In Re: v. Wallis, Etc.
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In Re: v. Wallis, Etc., (1st Cir. 1993).
Opinion
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
_________________________
No. 93-1174
KAY DOUGHTY,
MASSACHUSETTS COMMISSIONER OF INSURANCE, ETC.,
Plaintiff, Appellee,
v.
UNDERWRITERS AT LLOYD'S, LONDON, ET AL.,
Defendants, Appellants.
_________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
_________________________
No. 93-1214
IN RE:
DEREK RICHARD WALLIS, ETC., ET AL.,
Petitioners.
_________________________
ON PETITION FOR WRIT OF MANDAMUS
_________________________
[Hon. Joseph L. Tauro, U.S. District Judge]
___________________
_________________________
Before
Selya, Cyr and Boudin, Circuit Judges.
______________
___________________________
Mark A. Kreger, with whom Andrew Kochanowski, Robert A.
_______________ ___________________ __________
Badgley, Lord, Bissell & Brook, Kenneth W. Erickson, Matthew M.
_______ _____________________ ___________________ __________
Burke, and Ropes & Gray were on brief, for appellants-
_____ _______________
petitioners.
Raymond J. Brassard, with whom Scott Harshbarger, Attorney
___________________ __________________
General, Thomas A. Barnico, Assistant Attorney General, J. David
_________________ ________
Leslie, Stephen M. Voltz, and Rackemann, Sawyer & Brewster, P.C.
______ ________________ __________________________________
were on brief, for respondent-appellee.
_________________________
October 18, 1993
_________________________
SELYA, Circuit Judge. In this proceeding, we conclude
SELYA, Circuit Judge.
_____________
that the district court's abstention-based remand order is not
immediately appealable and that mandamus is not an appropriate
alternative. Because this jurisdictional determination involves
an issue on which the circuits are somewhat less than uniform, we
take some pains to elucidate our rationale. We do not, however,
reach the merits and, accordingly, leave a veritable hothouse of
efflorescent questions to be plucked at another time and in
another forum.
I. BACKGROUND
I. BACKGROUND
The controversy that is before us finds its genesis in
a beguilingly simple question: "Who insures the insurers?" The
question arises in connection with American Mutual Liability
Insurance Company (AMLICO), a Massachusetts-based firm, which
entered into a series of reinsurance contracts over a period of
more than three decades. When AMLICO began paying out huge sums
to satisfy asbestos-related claims at the tail end of this
period, its efforts to secure reimbursement from reinsurers bore
no fruit. Unassisted, AMLICO could not stanch the financial
hemorrhaging and sought protection under state insolvency laws.
The Massachusetts Supreme Judicial Court ordered the firm
liquidated, and, in due course, appointed respondent-appellee Kay
Doughty, the Commonwealth's Commissioner of Insurance, as
permanent receiver.
Doughty filed suit in state court to recover an
estimated $15,000,000 in overdue reinsurance indemnities, as well
2
as treble damages under the Massachusetts trade practices
statute. See Mass. Gen. Laws ch. 93A, 10, 11 (1984). She
___
named as defendants a melange of entities alleged to have entered
into reinsurance pacts, including the so-called London Market
Companies and several underwriting syndicates at Lloyd's, London
(collectively, "the Reinsurers").1
The Reinsurers did not relish the chance to settle
accounts in a court of law. Citing agreements contained in some
(but far from all) of the reinsurance contracts, they formally
requested that AMLICO submit its claims to arbitration. Doughty
declined the invitation. She asserted, among other things, that
the call for arbitration came too late; that the Reinsurers had
waived the benefit of any agreements to arbitrate; and that, in
any event, the dispute as a whole did not qualify as arbitrable.
____________________
1In labelling the London Market Companies and the
Underwriters at Lloyd's, collectively, as "the Reinsurers," we
exclude for present purposes a number of domestic firms and
certain other foreign-based insurance providers (e.g., English &
____
American Insurance Co. and St. Helens' Insurance Co.) named as
defendants in Doughty's action. The appellation "London Market
Companies" is itself a collective term describing a consortium of
foreign-based insurance providers, including Excess Insurance
Co.; General Reinsurance Co. (Amsterdam); General Reinsurance
Syndicate; Anglo French Insurance Co. (as successor to Federation
General Insurance Co.); British National Insurance Co.; Sovereign
Marine & General Insurance Co.; Royal Scottish Insurance Co.;
Swiss National Insurance Co.; Zurich Reinsurance (U.K.) (as
successor to Turegum Insurance Co.); and Gan Minster Insurance
Co. (as successor to Minster Insurance Co.). Finally, we note
that the Lloyd's underwriting syndicates are identified in the
notice of appeal and petition for mandamus only as "Derek Richard
Wallis, for himself and those other Underwriters at Lloyd's,
London."
3
At that point, the Reinsurers invoked 9 U.S.C. 205 (1988)2 and
removed Doughty's suit to the United States District Court for
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USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
_________________________
No. 93-1174
KAY DOUGHTY,
MASSACHUSETTS COMMISSIONER OF INSURANCE, ETC.,
Plaintiff, Appellee,
v.
UNDERWRITERS AT LLOYD'S, LONDON, ET AL.,
Defendants, Appellants.
_________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
_________________________
No. 93-1214
IN RE:
DEREK RICHARD WALLIS, ETC., ET AL.,
Petitioners.
_________________________
ON PETITION FOR WRIT OF MANDAMUS
_________________________
[Hon. Joseph L. Tauro, U.S. District Judge]
___________________
_________________________
Before
Selya, Cyr and Boudin, Circuit Judges.
______________
___________________________
Mark A. Kreger, with whom Andrew Kochanowski, Robert A.
_______________ ___________________ __________
Badgley, Lord, Bissell & Brook, Kenneth W. Erickson, Matthew M.
_______ _____________________ ___________________ __________
Burke, and Ropes & Gray were on brief, for appellants-
_____ _______________
petitioners.
