No. 06-2105/2152 CONSOL ENERGY INC; EIGHTY FOUR-MINING COMPANY v. Berkshire Hathaway Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 06-2105/2152
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CONSOL ENERGY INC;
EIGHTY FOUR-MINING COMPANY
v.
BERKSHIRE HATHAWAY INC.; NATIONAL FIRE & MARINE
INSURANCE COMPANY; ALLIED WORLD ASSURANCE COMPANY, LTD;
COMMONWEALTH INSURANCE COMPANY; INTERNATIONAL MINING INDUSTRY
UNDERWRITERS, LTD; INTERNATIONAL INSURANCE COMPANY OF HANOVER
LLOYDS OF LONDON; HISCOX SYNDICATE LIMITED; ASCOT
UNDERWRITERS LIMITED; R.J. KILN & CO. LIMITED; XL INSURANCE
BERMUDA), LTD.
*National Fire & Marine Insurance Company,
Appellant
*Per Clerk's Order 4/21/06
National Fire & Marine Insurance Company , Appellant - 06-2105
Berkshire Hathaway Inc., Appellant - 06-2152
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Appeal from the
United States District Court for the
Western District of Pennsylvania
(05-cv-00199)
District Judge: The Honorable Joy F. Conti
________________
Submitted Under Third Circuit LAR 34.1(a)
June 18, 2007
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Before: MCKEE, FISHER and CHAGARES

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In its Order dated January 19, 2006, the District Court adopted the Magistrate Judge’s1
well-reasoned Report and Recommendation of February 8, 2006, in which Judge Hay explains
why this case must be remanded to Pennsylvania state court.
2
Circuit Judges
(Filed: October 30, 2007)
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OPINION
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MCKEE, Judge.
National Fire and Marine Insurance Company (“National Fire”), and Berkshire Hathaway
(collectively referred to as the “Defendants”) appeal the District Court’s order granting CONSOL
Energy’s motion to remand, and dismissing Berkshire’s motion to dismiss and National Fire’s
motion to dismiss or stay and to compel arbitration as moot. We will affirm.
I.
Inasmuch as we write primarily for the parties who are familiar with this case, we need
not set forth the factual or procedural background in detail. Before we can decide the
Defendants’ challenge to the District Court’s remand order pursuant to the forum selection clause
in the disputed policy, we must first determine if the order is reviewable. Ordinarily,1
“[a]n order remanding a case to the State court from which it was removed is not reviewable on
appeal or otherwise, except [in civil rights cases],” 28 U.S.C. § 1447(d). However, the Supreme
Court has explained that the only remands that can not be reviewed on appeal are those
predicated upon lack of subject matter jurisdiction or defects in the removal procedure.
Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996). Conversely, remands that are not

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Section 1447(d) provides:2
An order remanding a case to the State court from which it was removed is not
reviewable on appeal or otherwise, except that an order remanding a case to the State
court from which it was removed pursuant to section 1443 of this title shall be reviewable
by appeal or otherwise.
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premised on either of those two grounds are subject to appellate review. Foster v. Chesapeake
Ins. Co., 933 F.2d 1207, 1211 (3d Cir.), cert. denied, 502 U.S. 908 (1991); see also Regis
Associates v. Rank Hotels (Management) Ltd., 894 F.2d 193, 194 (6th Cir. 1990) (“[A] remand
order is reviewable on appeal when it is based on a substantive decision on the merits of a
collateral issue as opposed to just matters of jurisdiction.”)
National Fire argues that the scope and application of the forum selection clause turns on
whether the parties agreed to arbitrate. The District Court concluded that the purported existence
of the arbitration agreement is irrelevant because National Fire unambiguously waived the right
to remove this action to federal court. Accordingly, the court remanded to state court without
reaching the merits of the dispute over the duty to arbitrate.
As a general rule, appellate courts do not have jurisdiction to review a district court’s
decision to remand a case to state court. 28 U.S.C. § 1447(d). However, that rule was limited2
by the Supreme Court’s decision in Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336
(1976). There, the Court held that only remands based on grounds specified in § 1447(c) are
insulated from review under § 1447(d). Id. at 351 (emphasis added). Section 1447(c) provides
two specific bases for remand: (1) lack of subject matter jurisdiction or (2) defect other than lack
of subject matter jurisdiction. See In re FMC Corporation Packaging Systems Div., 208 F.3d
445, 448 n.4 (3d Cir. 2000).

