Liberty Mutual Insurance v. Ward Trucking Corp.

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit

2-24-1995

Liberty Mutual v Ward Trucking
Precedential or Non-Precedential:

Docket 94-3377

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 UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________

No. 94-3377
___________

LIBERTY MUTUAL INSURANCE COMPANY
and
LIBERTY MUTUAL FIRE INSURANCE COMPANY,
Petitioners

vs.

WARD TRUCKING CORP.,
Respondent

and

THE HONORABLE GUSTAVE DIAMOND,
District Judge, United States District Court
for the Western District of Pennsylvania
Nominal Respondent
___________

Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 94-cv-00559)
___________

Argued
November 8, 1994
Before: BECKER, MANSMANN and ALITO, Circuit Judges.

(Filed February 24, 1995)
___________

Edward A. Greenberg, Esquire (ARGUED)
Daller, Greenberg & Dietrich
7111 Valley Green Road
Valley Green Corporate Center
Fort Washington, PA 19034

Counsel for Petitioners

Arlin M. Adams, Esquire (ARGUED)
Carl A. Solano, Esquire
Schnader, Harrison, Segal & Lewis
1600 Market Street
Suite 3600
Philadelphia, PA 19103-4252
Daniel D. Harshman, Esquire
Pietragallo, Bosick & Gordon
One Oxford Centre
38th Floor
Pittsburgh, PA 15219

Counsel for Respondent

___________

OPINION OF THE COURT
__________

MANSMANN, Circuit Judge.

This case comes to us by way of a petition for writ of

mandamus filed by the defendants Liberty Mutual Insurance Company

and Liberty Mutual Fire Insurance Company (collectively, "Liberty

Mutual"). Faced with Liberty Mutual's second notice of removal

based on diversity jurisdiction, the United States District Court

for the Western District of Pennsylvania granted Plaintiff Ward

Trucking Company's ("Ward") motion for remand without giving

Liberty Mutual an opportunity to respond. Liberty Mutual asserts

that in doing so, the district court acted without authority, and

asks for our review. We are, therefore, once again required to

address the parameters of a district court's statutorily defined

power to remand under 28 U.S.C. § 1447(c) and the scope of

Congress' prohibition on appellate review of remand orders set

forth in 28 U.S.C. § 1447(d).

I.

On May 11, 1993, Ward instituted a civil action by writ

of summons in the Court of Common Pleas of Allegheny County,
Pennsylvania against Liberty Mutual, its insurers.1 Thereafter,

Ward filed a seven-count complaint in assumpsit and tort,

asserting that Liberty Mutual mishandled claims, reserves and

premiums under various insurance policies. Paragraph 52 of the

complaint stated that "the amount of damages resulting from the

breach of duty and/or breach of contract are presently unknown

. . .", and the addendum clause in six of the seven counts

requested an unspecified amount in damages in excess of the

jurisdictional limits of the Arbitration Division of the Court of

Common Pleas, currently $25,000.

Count III of the complaint set forth a claim under

Pennsylvania's Bad Faith Statute, 42 Pa. C.S.A. § 8371, which

authorizes an action for an insurer's bad faith toward its

insured and allows for an award of interest on the claim at issue

in the amount equal to the prime rate of interest plus 3%,

punitive damages and the assessment of attorneys fees. Count

III's addendum clause requested "an amount exceeding the

jurisdictional limits of [the Court of Common Pleas], inclusive

of interest equal to prime plus 3%, punitive damages, costs and

attorneys fees."

1
. The parties are engaged in two other lawsuits. On May
24, 1991, Ward commenced an equity action in the Court of Common
Pleas of Blair County, Pennsylvania against Liberty Mutual,
alleging breach of fiduciary and contractual duties, and seeking
an accounting and a declaration of the amount of premiums, if
any, Ward owes to Liberty Mutual. This action has since been
transferred to Allegheny County, Pennsylvania. On June 11, 1993,
Liberty Mutual commenced an action against Ward in the United
States District Court for the Eastern District of Pennsylvania,
alleging that Ward failed to pay a past-due insurance premium.
 On July 7, 1993, Liberty Mutual filed a notice of

removal with the United States District Court for the Western

District of Pennsylvania, alleging federal diversity jurisdiction

under 28 U.S.C. § 1332. While both the writ and the complaint,

which were attached to the notice of removal, stated that Ward is

a Pennsylvania citizen and Liberty Mutual is a citizen of

Massachusetts, neither document showed that Ward's damages exceed

$50,000, the amount in controversy requirement of federal

diversity jurisdiction. Consequently, in an attempt to establish

this monetary threshold, Liberty Mutual attached counsel's

affidavit to its removal notice, setting forth his personal

belief that Ward's damages were greater than $50,000.

On July 19, 1993, Ward filed a motion to remand, which

was subsequently amended on August 2, 1993, challenging, inter

alia, Liberty Mutual's failure to show the requisite amount of

damages for diversity jurisdiction. On July 28, 1993, Liberty

Mutual filed a response to Ward's original remand motion and on

August 20, 1993, responded to Ward's amended motion. On November

3, 1993, the district court issued a memorandum opinion and

order, granting Ward's amended motion to remand and returning the

case to state court. Citing to our decision in Foster v. Mutual
Life Marine & Island Ins. Co., 986 F.2d 48 (3d Cir. 1993),2 the
2
. In Foster, after affirming a remand order which was
based on the doctrines of abstention and comity, we took the
opportunity to resolve the question as to when the thirty-day
period for removal in the first paragraph of 28 U.S.C. § 1446(b)
is triggered. We decided that the time limit for removal is
triggered when a writ of summons, praecipe or complaint provides
adequate notice to the defendant of federal jurisdiction. 986
F.2d at 54.
district court rejected counsel's affidavit as evidence of Ward's

damages, and held that because the writ and complaint included in

Liberty Mutual's notice of removal did not establish the amount

in controversy necessary to support federal jurisdiction, remand

was in order.

In the course of subsequent discovery, Liberty Mutual

obtained Ward's response to a document request which stated that

Ward incurred $156,045.89 in attorneys fees arising out of its

dispute with Liberty Mutual for the years 1987 to 1993.3

On April 6, 1994, Liberty Mutual filed a second notice

of removal, attaching Ward's discovery response regarding

attorneys fees for the purpose of establishing the required

federal jurisdictional monetary amount. On April 28, 1994, Ward

followed with a motion to remand, asserting, inter alia, that

Liberty Mutual's second removal notice failed to establish that

Ward's damages exceed $50,000. Without giving Liberty Mutual an

opportunity to respond, the district court granted Ward's motion.

In a memorandum opinion and order dated May 9, 1994, the district

court again cited to Foster, 986 F.2d at 48, and concluded that

Ward's discovery response could not be used to demonstrate the

amount in controversy requirement of diversity jurisdiction.

Referring to its prior remand opinion, the district court found

3
. By asking for the amount of fees Ward incurred over a
number of years prior to the 1993 commencement of the Allegheny
County, Pennsylvania, action, the discovery request apparently
was not limited to this action. In its brief, Ward clarifies
that the $156,045.89 represents fees incurred in all three of the
parties' lawsuits. See n.1, supra.
that Liberty Mutual's second removal suffered from the same

deficiency as the first, and concluded that remand was required.

Thus, the district court issued an order returning the case to

the state Court of Common Pleas.

Liberty Mutual then filed a petition for writ of

mandamus, requesting that we direct the district court to vacate

the May 9, 1994 remand order; reinstate the case and permit

Liberty Mutual an opportunity to respond to Ward's remand motion;

and find that Ward's discovery response constitutes "other paper"

under the second paragraph of section 1446(b) which may establish

removability. Ward, in turn, filed a motion for damages for

frivolous appeal pursuant to Fed. R. App. P. 38.

II.

The threshold question before us is whether we have

jurisdiction to review the district court's remand order. We

must determine whether the district court's decision to remand

which was made without giving Liberty Mutual the opportunity to

respond to Ward's motion may be considered in light of the bar to

appellate review of remand orders set forth in section 1447(d).

We turn first to the removal statutes, particularly the

history of section 1447(d).
 A.

Congress enacted a comprehensive statutory scheme for

the removal of state court actions to federal court. 28 U.S.C.

