The Section 1447(d) Bar – State of Vermont v. MPHJ Technology Investments, LLC

In a case of procedural jockeying, the United States Court of Appeals for the Federal Circuit in State of Vermont v. MPHJ Technology Investments, LLC, held that a “district court’s remand order dominate[d] any proceedings on th[e] appeal” and because a remand under 28 U.S.C. 1447(d) “is not reviewable on appeal or otherwise[,]” the Federal Circuit lacked appellate jurisdiction.

The path to the Federal Circuit’s decision began with a state court action brought by the State of Vermont against MPHJ Technology Investment, LLC (“MPHJ”) for unfair and deceptive trade practices under the Vermont Consumer Protection Act. MPHJ argued that what was fundamentally at issue was MPHJ’s right to enforce its patents. MPHJ removed the case to federal district court and the State subsequently moved to remand the case to state court arguing that the federal court lacked subject matter jurisdiction. MPHJ opposed the motion to remand and also moved for dismissal of the action for lack of personal jurisdiction and for Rule 11 sanctions. In addition, after the State amended its complaint, removing a request for a permanent injunction, MPHJ moved for summary judgment. Before the district court were the following motions:

1. The State’s motion to remand to state court for lack of subject matter jurisdiction;
2. MPHJ’s motion to dismiss for lack of personal jurisdiction;
3. MPHJ’s motion for Rule 11 sanctions, which also requested dismissal on the grounds that the State’s unfair and deceptive trade practices claims were preempted by MPHJ’s right to enforce its patents; and
4. MPHJ’s motion for summary judgment.

The district court decided only one of the pending motions granting the State’s motion to remand. The district court held that the State’s unfair and deceptive trade practices claims did not raise a substantial question of patent law. Also, because the United States Supreme Court has held that a defense can not provide the basis for federal subject matter jurisdiction, MPHJ’s defense that the case involved patent law, which preempted the state law claims, was not relevant with respect to establishing federal subject matter jurisdiction. Consequently, the district court remanded the case under §1447(c) for lack of subject matter jurisdiction.

MPHJ appealed the remand contending that the district court’s denial of its sanction motion and refusal to decide its motion to dismiss for personal jurisdiction was an abuse of discretion. MPHJ also petitioned the Federal Circuit for a writ of mandamus. MPHJ made a number of arguments including that there is precedence for a court to decide personal jurisdiction before subject matter jurisdiction. However, the Federal Circuit noted that none of MPHJ’s arguments could overcome the bar imposed by §1447(d), which prevents an appellate court from “second guessing the district court’s jurisdiction determination regarding subject matter” jurisdiction even in instances where the error in the remand order is plain. There was no question that the district court’s remand was based on subject matter jurisdiction; thus, the Federal Circuit, lacking the jurisdiction to review the remand decision, dismissed MPHJ’s appeal and petition for a writ of mandamus.