COURT LIMITS REVIEW OF REMAND ORDER BASED ON ONE DEFENDANT’S FORUM SELECTION CLAUSE

The Eleventh Circuit waded into a procedural thicket in Overlook Gardens Properties, LLC v. ORIX USA, L.P., 2019 WL 2590869 (11th Cir. June 25, 2019), ultimately concluding that it had no appellate jurisdiction to review an order remanding a removed case to state court .  At issue was the effect of a forum selection clause that bound one, but not all, of the defendants to litigate, in state court only, any dispute relating to the mortgage loan in issue. The district court held that defendant to have waived its right to removal, which precluded the required unanimous consent needed to remove the case based on diversity jurisdiction. The Eleventh Circuit began its analysis by noting that it has no appellate jurisdiction to review remand orders which are based on the absence of federal jurisdiction or on defects in the removal process, under 28 U.S.C. §1447(d). The court explained that, under Powerex Corp. v. Reliant Energy Services, Inc., 551 U.S. 224 (2007), appellate review of a district court’s jurisdiction-based remand order is restricted to “looking behind the face of that order for the limited and sole purpose of determining whether the reason stated is colorable.” The court held that the same standard should apply to remand orders based on defects in the removal process. “We see no logical or prudential reason for restricting the Supreme Court’s discussion in Powerex of the scope of § 1447(d)’s jurisdictional bar on appellate review of remand orders to only those based solely on a lack of subject matter jurisdiction.”

Applying that rule, the court concluded that the district court characterized the basis for its remand order as a lack of unanimous consent to removal, an unreviewable procedural defect. That characterization was colorable, so the order was unreviewable. To the extent that the prior Eleventh Circuit decision in Russell Corp. v. American Home Assurance Co., 264 F.3d 1040 (11th Cir. 2001), applied a different standard of review, the court held that decision was abrogated by the Supreme Court’s subsequent decision in Powerex.  The court agreed with the appellants that remand orders based solely on a forum selection provision remain reviewable where all of the defendants were bound by the provision, which was not so here.

Posted by Tom Byrne.

Back to top