§§ 1441-1452. Section 1441(a) provides in pertinent part:

Except as otherwise expressly provided by Act
of Congress, any civil action brought in a
State court of which the district courts of
the United States have original jurisdiction,
may be removed by the defendant or the
defendants, to the district court of the
United States for the district and division
embracing the place where such action is
pending.

Section 1446 sets forth the procedure for removing a

case to federal court, and section 1447 covers procedure after

removal has occurred. Section 1447(c) specifically provides for

the remand of a case that has been removed under section 1446 and

delineates two categories for removal: (1) a "defect in the

removal procedure" and (2) the absence of subject matter

jurisdiction:
(c) A motion to remand the case on the
basis of any defect in removal procedure must
be made within 30 days after the filing of
the notice of removal under section 1446(a).
If at any time before final judgment it
appears that the district court lacks subject
matter jurisdiction, the case shall be
remanded.

Section 1447(d), which speaks to the reviewability of

remand orders, severely circumscribes our authority to review by

providing that except for civil rights cases removed pursuant to

28 U.S.C. § 1443, "[a]n order remanding a case to the State court

from which it was removed is not reviewable on appeal or
otherwise. . . ." By adopting section 1447(d) and its statutory

predecessors, Congress sought to make the judgment of a district

court remanding a case final and conclusive in order to avoid the

delay caused by appellate review of remand decisions. United

States v. Rice, 327 U.S. 742, 751-52 (1946). In keeping with

this policy, until 1976, section 1447(d) was construed to

prohibit review of all remand orders without exception. In re

TMI Litigation Cases Consolidated II, 940 F.2d 832, 840 (3d Cir.

1991), cert. denied, ___ U.S.___, 112 S. Ct. 1262 (1992).

In 1976, the Supreme Court decided Thermtron Prod.,

Inc. v. Hermansdorfer, 423 U.S. 336 (1976). There, the district

court had remanded a case removed from state court on the basis

of an overcrowded docket. The plaintiffs sought a writ of

mandamus from the Court of Appeals for the Sixth Circuit

compelling the district court to exercise jurisdiction over the

action. The court of appeals denied the petition, relying on the

bar to review in section 1447(d).

Reversing, the Supreme Court concluded that section

1447(d) operates to preclude review of only those remand orders

which rely on the grounds contained in the controlling statute,

section 1447(c). The Court held that sections 1447(c) and

1447(d) must be read together and that "only remand orders issued

under § 1447(c) and invoking the grounds specified therein . . .

are immune from review under § 1447(d)." Id. at 346.
Acknowledging that it had declared an exception to the seemingly

absolute prohibition to review in section 1447(d), the Court

stated:
 There is no doubt that in order to
prevent delay in the trial of remanded cases
by protracted litigation of jurisdictional
issues, . . . Congress immunized from all
forms of appellate review any remand order
issued on the grounds specified in § 1447(c),
whether or not that order might be deemed
erroneous by an appellate court. But we are
not convinced that Congress ever intended to
extend carte blanche authority to the
district courts to revise the federal
statutes governing removal by remanding cases
on grounds that seem justifiable to them but
which are not recognized by the controlling
statute. That justice may move more slowly
in some federal courts than in their state
counterparts is not one of the considerations
that Congress has permitted the district
courts to recognize in passing on remand
issues. Because the District Judge remanded
a properly removed case on grounds that he
had no authority to consider, he exceeded his
statutorily defined power; and issuance of
the writ of mandamus was not barred by §
1447(d).

Id. at 351 (citation omitted). Further, the Court recognized

that mandamus was the "appropriate remedy to require the District

Court to entertain the remanded action." Id. at 352.

One year later, the Supreme Court revisited the issue

of section 1447(d)'s prohibition on appellate review of remand

orders in Gravitt v. Southwestern Bell Tel. Co., 430 U.S. 723
(1977). In Gravitt, the plaintiffs, some of whom were citizens

of Texas, filed an action in a Texas state court. After the

plaintiffs dropped all claims against the only defendant alleged

to be a Texas citizen, the remaining defendants removed the case

to federal court on the basis of diversity jurisdiction.

Following extensive discovery and pretrial activity, the

plaintiffs uncovered a pleading that one of the defendants,
Southwestern Telephone Company, an allegedly Missouri citizen,

had submitted in an unrelated state court proceeding. In that

pleading, Southwestern had averred that it was a Texas citizen.

The plaintiffs filed a motion for remand, asserting that complete

diversity did not exist. Refusing to hear contrary evidence from

Southwestern and citing to the doctrine of judicial estoppel, the

district court held that Southwestern was estopped to allege its

Missouri citizenship as a basis for diversity jurisdiction, and

granted the plaintiffs' motion to remand on the grounds that

subject matter jurisdiction was lacking. Southwestern commenced

a mandamus proceeding to compel the district court to retain the

case.

Concluding that a remand based on the doctrine of

judicial estoppel was not contemplated by section 1447(c), the

Court of Appeals for the Fifth Circuit held that the Supreme

Court's decision in Thermtron permitted review. The court noted

that the district court relied exclusively on the doctrine of

judicial estoppel to grant the remand without examining whether

Southwestern was a Texas citizen, and held that the doctrine

could not be used to defeat Southwestern's statutory right to a

federal forum. Accordingly, the court issued a writ of mandamus

ordering the district court to determine whether the parties were

in fact diverse. In a subsequent opinion, the panel determined

that the district court was not required to inquire further into

the diversity issue inasmuch as the plaintiffs did not challenge

Southwestern's Missouri citizenship as a factual matter, but

stood squarely on the estoppel theory as a matter of law to bar
Southwestern from asserting diverse citizenship. Sitting en

banc, the court concluded that the use of doctrine of judicial

estoppel was erroneous, and issued a writ of mandamus directing

that the remand order be vacated.

In a tersely worded, two-page per curiam opinion, the

Supreme Court reversed, not mentioning the doctrine of judicial

estoppel. Gravitt, 430 U.S. at 724. The Court stated that

"[t]he District Court's remand order was plainly within the

bounds of § 1447(c) and hence was unreviewable by the Court of

Appeals, by mandamus or otherwise", and re-emphasized the rule

set down in Thermtron that remands issued pursuant to section

1447(c) are not reviewable, "whether erroneous or not". Id. at

723; Thermtron, 423 U.S. at 343.

B.

Since Thermtron and Gravitt, we have analyzed the

prohibitive reach of section 1447(d) in a wide variety of

circumstances. At the outset, however, in order to address the

specific reviewability issue presented here and determine which

of our cases speak most clearly to the issue, we must decide the

precise nature of the district court's May 9, 1994 remand order.

While Ward characterizes the order as "jurisdictional", Liberty

Mutual describes it as based on a "defect in removal procedure".

In Liberty Mutual's view, the district court remanded under the

first sentence of section 1447(c) merely because it objected to

the discovery response Liberty Mutual attached to its notice of

removal; not under section 1447(c)'s second sentence because it

found that subject matter jurisdiction was lacking. Liberty
Mutual contends that the district court never grappled with the

question of jurisdiction, pointing to the absence of a finding

regarding the amount in controversy between the parties as proof

of its position.

Since the district court found that Liberty Mutual's

two removal notices were similarly deficient and incorporated the

reasoning enunciated in its first opinion into its second

opinion, we consider the court's November 3, 1993 and May 9, 1994

opinions together to determine the basis for the court's May 9,

1994 remand decision. We initially observe that the court began

its November 3, 1993 analysis by noting that the statute

authorizing removal provides that an action is removable only if

it could have initially been brought in a federal court and that

the party desiring removal bears the burden of establishing the

requirements of diversity jurisdiction. The issue the district

court confronted in each opinion was whether the papers that

Liberty Mutual placed before it established the amount in

controversy requirement of diversity jurisdiction. Despite

Liberty Mutual's position to the contrary, the court found that

Liberty Mutual's notices of removal did not show that Ward's

damages exceed $50,000. While it is true that the court refused

to consider the information set forth in the discovery response

attached to Liberty Ward's second removal notice in reaching its

May 9, 1994 decision, the court did not remand because it

concluded that Liberty Mutual violated one of the formalities

related to the removal process by including an inappropriate

document in the notice. Rather, the court remanded because it
concluded that Liberty Mutual failed to establish the threshold

monetary amount essential to the court's jurisdiction. We thus

conclude that the court's May 9, 1994 remand order rested on

jurisdictional grounds. See Baris v. Sulpicio Lines Inc., 932

F.2d 1540, 1544 (5th Cir.), cert. denied, ___ U.S.___, 112 S. Ct.

