Judge Posner rules that the united states supreme court is superior to district courts – lest there be any confusion

This appeal arises out of very complex litigation, the description of which Judge Posner decided to “simply ruthlessly” in his opinion. The background will be simplified even more ruthlessly here to include only the aspects directly relevant to appellate procedure.

The overall case included a bankruptcy action in New York and a fraud claim in the Cook County Circuit Court. The Cook County case was removed to the Northern District federal court. The Judicial Panel on Multidistrict Litigation than transferred the Illinois federal case to the federal court in New York. The case proceeded there and the federal judge in New York eventually entered summary judgment, the reason for which is immaterial to the discussion here. On appeal of the summary judgment, the U. S. Court of Appeals for the Second Circuit vacated the decision and remanded the case to the federal court with directions to abstain and transfer the case back to the Northern District of Illinois so that it could be remanded to the Cook County circuit court.

The New York federal judge transferred the case back to the Illinois federal court. However, the federal district court judge in Illinois refused to remand the case back to the state court, apparently believing that the applicable Illinois law was clear so that it would be a waste of time to remand the case to the state court rather than merely decide that case while he had it.

Pursuant to 28 U.S.C. §1334(d), a federal court’s decision to abstain is not reviewable by the court of the appeals or the United States Supreme Court. But, in effect, the federal judge in Illinois reviewed the New York federal court’s abstention decision and overruled it. That is where the procedural problem arises. As Judge Posner explained: “The statute doesn’t say in so many words that an order to abstain is not reviewable by another district court, but the idea that a district judge has appellate authority denied to the U.S. Supreme Court can’t be taken seriously. It would imply that although the Supreme Court could not have reversed the Second Circuit’s decision ordering that the case be returned to the Illinois state court, a district judge could do so.”

Judge Posner went on to explain that federal district judges “have appellate authority over decisions by magistrate judges, bankruptcy judges, and certain administrative law judges . . . but not over decisions by other district judges, let alone by courts of appeals.” The judge erred in exercising “de facto appellate authority” that he did not possess. Upon transfer, the district judge was “authorized to do naught but remand the case” to the state court and the court of appeals so ordered.

Parmalat Capital Finance Ltd. v. Grant Thornton Int’l, 756 F.3d 549 (7th Cir. 2014).