Heaton v. Monogram Crdt Card

Revised November 29, 2000
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 99-31341
PATRICIA HEATON,
Plaintiff-Appellee,
VERSUS
MONOGRAM CREDIT CARD BANK OF GEORGIA,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Louisiana
November 2, 2000
Before DUHÉ, EMILIO M. GARZA and DeMOSS, Circuit Judges.
DUHÉ, Circuit Judge:
Monogram Credit Card Bank of Georgia (“Monogram”) appeals the 1
district court's order remanding this case to state court pursuant 2
to 28 U.S.C. § 1447(c). Because Congress has specifically excluded 3
this type of remand order from appellate review, we conclude that 4
we lack jurisdiction and therefore DISMISS Monogram's appeal. 5
BACKGROUND 6

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2
We summarize only the facts relevant to the issues in dispute 7
in this appeal. Monogram, a Georgia credit card bank, issued a 8
credit card to Patricia Heaton (“Heaton”) to finance purchases from 9
a retail store called Campo Appliances. Heaton brought a class 10
action lawsuit in state court, alleging that Monogram charged late 11
fees on the card in excess of the limit provided under the 12
Louisiana Consumer Credit Law (“LCCL”), La. R.S. 9:3527. Heaton 13
also alleged breach of contract. 14
Monogram removed the suit. It argued that there was a basis 15
for federal subject matter jurisdiction because Heaton's claims 16
were completely preempted by Section 27 of the Federal Deposit 17
Insurance Act (“FDIA”), 12 U.S.C. § 1831d. Section 27 of the FDIA 18
authorizes federally-insured “state banks” (as defined under 19
Section 3(a)(2) of the FDIA, 12 U.S.C. § 1813(a)(2)) to charge late 20
fees permitted by the laws of their home states. Georgia law 21
provides for a higher late fee limit than the LCCL. Monogram also 22
argued that the parties were diverse and, pursuant to In re Abbott 23
Laboratories, 51 F.3d 524 (5th Cir. 1995), Heaton's demand for 24
attorney's fees under the LCCL caused the amount in controversy to 25
exceed $75,000. 26
Heaton sought remand, arguing that Monogram could not invoke 27
complete preemption because it was not a “state bank” under the 28
definition contained in Section 3(a)(2) of the FDIA. Section 29
3(a)(2) defines state banks as those which are “engaged in the 30
business of receiving deposits” and which are incorporated under 31

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1The judge's order did not address the question of diversity
jurisdiction.
3
state law. Part of Heaton's argument was that because Monogram 32
accepts deposits only from its parent company and not from its 33
customers, it could not be engaged in the business of receiving 34
deposits. She also contended that In re Abbott Laboratories was 35
inapplicable, and therefore the court lacked diversity 36
jurisdiction. 37
Judge Porteous denied Heaton's motion, concluding that under 38
the plain language of the FDIA, Monogram was a “state bank.” He 39
also cited a letter from the Federal Deposit Insurance Corporation 40
(“FDIC”) in which the FDIC stated that it considered Monogram to be 41
a state bank. Therefore, Heaton's claims were completely 42
preempted.1 Less than a week after the denial of remand, the case 43
was re-assigned to Judge Barbier. Judge Barbier denied Heaton's 44
petition for an interlocutory appeal of the denial of remand, 45
finding that there was no “substantial ground for difference of 46
opinion as to whether the defendant is a state bank.” Heaton v. 47
Monogram Credit Card Bank of Georgia, No. 98-1823 (E.D. La. Nov. 48
25, 1998) (minute entry denying permission to appeal). 49
Thereafter, Heaton moved to amend her petition to assert a 50
federal claim under the Truth in Lending Act (“TILA”), specifically 51
15 U.S.C. § 1637(c)(3)(B). This claim was not related to the 52
credit card late fees. A magistrate judge denied this motion, but 53
Judge Barbier vacated the magistrate judge's order and allowed 54