430 (1991) ("As used in [section 1447(c)], a `procedural' defect

is any defect that does not go to the question of whether the

case originally could have been brought in federal district

court. . .").4

C.

Having concluded that the district court's remand was

jurisdictional, we turn for guidance to our cases which address

the reviewability under section 1447(d) of a remand order based

on a district court's determination that subject matter

jurisdiction was lacking. In In re TMI Litigation Cases

Consolidated II, 940 F.2d 832 (3d Cir. 1991), cert. denied, ___

U.S.___, 112 S. Ct. 1262 (1992), the plaintiffs commenced actions

in a Pennsylvania state court for personal and economic injuries

arising out of an incident at the Three Mile Island nuclear

4
. In discussing the alternative grounds for remand set
forth in section 1447(c), Professor Moore has explained that
section 1447(c) "makes a distinction between formal defects in
removal procedure . . . [and] lack of subject matter
jurisdiction", and has noted that "[a] motion to remand [under
the first sentence of section 1447(c)] must be made within 30
days after removal, if the objections are of a character that can
be waived, such as formal and modal matters pertaining to the
procedure for removal or the non-removability of a proceeding
otherwise within federal jurisdiction." 1A J. Moore & B. Ringle,
Moore's Federal Practice § 0.168[4.-1] at 642, 644 (2d ed. 1993)
(footnotes omitted).
facility. The defendants removed, asserting that since the

plaintiffs' claims arose under the Price-Anderson Amendments Act

of 1988, 42 U.S.C. § 2011 et seq., those claims must be tried in

federal court. The plaintiffs filed a motion for remand claiming

that despite Congress' explicit statement to the contrary in the

Act, their claims did not "arise under" federal law. The

district court remanded for lack of federal subject matter

jurisdiction. The remand order was triggered by the court's

holding that the Act, which contained the grant of federal

jurisdiction upon which the defendants relied for removal, was

itself unconstitutional.

In determining the threshold question concerning our

jurisdiction, we reviewed the legislative and judicial history of

section 1447(d) in great detail, and held that the remand order

was subject to our review. In doing so, we concluded that

because "the jurisdictional determination of the district court,

resting as it did upon the conclusion that the entire statutory

scheme authorizing removal is unconstitutional, was not the type

of federal subject matter jurisdiction decision intended to be

governed by the terms of or the policy underlying section

1447(c)", section 1447(d) had no application. Id. at 845. In

other words, since the ruling which triggered the remand order

was not the routine type of jurisdictional determination

involving the presence of diversity or a federal question which

Congress entrusted to the district courts, our review was not

prohibited by section 1447(d). Id. at 844.
 Likewise, in Aliota v. Graham, 984 F.2d 1350 (3d Cir.),

cert. denied, ___U. S.___, 114 S. Ct. 68 (1993), we analyzed the

reach of section 1447(d) in connection with an order remanding a

removed case to a state court on the grounds that federal

jurisdiction was lacking. There a defamation action had been

filed in a Pennsylvania state court against five federal

employees in their individual capacities. After the case was

removed to federal court under section 2679(d) of the Westfall

Act, 28 U.S.C. § 2671 et seq., the United States Attorney for the

Western District of Pennsylvania, exercising the authority

delegated by the Attorney General of the United States, certified

that the five individual defendants were acting within the scope

of their employment. The United States was then substituted as

the sole defendant. The plaintiffs filed a motion to remand and

a motion to strike the substitution of the United States, arguing

that the individual defendants had not been acting within the

scope of their employment when they allegedly made the defamatory

comments. After conducting an evidentiary hearing, the district

court entered an order striking the substitution and remanding

the case to the state court. The United States filed a notice of

appeal,5 as well as a petition for mandamus seeking review of the

remand.

5
. We concluded that the district court's order
resubstituting the originally named defendants in place of the
United States was reviewable by way of an appeal under 28 U.S.C.
§ 1291. 984 F.2d at 1352-54.
 In deciding whether the remand order was reviewable, we

initially analyzed the Westfall Act and its provisions regarding

removal, and determined that when a tort suit is filed in a state

court and the Attorney General certifies that the employee was

acting within the scope of his employment and removes the case,

the district court does not have authority to remand on the

grounds that the Attorney General's certification was erroneous.

Id. at 1356. This determination was dictated by the terms of the

Westfall Act which express Congress' intent that subject matter

jurisdiction is conclusively established upon the Attorney

General's certification. Id. We concluded that the district

court exceeded its statutorily defined powers in section 1447(c)

in remanding the case because there was no jurisdictional

question before it, and held that section 1447(d) did not bar

review. Id. at 1357.

Before we decided the merits of the dispute, we noted,

however, that this case stood in "marked contrast to the normal

jurisdictional decisions made in connection with remand . . .

thus . . . fall[ing] outside the types of cases section 1447(d)

was intended to cover", and cautioned that "[i]t [did] not follow

from our decision that anytime the district court misinterprets a

jurisdictional statute we have the authority to review the remand

decision . . . [since] [s]uch an exception would obviously

swallow the rule." Id. Thus, our holding was limited to the

"narrow situation where the district court has relied on a factor
in its jurisdictional analysis that Congress intended to exclude

from consideration of the jurisdictional issue." Id.6

We again had the opportunity to examine the limits of

section 1447(d) in connection with a jurisdictional remand order

in Carr v. American Red Cross, 17 F.3d 671 (3d Cir. 1994). Carr

had commenced a personal injury action in the state courts to

recover damages from Red Cross and the Osteopathic Medical Center

of Philadelphia arising out of an HIV-injected blood transfusion

he received during an operation. Red Cross invoked its federal

charter and filed a notice of removal to the district court.

Acting sua sponte, the district court remanded the case to the

state court, rejecting Red Cross' contention that its charter

automatically conferred federal jurisdiction over civil actions

to which it is a party. After remand, Carr filed an amended

complaint. In its answer, Osteopathic asserted a cross-claim for

contribution and indemnity against Red Cross. Following the

Supreme Court's decision in American Nat. Red Cross v. S.G., ___

U.S. ___, 112 S. Ct. 2465 (1992), which held that the Red Cross

charter confers jurisdiction over civil cases to which Red Cross

is a party, Red Cross again removed the action to the district

court. Carr then filed a motion to dismiss Red Cross from the

case and a motion for remand to the state court, asserting that

6
. Guided by our decision in Aliota, we subsequently held
in Powers v. Southland Corp. 4 F.3d 223 (3d Cir. 1993), that
section 1447(d) did not bar our review of a portion of a district
court's jurisdictional remand order granting the plaintiff a
relation back amendment because it was separate from and
logically preceded the remand decision. Id. at 226-30.
the district court no longer had jurisdiction as a result of a

joint tortfeasor release that Carr had given Red Cross. The

district court granted Carr's motions for dismissal and remand on

the basis that once Red Cross entered into the release with Carr,

federal subject matter jurisdiction no longer existed.

Osteopathic filed an appeal7 and a petition for writ of mandamus

directing the district court to vacate the remand order.

In considering whether section 1447(d) permitted our

review, we cited our holdings in TMI Litigation and Aliota that

section 1447(d) bars review of remand orders based on the routine

jurisdictional determinations that Congress intends for the

district courts to make. Id. at 682. Recognizing that we were

presented with a "garden-variety, routine jurisdictional

determination", we nonetheless expanded our remand reviewability

principles and announced that "where a separable and final

determination has been made by the district court, whether

substantive or jurisdictional, which determination triggers

remand, we will review both the underlying final order and the

remand order itself." Id. at 682-83. Our decision to address

the remand was based upon our serious concern that unless the

remand order were reviewed, Osteopathic would not have been able

to obtain review of the district court's preceding order of

dismissal, and the state court would have been obligated to give

7
. We concluded that the district court's order dismissing
Red Cross was reviewable under 28 U.S.C. § 1291. 17 F.3d at 675-
79.
full faith and credit to the unappealed decision of the federal

court. Id. at 683.

