Allowing cases to move between federal and state courts through removal and remand gives parties a chance to vie for the forum that best meets their needs. Removal and remand, however, may also waste judicial resources if too much time is spent selecting the court in which to litigate before the merits of the action are even reached. In order to prevent cases from “ricochet[ing] back and forth” between federal and state courts and unnecessarily depleting judicial resources,1 Congress prohibited appellate review of remand orders.2 Under 28 U.S.C. § 1447(d), “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.”3 There are, however, several statutory4 and court-made5 exceptions to this bar on appellate review. Recently, in Barlow v. Colgate Palmolive Co.,6 the Fourth Circuit sitting en banc held that § 1447(d) does not prevent a district court from vacating a remand order that was obtained through misrepresentation.7 The Fourth Circuit’s limited expansion of the circumstances in which a remand order may be vacated is reasonable and strikes the right balance between preserving the goals of § 1447(d) and preserving the integrity of federal judicial proceedings.
In 2011, plaintiffs Clara Mosko and Joyce Barlow, who were represented by the same counsel,8 separately filed lawsuits against the Colgate-Palmolive Company and numerous other defendants in Maryland state court, alleging that those defendants’ products exposed them to asbestos.9 After several months of discovery, Colgate removed the cases to federal district court under 28 U.S.C. § 1441, arguing that the district court had diversity jurisdiction over the cases under 28 U.S.C. § 1332 because the amounts in controversy exceeded $75,000, there was complete diversity between the defendants and the plaintiff in each case, and any in-state defendants had been fraudulently joined for the purpose of avoiding federal jurisdiction.10
The plaintiffs moved to remand.11 To support their argument that they had viable causes of action against some in-state defendants, both plaintiffs represented to the district court that there was circumstantial evidence that they had been exposed to asbestos at their workplaces as a result of conduct by the Maryland defendants.12 Relying on these representations, the district court judges in the two cases issued remand orders.13 Shortly thereafter, the plaintiffs moved to consolidate the two cases in state court.14 In responding to Colgate’s objections that the alternative possibilities for asbestos exposure made the cases too different to consolidate, the plaintiffs stated: “[T]here is absolutely no evidence to indicate or even suggest that the Plaintiffs were exposed to asbestos in any form other than [Colgate’s products].”15 The judge then asked the plaintiffs’ counsel: “It is a one-defendant case, right?,” to which the counsel replied: “Yes.”16
Surprised by this about-face regarding the existence of viable claims against in-state defendants, Colgate filed motions for sanctions in the federal district court17 and requested that the court vacate the remand orders under Rule 60(b)(3) of the Federal Rules of Civil Procedure.18 Relying on In re Lowe,19 in which the Fourth Circuit confirmed that § 1447(d) prohibits reconsideration of remand decisions by district courts as well as by appellate courts,20 the district court held that “such relief is not available, as this Court has no jurisdiction to grant that request.”21 Colgate appealed to the Fourth Circuit.22
The panel affirmed.23 Writing for the majority, Judge Davis24 reasoned that considering the effect of the fraudulent statements on the district court’s decision to remand would necessarily require the court to revisit the merits of that decision.25 Since reconsideration runs counter to § 1447(d), the panel held that the district court did not have jurisdiction to vacate the order.26 Given the broad statutory language prohibiting review “on appeal or otherwise”27 and the policy goals of § 1447(d) to preserve judicial resources, Judge Davis did not think it wise to create a judicially made exception.28 Judge Floyd dissented, arguing that the decision to vacate would consider only matters collateral to the remand order, not its merits, and would therefore not fall under § 1447(d)’s prohibition on reviewing such orders.29 Colgate successfully petitioned for rehearing en banc.30
The en banc Fourth Circuit reversed the district court.31 Writing for the majority, Judge Floyd32 expounded on the arguments made in his dissent to the panel’s decision. Judge Floyd began by recognizing the significant policy reasons for the “strict treatment” of § 1447(d) — to prevent actions from “ricochet[ing] back and forth depending upon the most recent determination of a federal court”33 — and noting that the case didn’t fit into any of the limited exceptions.34 Judge Floyd then considered whether the district court had jurisdiction to decide the Rule 11(b) motions for sanctions. Relying on on-point decisions from the Fourth Circuit and other circuits, Judge Floyd ruled unequivocally that the district court had such jurisdiction.35 Judge Floyd acknowledged, however, that vacating the remand order would not be an appropriate form of relief for misrepresentation under Rule 11(b).36
Judge Floyd next turned to the question of whether Rule 60(b)(3)’s provision that a court may vacate an order obtained through fraud or misrepresentation applies to orders remanding cases to state court.37 Dismissing three unpublished opinions from other circuits on the issue as “non-binding” and decided with “minimal analysis,”38 Judge Floyd focused on the text of § 1447(d).39 He noted that the statute prohibited “reviewing” a remand order, but said nothing about “vacating” it.40 Judge Floyd emphasized that the motion to vacate asked the court to consider solely the means by which the remand order was obtained and not the merits of the remand.41 The Fourth Circuit also found support in an Eleventh Circuit opinion that held that vacating a remand order for “reasons that do not involve a reconsideration or examination of its merits” did not count as review of that order.42 Because vacatur was not review, an order to vacate would not fall within § 1447(d)’s prohibition, and the district court would have jurisdiction to issue it.43 The en banc Fourth Circuit remanded the case to the district court to reconsider its decision on the Rule 11 motion for sanctions and on the Rule 60(b)(3) motion to vacate the remand order in light of the Fourth Circuit’s opinion.44
Judge Davis dissented.45 Judge Davis objected to what he termed an instruction to the district judge “to redo his ‘mid-term exam’ on removal jurisprudence and sanctions law.”46 Judge Davis agreed with the district court that vacating a remand order under Rule 60(b)(3) “contravenes the mandate of § 1447(d)” and argued that the en banc decision elevated a Federal Rule of Civil Procedure above a statutory prohibition.47 He critiqued the majority’s textual interpretation of “review” as “linguistic jiu-jitsu”48 and noted that there was no authority for the decision49: the Eleventh Circuit case that the majority had found persuasive was inapposite to the case at hand.50 Judge Wynn also wrote an opinion, concurring in part and dissenting in part.51
Although the en banc Fourth Circuit’s decision extends the circumstances in which a court may vacate an order remanding a case to state court, it is a reasonable interpretation of the doctrine. If carefully applied, the decision will address serious concerns regarding the integrity of remand proceedings without significantly impairing the policy goal of preserving judicial resources.
