Key Points

  • The Fifth Circuit held that 28 U.S.C. § 1447(d) did not bar review of a district court's sua sponte remand based on a deficient notice of removal.
  • Under In re Allstate, 8 F.3d 219 (5th Cir. 1993), a removal notice's failure to conclusively establish diversity, absent record evidence negating it, is a procedural rather than jurisdictional defect, and district courts may not remand for procedural defects on their own motion.
  • UPS's allegations, made on information and belief, that the plaintiffs were domiciled in and citizens of Texas or El Salvador were likely sufficient at the early stage of the litigation, the panel held, citing PNC Bank v. 2013 Travis Oak Creek (5th Cir. 2025).
  • The panel vacated the remand order and left the parties' fraudulent-joinder arguments for the district court to consider in the first instance.

A federal appeals court on Oct. 30 revived United Parcel Service Inc.'s effort to defend a Texas death suit in federal court, holding that a trial judge's order sending the case back to state court on the judge's own initiative rested on a pleading defect that the appeals court had power to review.

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit vacated the remand order issued by the U.S. District Court for the Northern District of Texas. Judge James C. Ho wrote the opinion for the panel, which also included Judges Stewart and Higginson.

The decision turns on a federal statute, 28 U.S.C. § 1447(d), that generally forbids appeals of orders returning removed cases to state court. The panel held that the bar does not apply when a district court remands sua sponte, meaning without a motion from either party, because the defendant's notice of removal pleaded jurisdictional facts poorly rather than because the court found that federal jurisdiction was actually missing.

The suit was brought by Rubidia Benitez De Chavez, individually and as independent administrator of the estate of Juan Chavez, and two other plaintiffs after the death of her husband. They sued UPS and several other companies in Texas state court. When one defendant, Compactor Rentals of America LLC, removed that first suit to federal court, De Chavez voluntarily dismissed it. She then refiled in state court against the same defendants plus Fusion Recycling LLC, a Texas company.

UPS removed the second suit, invoking diversity jurisdiction. De Chavez argued that Fusion's presence as a Texas defendant defeated complete diversity. UPS countered that Fusion was improperly joined, meaning it should not be counted in deciding whether the parties were diverse.

The district court's remand order did not address that dispute. It remanded the case on its own, without giving UPS a chance to cure the problem, because UPS had relied on the plaintiffs' state-court petition, which said only that they "reside" in Texas. "Federal diversity jurisdiction turns on citizenship, not residency," Judge Ho wrote in the opinion's first line. "One can reside in a state without being a citizen of that state, and vice versa."

The panel first had to decide whether it could hear the appeal. De Chavez argued that § 1447(d) barred review. Judge Ho traced what he called "this admittedly arcane corner of federal civil procedure" to the companion provision, § 1447(c). Under Supreme Court precedent, only remands resting on grounds listed in that provision are immune from appeal. Its first sentence covers a "motion to remand" for defects other than lack of jurisdiction, and its second covers remands where the court lacks subject matter jurisdiction.

The Fifth Circuit held in In re Allstate, a 1993 decision, that the first sentence does not let a district court remand for procedural defects on its own motion. "Section 1447(c)'s second sentence assigns to the court concern for its jurisdictional prerequisites; the first consigns procedural formalities to the care of the parties," the Allstate court wrote. A sua sponte remand for a procedural defect therefore falls outside § 1447(c), and outside the appeal bar.

The panel found that the order below fit that category. The district court said it was "unable to confirm whether complete diversity of citizenship exists between the parties," and it did not find that diversity was lacking. "So the remand order here was based, not on a determination of subject matter jurisdiction, but on a deficiency in UPS's pleading in its notice of removal," Judge Ho wrote. Under Allstate, the panel held, that kind of deficiency is procedural.

The plaintiffs offered two reasons to affirm anyway. They argued that UPS had not proven fraudulent joinder, but the panel said "the remand order gave no indication that the district court had considered the fraudulent joinder claim" and left that question for the trial court. They also argued that Allstate did not control because it arose on a petition for mandamus rather than on appeal. The panel rejected that distinction and added that it may treat an appeal as a mandamus petition in any event.

On the merits, the panel wrote that it was "not persuaded that UPS made the egregious error suggested by the district court." UPS's notice of removal alleged "upon information and belief" that the plaintiffs were domiciled in, and citizens of, Texas or El Salvador. Domicile, the opinion explained, requires both residence in a state and an intent to remain there. "UPS's pleading of residency alone was not enough to conclusively prove citizenship. But UPS evidently knew that," Judge Ho wrote.

The panel relied on its 2025 decision in PNC Bank v. 2013 Travis Oak Creek, which held that citizenship allegations made on information and belief may suffice "in the nascency of litigation." The plaintiffs filed the current suit in August 2025, UPS removed a month later, and the district court remanded six days after receiving the notice. Even measured from the April 2025 filing of the first suit, the panel wrote, that timeline was "a far cry from the five-year delay in PNC Bank." UPS's allegations were "likely enough at this stage," the court held.

The opinion closed with a caution to the bar. "So when it comes to pleading diversity jurisdiction, lawyers should be careful to plead diversity of citizenship, not residency," Judge Ho wrote. He added that the error "could have been fatal" to UPS's choice of forum, because a remand ordered on the plaintiffs' motion would have been unreviewable. Because the district court acted on its own, he wrote, "fortunately for UPS, that's enough to avoid the bar on appellate review that § 1447(d) would otherwise impose."

The case, No. 25-11146, now returns to the Northern District of Texas for further proceedings. The panel directed the district court to decide the parties' fraudulent-joinder arguments in the first instance.