III.

With the principles enunciated in Thermtron, Gravitt

and our own cases interpreting the reach of section 1447(d) in

mind, we turn to the remand order before us. To determine

whether we have the authority to review despite section 1447(d)'s

prohibition, we consider two interrelated questions: first, was

the district court's order of the type that Congress intended to

shield from appellate review under section 1447(d); and second,

did the district court act consistently with its statutory

authority defined in section 1447(c).

The district court's decision regarding Liberty

Mutual's failure to establish the monetary amount essential to

diversity jurisdiction is precisely the type of routine and

regular jurisdictional decision that we determined in TMI and in

Aliota Congress expected the district courts to make in removal

cases and intended to insulate from challenge by enacting section

1447(d). Further, the district court's remand order was not made

in the context of a separable and final determination, so that

the addition to reviewability that we announced in Carr does not
apply. In our view, this case is most analogous to and

controlled by Gravitt. As in Gravitt, the district court here

determined that a basic element of diversity jurisdiction was

lacking, and issued a remand order that falls "plainly within the

grounds of § 1447(c)". 430 U.S. at 723. Therefore, under
Thermtron, the court's order is shielded from review by section

1447(d). 423 U.S. at 336. See Bregman v. Alderman, 955 F.2d 660

(11th Cir. 1992) (even where the district court's remand order

was issued without a finding as to whether diversity of

citizenship in fact existed and could have been mistaken,

appellate review was barred by section 1447(c) since the order

was based on a lack of subject matter jurisdiction, not a defect

in removal procedures).

IV.

Additionally, we conclude that section 1447(c)

authorizes the district court to remand as it did, without

affording Liberty Mutual an opportunity to respond to Ward's

motion. As we must, we start with the plain language of the

statute -- "[i]f at any time before final judgment it appears

that the district court lacks subject matter jurisdiction, the

case shall be remanded" -- and note that it allows and indeed

compels a district court to address the question of jurisdiction,

even if the parties do not raise the issue. Moreover, the

general rule that federal courts have an ever-present obligation

to satisfy themselves of their subject matter jurisdiction and to

decide the issue sua sponte applies equally in removal cases.

Steel Valley Auth. v. Union Switch and Signal Div., 809 F.2d

1006, 1010 (3d Cir. 1987), cert. dismissed, 484 U.S. 1021 (1988).

See also American Policyholders Ins. Co. v. Nyacol Products,
Inc., 989 F.2d 1256, 1258-59 (1st Cir. 1993), cert. denied,

___U.S.___, 114 S. Ct. 682 (1994); Ziegler v Champion Mortg. Co.,
913 F.2d 228, 229 (5th Cir. 1990). Thus, since a motion and

response are not required (i.e., are not the basis) for

jurisdictional remand orders under section 1447(c), the district

court did not exceed its statutory authority by not waiting for a

response from Liberty Mutual. Stated alternatively, the absence

of Liberty Mutual's response did not deprive the district court

of its statutory power to remand once it determined that subject

matter jurisdiction was lacking.

In support of reviewability, however, Liberty Mutual

contends that the district court exceeded its section 1447(c)

authority by breaching rules of fundamental fairness in not

permitting it to respond. Assuming arguendo that the process by

which the district court remanded was unfair and also violative

of established legal principles, it does not follow that Liberty

Mutual's argument prevails, for it essentially equates error with

unauthorized action. Were this so, then every erroneous remand

decision would be reviewable, and section 1447(d) would have no

meaning. If Thermtron and Gravitt teach nothing else, they

instruct that when a district court exercises its power to remand

under section 1447(c), section 1447(d) allows a district court to

err; it necessarily follows that section 1447(d) also allows a

district court to be procedurally unfair. Just as section

1447(d) prohibits our review of the merits of a remand order that

falls within the parameters of section 1447(c), it prohibits our

review of the manner by which such an order was rendered.

Furthermore, our decision is in keeping with the policy

of minimizing delay which underlies the section 1447(d) bar to
review. If, despite section 1447(d)'s prohibition, parties

opposing remand are permitted to invoke appellate review upon

claims of a district court's unfairness, the potential for

disruption and delay, which Congress sought to minimize by

enacting section 1447(d), would be far-reaching.

Thus, we hold that review of the district court's

remand order in this case is barred by section 1447(d). No

matter how faulty we might consider the district court's

reasoning or methods, section 1447(d) prohibits us from reviewing

an action the district court was empowered to take, and one that

Congress intended to be final. The dissent correctly points out

that our opinion does not require a district court to grant a

motion for remand on jurisdictional grounds without waiting for a

response; and indeed, our decision should not be read as an

imprimatur on the district court's actions. This is a matter of

applying Congress' intent in enacting the removal statutes, and

it is here where we and the dissent part ways. Accordingly,

having determined that we do not have jurisdiction to review, we

will not address the substance of the questions presented in

Liberty Mutual's petition.

V.

Ward requests that we impose damages under Federal Rule

of Appellate Procedure 38 against Liberty Mutual for having filed

the petition for writ of mandamus. Ward characterizes the

petition as frivolous and asserts that the issue Liberty Mutual

raises is completely lacking in merit .

Rule 38 states:
 Damages for Delay
If a Court of Appeals shall determine
that an appeal is frivolous, it may award
just damages and single or double costs to
the appellee.

Fed. R. App. P. 38.

We employ an objective standard in determining whether

an appeal is frivolous. Hilmon Co. (V.I.) v. Hyatt Int'l, 899

F.2d 250, 253 (3d Cir. 1990). We impose damages under Rule 38

only when an appeal is frivolous. Mellon Bank Corp. v. First

Union Real Estate Equity and Mortg., 951 F.2d 1399, 1413 (3d Cir.

1991). We find that Liberty Mutual raised a novel question in

its petition regarding the parameters of sections 1447(c) and

1447(d), and presented a meritorious argument in favor of

reviewability. Thus, we will not impose Rule 38 damages against

Liberty Mutual.

VI.

Because we do not have jurisdiction to review under 28

U.S.C. § 1447(d), we will dismiss Liberty Mutual's petition for

writ of mandamus. Having determined that Liberty Mutual's

petition was not frivolous, we will deny Ward's motion for

damages pursuant to Fed. R. App. P 38.
Liberty Mutual Ins. Co. & Liberty Mutual Fire Ins. Co. v. Ward
Trucking Corp. & The Hon. Gustave Diamond, No. 94-3377

BECKER, Circuit Judge, dissenting.

Nothing is more central to the regime of federal civil

procedure than the principle of notice and opportunity to be

heard. This appeal is from an order of the district court that

granted defendant's motion to remand a removed case back to the

state court on the ground that the plaintiff had not demonstrated

sufficient damages to support subject matter jurisdiction,

without affording plaintiff notice and an opportunity to be

heard, even by a simple letter memorandum, on the question

whether a dispute existed as to the existence of jurisdictional

amount.8 The majority blesses this procedure. I cannot.

Section 1447(c) authorizes such remand where "it

appears that the district court lacks subject matter

jurisdiction." I do not see how a deficiency can "appear" unless

the party opposing the remand can say at least something about

the matter, and hence I read section 1447(c) as requiring at
least minimal notice and opportunity to be heard. In my view,

the majority's crabbed and rigid reading of section 1447(c),

which gives rise to an egregious departure from bedrock

principle, is unsustainable. The majority's defensive statement

that section 1447(d) also "allows a district court to be

8
. I agree with the majority opinion's conclusion that the
remand order at issue here was "jurisdictional," rather than one
based on a "defect in removal procedure." Maj. Op. at 13.
procedurally unfair," Maj. Op. at 21, is as startling as it is

distressing.

Nor do I think that we would violate section 1447(d) by

reviewing this remand order. Our opinion in Air-Shields, Inc. v.

