
    could expire before he became a party.
    Just so, Florio insists, with the first-
    served defendant rule, which could--and
    here did--extinguish a defendant’s right
    to remove before he became a party.
    After Quackenbush v. Allstate Insurance
    Co., 
    517 U.S. 706
    , 714-15 (1996), appeal
    (rather than mandamus) is the right way
    to contest remand orders. See Benson v.
    SI Handling Systems, Inc., 
    188 F.3d 780
    (7th Cir. 1999). Nonetheless, "[a]n order
    remanding a case to the State court from
    which it was removed is not reviewable on
    appeal or otherwise, except that an order
    remanding a case to the State court from
    which it was removed pursuant to section
    1443 of this title shall be reviewable by
    appeal or otherwise." 28 U.S.C.
    sec.1447(d). Florio did not remove under
    sec.1443, which covers civil rights
    cases, so a straightforward reading of
    sec.1447(d) forecloses his effort to get
    appellate review. Yet just as the Court
    refused in Murphy Brothers to read
    sec.1446(b) literally, so it has declined
    to read sec.1447(d) literally. A series
    of cases beginning with Thermtron
    Products, Inc. v. Hermansdorfer, 
    423 U.S. 336
     (1976), and culminating in Things
    Remembered, Inc. v. Petrarca, 
    516 U.S. 124
     (1995), had produced this conclusion:
    sec.1447(d) must be read in pari materia
    with sec.1447(c), so that only remands
    based on grounds specified in sec.1447(c)
    are immune from review under sec.1447(d).
    As long as a district court’s remand is
    based on a timely raised defect in
    removal procedure or on lack of subject-
    matter jurisdiction--the grounds for
    remand recognized by sec.1447(c)--a court
    of appeals lacks jurisdiction to
    entertain an appeal of the remand order
    under sec.1447(d).
    
    516 U.S. at 127-28
     (citation omitted). A
    remand based on a conclusion that removal
    was untimely is "based on a . . . defect
    in removal procedure"; sec.1446 specifies
    removal procedures, and timeliness is a
    statutory condition of removal. Things
    Remembered held that a remand order is
    not reviewable by the court of appeals
    when the remand is "on grounds of
    untimely removal, precisely the type of
    removal defect contemplated by
    sec.1447(c)." 
    516 U.S. at 128
     (footnote
    omitted).
    Section 1447(d), as construed in Things
    Remembered, requires us to dismiss
    Florio’s appeal. Here, just as in Things
    Remembered, the district judge remanded a
    proceeding on the statutory ground that
    removal had been untimely. Florio
    insists, however, that this case is
    different because the district judge used
    extra-statutory criteria to determine
    timeliness. Instead of sticking with the
    language of sec.1446(b), the district
    judge relied on two additional rules: the
    principle that removal is proper only if
    all defendants join the notice, and the
    supposed corollary (essential to the
    first-served defendant rule) that one
    defendant may join another’s notice only
    if the joining defendant is eligible to
    remove on its own. Neither the all-
    defendants rule nor the first-served-
    defendant corollary can be found in
    sec.1446(b), which means, Florio
    concludes, that the case has not been
    remanded on a statutory ground, making
    appellate review available.
    This is a nice try--close enough to
    require denial of appellees’ request for
    sanctions under Fed. R. App. P. 38--but
    no cigar. Section 1446(b) is not self-
    contained. No part of the judicial code
    is. All statutes depend for their meaning
    on external norms. Section 1446(b) uses
    words such as "filed" and "days" and
    "service" that can be understood only by
    reference to other sources of law. What
    it means to "file" a document recently
    required decision by the Supreme Court.
    See Artuz v. Bennett, 
    121 S. Ct. 361
    (2000). Does "day" mean "calendar day" or
    "business day"? What happens when the
    court is closed (for the weekend or a
    holiday) on the last day of the 30-day
    period? What does "service" mean (the
    subject of Murphy Brothers)? To say that
    any resort to understandings and legal
    propositions that can’t be found within
    the four corners of sec.1446 precludes
    application of sec.1447(d) would be to
    make the latter statute useless.
    Gravitt v. Southwestern Bell Telephone
    Co., 
    430 U.S. 723
     (1977), illustrates how
    sec.1447(d) works in conjunction with
    judicial glosses. Asserting diversity of
    citizenship, defendants removed a suit to
    federal court. Plaintiff filed a motion
    to remand, contending that diversity was
    not complete--and "complete diversity"
    (no plaintiff may have the same
    citizenship as any defendant) is the
    reading Strawbridge v. Curtiss, 7 U.S. (3
    Cranch) 267 (1806), gave to the
    requirements of what is now 28 U.S.C.
    sec.1332(a). Plaintiff’s argument had one
    more wrinkle. To go by criteria such as
    the corporate defendants’ states of
    incorporation, which can be ascertained
    from public records, the complete-
    diversity requirement was satisfied.
    Nonetheless, plaintiff asserted, the
    federal court should disregard one
    defendant’s actual state of incorporation
    and principal place of business, because
    in an earlier suit a lawyer for that
    corporation had filed an affidavit
    averring that the corporation was a
    citizen of Texas, the same state as the
    plaintiff. Applying a doctrine known as
    judicial estoppel, the district judge
    held that the affidavit bound the
    corporation in a later suit, precluding
    it from establishing its actual place of
    incorporation and principal place of
    business. Strawbridge’s requirement of
    complete diversity plus the doctrine of
    judicial estoppel led to a remand order.
    The court of appeals deemed judicial
    estoppel unavailable and issued a writ of
    mandamus. In re Southwestern Bell
    Telephone Co., 
    535 F.2d 859
     (5th Cir.
    1976), 
    542 F.2d 297
     (en banc). But the
    Supreme Court unanimously reversed,
    holding that sec.1447(d) barred appellate
    review because the district court’s
    bottom line was that the parties were not
    of diverse citizenship, a statutory
    ground of remand. Gravitt demonstrates
    that a court of appeals must look at the
    reason for remand rather than the
    reasoning supporting that decision. See
    also In re Amoco Petroleum Additives Co.,
    
    964 F.2d 706
    , 711-13 (7th Cir. 1992).
    Otherwise sec.1447(d) would amount to
    little more than a caution against
    reversing decisions that are not
    erroneous. Unless it blocks inquiry into
    the question whether the decision was
    erroneous, sec.1447(d) serves no
    function. Gravitt shows that a remand
    made erroneous by improper application of
    legal principles that influence
    application of sec.1446 is nonetheless
    conclusive.
    For reasons mentioned in this opinion’s
    second paragraph, the soundness of the
    district judge’s decision is
    questionable. But that was no less true
    in Gravitt. In the end, this remand was
    based on a conclusion that the notice of
    removal was untimely, and such a decision
    is not reviewable by a court of appeals.
    Florio’s appeal is dismissed under
    sec.1447(d).