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4
In Foster, we stated, “if a defendant has removed a case in violation of a forum selection
clause, remand is a particularly appropriate and effective remedy for the wrong.” 933 F.2d at
1217. Here, the District Court realized that National Fire could not consent to removal based
upon the forum selection clause in its policy of insurance with Consol. Accordingly, the rule of
unanimity was not satisfied and the court properly remanded to state court as explained in the
thoughtful Report and Recommendation of the Magistrate Judge. The Magistrate Judge
explained why remand was appropriate, and we will affirm the order remanding to state court
substantially for the reasons set forth in the Magistrate Judge’s Report and Recommendation.
See, e.g., Foster, 933 F.2d at 1211 (finding “the order of remand here, based on the forum
selection clause . . . is not rendered unappealable by section 1447(d).”).
II.
Our determination that the District Court properly remanded this case to state court does
not dispose of Berkshire’s appeal. The Magistrate Judge initially found that Berkshire had been
fraudulently joined, but the final Report and Recommendation relied only upon the failure to
satisfy the rule of unanimity and did not address Berkshire’s claim of fraudulent joinder.
Berkshire argues in its appeal that the District Court erred in failing to address its claim of
fraudulent joinder prior to granting the motion for remand. Berkshire also claims that it does not
have sufficient contacts with the forum to allow the court to exercise jurisdiction over it, and that
it can not be sued as the alter ego of National Fire. We reject the first contention, and do not
reach the second, for the reasons below.
Berkshire argues that where a district court “is presented with a fraudulently joined
defendant, it is required to first dismiss that defendant in a threshold determination - thereby

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Neither the district court nor the parties had the benefit of this decision, as it was handed3
down after the parties had submitted their briefs on appeal to this Court.
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confirming existence of subject matter jurisdiction - before it accepts and exercises jurisdiction to
interpret the parties’ contractual forum selection clause.” Berkshire Br. at 9. We agree that
courts are generally required to determine questions of jurisdiction before reaching the merits of
a case. Steel Co. v. Citizens for Better Environment, 523 U.S. 83 (1998). However, a federal
court does have some discretion “to choose among threshold grounds for denying audience to a
case on the merits.” Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 585 (1999).
In Sinochem International Co. Ltd. v. Malaysia International Shipping Corp., 127 S.Ct.
1184 (2007), the Court explained: “[a] district court may dispose of an action by a forum non3
conveniens dismissal, by-passing questions of subject-matter and personal jurisdiction, when
considerations of convenience, fairness, and judicial economy so warrant.” Id. at 1192.
Although we are not concerned with a dismissal under the doctrine of forum non conveniens , the
considerations here are analogous. The District Court’s remand served the interests of
“considerations of convenience, fairness, and judicial economy[.]” Since the case was improperly
removed due to the failure of unanimity, it would be unfair for Berkshire to benefit from the
wrongful removal by having its motion to dismiss decided in a federal forum. Furthermore, the
resolution of Berkshire’s motion would not change the end result - remand to the state court.
Inasmuch as the District Court properly concluded that this suit was not properly before it
given National Fire’s waiver of its right to remove to federal court, there was simply no need for
the court to consider whether Berkshire was fraudulently joined or address its personal
jurisdiction argument. The answer to those inquiries could not defeat the absence of the

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unanimity required for removal. We therefore agree that no purpose is served by addressing the
issues Berkshire insists upon raising.
III.
For the reasons set forth above, we will affirm the District Court’s order remanding to
state court, dismissing as moot National Fire’s motion to dismiss or stay and to compel
arbitration, and dismissing as moot Berkshire’s motion to dismiss.

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