Fullam, 891 F.2d 63 (3d Cir. 1989), holds that when the district

court does not comply with the requisites of section 1447(c),

section 1447(d) does not shelter a remand order from review. If,

as I believe, section 1447(c) requires an opportunity to respond

before remand may be ordered, then that is as much one of "the

parameters of a district court's statutorily defined power to

remand under 28 U.S.C. § 1447(c)," Maj. Op. at 2, as the holding

of Air-Shields that sua sponte remands cannot be ordered after

the 30 day time limit. In short, I cannot conceive that either

the district court's admittedly broad remand power under section

1447(c) or the delay avoidance policy of section 1447(d) renders

a district court's ex parte determination that it lacks subject

matter jurisdiction, made without notice or opportunity to be

heard, inviolate and unreviewable. This is especially so in a

case such as this where the district court is remanding for the

second time.
Because the district court did not offer notice and an

opportunity to be heard, even minimally, it acted in excess of

its authority in entering the remand order, and as a result,

section 1447(d) does not bar review thereof.9 I would therefore

9
. The majority opinion makes much of Aliota v. Graham, 984 F.2d
1350 (3d Cir.), cert. denied, 114 S. Ct. 68 (1993), and Carr v.
grant Liberty Mutual's petition for writ of mandamus and direct

the district court to allow Liberty Mutual to respond to Ward

Trucking's remand motion before ruling upon it. These views are

informed not merely by my sense of the fundaments of our judicial

polity, but also by a venerable history, with which I begin.
I. § 1447(c) AND THE REQUIREMENT OF NOTICE AND
OPPORTUNITY TO BE HEARD

A. Origins of the Statutory Remand Power
The remand power currently embodied in section 1447(c)

originally required district courts in all cases to give the

affected parties notice and an opportunity to be heard before

remanding for a lack of jurisdiction. Section 1447(c) had its

genesis in the Judiciary Act of 1875. Section 5 of the Act

provided:
That if, in any suit commenced in a circuit court or
removed from a State court to a circuit court of the
United States, it shall appear to the satisfaction of
said circuit court, at any time after such suit has
been brought or removed thereto, that such suit does
not really and substantially involve a dispute or
controversy properly within the jurisdiction of said
circuit court, or that the parties to said suit have
(..continued)
American Red Cross, 17 F.3d 671 (3d Cir. 1994). The discussion
of these cases, however, is besides the point. No one argues
that the remand order at issue here was was anything but a
jurisdictional remand based on a non-constitutional, non-
severable determination that the requisite amount in controversy
had not been established. The real question is whether the
district court entered its remand order in a manner authorized by
section 1447(c), in which case the reviewability bar of section
1447(d) applies, or whether the district court exceeded its
authority by remanding without first offering to Liberty Mutual
notice and an opportunity to be heard, in which case we may
review the remand order. Thus, Air-Shields is the controlling
precedent, as explained infra Part II.
 been improperly or collusively made or joined, either
as plaintiffs or defendants, for the purpose of
creating a case cognizable or removable under this act,
the said circuit court shall proceed no further
therein, but shall dismiss the suit or remand it to the
court from which it was removed as justice may require,
and shall take such order as to costs as shall be just;
but the order of said circuit court dismissing or
remanding said cause to the State Court shall be
reviewable by the Supreme Court on writ or error or
appeal, as the case may be.

Act of March 3, 1875, ch. 137, § 5, 18 Stat. 472 (emphasis

supplied). At that time circuit courts were federal trial

courts, and so, under this act, the trial court was directed to

remand an action if, inter alia, "it shall appear to [its]

satisfaction . . . that such suit does not really and

substantially involve a dispute or controversy properly within

the jurisdiction of" the court.10

That this provision should be interpreted as containing

a requirement that the trial court hear from the affected parties

before remanding is shown by the Supreme Court's opinion in

Morris v. Gilmer, 129 U.S. 315, 9 S. Ct. 289 (1889). That case

involved an appeal from the circuit court for the Middle District

of Alabama. The plaintiff, a recent Alabama citizen and resident

claiming to be a Tennessee citizen, had filed suit against

defendants who were citizens of Alabama. The defendants moved to

dismiss, arguing that the court lacked jurisdiction because the

10
. The court might also dismiss, since this provision governed
both removed actions and ones originally filed in the circuit
courts.
plaintiff was actually an Alabama citizen. After considering

affidavit and deposition testimony, "and after argument by

counsel for the respective parties," the court denied the motion.

Id. at 321, 9 S. Ct. at 291 (emphasis supplied). When the

plaintiff prevailed on final judgment, the defendants appealed.

Not reaching other, substantive questions presented by

the appeal, the Supreme Court concluded that the circuit court

should have dismissed the case under section five of the

Judiciary Act of 1875. Id. at 324-25, 9 S. Ct. at 292. The

court explained that if the plaintiff had not changed his state

of citizenship to Tennessee, the circuit court was obliged to

dismiss the suit for lack of jurisdiction. Interpreting the

statute, the Court explained that
this duty arose only when it appeared to the
satisfaction of the court that the suit was not one
within its jurisdiction. But if the record discloses a
controversy of which the court cannot properly take
cognizance, its duty is to proceed no further, and to
dismiss the suit; and its failure or refusal to do
what, under the law applicable to the facts proved, it
ought to do, is an error . . . .

Id. at 325, 9 S. Ct. at 292. This duty comes into play whenever

the court determines that jurisdiction is lacking, for "the court

is bound to ask and answer [the jurisdictional question] for

itself, even when not otherwise suggested," id. at 326, 9 S. Ct.

at 292 (quoting Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S.

379, 382, 4 S. Ct. 510, 511 (1884)). Moreover, and more to the

point,
the statute does not prescribe any particular mode in
which such fact [the lack of jurisdiction] may be
 brought to the attention of the court. It may be done
by affidavits, or the depositions taken in the cause
may be used for that purpose. However done, it should
be upon due notice to the parties affected by the
dismissal.

Id. (emphases supplied).

Thus, although the Supreme Court concluded that lack

of jurisdiction was manifest from the record before the circuit

court, and hence that the court erroneously failed to dismiss the

case in compliance with the substance of section five, id. at

328-29, 9 S. Ct. at 293, the Court was nonetheless satisfied that

the circuit court had complied with section five's procedural

strictures:
In the case before us the question [of subject matter
jurisdiction] was formally raised, during the progress
of the cause, by written motion, of which the plaintiff
had due notice, and to which he appeared and objected.
So that there can be no question as to any want of
opportunity for him to be heard, and to produce
evidence in opposition to the motion to dismiss.

Id. at 327-28, 9 S. Ct. at 293 (emphases supplied).

The court distinguished this case from Hartog v.

Memory, 116 U.S. 588, 6 S. Ct. 521 (1886). There, although the
complaint properly alleged diversity jurisdiction, the defendant

did not challenge the citizenship allegations until after

receiving an unfavorable verdict. The Supreme Court said that
if, from any source, the court is led to suspect that
its jurisdiction has been imposed upon by the collusion
of the parties or in any other way, it may at once of
its own motion cause the necessary inquiry to be made,
either by having the proper issue joined and tried, or
by some other appropriate form of proceeding, and act
as justice may require for its own protection against
fraud or imposition . . . .
Id. at 591, 6 S. Ct. at 522 (quoted in Morris, 129 U.S. at 327, 9

S. Ct. at 292-93) (emphases supplied). The Morris Court

contrasted the actions of the circuit court in its case with

those of the trial court in Hartog, which had
summarily dismissed the action, upon the ground solely
of want of jurisdiction, without affording the
plaintiff any opportunity whatever to rebut or control
the evidence upon the question of jurisdiction.

Morris, 129 U.S. at 327, 9 S. Ct. at 293 (emphasis supplied).

The trial court's failure to give the plaintiff an opportunity to

be heard before dismissing for lack of jurisdiction was enough to

warrant the Supreme Court's reversing the order of dismissal and

remanding for further proceedings. Id. Thus, the Supreme Court

read section five as requiring that the trial court provide the

affected parties with notice of its intent to remand, i.e., to

rule on the existence of subject matter jurisdiction, as well as

an opportunity to be heard.
 B. Evolution of Section 1447(c)

Nothing in the subsequent evolution of section 1447(c)

from section five of the Judiciary Act of 1875 forward

demonstrates an intent to abrogate the salutary restriction

described above, i.e., that the (original) statutory power of the

federal trial courts to remand for lack of jurisdiction required

that remand orders be entered only after giving the affected

parties notice and an opportunity to be heard. The following

discussion of the evolution of section 1447(c) does not, for the

most part, treat the companion development of the bar on

appellate review of remand orders now expressed in 28 U.S.C.