Raymond J. Brassard, with whom Scott Harshbarger, Attorney
___________________ __________________
General, Thomas A. Barnico, Assistant Attorney General, J. David
_________________ ________
Leslie, Stephen M. Voltz, and Rackemann, Sawyer & Brewster, P.C.
______ ________________ __________________________________
were on brief, for respondent-appellee.
_________________________
October 18, 1993
_________________________
SELYA, Circuit Judge. In this proceeding, we conclude
SELYA, Circuit Judge.
_____________
that the district court's abstention-based remand order is not
immediately appealable and that mandamus is not an appropriate
alternative. Because this jurisdictional determination involves
an issue on which the circuits are somewhat less than uniform, we
take some pains to elucidate our rationale. We do not, however,
reach the merits and, accordingly, leave a veritable hothouse of
efflorescent questions to be plucked at another time and in
another forum.
I. BACKGROUND
I. BACKGROUND
The controversy that is before us finds its genesis in
a beguilingly simple question: "Who insures the insurers?" The
question arises in connection with American Mutual Liability
Insurance Company (AMLICO), a Massachusetts-based firm, which
entered into a series of reinsurance contracts over a period of
more than three decades. When AMLICO began paying out huge sums
to satisfy asbestos-related claims at the tail end of this
period, its efforts to secure reimbursement from reinsurers bore
no fruit. Unassisted, AMLICO could not stanch the financial
hemorrhaging and sought protection under state insolvency laws.
The Massachusetts Supreme Judicial Court ordered the firm
liquidated, and, in due course, appointed respondent-appellee Kay
Doughty, the Commonwealth's Commissioner of Insurance, as
permanent receiver.
Doughty filed suit in state court to recover an
estimated $15,000,000 in overdue reinsurance indemnities, as well
2
as treble damages under the Massachusetts trade practices
statute. See Mass. Gen. Laws ch. 93A, 10, 11 (1984). She
___
named as defendants a melange of entities alleged to have entered
into reinsurance pacts, including the so-called London Market
Companies and several underwriting syndicates at Lloyd's, London
(collectively, "the Reinsurers").1
The Reinsurers did not relish the chance to settle
accounts in a court of law. Citing agreements contained in some
(but far from all) of the reinsurance contracts, they formally
requested that AMLICO submit its claims to arbitration. Doughty
declined the invitation. She asserted, among other things, that
the call for arbitration came too late; that the Reinsurers had
waived the benefit of any agreements to arbitrate; and that, in
any event, the dispute as a whole did not qualify as arbitrable.
____________________
1In labelling the London Market Companies and the
Underwriters at Lloyd's, collectively, as "the Reinsurers," we
exclude for present purposes a number of domestic firms and
certain other foreign-based insurance providers (e.g., English &
____
American Insurance Co. and St. Helens' Insurance Co.) named as
defendants in Doughty's action. The appellation "London Market
Companies" is itself a collective term describing a consortium of
foreign-based insurance providers, including Excess Insurance
Co.; General Reinsurance Co. (Amsterdam); General Reinsurance
Syndicate; Anglo French Insurance Co. (as successor to Federation
General Insurance Co.); British National Insurance Co.; Sovereign
Marine & General Insurance Co.; Royal Scottish Insurance Co.;
Swiss National Insurance Co.; Zurich Reinsurance (U.K.) (as
successor to Turegum Insurance Co.); and Gan Minster Insurance
Co. (as successor to Minster Insurance Co.). Finally, we note
that the Lloyd's underwriting syndicates are identified in the
notice of appeal and petition for mandamus only as "Derek Richard
Wallis, for himself and those other Underwriters at Lloyd's,
London."
3
At that point, the Reinsurers invoked 9 U.S.C. 205 (1988)2 and
removed Doughty's suit to the United States District Court for
the District of Massachusetts. Next, they filed motions to
compel arbitration and, as an interim prophylactic, to stay
proceedings pending the outcome of the arbitral process. Doughty
objected to these motions and moved on sundry grounds for an
order remanding the case to state court. The Reinsurers opposed
this motion.
Concluding that principles of Burford abstention
_______
controlled, see Burford v. Sun Oil Co., 319 U.S. 315 (1943); see
___ _______ ___________ ___
also Fragoso v. Lopez, 991 F.2d 878, 882-83 (1st Cir. 1993)
____ _______ _____
(explicating scope, reach, and current status of Burford
_______
abstention), the district court overruled appellants' objection
and granted the motion to remand. The court did not speak to the
other reasons advanced in support of the motion. Moreover,
consistent with its relinquishment of jurisdiction, the court
left both the question of arbitrability and the related matter of
a stay to the state tribunal.
This proceeding ensued. In it, the Reinsurers wear two
hats, appearing as both appellants and petitioners; they appeal
____________________
2This statute implements the Convention on the Recognition
of Foreign Arbitral Awards (the "Convention"). It provides that,
if "the subject matter of an action or proceeding pending in a
State court relates to an arbitration agreement or award falling
under the Convention, the defendant or the defendants may, at any
time before the trial thereof, remove such action or proceeding."
Under 9 U.S.C. 202, the arbitration agreements here at issue
arguably come within the Convention's grasp because, if the
agreements exist and remain in effect, at least one party to each
such agreement is a foreign entity.
4
from the remand order while simultaneously seeking a writ of
mandamus aimed at recalling it. We consolidated these two
initiatives for briefing, oral argument, and decision.
II. THE APPEAL
II. THE APPEAL
We begin our inquiry into the appeal by addressing the
question of appellate jurisdiction for, if no jurisdiction
attaches, the appeal founders. See In re Recticel Foam Corp.,
___ __________________________
859 F.2d 1000, 1002 (1st Cir. 1988). Here, two hurdles block the
jurisdictional path: the statutory bar to appellate review of
remand orders, see 28 U.S.C. 1447(d) (1988), and the bedrock
___
requirement that jurisdiction can never be assumed but must be
premised on some affirmative source. See, e.g., Massachusetts v.
