Doughty v. Underwriters at Lloyd's, London

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

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

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.

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.

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

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.

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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