1447(d), for the point of the discussion is to show that section

1447(c) should be held to require district courts to give notice

and an opportunity to be heard to the parties before remanding a

removed case. Once that is demonstrated, section 1447(d) ceases

to be a problem because that section does not bar review of an

order entered in excess of the district court's authority.

Section five was modified by the Judiciary Act of 1887,

which repealed the provision allowing review of remand orders "on

writ or error or appeal." See Act of March 3, 1887, ch. 373,

§§ 2, 6, 24 Stat. 552. The provision authorizing remand for lack

of jurisdiction, however, was unaffected by the 1887 act (or by

the 1888 act correcting errors in the enrollment of the 1887 act,

Act of March 3, 1887, ch. 866, 25 Stat. 433). State of Minnesota

v. Northern Sec. Co., 194 U.S. 48, 65, 24 S. Ct. 598, 602 (1904);
Waite v. City of Santa Cruz, 184 U.S. 302, 325, 22 S. Ct. 327,

335 (1902).

In 1911, Congress codified the Judicial Code. Act of

March 3, 1911, ch. 231, 36 Stat. 1087. Aside from not

resurrecting the repealed reviewability provision, the 1911 act

re-enacted section five's remand provision almost verbatim. Act

of March 3, ch. 231, § 37, 36 Stat. 1098. Thus, the 1911 Code

displays no intent to eliminate the notice-and-hearing

requirement.

The 1948 re-codification of the Judicial Code and the

1949 corrections thereto produced the remand provision's next

change in form. See Act of June 25, 1948, ch. 646, § 1447, 62

Stat. 869, 939, amended, Act of May 24, 1949, ch. 139, § 84, 63

Stat. 89, 102. As a result of these changes, the new 28 U.S.C.

§ 1447(c) read (with emphasis supplied):
If at any time before final judgment it appears that
the case was removed improvidently and without
jurisdiction, the district court shall remand the case,
and may order the payment of costs.

Again, as the Supreme Court has explained, the change from the

1911 Judicial Code to section 1447 was "no[t] inten[ded] to

change the prior law substantively," but was meant "to recodify

the pre-1948 law without material change insofar as the

provisions of §§ 71 and 80 of the old Code here relevant were
concerned." Thermtron, 423 U.S. at 350 n.15, 96 S. Ct. at 592

n.15.11

Moreover, the "it appears" language carried through the

re-codification, albeit with minor modification: the statute

dropped the modifier "to the satisfaction of the district court"

(and switched from the future to the present tense). The

elimination of court-centered language from the requirement that

the lack of jurisdiction "appear" moves in the opposite direction

of what one would expect if Congress intended to delete a

requirement that courts give parties notice and an opportunity to

be heard before remanding cases for lack of subject matter

jurisdiction. Thus, the requirement, still in effect in the

Judicial Code of 1911, survived re-codification in 1948.

The current version of section 1447(c),
A motion to remand the case on the basis of any defect
in removal procedure must be made within 30 days after
the filing of the notice of removal under section
1446(a). If at any time before final judgment it
appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.

28 U.S.C.A. § 1447(c) (1994), results from one of many amendments

to the Judicial Code made by Congress in 1988. See Judicial

11
. Although the dissent in Thermtron was less sanguine than the
majority that no change was intended by the 1948 re-codification,
see Thermtron, 423 U.S. at 359-60, 96 S. Ct. at 597 (Rehnquist,
J., dissenting), it offered no evidence of the type of "changes
in substance" that were intended, id. at 360, 96 S. Ct. at 597,
and at all events, the language relevant here -- the intact
provision that the lack of jurisdiction shall "appear" --
remained. See infra.
Improvements and Access to Justice Act of 1988, Pub. L. 100-702,

102 Stat. 4642. The two sentences of this version of section

1447(c) were produced by splitting up the sole sentence of the

pre-amendment provision. In doing so, Congress replaced the two

prior authorized remand grounds -- if a case was removed

"improvidently," or if a case was removed "without jurisdiction"

-- with, respectively, a sentence authorizing remands of cases

for a "defect in removal procedure" and one authorizing remands

for a "lack[ of] subject matter jurisdiction." See Rothner v.

City of Chicago, 879 F.2d 1402, 1411 & n.7 (7th Cir. 1989). The

scanty legislative history of this change (a mere two

paragraphs), see H.R. REP. NO. 100-889, 100th Cong., 2d Sess. 72

(1988), reprinted in 1988 U.S.C.C.A.N. 5982, 6033; see also 134

CONG. REC. S16284, S16308 (daily ed. Oct. 14, 1988); Court Reform

and Access to Justice Act: Hearings on H.R. 3152 Before the

Subcomm. on Courts, Civil Liberties and the Administration of

Justice of the House Comm. on the Judiciary, 100th Cong., 1st &

2d Sess. 97-98 (1987-1988), reveals no intent to change the

requirements for district court remands, other than to require

that motions for remands for removal procedure defects be made

within thirty days of removal. Importantly, the statute retained

(without change) the operative phrase, "it appears."

C. Consistency with Judicial Policy
As the foregoing analysis shows, section 1447(c)

requires the district court to give the affected parties notice
and an opportunity to be heard before remanding a case. This

makes sense, for subject matter jurisdiction -- although a

threshold issue -- is not something fit for judicial notice, and

the law and facts of a given case must generally be determined,

in our adversary system, by the court, after hearing from the

interested parties.12

More specifically, district courts are obligated to

listen to the affected parties before dismissing a case for lack

of subject matter jurisdiction. We have explained this in

Neiderhiser v. Borough of Berwick, 840 F.2d 213, 216 n.6 (3d Cir.

1988). There, the district court had dismissed the plaintiff's

action for lack of subject matter jurisdiction because it

concluded, sua sponte, that the suit did not present a live case

or controversy. Id. at 216. The fact that the district court

12
. The majority's invocation of cases where the court sua
sponte raised the issue of subject matter jurisdiction is not to
the contrary. The practice at least of this Circuit is to allow
the parties the opportunity to be heard even when sua sponte
raising the issue of subject matter jurisdiction. See, e.g.,
Lunderstadt v. Colafella, 885 F.2d 66, 69 (3d Cir. 1989); Knop v.
McMahan, 872 F.2d 1132, 113 (3d Cir. 1989); Lovell Mfg. v.
Export-Import Bank of the United States, 843 F.2d 725, 729 (3d
Cir. 1988); Lewis v. International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America, Local Union No.
771, 826 F.2d 1310, 1312 (3d Cir. 1987); Kiick v. Metropolitan
Edison Co., 784 F.2d 490, 492 (3d Cir. 1986); Stibitz v. General
Pub. Utilities Corp., 746 F.2d 993, 995 (3d Cir. 1984); Local
Union 334, United Ass'n of Journeymen and Apprentices of Plumbing
and Pipe Fitting Indus. of U.S. and Canada, AFL-CIO, 628 F.2d
812, 813 (3d Cir. 1980); Medlin v. Boeing Vertol Co., 620 F.2d
957, 958 & n.1 (3d Cir. 1980); Jersey Central Power & Light Co.
v. Local Unions 327, 749, 1289, 1298, 1303, 1309 and 1314 of
Int'l Brotherhood of Elec. Workers, 508 F.2d 687, 698 n.30 (3d
Cir. 1975).
sua sponte considered dismissal was not a problem in itself, but

the procedure used was impermissible:
While the district court's consideration of the
jurisdictional issue sua sponte was proper, the court
did not afford the parties the opportunity to brief or
present evidence on this issue. We find this lack of
opportunity to be heard improper. The court below
should have allowed [the plaintiff] sufficient time to
present evidence or otherwise respond on the issue of
jurisdiction before it determined that none existed.

Id. at 216 n.6 (emphases supplied). We did not need to remand

there only because -- on the extant record -- we ruled in favor

of the plaintiff, holding that subject matter jurisdiction

existed.