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4
Heaton to assert the TILA claim. 55
Later, Heaton discovered that Monogram had participated in the 56
preparation of the FDIC letter that Judge Porteous had cited in his 57
order denying the motion to remand. Heaton then moved for a 58
reconsideration of her motion. Judge Barbier granted the motion 59
and remanded the case to state court, citing 28 U.S.C. § 1447(c). 60
The judge rejected Monogram's argument that Heaton had waived her 61
objection to the earlier denial of remand by amending her petition 62
to add the TILA claim. On the same day that he signed the remand 63
order, Judge Barbier granted Heaton's voluntary motion to dismiss 64
that claim with prejudice, and noted the dismissal in a footnote in 65
the remand order. 66
In granting the motion to remand, Judge Barbier concluded that 67
Monogram was not a “state bank” because it was not “engaged in the 68
business of receiving deposits” under Section 3(a)(2). He reasoned 69
that because Monogram only receives deposits from its parent 70
company, under a plain reading of the FDIA, it could not be engaged 71
in the business of receiving deposits from its customers. As a 72
result, the judge concluded that “this Court does not have federal 73
question jurisdiction, and there is no federal preemption.” Heaton 74
v. Monogram Credit Card Bank of Georgia, No. 98-1823 (E.D. La. Nov. 75
22, 1999) (minute entry ordering remand). The judge also found 76
diversity lacking, and noted that “if there is any doubt as to 77
federal subject matter jurisdiction, the court should resolve the 78
doubt in favor of remand.” Id. 79

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5
Monogram appealed. Heaton moved to dismiss the appeal for 80
lack of appellate jurisdiction. 81
DISCUSSION 82
We begin with 28 U.S.C. § 1447(d), which provides: “An order 83
remanding a case to State court from which it was removed is not 84
reviewable on appeal or otherwise.” Notwithstanding this broad 85
language, the Supreme Court has explained that this provision is to 86
be interpreted in pari materia with § 1447(c), such that only 87
remand orders issued under § 1447(c) and “invoking the grounds 88
specified therein” are immune from review. Thermtron Prods., Inc. 89
v. Hermansdorfer, 423 U.S. 336, 345-46, 96 S. Ct. 584, 590, 46 L. 90
Ed. 2d 542 (1976), abrogated on other grounds by Quackenbush v. 91
Allstate Ins. Co., 517 U.S. 706, 116 S. Ct. 1712, 135 L. Ed. 2d 1 92
(1996); Smith v. Texas Children's Hosp., 172 F.3d 923, 925 (5th 93
Cir. 1999). Lack of subject matter jurisdiction is one basis for 94
remand under § 1447(c). A § 1447(c) remand is not reviewable on 95
appeal even if the district court's remand order was erroneous. 96
Thermtron, 423 U.S. at 343, 96 S. Ct. at 589; Smith, 172 F. 3d at 97
925; Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 336 (5th 98
Cir. 1999). “Reviewable non-§ 1447(c) remands constitute a narrow 99
class of cases, meaning we will review a remand order only if the 100
district court 'clearly and affirmatively' relies on a non-§ 101
1447(c) basis.” Copling v. Container Store, Inc., 174 F.3d 590, 102
596 (5th Cir. 1999); Giles, 172 F.3d at 336. The justification for 103
this rule is “to prevent delay in the trial of remanded cases by 104

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6
protracted litigation of jurisdictional issues.” Thermtron, 423 105
U.S. at 351, 96 S. Ct. at 593. As a result, we have stated that 106
“the district court is the final arbiter of whether it has 107
jurisdiction to hear the case.” Smith, 172 F.3d at 925. 108
A plain and common sense reading of the Judge Barbier's remand 109
order reveals that he stated a § 1447(c) basis for remand. The 110
judge specifically concluded that “this Court does not have federal 111
question jurisdiction” and that “there is no federal preemption.” 112
He also specifically mentioned that doubt as to whether there is 113
subject matter jurisdiction should be resolved in favor of remand. 114
He then invoked § 1447(c) in ordering the remand. Even if Judge 115
Barbier's conclusions that Monogram was not a state bank and that 116
there was therefore no preemption were erroneous, we cannot review 117
his remand order. 118
Monogram argues, however, that despite the clear language of 119
the remand order, the true basis for the order was 28 U.S.C. § 120
1367(c)(3). Monogram thus concludes that we have jurisdiction in 121
this case because remand orders pursuant to § 1367(c) are subject 122
to appellate review. Hook v. Morrison Milling Co., 38 F.3d 776, 123
780 (5th Cir. 1994). Under § 1367(c)(3), a district court may 124
decline in its discretion to exercise supplemental jurisdiction 125
over supplemental (formerly “pendent”) state law claims when the 126
court has dismissed all claims giving rise to original 127
jurisdiction. Monogram asserts that Judge Barbier's dismissal of 128
Heaton's federal TILA claim, which he noted in his remand order, 129