___ ____ _____________
V & M Management, Inc., 929 F.2d 830, 833 (1st Cir. 1991) (per
_______________________
curiam). We trace the dimensions of each hurdle and, in the
process, consider appellants' hurdle-clearing capability.
A. The Statutory Bar.
A. The Statutory Bar.
_________________
28 U.S.C. 1447(d) provides that "[a]n order remanding
a case to the State court from which it was removed is not
reviewable on appeal or otherwise." Although this statute
prohibits appellate review of remand orders "whether erroneous or
not and whether review is sought by appeal or by extraordinary
writ," Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 343
______________________ _____________
(1976), the proscription is deeper than it is wide. Because
courts must read section 1447(d) in pari materia with its
____ _______
statutory neighbor, 28 U.S.C. 1447(c), see Thermtron, 423 U.S.
___ _________
5
at 353, only remand orders issued under the authority of section
1447(c) are rendered unreviewable by the operation of section
1447(d), see Garcia v. Island Program Designer, Inc., ___ F.2d
___ ______ ______________________________
___, ___ (1st Cir. 1993) [No. 92-1853, slip op. at 5]; V & M
______
Management, 929 F.2d at 832-33. And, since section 1447(c), by
__________
its terms, is concerned exclusively with remands stemming from
"defect[s] in removal procedure" such that "the district court
lacks subject matter jurisdiction," it follows that section
1447(d) leaves open the possibility of appellate review in all
cases that are remanded for reasons not covered by section
1447(c).
This is such an instance. Despite the fact that
Doughty articulated several reasons for remanding the case, many
of which implicated section 1447(c), the district court shunted
these asseverations to one side and instead remanded exclusively
on the basis of Burford abstention. Because abstention, by
_______
definition, assumes the existence of subject matter jurisdiction
in the abstaining court after all, one must have (or, at least,
presume the presence of) subject matter jurisdiction in order to
decline the exercise of it section 1447(c) does not apply to an
abstention driven remand. See Corcoran v. Ardra Ins. Co., 842
___ ________ _______________
F.2d 31, 34 (2d Cir. 1988). Hence, the statutory bar does not
preclude us from reviewing the lower court's remand order.
B. Possible Sources of Appellate Jurisdiction.
B. Possible Sources of Appellate Jurisdiction.
__________________________________________
Our determination that 28 U.S.C. 1447(d) does not
operate to bar appellate review merely removes the first hurdle
6
blocking the jurisdictional path. To pass the next hurdle, the
Reinsurers must demonstrate the existence and applicability of
some affirmative authority conferring jurisdiction on the courts
of appeals to review remand orders of the sort at issue here.
The Reinsurers try to clear this hurdle from three different
angles. They urge that the remand order is appealable under 28
U.S.C. 1291 (1988)(conferring jurisdiction on the courts of
appeals to review "final decisions of the district courts"), or,
alternatively, as a collateral order, see Cohen v. Beneficial
___ _____ __________
Industrial Loan Corp., 337 U.S. 541, 546 (1949), or, if all else
_____________________
fails, on the basis that the district court's rulings, taken in
their totality, constitute a set of orders appealable under the
Federal Arbitration Act. We find these exhortations
unconvincing.
1. The Final Judgment Rule. In respect to the
1. The Final Judgment Rule.
_________________________
suggestion that the remand order is appealable as a final
judgment, the sockdolager is that the Supreme Court has said
exactly the opposite:
[B]ecause an order remanding a removed action
does not represent a final judgment
reviewable by appeal, the remedy in such a
case is by mandamus to compel action, and not
by writ of error to review what has been
done.
Thermtron, 423 U.S. at 352-53 (citation and internal quotation
_________
marks omitted).
The Reinsurers attempt to deflect the force of this
blunt statement by suggesting that it should be regarded as
dictum. They posit that, because the Thermtron Court found the
_________
7
remand order so egregious as to justify mandamus, no need to
decide the availability of direct appellate review ever arose.
In advancing this suggestion, the Reinsurers are whistling past
the graveyard.
"Dictum" is a term that judges and lawyers use to
describe comments relevant, but not essential, to the disposition
of legal questions pending before a court. See Kastigar v.
___ ________
United States, 406 U.S. 441, 454-55 (1972); Dedham Water Co. v.
_____________ _________________
Cumberland Farms Dairy, Inc., 972 F.2d 453, 459 (1st Cir. 1992);
_____________________________
United States v. Crawley, 837 F.2d 291, 292-93 (7th Cir. 1988).
_____________ _______
Given the familiar principle that "whatever may be done without
the employment of [mandamus], may not be done with it," Ex parte
_________
Rowland, 104 U.S. 604, 617 (1882)); see also Helstoski v. Meanor,
_______ ___ ____ _________ ______
442 U.S. 500, 505-08 (1979), the Court's statement in Thermtron
_________
defies description as mere dictum. To the exact contrary, the
mandamus remedy employed in Thermtron necessarily betokened, and,
_________
indeed, depended on, the Court's antecedent holding anent the
unavailability of direct appellate review. Because deleting the
challenged statement would have impaired the analytical
foundation of the Court's ultimate decision to issue mandamus,
that statement is properly categorized as part of the court's
holding, not as dictum.3
____________________
3On this issue, all roads lead to Rome. Were we to assume,
favorably to appellants, that the challenged statement did not
comprise part of the Court's holding, we would nevertheless hew
to it. Carefully considered language of the Supreme Court, even
if technically dictum, generally must be treated as
authoritative. See United States v. Santana, ___ F.2d ___, ___
___ ______________ _______
(1st Cir. 1993) [No. 93-1393, slip op. at 19-20]; McCoy v.
