Abraham Watkins Nichols Agosto Aziz v. Festeryga

109 F.4th 810

ABRAHAM WATKINS NICHOLS AGOSTO AZIZ & STOGNER, Plaintiff—Appellee, v. Edward FESTERYGA, Defendant—Appellant.

No. 23-20337

United States Court of Appeals, Fifth Circuit

FILED July 25, 2024

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:22-CV-4249, George C. Hanks, Jr., U.S. District Judge

Robert Tresch Owen Esq. (argued), Martin, Disiere, Jefferson & Wisdom, L.L.P., Houston, TX, Muhammad Suleiman Aziz, Esq., Abraham Watkins Nichols Agosto Aziz & Stogner, Houston, TX, Dale Jefferson, Houston, TX, for Plaintiff-Appellee.

Guillermo Alberto Alarcon (argued), Armbrust & Brown, P.L.L.C., Austin, TX, for Defendant-Appellant.

Before Dennis, Willett, and Duncan, Circuit Judges.

Don Willett, Circuit Judge:

This is an appeal from a waiver-based remand order. Edward Festeryga, an attorney embroiled in a dispute with his former law firm, wants this case heard in federal court and contends we have appellate jurisdiction over the district court's remand order because waiver is neither an issue of subject-matter jurisdiction nor a defect in removal procedure under 28 U.S.C. § 1447(c). We agree, but our 40-plus-year-old precedent provides otherwise, holding that a waiver-based remand order is jurisdictional under § 1447(c) and thus unappealable under § 1447(d).¹ Abiding by our rule of orderliness, we must dismiss for lack of appellate jurisdiction.

I

The underlying dispute in this case is between the law firm Abraham Watkins Nichols Agosto Aziz & Stogner and one of its former associates, Edward Festeryga. Abraham Watkins terminated Festeryga's employment after learning that Festeryga attempted to take clients and firm files with him to a new firm. Festeryga mostly denies the allegations, but whatever their veracity, Abraham Watkins eventually sued Festeryga in Texas state court for conversion, breach of fiduciary duty, and tortious interference with contract.

The ensuing state-court proceedings spanned 17 days. After Abraham Watkins obtained a temporary restraining order prohibiting Festeryga from spoliating evidence, representing firm clients, and disclosing client information, Festeryga moved to dismiss the suit under Texas's anti-SLAPP statute, the Texas Citizens Participation Act (TCPA).² Festeryga's TCPA motion had the effect of staying the expedited discovery that Abraham Watkins sought,³ but the parties were able to agree on a protective order following an off-the-record hearing. In what Festeryga describes as an effort to "deescalate" the litigation, he specifically agreed to produce certain documents within several days after signing the protective order.

The day before the documents were due, however, Festeryga filed a notice of removal in the United States District Court for the Southern District of Texas, attesting that he was a citizen of Canada and that the district court could accordingly exercise original jurisdiction over the diverse parties.⁴ Abraham Watkins moved to remand, arguing that (1) Festeryga did not carry his burden in showing diversity of citizenship, and, in any event, (2) Festeryga waived his right to remove by agreeing to a protective order and filing a motion to dismiss in state court. The district court took no position on the first point but agreed on the second. Festeryga's filing of the TCPA motion to dismiss, the district court concluded, demonstrated an intent to "invok[e] the jurisdiction of the state court."⁵ The district court accordingly granted Abraham Watkins's motion to remand.

Festeryga now appeals, and we must determine at the outset whether we have appellate jurisdiction. As explained below, we do not.

II

"For the most part," a unanimous Supreme Court observed a couple of months ago, "a remand order is not appealable."⁶ Indeed, subject to some narrow exceptions not relevant here, 28 U.S.C. § 1447(d) provides an ostensibly categorical bar to reviewing remand orders on appeal: "An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise."

