On November 25, 2014, the US Court of Appeals for the Fourth Circuit held in Barlow v. Colgate Palmolive Co. that a district court could impose sanctions and vacate a remand order in a case that it had previously remanded to state court (No. 13-1839, (4th Cir. Nov. 25, 2014)).

The plaintiffs commenced state court actions against Colgate Palmolive and a number of other companies, alleging that each of the defendants' products had exposed them to asbestos. Colgate removed the cases to federal court on the basis of diversity of citizenship. Although the plaintiffs had also asserted claims against in-state defendants, Colgate argued that those defendants had been fraudulently joined. According to Colgate, the plaintiffs' deposition testimony and interrogatory responses demonstrated that they did not intend to pursue claims against the in-state defendants. The plaintiffs moved for remand, and the district court granted their motion because the plaintiffs maintained that there was a possibility that the plaintiffs could pursue a claim against the non-diverse defendants. In particular, the district court relied on the claim that the plaintiffs may have been exposed to asbestos during the course of their employment with two of the in-state defendants.

On remand, the plaintiffs filed a motion to consolidate their cases with two other asbestos-related cases. Colgate opposed the motion. In their briefing and argument on the motion, the plaintiffs stated that they only intended to pursue claims against Colgate, not any of the in-state defendants. Consequently, Colgate moved in the district court for sanctions against the plaintiffs' attorneys under FRCP 11. Colgate later moved for relief under FRCP 60(b)(3), seeking vacatur of the remand orders. The district court held that 28 U.S.C. § 1447(d) (providing that a remand order is not reviewable on appeal or otherwise) deprived it of jurisdiction to vacate or strike its remand orders and that the court was "not convinced that counsel's conduct [was] sanctionable" because the alleged misrepresentations were "attributable to different attorneys in markedly different litigation contexts."

The Fourth Circuit held that section 1447(d) did not apply because the relief sought by Colgate did not require review of the district court's remand order on the merits. Vacatur was sought based on alleged attorney misconduct, a collateral consideration. The court distinguished its prior holding in In re Lowe (102 F.3d 731 (4th Cir. 1996)). In Lowe, the defendants had moved for reconsideration of the remand order. Here, the motion seeking vacatur would not require the district court to reassess the facts that were presented to the district court at the time of removal. In holding that vacatur of a remand order may be permissible if not based on the remand's merits, the Fourth Circuit joined the US Courts of Appeals for the Fifth and Eleventh Circuits (Aquamar S.A. v. Del Monte Fresh Produce N.A., Inc., 179 F.3d 1279 (11th Cir. 1999); Tramonte v. Chrysler Corp., 136 F.3d 1025 (5th Cir. 1998)). The court recognized that other circuits had issued non-precedential opinions disagreeing with its conclusion (Wachovia Mortg. FRSB v. Marquez, 520 F. App'x 783 (11th Cir. 2013) (per curiam); Ysais v. Ysais, 372 F. App'x 843 (10th Cir. 2010); Lindo v. Westlake Dev. Co., 100 F.3d 963 (9th Cir. 1996)). The Fourth Circuit directed the district court to consider the motion for vacatur.

The Fourth Circuit also held that the district court was not barred from imposing sanctions after remanding the case. Courts may consider collateral issues after an action is no longer pending. The court relied on the Supreme Court decision in Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 389–90 (1990 ) holding that it was appropriate to impose sanctions under FRCP 11 after an action was voluntarily dismissed or remanded. Because it was unclear whether the district court was aware that it had jurisdiction to impose sanctions and because the district court did not fully consider the imposition of sanctions in its opinion, the Fourth Circuit remanded the cases for reconsideration in light of its opinion and directed the district court to make specific findings on whether the plaintiffs' counsel had engaged in misconduct while in federal court.

For more information about post-remand proceedings in federal court, see Practice Note, Removal: Remanding the Case to State Court: Litigating in Federal Court After Remand.