_____
8
Still using the final judgment rule as their stepping
stone, the Reinsurers make a second effort to boost themselves
over the hurdle an effort hinging on the assumption that
Thermtron did not survive the Court's later decision in Moses H.
_________ ________
Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983).
____________________ _____________________
This argument, too, is easily repelled. The short, dispositive
answer to the argument is that this court only recently refused
to follow those cases suggesting that Cone undermines Thermtron,
____ _________
and, instead, continued to apply Thermtron's rule that remand
_________
orders are not final. See Garcia, ___ F.2d at ___ [slip op. at
___ ______
6-8]. That ends the matter. It is black-letter law that, in a
multi-panel circuit, newly constituted panels are, with few
exceptions (none applicable here), bound by prior panel decisions
closely in point. See, e.g., United States v. Wogan, 938 F.2d
___ ____ _____________ _____
1446, 1449 (1st Cir.), cert. denied, 112 S. Ct. 441 (1991);
_____ ______
Jusino v. Zayas, 875 F.2d 986, 993 (1st Cir. 1989). Thus,
______ _____
principles of stare decisis require our allegiance to the
_____ _______
Thermtron rule in this situation.
_________
The slightly longer, but equally forceful, rebuttal is
____________________
Massachusetts Inst. of Technology, 950 F.2d 13, 19 (1st Cir.
___________________________________
1991), cert. denied, 112 S. Ct. 1939 (1992). This truism is
_____ ______
fortified here inasmuch as the rule that the Court's statement
enunciates that remand orders are not final judgments has
been adopted in a long string of circuit-level opinions. See,
___
e.g., Garcia, ___ F.2d at ___ [slip op. at 7-8]; Melahan v.
____ ______ _______
Pennock Ins., Inc., 965 F.2d 1497, 1500 (8th Cir. 1992); V & M
___________________ _____
Management, 929 F.2d at 833-34; Corcoran, 842 F.2d at 34; Nasuti
__________ ________ ______
v. Scannell, 792 F.2d 264, 267 (1st Cir. 1986); see also Milk `N'
________ ___ ____ ________
More, Inc. v. Beavert, 963 F.2d 1342, 1344 (10th Cir. 1992);
___________ _______
McDermott Int'l v. Lloyd's Underwriters, 944 F.2d 1199, 1203 (5th
_______________ ____________________
Cir. 1991).
9
that there seem to be other good reasons counselling in favor of
Thermtron's continued vitality. In Cone, the Court held that a
_________ ____
stay, issued in order to permit a related state case to proceed
prior to the federal case, could be appealed as a final order.
But, Cone makes no reference to Thermtron's holding vis-a-vis
____ _________
remand orders, a circumstance which strongly suggests that the
Court viewed the rules pertaining to remands and to stays,
respectively, as separate and distinct. Moreover, the Supreme
Court has continued to rely on Thermtron in the post-Cone era.
_________ ____
See, e.g., Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 347 &
___ ____ _____________________ ______
n.4 (1988). Such continuing reliance indicates that Thermtron is
_________
still alive and well. Then, too, our reluctance to find that
Cone implicitly overruled Thermtron is sharpened by the fact that
____ _________
Thermtron's "language is rather absolute." Garcia, slip op. at
_________ ______
7. Where the Court has expressed a rule so clearly, inferior
courts are entitled to expect equally blunt guidance should the
Court wish to retract the rule or declare that it is no longer
good law. Cone sends no such signal.
____
Lastly, and relatedly, Thermtron and Cone, scrutinized
_________ ____
side by side, highlight certain differences between remand orders
and stay orders. Whereas stay orders ordinarily signal a
determination that there are federal interests at stake,
sufficient ultimately to justify a hearing in federal court,
remands, by definition, embody a determination that the
cognizable federal interests, if any, when compared to the
cognizable state interests, are so lacking in weight that the
10
federal court either does not have, or should not appropriately
exercise, jurisdiction. A remanded case's failure to pass a
threshold test of this sort might possibly explain why a federal
appeal as of right does not attach and the back-up remedy of
mandamus is deemed adequate protection. Furthermore, remand
orders typically involve a single case that a federal court
returns to the state tribunal whence it emanated. Consequently,
the litigation continues to progress, albeit in a state rather
than a federal forum. In that sense, there is neither a
permanent disposition of the case nor a disruption of its
progress. A stay, on the other hand, typically involves two
separate proceedings, say, one in a state court and one in a
federal court. When the federal tribunal stays the latter
pending the outcome of the former in state court, res judicata
___ ________
principles make that decision effectively final as to certain
aspects of the federal case. See Cone, 460 U.S. at 10-13 & n.11.
___ ____
We think this finality helps to explain why the Court has
permitted appeals to be taken from stay orders in situations
where remand orders would not be appealable. See In re Amoco
___ ____________
Petroleum Additives Co., 964 F.2d 706, 712 (7th Cir. 1992). And
_______________________
we think that this twist affords an added reason why,
notwithstanding Cone, Thermtron's holding that a remand order is
____ _________
not a final judgment remains intact.
2. The Collateral Order Doctrine. Next, the
2. The Collateral Order Doctrine.
________________________________
Reinsurers argue that the remand order, even if not a final
judgment, may nonetheless be appealable under the collateral
11
order doctrine. That doctrine carves out a "narrow exception to
the normal application of the final judgment rule," Midland
_______
Asphalt Corp. v. United States, 489 U.S. 794, 798 (1989), limited
_____________ _____________
to orders that (1) conclusively determine (2) important legal
questions which are (3) completely separate from the merits of
the underlying action and are (4) effectively unreviewable on
appeal from a final judgment. See Lauro Lines S.R.L. v. Chasser,
___ __________________ _______
490 U.S. 495, 498 (1989); Cohen, 337 U.S. at 546; In re Insurers
_____ ______________
Syndicate, Etc., 864 F.2d 208, 210 (1st Cir. 1988). The
________________
Reinsurers contend that the district court's remand order meets
these four preconditions.