As a general matter, the district court is required to

give parties notice and an opportunity to be heard before

remanding a removed case. See Local 336, American Federation of

Musicians, AFL-CIO v. Bonatz, 475 F.2d 433, 437 (3d Cir. 1973)

("Even on [issues of jurisdictional fact] the record must clearly

establish that after jurisdiction was challenged the plaintiff

had an opportunity to present facts by affidavit or by

deposition, or in an evidentiary hearing, in support of his

jurisdictional contention.") (emphasis supplied); Prakash v.

American Univ., 727 F.2d 1174, 1179-80 (D.C. Cir. 1984) ("When

subject matter jurisdiction is questioned, the court must, of

course, satisfy itself of its authority to hear the case, and in

so doing, it may resolve factual disputes. The court has

considerable latitude in devising the procedures it will follow

to ferret out the facts pertinent to jurisdiction, and normally
it may rely upon either written or oral evidence. The court

must, however, afford the nonmoving party `an ample opportunity

to secure and present evidence relevant to the existence of

jurisdiction.'") (quoting Gordon v. National Youth Work Alliance,

675 F.2d 356, 363 (D.C. Cir. 1982) (Spotswood W. Robinson, III,

C.J., concurring)).

While these cases go to jurisdictional facts, I do not

see why their reasoning is not also applicable to "jurisdictional

law." Indeed, in the instant case, Liberty Mutual contends that

the district court adopted verbatim Ward Trucking's mistaken view

of the requirements of 28 U.S.C. § 1446(b) for establishing

amount in controversy, and that this error led the district court

incorrectly to conclude that the plaintiff could not use

discovery responses to support removal. In Liberty Mutual's

submission, the district court's confusion as to jurisdictional

law led the court to conclude incorrectly that Liberty Mutual had

not shown a jurisdictional fact, i.e., an amount in controversy

in excess of $50,000. See discussion in the margin.13

13
. Although the majority opinion refers generally to the basis
for the district court's remand order, it paints an incomplete
picture. The majority notes that the district court entered its
first remand order because Ward Trucking's state court complaint
and writ failed to show a sufficient amount in controversy, and
because the affidavit of Liberty Mutual's counsel, in which he
opined that the amount in controversy exceeded $50,000, was
legally insufficient. And, as the majority explains, the
district court remanded the second time after it refused to
consider the discovery responses that had since been submitted by
Liberty Mutual in support of removal. Despite the fact that
Liberty Mutual thus presented admissions of the plaintiff, and
 These views are strongly supported by the discussion in

In re Continental Casualty Co., 29 F.3d 292, 294 (7th Cir. 1994),

(..continued)
not merely a statement of its own counsel's views, the majority
simply states:

The issue the district court confronted in each opinion
was whether the papers that Liberty Mutual placed
before it established the amount in controversy
requirement of diversity jurisdiction.

Maj. Op. at 12. This characterization of the issues is
incomplete.
Under the first paragraph of 28 U.S.C. § 1446(b), the
issue in the first removal and remand was whether the "initial
pleadings" filed by the defendant in the state court action
established that suit could have been brought in federal court.
See Foster v. Mutual Life Marine & Island Ins. Co., 986 F.2d 48,
54 (3d Cir. 1993) cited in Maj. Op. at 4 n.2. However, under the
second paragraph of section 1446(b), the issue in the second
removal and remand was whether Liberty Mutual had presented the
district court with "other paper" that showed an adequate amount
in controversy. Foster resolved only the question of what
constituted "pleadings" and did not define "other paper"; indeed,
several reported decisions, including one from the Middle
District of Pennsylvania, hold that discovery responses may
constitute "other paper" that can establish amount in controversy
under section 1446(b). See, e.g., Zawacki v. Penpac, Inc., 745
F. Supp. 1044, 1047 (M.D. Pa. 1990) (deposition testimony). But
Ward Trucking cited none of these cases to the district court,
instead using the Foster definition of pleadings to argue in its
remand motion that the discovery responses were inadmissible for
amount in controversy purposes. Without even asking whether
Liberty Mutual disagreed with that construction of section
1446(b) (at which time Liberty Mutual could have called these
other cases to the court's attention for consideration), the
district court entered a remand order that word for word adopted
Ward Trucking's interpretation of Foster and section 1446(b).
I do not, of course, opine as to whether Liberty Mutual
or Ward Trucking correctly interpreted section 1446(b). My
discussion is meant solely to illustrate the dangers inherent in
the majority's interpretation of section 1447(c) as authorizing
district courts to remand without giving the parties notice and
an opportunity to be heard.
where the Court of Appeals for the Seventh Circuit held that

section 1447(c) does not authorize district courts to remand

cases for procedural defects absent a motion by a party. In so

concluding, the court stressed the importance of hearing from the

affected parties:
By acting without any motion, district judges increase
the risk of error--both legal error and error in
understanding the parties' desires. Ours is an
adversarial system, and courts rely on lawyers to
identify the pertinent facts and law. In this case the
district judge stated the facts correctly but
apparently was unaware of cases that had discussed the
issue and reached conclusions at odds with his own.
Perhaps these other cases are incorrect; we have no
views on the subject. But the district court should
have solicited the parties' submissions before acting,
to avoid what has happened in this case--extended
disputation, potentially leading to another change of
forum. If the district judge should entertain the
parties' views before remanding a case, then he also
ought to wait for a motion . . . .

Id. at 295 (citation omitted). Because the court of appeals

required the district court to hear from the parties before

remanding, it concluded that the district court could not sua

sponte remand on the grounds of procedural defect. See id.

Although the plaintiff's ability to waive procedural defects

supported the court's conclusion that district courts must await

a party's motion before remanding for procedural defects, id.,
the independent requirement that district courts must "solicit

the views of the parties" flowed from the more general concerns
about risks of error in light of the nature of our adversarial

court system.14

14
. The construction of 1447(c) described above also accords
with the sound practice of many of our district court judges.
See, e.g., Allergy Diagnostics Lab. v. The Equitable, 785
F. Supp. 523, 524 (W.D. Pa. 1991) (addressing arguments made by
removing defendant "upon the court's raising the jurisdictional
issue at a status conference"); McDonough v. Blue Cross of N.E.
Penn., 131 F.R.D. 467, 470-72 (W.D.Pa. 1990) (remanding only
after addressing and rejecting defendants contentions in support
of jurisdiction); Mall v. Atlantic Fin. Federal, 127 F.R.D. 107,
108-09 (W.D. Pa. 1989) (although neither plaintiff nor defendants
moved for remand, both plaintiff and one defendant questioned the
court's jurisdiction); id. at 110 (defendant opposing remand
filed supplemental brief arguing for jurisdiction); Recchion v.
Kirby, 637 F. Supp. 290, 291 (W.D. Pa. 1986) ("[The district
court] sua sponte addressed the propriety of removal . . . and
the basis for . . . subject matter jurisdiction and ordered the
parties to file briefs on the issue.").
 D. Consistency with Congressional Policy

This construction of section 1447(c) accords with the

policy underlying section 1447. Certainly, in curtailing review

of remands issued for lack of jurisdiction, Congress did seek "to

make the judgment of a district court remanding a case final and

conclusive in order to avoid the delay caused by appellate review

of remand decisions." Maj. Op. at 7 (emphasis supplied). But by

concluding that the risk of erroneous remand orders was not great

enough to outweigh the threat posed by protracted litigation over

jurisdictional questions, Congress must have presupposed the

exercise of judgment. Cf. Kloeb v. Armour & Co., 311 U.S. 199,

201, 204, 61 S. Ct. 213, 215-16 (1940) (where, on plaintiff's

remand motion, district court took evidence before deciding to

grant remand, remand was unreviewable, for the remand statutes

"entrust determination concerning such matter to the informed

judicial discretion of the district court") (emphasis supplied).

That expectation would conform with my view that section 1447(c)

requires the district court to afford the affected parties notice

and opportunity to be heard before it remands cases to state

court.

