Complex Litigation Update: Ninth Circuit Holds Magistrate Judges Powerless to Order Remand

Jun 12, 2015   

June 12th, 2015

A magistrate judge can no longer have the last word when it comes to a motion to remand a case back to state court. On June 8, 2015, the Ninth Circuit Court of Appeals issued its opinion in Flam v. Flam, holding that 28 U.S.C. § 636 does not give a magistrate judge the power to issue a remand order under 28 U.S.C § 1447(c). Instead, a magistrate judge can only issue a recommendation or report for the federal district court judge, who should make the final order. The Ninth Circuit also held that a district court judge is not barred from reviewing a magistrate’s remand order under 28 U.S.C. § 1447(d) because the magistrate lacked authority to make that final decision in the first place.

Background

This case began with a dispute related to the division of pension assets after a divorce. While Laura Flam originally filed suit in Fresno County Superior Court in June 2012, Dr. Marshall Flam timely removed the case to the Eastern District of California based on federal question jurisdiction. He claimed the suit was governed by the Employee Retirement Security Act. Ms. Flam moved to remand the case to state court, and the magistrate judge issued an order to remand. Dr. Flam filed a motion for reconsideration of the removal order, but the district court refused to grant the motion for reconsideration.

In refusing to grant the motion for reconsideration, the district court determined it could not reconsider due to 28 U.S.C § 1447(d), which states in part “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.” Dr. Flam appealed this denial. On appeal, the Ninth Circuit addressed the issues of “whether a magistrate judge is empowered to issue an order remanding a removed case to state court, and whether such an order, once made, may be reviewed by the district court.”

The Magistrate Court’s Lack of Power to Order Remand

On appeal, the Ninth Circuit held that magistrate judges lack the power to issue remand orders primarily because the court defines such remand motions as “dispositive.” As explained by the Ninth Circuit, the Federal Magistrates Act, 28 U.S.C. § § 631-39 provides that “certain matters (for example, non-dispositive pretrial matters) may be referred to a magistrate judge for decision, while certain other matters (such as case-dispositive motions…) may be referred only for evidentiary hearing, proposed findings and recommendations.”

While the Federal Magistrates Act lists several dispositive matters, see 28 U.S.C. § 636(b)(1)(A), the Ninth Circuit found that the list is not exhaustive. In determining whether a motion not listed in 28 U.S.C. § 636(b)(1)(A) is dispositive, the Ninth Circuit uses a functional approach based on the effect of the motion.

In its analysis, the Ninth Circuit started with the Supreme Court’s view that judicial functions could be dispositive notwithstanding their absence from § 636(b)(1)(A). More on point, the Ninth Circuit addressed its “sister circuit” decisions, where other federal courts of appeal have specifically considered whether a remand motion is dispositive. The Second, Third, Sixth and Tenth Circuits all analyzed the issue of a magistrate’s authority regarding remand by analyzing the practical effect of the challenged action on the litigation.

Similar to its sister courts that ruled on the same issue, the Ninth Circuit here held that a motion to remand is a dispositive one. It pointed to In re U.S. Healthcare, a Third Circuit case, which held that a remand order “preclusively determines the important point that there will not be a federal forum available to entertain a particular dispute.” Like its sister circuits, the Ninth Circuit ruled that the magistrate’s decision was dispositive and therefore beyond the magistrate’s jurisdiction.

The District Court’s Ability to Review the Magistrate’s Decision

The second issue that the Ninth Circuit considered was whether 28 U.S.C. § 1447(d) bars review of the magistrate judge’s order. In short, the court found that the statute permits the district court judge to review.

Although, 28 U.S.C. § 1447(d) says “an order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise…,” the court recognized exceptions to this rule, and interpreted prior cases to mean that if a court lacked authority to remand under §1447(c), § 1447(d) would   not preclude review because the two must be construed together. Thus, if the magistrate judge lacked authority to issue an order to remand in the first place, § 1447(d) does not apply. The Second, Third, and Sixth Circuits have concluded that § 1447(d) does not bar review of a magistrate judge’s order, and the Ninth Circuit agreed.

As a result of the Ninth Circuit’s decision, the district court is left with two options in addressing the remand issue: 1) the district court could address the merits of the motion in the first instance; or 2) the district court could allow the magistrate to address the merits of the remand motion through a report and recommendation similar to other dispositive motions which routinely come before magistrates such as motions for summary judgment and motions to dismiss. If the latter option is chosen, then the parties have an opportunity to object to the magistrate’s findings in its report and recommendation by filing such objections with the district court. In instances where objections are filed, the findings of the magistrate will be reviewed de novo by the district court.

The attorneys at Fuerst Ittleman David & Joseph have extensive experience in the areas of complex civil and administrative litigation at both the state and federal levels. Should you have any questions or need further assistance, please contact us by email at contact@fidjlaw.com or telephone at 305.350.5690.