The en banc majority’s reasoning that Rule 60(b)(3) involves simply vacating, and not reviewing, a remand order is supported by the way courts apply Rule 60(b)(3) in practice. Under Rule 60(b)(3), a “court may relieve a party . . . from a final judgment, order, or proceeding for . . . fraud . . . , misrepresentation, or misconduct by an opposing party.”52 In Schultz v. Butcher,53 the Fourth Circuit held that to successfully petition for vacatur of a judgment under Rule 60(b)(3), “(1) the moving party must have a meritorious defense; (2) the moving party must prove misconduct by clear and convincing evidence; and (3) the misconduct [must have] prevented the moving party from fully presenting its case.”54
Admittedly, determining whether misconduct has prevented the moving party from fully presenting its case requires the court to examine some of the same facts it considered when making its initial decision. However, Rule 60(b)(3) requires these facts to be analyzed through a different lens. Instead of reevaluating the decision in light of the misrepresentation or fraud, the court need only determine the collateral issues of whether misconduct occurred and whether it was relevant to the case — the misconduct “does not have to be result altering” for a court to vacate its judgment.55 For example, in Schultz, the Fourth Circuit held that a district court should have vacated a judgment under Rule 60(b)(3) where the plaintiff withheld a report during discovery that substantiated the claim that the defendant had not been negligent and that a third party was responsible for the plaintiff’s injuries.56 The court reasoned that the defendant’s argument that it was not responsible for the plaintiff’s injuries was a valid defense, that the plaintiff committed misconduct by withholding the report, and that the defendant was prevented from fully presenting its case because the report may have pointed toward “additional evidence that supported the report’s findings and conclusions, which [were] favorable to [the defendant].”57 The court did not, however, consider whether it would have made a different decision regarding the defendant’s liability before vacating the original judgment.
Applying this interpretation of Rule 60(b)(3) to motions to vacate remand orders suggests that the moving party need only convince the district court of three things: that it had a valid argument against remand, that the nonmoving party misrepresented evidence relevant to that argument, and that this misrepresentation prevented the moving party from fully litigating its claims. Once those threshold elements are established, the district court need not further evaluate whether it would still have issued the remand had the misconduct not occurred. This application of the Rule 60(b)(3) doctrine supports the en banc majority’s contention that the analysis performed by the district court in determining whether to vacate its remand order, although involving some of the same facts as those considered in making the remand decision, is independent from the kind of analysis it would perform if it were to fully reconsider the remand. It is therefore reasonable to conclude that Rule 60(b)(3) analysis is not precluded by § 1447(d).
The Fourth Circuit’s application of Rule 60(b)(3) to vacate a remand order also accords with jurisprudence regarding the jurisdictional effects of § 1447(d). First, federal courts retain jurisdiction over matters collateral to the case, such as Rule 11 sanctions, even after remand to state court.58 Second, although not settled law, several circuits have vacated remand orders after reversing decisions antecedent to those remand orders.59 If the underlying decisions were incorrectly decided, the remand would be vacated as an “essentially ministerial task.”60 These examples suggest that while § 1447(d) does limit a court’s ability to review remand orders, it does not, in contrast to Fourth Circuit precedent, “divest[] the district court of all jurisdiction . . . and preclude[] it from entertaining any further proceedings of any character.”61
Finally, policy considerations also favor the Fourth Circuit’s ruling allowing the vacatur of remands when a party has committed fraud or intentionally misrepresented facts before the court. After all, even in the usual case where it is applied to nonremand orders, Rule 60(b)(3) unsettles the finality of judgments and prolongs litigation. The rule codifies the “‘historic power of equity to set aside fraudulently begotten judgments,’ [which] is necessary to the integrity of the courts.”62 If courts refuse to consider meritorious Rule 60(b)(3) motions under circumstances such as those in Barlow, they will be inviting misrepresentation during remand proceedings from opportunistic parties taking advantage of the nonreviewability of remand orders and the limits of Rule 11 sanctions. As a result of this misrepresentation, the other party would permanently lose its ability to litigate in a venue to which it has a right.63 Allowing vacatur of remands under Rule 60(b)(3) would deter such conduct and protect the integrity of remand proceedings. In addition, by limiting the vacatur of remand orders to situations where there is clear and convincing evidence of misconduct, courts will vacate remands only infrequently.64 Such limited vacaturs will leave mostly intact the policy behind § 1447(d) to prevent undue delay and preserve judicial resources.65