Once outside the purview of 28 U.S.C. 1447(d), see
___
supra Part II(A), there is no absolute rule either prohibiting or
_____
permitting immediate appellate review of remand-related orders
under the Cohen rubric. Compare, e.g., Karl Koch Erecting Co. v.
_____ _______ ____ ______________________
New York Convention Ctr. Dev. Corp., 838 F.2d 656, 658-59 (2d
_____________________________________
Cir. 1988) (permitting review of decision to remand based on
interpretation of forum selection clause) with, e.g., Corcoran v.
____ ____ ________
Ardra Ins. Co., 842 F.2d at 35 (dismissing appeal of decision to
______________
remand based on Burford abstention). Rather, courts must apply
_______
the multi-pronged Cohen test to each remand order (or, at least,
_____
to each type of remand order) in an individualized, case-specific
____
manner. See, e.g., Garcia, ___ F.2d at ___ [slip op. at 8-9]
___ ____ ______
(undertaking case-specific analysis). And, in determining
whether a particular remand order falls within or without Cohen's
_____
collateral order exception, courts must look to the general
12
circumstances surrounding the order's issuance, including the
reasons underlying it. See Travelers Ins. Co. v. Keeling, 996
___ __________________ _______
F.2d 1485, 1488-89 (2d Cir. 1993); Corcoran, 842 F.2d at 35.
________
The remand order here at issue does not pass muster
under Cohen. The salient legal question that stands separate and
_____
apart from the merits in this case that is, the "collateral"
issue is whether the parties' overall dispute should be
resolved in arbitration. The district court's ruling did not
conclusively determine this issue. Instead, the district court's
order set to rest only the preliminary question of which court
should resolve the collateral issue. In other words, the
collateral issue remains an open matter a matter that the state
court must yet decide. We agree with the Second Circuit that, to
come within the collateral order rule, a decree must definitively
resolve the merits of the collateral issue, not merely determine
which court will thereafter resolve it. See Corcoran, 842 F.2d
___ ________
at 35; see also Bennett v. Liberty Nat'l Fire Ins. Co., 968 F.2d
___ ____ _______ ___________________________
969, 970-71 (9th Cir. 1992). Determining whether a state or
federal court is to resolve an issue constitutes the definitive
resolution of a collateral matter only when special circumstances
exist, such as when the remand is pursuant to judicial
interpretation of a forum-selection provision. See Corcoran, 842
___ ________
F.2d at 35. That is not the case here. Hence, the order that
the Reinsurers contest does not satisfy the first precondition to
appealability under the Cohen doctrine.
_____
The Reinsurers attempt to subvert this conclusion by
13
redefining the collateral issue. They suggest that the question
is not whether the underlying dispute should be resolved in
arbitration, but, rather, whether a federal or state court is the
proper forum for determining the dispute's arbitrability. We
think this argument proves too much. Every remand order
conclusively determines which court will thereafter determine the
issues in controversy. Thus, appellants' approach could easily
expand Cohen beyond the isthmian confines that the Court
_____
envisioned, see Cohen, 337 U.S. at 546 (predicting that only a
___ _____
"small class" of cases would be affected by the doctrine), and
thereby thwart the strong federal interest in precluding
piecemeal appeals. See Coopers & Lybrand v. Livesay, 437 U.S.
___ __________________ _______
463, 471 (1978); Recticel, 859 F.2d at 1003 & n.3. At any rate,
________
we are skeptical about permitting litigants to avoid Cohen's
_____
first prong by the simple expedient of distilling issues to the
smallest possible unit of measurement. We, therefore, decline to
accept the Reinsurers' attempted reformulation of the collateral
issue. See generally Travelers Ins. Co. v. Keeling, 996 F.2d at
___ _________ __________________ _______
1489 (refusing, in nearly identical circumstances, to redefine
the issue in dispute); Corcoran, 842 F.2d at 35 (similar).
________
In all events, we conclude that, whatever way the
collateral issue is defined, the remand order is not immediately
appealable because it fails another element of the test. Cohen
_____
requires that the disputed issue represent "an important and
unsettled question of controlling law, not merely a question of
the proper exercise of the trial court's discretion." Boreri v.
______
14
Fiat S.p.A., 763 F.2d 17, 21 (1st Cir. 1985); accord Insurers
___________ ______ ________
Syndicate, 864 F.2d at 210; United States v. Sorren, 605 F.2d
_________ _____________ ______
1211, 1213 (1st Cir. 1979); see also Lauro Lines, 490 U.S. at 504
___ ____ ___________
(Scalia, J., concurring) (explaining that the collateral issue
must be "sufficiently important to overcome the policies
militating against interlocutory appeals"). Although the
question, admittedly, is not free from doubt the Convention,
after all, contemplates the possibility of removal when a state-
court proceeding relates to an arbitration agreement and involves
a foreign reinsurer we believe that the Burford-based decision
_______
as to which forum, state or federal, will ultimately determine
arbitrability lacks the necessary high degree of importance that
is demanded. This conclusion is scarcely original. Both the
Court, in Thermtron, and the Congress, in enacting 28 U.S.C.
_________
1447, have adumbrated that, absent exceptional circumstances, the
determination that one particular court, rather than some other
equally qualified court, will adjudicate an issue is not so vital
as to outweigh the interests of the parties and of society in the
swift, efficient administration of justice. Indeed, Thermtron
_________
and section 1447 serve as vivid reminders that, when remand is at
stake, the policies militating against interlocutory appeal
possess their full vigor. See generally 14A Charles A. Wright,
___ _________
et al., Federal Practice and Procedure 3740 (1985 & Supp.
_______________________________
1993).