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7
was the predicate for the remand of what Judge Barbier considered 130
to be remaining state law claims. Heaton's addition of the TILA 131
claim, according to Monogram, formed an independent basis for 132
federal question jurisdiction, and Judge Barbier's dismissal of the 133
claim with prejudice demonstrated that he thought he had subject 134
matter jurisdiction over that claim. Therefore, Monogram argues 135
that the remand order was necessarily pursuant to § 1367(c)(3), and 136
Judge Barbier simply mislabeled the order as one pursuant to § 137
1447(c). 138
In making this argument, Monogram relies on our decision in 139
Bogle v. Phillips Petroleum Co., 24 F.3d 758 (5th Cir. 1994). In 140
that case, a panel of this Court stated: 141
The critical distinction for determining appealability is 142
the presence of federal subject matter jurisdiction prior 143
to the order of remand. In a Section 1447(c) remand, 144
federal jurisdiction never existed, and in a non-Section 145
1447(c) remand, federal jurisdiction did exist at some 146
point in the litigation, but the federal claims were 147
either settled or dismissed. 148
Id. at 762. Monogram asserts that because the TILA claim conferred 149
federal question jurisdiction on the district court, federal 150
jurisdiction “did exist at some point” in the suit and therefore 151
the remand could not have been based on § 1447(c). 152
We reject Monogram's argument. In Bogle, the district court's 153
remand order concluded that “'[t]his case does not contain a 154

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2But see Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 336
(5th Cir. 1999) (where the remand order was reviewable on appeal
because “[t]he court specifically noted that 'this is an appealable
order because the basis of my ruling is an exercise of discretion
to remand pendent state law claims.”); and Hook v. Morrison Milling
Co., 38 F.3d 776, 780 (5th Cir. 1994) (the remand order was
reviewable because “[t]he district court below made clear that it
was remanding Hook's state law negligence claim, i.e., her only
8
federal claim.'” Id. However, the court also went on to discuss 155
the discretionary factors set forth in Carnegie-Mellon University 156
v. Cohill, 484 U.S. 343, 108 S. Ct. 614, 98 L. Ed. 2d 720 (1988), 157
which district courts should consider in remanding supplemental 158
state law claims. Therefore, because the remand order in Bogle was 159
at first glance somewhat ambiguous, our elucidation of the grounds 160
for remand was required in order to determine the district court's 161
reasons for remanding. We concluded that the district court's 162
discussion of the discretionary factors did not taint its 163
conclusion that subject matter jurisdiction was lacking, and 164
therefore § 1447(c) formed the basis for the order. Bogle, 24 F.3d 165
at 762. 166
In the instant case, however, we see no ambiguity whatsoever 167
in Judge Barbier's remand order. Although brief, the order clearly 168
and affirmatively stated a § 1447(c) reason for remand, because 169
Judge Barbier concluded that he lacked subject matter jurisdiction. 170
His citation of § 1447(c) is clearly not a “mislabeling” of the 171
basis for remand. Nowhere in the order did the judge discuss the 172
discretionary factors set forth in Carnegie-Mellon, nor did he cite 173
§ 1367(c)(3) or any other basis for remand.2 In Smith, this Court 174

