Powerex Corp. v. Reliant Energy Services, Inc.

2007-06-18

Headline: Court blocks federal appeal in dispute over whether a Canadian-owned energy company counts as a foreign state under immunity law, making it harder for such companies to get federal review after state-court remands.

Holding: Section 1447(d) bars appellate consideration of Powerex’s claim that it is a foreign state for FSIA purposes, so the Court dismissed Powerex’s appeal for lack of jurisdiction.

Real World Impact:

Prevents federal appeals of remands based on colorable jurisdictional grounds.
Foreign government-owned companies may lose federal procedures like bench trials.
Leaves FSIA status disputes unresolved if remand is unreviewable.

Topics: foreign sovereign immunity, appellate review of remands, international energy companies, state-court remands

Summary

Background

A group of California plaintiffs sued companies in state court over energy-price fixing. Some defendants filed cross-claims seeking indemnity from two U.S. power agencies (BPA and WAPA), the Canadian crown corporation BC Hydro, and BC Hydro’s wholly owned subsidiary, a Canadian energy company called Powerex. Two federal agencies and BC Hydro removed under separate removal rules, and plaintiffs moved to remand arguing lack of foreign-state status and sovereign immunity. The district judge found Powerex was not a foreign state, concluded others had immunity, and remanded the case to state court.

Reasoning

The Court examined whether Powerex qualifies as a “foreign state” under the Foreign Sovereign Immunities Act (FSIA) and whether federal appeals courts may review a district court remand in light of 28 U.S.C. §1447(d). Reading §1447(d) together with §1447(c), the Court held that remands based on lack of subject-matter jurisdiction are not reviewable on appeal. The district court’s remand was held to rest on a colorable jurisdictional ground, so appellate review was barred and the Supreme Court dismissed Powerex’s appeal for lack of jurisdiction.

Real world impact

Foreign government-owned companies that are wrongly remanded may be denied federal review and some federal-only procedures, like bench trials. The decision leaves the underlying question of Powerex’s FSIA status unresolved here and signals that Congress, not the courts, must change removal rules if different results are wanted.

Dissents or concurrances

Justice Breyer dissented, arguing the FSIA should permit review and that Powerex is an organ of British Columbia; Justice Kennedy concurred and urged Congress to correct the outcome if unintended.