Carlsbad Technology v. HIF Bio

The Supreme Court has agreed to weigh in on whether a remand order can be appealed, if the judge returned the case after declining to rule on the state-law claims when finding that the federal claim was insufficient.

In 2005, HIF Bio Inc. filed suit against Yung Shin Pharmaceuticals Industrial Co., Carlsbad Technology and others in Los Angeles Superior Court. In its complaint, HIF asked the court for a declaratory judgment for ownership of the invention of a chemical compound that is used in treating cancer.

HIF filed an amended complaint, in which it asserted, in addition to 11 state claims, a federal claim under the Racketeer Influenced and Corrupt Organizations Act. The U.S. District Court for the Central District of California dismissed the RICO claim, declined to exercise supplemental jurisdiction over the remaining state-law claims and remanded the case back to Los Angeles Superior Court.

On appeal, a three-judge panel on the U.S. Court of Appeals for the Federal Circuit held in November 2007 that it lacked jurisdiction to review the district court order. In particular, the court held that 28 USC §1447(d) blocks federal appellate jurisdiction over remands back to state court. The decision split with past rulings from the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh Circuits.

Writing for the court, Judge Arthur Gajarsa cited the 2007 Supreme Court case Powerex Corp. v. Reliant Energy Servs., which held that “[i]t is far from clear ... that when discretionary supplemental jurisdiction is declined the remand is not based on lack of subject-matter jurisdiction for purposes of § 1447(c) and § 1447(d).”

On Oct. 14, 2008, the Supreme Court granted review in the case. Oral arguments will be held in early 2009.

Question presented: Whether a federal court order remanding a case to state court after declining to exercise supplemental jurisdiction is subject to appellate review.

The Supreme Court ruled today that a remand order can be appealed, even if the judge returned the case after declining to rule on the state-law claims when finding that the federal claim was insufficient.

In 2005, HIF Bio Inc. filed suit against Yung Shin Pharmaceuticals Industrial Co., Carlsbad Technology and others in Los Angeles Superior Court. In its complaint, HIF asked the court for a declaratory judgment for ownership of the invention of a chemical compound that is used in treating cancer.

HIF filed an amended complaint, in which it asserted, in addition to 11 state claims, a federal claim under the Racketeer Influenced and Corrupt Organizations Act. The U.S. District Court for the Central District of California dismissed the RICO claim, declined to exercise supplemental jurisdiction over the remaining state-law claims and remanded the case back to Los Angeles Superior Court.

On appeal, a three-judge panel on the U.S. Court of Appeals for the Federal Circuit held in November 2007 that it lacked jurisdiction to review the district court order. In particular, the court held that 28 USC §1447(d) blocks federal appellate jurisdiction over remands back to state court. The decision split with past rulings from the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh Circuits.

Writing for the court, Judge Arthur Gajarsa cited the 2007 Supreme Court case Powerex Corp. v. Reliant Energy Servs., which held that “[i]t is far from clear ... that when discretionary supplemental jurisdiction is declined the remand is not based on lack of subject-matter jurisdiction for purposes of § 1447(c) and § 1447(d).”

On May 4, 2009, a unanimous Supreme Court reversed and remanded the lower court order.

“When a district court remands claims to a state court after declining to exercise supplemental jurisdiction, the remand order is not based on a lack of subject-matter jurisdiction for purposes of §§1447(c) and (d),”Justice Clarence Thomas wrote for the majority opinion.

Justice John Paul Stevens and Justice Antonin Scalia filed concurring opinions. Justice Stephen G. Breyer filed a concurring opinion, joined by Justice David Souter.

Question presented: Whether a federal court order remanding a case to state court after declining to exercise supplemental jurisdiction is subject to appellate review.