We hold, therefore, that an order to remand premised on
Burford abstention is not immediately appealable under the Cohen
_______ _____
15
rubric. In reaching this result, we find ourselves in agreement
with the Second Circuit. See Corcoran, 842 F.2d at 35. We
___ ________
expressly decline to extend the Fifth Circuit's decision in
McDermott Int'l v. Lloyd's Underwriters, 944 F.2d 1199, 1203 &
_______________ ____________________
n.5 (5th Cir. 1991), beyond the facts there presented.4 When
all is said and done, in this case, as in Garcia, ___ F.2d at ___
______
[slip op. at 9], "we cannot find a `collateral order' exception
large enough to fit our case that does not swallow up (and
thereby simply disregard) the general rule."
3. The Federal Arbitration Act. The Federal
3. The Federal Arbitration Act.
______________________________
Arbitration Act is the last source of the Reinsurers' effort to
____________________
4While we are comfortable with the result in McDermott,
_________
given its facts, some of the language contained in the opinion is
potentially mischievous. With respect, we think the court
overgeneralized by failing to distinguish between cause and
effect. McDermott properly found the district court's remand
_________
order to be appealable under the collateral order doctrine, but
this outcome is not dictated merely because the remand order had
the "effect [of] allow[ing] a state court to decide the question
______
of arbitrability." McDermott, 944 F.2d at 1203 (emphasis
_________
supplied). Rather, the question of where the parties' dispute
regarding arbitration was to be resolved constituted a collateral
issue because the parties had jointly made it a collateral issue,
i.e., they had included a service-of-suit clause in the contract
____
and the court based the remand on its substantive interpretation
of that provision. See id. at 1201. The mere fact that a remand
___ ___
order has the effect of deciding that issues are to be resolved
in a state court does not mean that, in every case, the identity
of the forum is a collateral issue within the ambit of Cohen.
_____
See Corcoran, 842 F.2d at 35. After all, remand orders always
___ ________
cause the disputed issues to be determined in state court; and
McDermott's reasoning, applied across the board, would make
_________
virtually all remand orders (save only those which are subject to
___
the statutory bar, see supra Part II(A)) appealable collateral
___ _____
orders a position to which we cannot subscribe.
16
generate an adequate jurisdictional showing.5 The Act provides,
inter alia, that an appeal may be taken from an order refusing a
_____ ____
stay pending arbitration or denying a motion to compel
arbitration. See 9 U.S.C. 16(a)(1)(A), (C) (Supp. V 1992).
___
Here, the district court, after remanding the case, stated that
it was denying appellants' motions to compel arbitration and stay
the litigation, without prejudice. The Reinsurers endeavor to
appeal from these "denials." We are unimpressed.
We think it is evident that the district court, having
indicated its intention to remand the case to state court, added
the "denied without prejudice" language merely as a way of
flagging that it intended the arbitrability issue to be decided
in a state court and that the federal court, in remanding, took
no view of arbitrability. The district court's remarks, then,
did not deal with the merits of the arbitration question and were
not arbitrability denials of the sort that the Federal
Arbitration Act makes immediately appealable. Compare Asset
_______ _____
Allocation & Management Co. v. Western Employers Ins. Co., 892
____________________________ ___________________________
F.2d 566, 574 (7th Cir. 1989) (finding district court's order
appealable under Federal Arbitration Act) with Jeske v. Brooks,
____ _____ ______
875 F.2d 71, 73 (4th Cir. 1989) (finding district court's order
inappropriate for appeal). To hold otherwise would be
____________________
5We need not consider whether the Enelow-Ettelson doctrine,
_______________
see Enelow v. New York Life Ins. Co., 293 U.S. 379 (1935);
___ ______ _________________________
Ettelson v. Metropolitan Life Ins. Co., 317 U.S. 188 (1942),
________ ____________________________
might make the remand order immediately appealable under 28
U.S.C. 1292(a)(1). The Court has overruled that line of cases.
See Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271,
___ __________________________ _______________
279-88 (1988).
17
mechanically to elevate form over substance, a practice that we
have consistently spurned. See, e.g., United States v. Branble,
___ ____ _____________ _______
925 F.2d 532, 534 (1st Cir. 1991); Maine v. Thomas, 874 F.2d 883,
_____ ______
886 (1st Cir. 1989).
The Reinsurers cannot achieve a different result even
if the district court acted with a more meddlesome intent. Once
it remanded the case to a state forum, the district court lost
jurisdiction over the case and, therefore, lacked the authority
to issue substantive orders of the sort that the Reinsurers
suggest were issued here. See, e.g., In re La Providencia Dev.
___ ____ __________________________
Corp., 406 F.2d 251, 252-53 (1st Cir. 1969); see also General
_____ ___ ____ _______
Elec. Co. v. Byrne, 611 F.2d 670, 672-73 (7th Cir. 1979) (per
__________ _____
curiam) (stating that a "transfer order deprives the transferor
court of jurisdiction until the case is returned to it"); cf.
___
Moore v. Permanente Medical Group, Inc., 981 F.2d 443, 445 (9th
_____ _______________________________
Cir. 1992) (holding that a district court possessed the authority
to award attorneys' fees after remanding only because the award
of fees was specifically authorized by the remand statute and
was, therefore, "collateral to the decision to remand"); In re
______
Spillane, 884 F.2d 642, 645-46 (1st Cir. 1989) (similar, but in
________
venue-transfer context). Put another way, absent an emergency or
some other extraordinary circumstance, the district court could
only have issued substantive orders necessary to reaching the
decision to remand.6 See, e.g., Karl Koch, 838 F.2d at 659
___ ____ __________
____________________
6The court's power to issue such orders is derivative of,
and implicit in, its power to remand.
18
(remanding because court interpreted a forum-selection provision
as requiring parties to litigate in state court); Pelleport
_________
Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273,
_______________ _____________________________
275 (9th Cir. 1984) (similar).
In the last analysis, whether or not we construe the
district court's remarks as rulings, the bottom line is
unaffected: the denials have no legal effect aside from making
clear the dimensions of the issues that the court proposed to
leave unadjudicated.