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remaining claim, pursuant to its discretion.”).
9
initially reviewed the first of two remand orders in that case. 175
Because the district judge granted summary judgment against the 176
plaintiff on some of her claims but remanded a remaining state law 177
claim, the Court interpreted the order as a discretionary remand of 178
pendent state law claims. Smith v. Texas Children's Hosp., 84 F.3d 179
152, 154 (5th Cir. 1996). On remand to the federal district court, 180
the district judge entered a second order remanding the case to 181
state court. Despite our interpretation of the first remand order, 182
the second remand order stated: “This court does not and has never 183
had jurisdiction over Smith's claim.” The judge then ordered the 184
remand pursuant to § 1447(c). Smith v. Texas Children's Hosp., 172 185
F.3d 923, 925 (5th Cir. 1999). On the appeal of this second order, 186
we concluded that the order did not affirmatively state a non-§ 187
1447(c) ground for remand, and therefore § 1447(d) barred appellate 188
review. Id. at 927. Likewise, in the instant case, even if Judge 189
Barbier's conclusion that he lacked subject matter jurisdiction was 190
clearly erroneous, he did not state a non-§ 1447(c) ground for 191
remand and we cannot review his order. 192
Monogram relies on decisions of other circuits in asserting 193
that the “mere incantation” of § 1447(c) or the words of subject 194
matter jurisdiction does not automatically render the remand order 195
unreviewable. Further, Monogram urges us to conduct an independent 196
review of the remand order to determine the “true” basis for the 197

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3See also McDermott Int'l, Inc. v. Lloyds Underwriters of London,
944 F.2d 1199, 1201 n.1 (5th Cir. 1991) (noting that the grounds
for reviewing remand orders have expanded, and admonishing district
courts to “take care to explain their reasons for remanding cases”
because “the availability and means of appellate review turns
exclusively on the district court's reason for remand.”); Tillman
v. CSX Transp., Inc., 929 F.2d 1023, 1026 (5th Cir. 1991)
(“Reviewability of a remand order depends entirely upon the trial
court's stated grounds for its decision to remand.”); Richards v.
Federated Dep't Stores, Inc., 812 F.2d 211 & n.1 (5th Cir. 1987)
(the remand order “is proof against review even if it merely
'purports' to remand on the ground quoted.”); and In re Merrimack
Mut. Fire Ins. Co., 587 F.2d 642, 644 (5th Cir. 1978) (“If . . .
the remand order states that it is based on 1447(c) statutory
grounds, it is immune from review by an appellate court.”).
Monogram suggests these decisions may be inapplicable because
they dealt with cases originated before the December 1, 1990
effective date of § 1367. However, the Supreme Court clearly
approved discretionary remands of pendent state law claims as early
as 1988 in Carnegie-Mellon. Moreover, because of our holding today
that Judge Barbier's order was based solely on § 1447(c) grounds,
we see no reason why these cases are inapposite.
10
remand. However, we note that in Bogle, looking at the face of the 198
remand order we stated: “The magic words 'this case does not 199
contain a federal claim' rendered the district court's remand order 200
unreviewable.” Bogle, 24 F.3d at 762.3
201
Monogram also argues that we must apply our decision in In re 202
Digicon Marine, Inc., 966 F.2d 158 (5th Cir. 1992) and conclude 203
that we are not bound by Judge Barbier's “erroneous 204
characterization” of his reasons for remanding. However, Digicon 205
Marine supports, rather than contradicts, our holding today. In 206
that case, the trial court granted a motion to remand based on the 207
lack of authority to remove a maritime case under 28 U.S.C. § 208
1441(b). Id. at 159. Later, in an order denying reconsideration, 209
it stated that the earlier ruling was based upon a lack of subject 210

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4Moreover, we note that Digicon Marine points out that when a
remand is reviewable on appeal, a district court may reconsider and
vacate its own order. Digicon Marine, 966 F.2d 158, 160-61,
quoting In re Shell Oil Co., 932 F.2d 1523, 1528 (5th Cir. 1991).
However, Monogram did not seek a reconsideration or amendment of
Judge Barbier's order to reflect its position that the order was
really based on § 1367(c)(3).
11
matter jurisdiction. Id. We concluded that “[d]espite the 211
district court's description of the remand as one based on a lack 212
of subject matter jurisdiction in its order on reconsideration, the 213
district court's original remand order clearly indicates on its 214
face that the remand was not based upon lack of original subject 215
matter jurisdiction . . . .” Id. at 160. In the instant case, 216
Judge Barbier did not discuss his reasons for remanding in any 217
order outside the remand order itself. Just as in Digicon Marine, 218
in this case we need only look to the face of the remand order to 219
determine his reasons for remanding. We cannot read the remand 220
order to say that the court “clearly and affirmatively” relied on 221
a non-§ 1447(c) basis as required by Copling v. Container Store, 222
Inc., 174 F.3d 590, 596 (5th Cir. 1999) and Giles v. NYLCare Health 223
Plans, Inc., 172 F.3d 332, 336 (5th Cir. 1999). The face of the 224
order clearly states a § 1447(c) basis for remand.4
225
We think adopting Monogram's position that we interpret the 226
remand order as one pursuant to § 1367(c)(3) would basically 227
require us to conclude that Judge Barbier remanded the case for the 228
wrong reasons. That approach would essentially amount to an 229
appellate review of the order, which Congress has clearly forbidden 230