The assumption that district courts arrive at reasoned

remand decisions, unlikely to be wrong, also underlies the

decision of In re TMI Litigation Cases Consolidated II, 940 F.2d
832 (3d Cir. 1991), and supports my conclusions here. As the

majority relates, that case held that section 1447(d) did not bar
review of a district court's remand order that was based on the

lack of subject matter jurisdiction flowing from the district

court's determination that the act giving rise to federal

question jurisdiction was itself unconstitutional. Maj. Op. at

13-14. How was this court able to review the remand order,

"plainly within the bounds of § 1447(c)," Gravitt, 430 U.S. at

723, without offending section 1447(d)? Because we concluded

that "the jurisdictional determination of the district court

. . . was not the type of federal subject matter jurisdiction

decision intended to be governed by the terms of or the policy

underlying section 1447(c)." Maj. Op. at 14 (quoting TMI

Litigation, 940 F.2d at 845) (internal quotation marks omitted).

As the majority here explains, "the ruling which triggered the

remand order was not the routine type of jurisdictional

determination . . . which Congress entrusted to the district

courts[.]" Id. (emphasis supplied).

TMI Litigation might be distinguished on the grounds

that it involved a distinction among the subject matters of

district court determinations, rather than the procedures, but it

supports my view that Congress did not expect district courts to

accept verbatim a moving party's statement of the law without

listening to the opposing party's views, for that is not a

"routine" method of making judicial decisions. Given that judges

are human, a court that would rule without listening is

appreciably more likely to err than one that considers both
sides' input. Since we ordinarily do not scrutinize district

courts' subject matter jurisdiction remand decisions for

substantive error, it is critically important that we preserve

the prophylactic requirement that the court hear first from the

parties before remanding. Indeed, providing notice and an

opportunity to be heard may even reduce delays, for by reducing

the chances of erroneous remands, this rule makes it less likely

that parties will need to remove actions more than once (where

the time period permits) in order to use a subsequent removal

notice to explain the governing law to the district court.

This construction of 1447(c) is also consistent with

Supreme Court precedent on reviewability of remand orders. In

Thermtron, the district court had entered an order to show cause

as to why the case should not be remanded and the parties had

responded to that order. See Thermtron, 423 U.S. at 339-40, 96

S. Ct. at 587. In Gravitt, 430 U.S. at 723, 97 S. Ct. at 1439,

the district court had afforded the removing defendant an

opportunity to be heard before granting the plaintiff's remand

motion. See 416 F. Supp. 830, 831 & n.2 (1976).
 E. Summary

In conclusion, the Supreme Court early on held that

remands under the 1875 forerunner of section 1447(c) required

that the affected parties first be given notice and an

opportunity to be heard. Nothing in the subsequent development

of the remand provision was intended to abolish this requirement,

which does not conflict with section 1447(d)'s underlying policy

of avoiding delay. I must therefore disagree with the majority

that section 1447(c) authorized the district court to remand

without first allowing Liberty Mutual to respond to Ward

Trucking's remand motion.

II. § 1447(d) AND REVIEWABILITY OF
THE DISTRICT COURT'S REMAND ORDER

Because the district court failed to provide Liberty

Mutual an opportunity to be heard before remanding, its remand

order was unauthorized. As a result, under our remand

reviewability jurisprudence, section 1447(d) does not prevent us

from issuing a writ of mandamus to compel the district court to

remain within the bounds of its authority by awaiting Liberty

Mutual's response to Ward Trucking's remand order. I elaborate

on these points as follows.
 A. Reviewability of Procedurally Unauthorized Remand Orders

Our opinion in Air-Shields, Inc. v. Fullam, 891 F.2d 63

(3d Cir. 1989), dictates the conclusion that remand orders

entered in a manner not authorized by section 1447(c) are

reviewable despite the limitations in section 1447(d). In Air-

Shields, the district court sua sponte remanded a case that it

concluded had been filed untimely and without a required surety

bond. Id. at 64-65. Because we determined that section 1447(c)

would not have allowed the district court to remand for these

procedural defects outside thirty days from the filing period,15

id. at 65, we concluded that by doing so "the district court

exceeded its statutorily defined power," id. at 66 (quoting

Thermtron, 423 U.S. at 351, 96 S. Ct. at 593) (internal quotation

marks omitted). Thus, we were not barred by section 1447(d) from

issuing a writ of mandamus directing the district court to vacate

its remand order. Id.

The situation here is analogous. Since, as I have

shown, notice and an opportunity to be heard before remand are

"essential to action under . . . § 1447(c), then the lack

[thereof] deprives a district judge of power to return a case to
state court." Continental Casualty Co., 29 F.3d at 294. By

granting Ward Trucking's motion to remand without allowing

Liberty Mutual to respond, the district court here exceeded its

15
. We did not decide whether the district court was ever
permitted to remand for defect in removal procedure absent a
motion by a party. See id. at 65.
statutorily defined power. I of course agree with the majority

that "only remand orders issued under § 1447(c) and invoking the

grounds specified therein . . . are immune from review under

§ 1447(d)." Maj. Op. at 8 (quoting Thermtron, 423 U.S. at 346,

96 S. Ct. at 590) (internal quotation marks omitted and emphasis

supplied here). But the district court's failure to give Liberty

Mutual notice and opportunity to be heard precluded this from

constituting a "remand order issued under § 1447(c)."

B. Unauthorized Action or Unreviewable Error

While the majority does not address the Air-Shields

analysis, it responds to Liberty Mutual's arguments by attacking

the construction of section 1447(c) discussed above, accusing

Liberty Mutual of "equat[ing] error with unauthorized action."

Maj. Op. at 21. This remonstration, however, is misdirected.

The section 1447(c) requirement that district courts

hear from the parties before remanding does not, as the majority

believes, dictate that "every erroneous remand decision would be

reviewable." Id. Rather, since the district court's authority

to remand a removed case extends to all situations where it finds

a lack of subject matter jurisdiction after allowing the parties
notice and an opportunity to be heard, the courts of appeals

would review only those decisions where the district court fails

to listen to the parties before remanding. If the court receives

argument from each side before acting yet still remands for lack

of subject matter jurisdiction, review would generally be
unavailable, regardless of how erroneous the court may have been

in its jurisdictional determination.

Indeed, the majority is itself guilty of conflating

error with unauthorized action. I agree that Thermtron and

Gravitt teach that "when a district court exercises its power to

remand under section 1447(c), section 1447(d) allows a district

court to err." Id. However, it does not as a matter of logic

"necessarily follow[] that section 1447(d) also allows a district

court to be procedurally unfair." Id. The majority's deduction

would be sound only if procedural unfairness were merely one more

form of error. But that cannot be, for to so hold would

undermine the legitimacy of our procedural system. Procedural

fairness is the predicate of legitimacy. And since

(concomitantly) section 1447(c) does not authorize judges to

remand without hearing from the parties, a district court does

not exercise "its power to remand under section 1447(c)" when it

remands as the district court did here, for it possesses no such

power. Such conduct would not then be an "error" permitted to

stand by section 1447(d) any more than would be the remand at

issue in Thermtron, which was entered for docket control reasons;
both actions are ultra vires.

The majority's reasoning is therefore either circular

or inconsistent with Thermtron. The majority's confident

assertion that "[j]ust as section 1447(d) prohibits our review of

the merits of a remand order that falls within the parameters of
section 1447(c), it prohibits our review of the manner by which

such an order is rendered," id. (emphasis supplied), begs the

question: Does a remand entered without hearing from the

removing party "fall within" section 1447(c)? Since, as I have

argued, it does not, section 1447(d) is no bar to our review.

III. CONCLUSION

I believe that the majority errs in construing section

1447(c) to authorize district courts to issue remand orders

without giving the parties notice and an opportunity to be heard.

Fortunately, the damage this holding does to remand jurisprudence

may in time prove to be circumscribed, for nothing in the

majority's opinion today requires district courts to engage in

this constitutionally dubious practice.16 Courts might never

need to address this question if district courts would in the

future give the notice and opportunity to be heard of which I

have spoken. This would not undermine section 1447's policy of

delay avoidance because, unless the district court desires to

extend it, the substantive remand ruling can be made without

elaborate filings or procedures.

For the foregoing reasons, I respectfully dissent.

16
. It remains an open question whether such conduct violates
the Due Process Clause, for Liberty Mutual has not brought a
constitutional challenge.