4. Summary. To recapitulate, under the circumstances
4. Summary.
_______
of this litigation, the district court's remand order is not a
final judgment; it is not an appealable collateral command; and
its accouterments are not appealable under the Federal
Arbitration Act. Because the Reinsurers have been wholly unable
to demonstrate a cognizable hook on which appellate jurisdiction
may be hung, their appeal must be dismissed for want of
jurisdiction.7
III. THE PETITION FOR MANDAMUS
III. THE PETITION FOR MANDAMUS
Anticipating problems in topping the jurisdictional
hurdles, the Reinsurers also seek to proceed by way of mandamus.
They ask that we issue a writ requiring the district court to
vacate the remand order, accept jurisdiction over the case,
compel arbitration of a portion of the underlying dispute, and
____________________
7Inasmuch as we hold that there is no affirmative source
conferring jurisdiction over the appeal essayed by the
Reinsurers, we need not address any of Doughty's other challenges
to this court's appellate jurisdiction.
19
stay proceedings as to the remainder. We see no reason to honor
the request.
Although federal appellate courts have power to issue
prerogative writs that are "necessary or appropriate in aid of
their . . . jurisdiction[]," 28 U.S.C. 1651(a) (1988), that
power must be used stintingly and brought to bear only in
extraordinary situations. See Allied Chem. Corp. v. Daiflon,
___ ___________________ ________
Inc., 449 U.S. 33, 34 (1980) (per curiam); Recticel, 859 F.2d at
____ ________
1005. Thus, prerogative writs, although frequently sought, are
seldom issued. To succeed in the hunt, a writ-seeker usually
must demonstrate that the challenged order is palpably erroneous
and that he faces some special risk of irreparable harm.8 See
___
In re Pearson, 990 F.2d 653, 656 & n.4 (1st Cir. 1989)
_______________
(collecting cases). Given the stringency of this standard, it is
unsurprising that "[i]nterlocutory procedural orders . . . rarely
will satisfy th[e] precondition for mandamus relief." Recticel,
________
859 F.2d at 1006; accord Pearson, 990 F.2d at 656. We explain
______ _______
briefly why this case is no exception to the rule.
In the first place, "mandamus [generally] will not
issue to control exercises of discretion." Recticel, 889 F.2d at
________
1006; accord DeBeers Consolidated Mines, Ltd. v. United States,
______ ________________________________ _____________
325 U.S. 212, 217 (1945); In re Bushkin Assocs., Inc. 864 F.2d
____________________________
____________________
8We have, on infrequent occasions, relaxed these
requirements and exercised our powers of "advisory mandamus" when
matters of great public import are involved. See In re Justices
___ ______________
of the Supreme Court of Puerto Rico, 695 F.2d 17, 25 (1st Cir.
_____________________________________
1982). The Reinsurers have not urged us to use advisory mandamus
here and, at any rate, this is plainly not a suitable case.
20
241, 245 (1st Cir. 1988). Burford-based abstention decisions,
_______
while more closely cabined under the current legal regime, see,
___
e.g., Fragoso, 991 F.2d at 883-86, still contain a discretionary
____ _______
element. See, e.g., General Glass Indus. Corp. v. Monsour
___ ____ ____________________________ _______
Medical Found., 973 F.2d 197, 203 (3d Cir. 1992): New Orleans
______________ ____________
Pub. Serv., Inc. v. New Orleans, 798 F.2d 858, 862 (5th Cir.
_________________ ____________
1977); Richardson v. City, Etc. of Honolulu, 759 F.Supp. 1477,
__________ _______________________
1483 (D.Haw. 1991). It follows that, to the degree the district
court understood controlling abstention law and exercised its
discretion within that known law, this case is a poor candidate
for mandamus relief. See Bushkin, 864 F.2d at 245 (explaining
___ _______
that "mandamus is generally thought an inappropriate prism
through which to inspect exercises of judicial discretion").
Even misuses of discretion will not provoke mandamus relief
_______
absent a clear usurpation of power or some similarly egregious
circumstance. See id.
___ ___
In the second place, we cannot say that the district
court's decision in this case represents a palpably erroneous
application of Burford abstention law. Although the radius of
_______
permissible Burford abstention has shrunk in recent years, see
_______ ___
New Orleans Pub. Serv., Inc. v. City Council of New Orleans, 491
_____________________________ ___________________________
U.S. 350, 360-64 (1989); Fragoso, 991 F.2d at 882-86, this
_______
litigation involves a number of novel questions, including
whether the complex system Massachusetts has enacted for the
liquidation of domestic insurance companies is the sort of scheme
that warrants serious consideration as a basis for abstention.
21
After reviewing the record, we can say only that the district
court's Burford-based decision is possibly erroneous not that
_______
it is palpably so. That is not enough to satisfy the customary
precondition for mandamus relief. See Bushkin, 864 F.2d at 245.
___ _______
And, moreover, mandamus seems an awkward vehicle for resolving
the doubtful issues that permeate the Burford equation. See
_______ ___
Amoco Petroleum, 964 F.2d at 713 (collecting cases); Corcoran,
_______________ ________
842 F.2d at 36-37 (declining, in similar circumstances, to issue
a writ of mandamus).
We note, too, that the record reveals several potential
non-Burford-based reasons for remanding this case which, on the
_______
surface, appear to possess merit. It is a prerequisite to
mandamus relief that the ruling below be "palpably improper,"
LaBuy v. Howes Leather Co., 352 U.S. 249, 256 (1957), and that a
_____ _________________
suitor's entitlement to the claimed relief be plain as a matter
of law, Pearson, 990 F.2d at 657 & n.4. We do not believe these
_______
criteria are satisfied if the disputed disposition, albeit
premised on a doubtful ground, is nevertheless probably
sustainable on an alternative ground. The case before us
illustrates the point: whatever may be said of the district
court's Burford rationale, the outcome of the federal
_______
adjudicative process retransmitting the litigation to the state
court cannot by any stretch be classified as palpably
erroneous.