Section 1447(d), however, has not been construed as categorically as its plain language suggests. The Supreme Court has instead read §§ 1447(c) and 1447(d) in pari materia and limited the reach of § 1447(d)'s appellate bar to only those remand orders predicated on the grounds specified in 1447(c)—namely, lack of subject-matter jurisdiction or a defect in removal procedure.⁷ As we put it just a few years ago, § 1447(d) "only prohibits appellate review of certain types of remand orders: the kind specified in neighboring subsection 1447(c)."⁸ Thus, to the extent a district court remands a case for lack of subject-matter jurisdiction (e.g., non-diverse parties) or a defect in removal procedure (e.g., missing the 30-day removal deadline), we cannot review that order on appeal.⁹

Remand orders predicated on discretionary grounds outside § 1447(c), on the other hand, are generally reviewable on appeal.¹⁰ The Supreme Court has held, for example, that an order remanding a case to state court under Burford abstention is appealable under the collateral-order doctrine.¹¹ The Court has held likewise for remand orders in which a district court declines to exercise supplemental jurisdiction over state-law claims.¹² We have since followed suit, adhering to the same understanding of our appellate jurisdiction despite subsequent amendments to § 1447(c).¹³

The question before us, then, is whether the district court's remand order in this case—again, which was predicated on waiver by state-court participation—is a specified ground within § 1447(c) and thus barred from our review under § 1447(d) or a discretionary ground outside § 1447(c) and thus an appealable collateral order under § 1291.

Intuition and basic legal principles suggest the latter, but we read our decision in In re Weaver¹⁴ to say differently. Weaver, a decision that predates the Fifth Circuit's split into two separate circuits in 1981,¹⁵ was by all appearances an ordinary business dispute involving claims of slander, fraud, breach of contract, and interference with contractual relations. The plaintiff, a Georgia corporation, filed suit in Georgia state court and successfully obtained an ex parte temporary injunction against the defendants from selling seized corporate assets. The defendants, upon hearing of the injunction, apparently "arranged a telephone conference with a different superior court judge," had the injunction vacated, and then removed the case to federal court.¹⁶ The federal district court, in turn, remanded the case back to state court, suggesting that remand was proper because the defendants had participated in the state-court proceedings and thus waived their right to remove: "If the case was removable at all," the district court said, "it was removable prior to the appearance of the [d]efendants in the Superior Court action."¹⁷

Relying on the Supreme Court's then-recent decision in Thermtron, the defendants petitioned for mandamus relief, seeking a writ directing the district court to reinstate the case.¹⁸ Weaver, however, held that we lacked appellate jurisdiction, reasoning that the remand order was ambiguous and that "Thermtron was intended to be strictly limited to those cases in which a district court ha[d] clearly not relied upon § 1447(c) in ordering remand."¹⁹ The district court had not done so, the court explained, nor had it "state[d] a non-section 1447(c) ground." Thus, the court concluded, "mandamus is unavailable."²⁰

Weaver would have been an unremarkable decision but for the fact that its reasoning did not stop there. In the final two sentences of the opinion—the subject of much skepticism and our focus today—the panel seemed to also say that the district court had correctly understood that waiver affected its jurisdiction under § 1447(c) and was thus unreviewable under § 1447(d):

Even though the specific language of § 1447(c) was not used, it seems apparent that at the time of the remand order, [the district-court judge] believed the case was not removable, leading to the logical inference that he felt jurisdiction was lacking. Such a holding is within the guidelines of § 1447(c).²¹

It would be easy to overlook, if not outright dismiss, this pair of rather vague concluding sentences. At the same time, however, we also cannot ignore their direct relevance to the issue before us now: whether waiver is a ground within the terms of § 1447(c). Weaver seems to say yes, because the district court made the "logical inference" that "jurisdiction was lacking" in light of the defendants' participation in state court. And lack of jurisdiction, of course, is "a holding within the guidelines of § 1447(c)."²² We thus read Weaver, reluctantly, to say that a waiver-based remand order is jurisdictional under § 1447(c) and thus "immune from review under § 1447(d)."²³

Notably, our reading of Weaver is not unique. The Tenth Circuit, for example, has described the decision just as we have and understandably rejected its reasoning, noting that it could "fathom no explanation" for why Weaver thought waiver was jurisdictional under § 1447(c).²⁴ The Seventh Circuit, for its part, spared no criticism of Weaver, calling its reasoning in this respect "unsound," "illogical," and "unpersuasive."²⁵ This is not to say, however, that Weaver has been universally rejected. A dissenting judge in the Seventh Circuit—who cited Weaver for the proposition that appellate courts cannot review on appeal a "district judge's order remanding a case to state court on account of waiver implied from the course of litigation"—would have followed it.²⁶ And the Ninth Circuit has in fact done so, citing it favorably for the same proposition but offering no independent reasoning as to why it was worth following.²⁷

Thus, our reading of Weaver today affirms that there is indeed a 2-2 circuit split on the question whether waiver-based remand orders are reviewable on appeal. Yet this affirmance comes with reluctance. Based...