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5See also Tramonte v. Chrysler Corp., 136 F.3d 1025, 1027 (5th
Cir. 1998) (“[T]he [Supreme] Court has recognized that § 1447(d)
intends to insulate from appellate review a district court's
determinations as to its subject matter jurisdiction . . . .”); and
Tillman v. CSX Transp., Inc., 929 F.2d 1023, 1024 (5th Cir. 1991)
(“The trial court brought its remand order within the absolute
immunity from review of 28 U.S.C. § 1447(c) by expressly referring
to a lack of jurisdiction as one of the bases of its decision to
remand.”).
12
us to do under § 1447(d). Monogram urges that “[p]ublic policy 231
considerations strongly militate in favor of allowing this appeal 232
to be maintained.” Appellant's Reply Brief at 10. It argues that 233
allowing district courts to insulate their remand orders from 234
appellate review by “intoning the words 'subject matter 235
jurisdiction'” would unleash “unreviewable mischief” and deny 236
litigants their right of appeal of § 1367(c)(3) remand orders. Id. 237
Although we seriously doubt Monogram's prediction, we think the 238
“public policy” decision is one for Congress to make, and one which 239
it has already made in the plain language of § 1447(d). In 240
enacting § 1447(d), “Congress struck the balance of competing 241
interests in favor of judicial economy.” Smith, 172 F.3d at 925.5
242
We recognize that the merits of this case present significant 243
questions of law concerning the interpretation of the FDIA and the 244
ability of courts to “second-guess” the FDIC's determinations about 245
whether financial institutions are “state banks” under the FDIA. 246
However, we note that because we construe the remand order as 247
jurisdictional in nature, the district court's determinations as to 248
Monogram's substantive preemption defense will have no preclusive 249

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6We realize that because of our holding today, Monogram may file
another petition for removal based on the TILA claim once this case
is returned to state court. We are aware that this result may
conflict with the policy of judicial economy embodied in § 1447(d).
However, we are constrained by the language of Judge Barbier's
remand order that he felt he had no subject matter jurisdiction in
this case, and therefore we can reach no other result but that
Judge Barbier was not empowered to render a ruling on the merits.
13
effect on the state court. Smith v. Texas Children's Hosp., 172 250
F.3d 923, 926 (5th Cir. 1999). 251
We think Judge Barbier clearly intended to base his order on 252
§ 1447(c). Having concluded that he lacked subject matter 253
jurisdiction over the case, however, Judge Barbier lacked 254
jurisdiction to grant Heaton's motion for voluntary dismissal with 255
prejudice. Such a ruling is a judgment on the merits. See 256
Boudloche v. Conoco Oil Corp., 615 F.2d 687, 688 (5th Cir. 1980). 257
In Bogle, the district court remanded the case because it believed 258
that it lacked subject matter jurisdiction, yet it granted the 259
plaintiff a partial nonsuit with prejudice of the claims that 260
formed the basis of the defendant's removal petition. Bogle v. 261
Phillips Petroleum Co., 24 F.3d 758, 762 (5th Cir. 1994). We held 262
that order was void and of no effect. We reach the same conclusion 263
here. The order dismissing Heaton's TILA claim is void.6
264
CONCLUSION 265
Because we have concluded that we lack jurisdiction in this 266
case, we DISMISS Monogram's appeal pursuant to 28 U.S.C. § 1447(d). 267
APPEAL DISMISSED. 268

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