Also, we descry no special risk of irreparable harm.
The Reinsurers' rhetoric does not change the fact that the remand
22
order leaves the issue of arbitrability unresolved. The state
court will decide that issue, and the Reinsurers will have rights
to appeal within that system should they so elect. While the
Reinsurers may prefer that a federal forum determine the result,
they have offered no reason why the frustration of this
preference is likely to cause irreparable harm. Cf., e.g.,
___ ____
Garcia, ___ F.2d at ___ [slip op. at 10] (finding mandamus
______
appropriate where a "critical legal determination" would,
following remand, be insulated from "meaningful review").
There is an overriding consideration that touches upon
all the above. A court that is asked to issue a writ of mandamus
is itself invested with considerable discretion. See Kerr v.
___ ____
United States District Court, 426 U.S. 394, 403 (1975). Given
_____________________________
the facts and posture of this dispute, the wise exercise of
judicial discretion strongly favors continuing to employ mandamus
sparingly, Recticel, 859 F.2d at 1005; see also Boreri, 763 F.2d
________ ___ ____ ______
at 26 (warning that "the currency [of mandamus] is not
profligately to be spent"), and allowing this case to proceed in
state court. The Convention, which is the sole source of
ostensible federal jurisdiction, applies neither to the numerous
reinsurance contracts that do not contain arbitration clauses nor
to those underwritten by the several domestic insurance
providers. Most of the years in controversy are years in which
the reinsurance arrangements are not even arguably affected by
arbitration clauses. The net result is that, should we heed the
Reinsurers' pleas, the litigation would be split between federal
23
and state court.
Further, the crux of the controversy involves the
contested interpretation of contract provisions presenting
chiefly matters of state law. Claims have also been brought
under Massachusetts unfair trade practice statute. The larger
context in which the litigation is set concerns the business of
insurance, which the McCarran-Ferguson Act, 21 U.S.C. 1012
(1988), unequivocally declares to be a state-law preserve. The
Commonwealth, through its Insurance Commissioner, is a real party
in interest. In all, it likely understates the obvious to
acknowledge that "state issues substantially predominate."
United Mine Workers of America v. Gibbs, 383 U.S. 715, 726
_________________________________ _____
(1966). When these features are coupled with the host of
significant questions concerning the propriety of the removal
order, it would be rashly injudicious for us to exercise our
discretion to sponsor mandamus, thereby wresting the suit from
its natural habitat and abetting its balkanization.
We need go no further. It is apodictic that
"[m]andamus cannot be allowed to become a handy substitute for an
otherwise unavailable interlocutory appeal." Bushkin, 864 F.2d
_______
at 265. Thus, a party seeking the issuance of a prerogative writ
bears a heavy burden. The Reinsurers have neither carried this
burden nor persuaded us that we should gratuitously oust the
state court of jurisdiction over part of the litigation, leaving
the remainder to linger there. The petition for mandamus must,
therefore, be denied.
24
IV. CONCLUSION
IV. CONCLUSION
To summarize, although the statutory bar, 28 U.S.C.
1447(d), does not pertain, the Reinsurers cannot clear the other
jurisdictional hurdles that dot the path to federal appellate
relief. We lack jurisdiction over their appeal and we also lack
a cognizable basis for issuing a prerogative writ.
The appeal is dismissed for want of appellate
_______________________________________________________
jurisdiction. The petition for issuance of a writ of mandamus is
____________ __________________________________________________
denied. Costs are to be taxed in favor of respondent-appellee.
______ _____________________________________________________
25
Related
Ex Parte Rowland
104 U.S. 604 (Supreme Court, 1882)
Enelow v. New York Life Insurance
293 U.S. 379 (Supreme Court, 1935)
Ettelson v. Metropolitan Life Insurance
317 U.S. 188 (Supreme Court, 1943)
Burford v. Sun Oil Co.
319 U.S. 315 (Supreme Court, 1943)
De Beers Consolidated Mines, Ltd. v. United States
325 U.S. 212 (Supreme Court, 1945)
Cohen v. Beneficial Industrial Loan Corp.
337 U.S. 541 (Supreme Court, 1949)
La Buy v. Howes Leather Co.
352 U.S. 249 (Supreme Court, 1957)
United Mine Workers of America v. Gibbs
383 U.S. 715 (Supreme Court, 1966)
Kastigar v. United States
406 U.S. 441 (Supreme Court, 1972)
Thermtron Products, Inc. v. Hermansdorfer
423 U.S. 336 (Supreme Court, 1976)
Kerr v. United States Dist. Court for Northern Dist. of Cal.
426 U.S. 394 (Supreme Court, 1976)
Helstoski v. Meanor
442 U.S. 500 (Supreme Court, 1979)
Allied Chemical Corp. v. Daiflon, Inc.
449 U.S. 33 (Supreme Court, 1980)
Moses H. Cone Memorial Hospital v. Mercury Construction Corp.
460 U.S. 1 (Supreme Court, 1983)
Carnegie-Mellon University v. Cohill
484 U.S. 343 (Supreme Court, 1988)
Gulfstream Aerospace Corp. v. Mayacamas Corp.
485 U.S. 271 (Supreme Court, 1988)
Midland Asphalt Corp. v. United States
489 U.S. 794 (Supreme Court, 1989)
In Re La Providencia Development Corporation
406 F.2d 251 (First Circuit, 1969)
General Electric Company, a Corporation v. Hon. William Matthew Byrne, Jr., United States District Judge for the Central District of California
611 F.2d 670 (Seventh Circuit, 1979)
In Re the Justices of the Supreme Court of Puerto Rico, in Re Colegio De Abogados De Puerto Rico, and Fundacion Colegio De Abogados
695 F.2d 17 (First Circuit, 1982)
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