## Facts

- A California court placed Mission Insurance Company and affiliates into liquidation, and the California Insurance Commissioner was appointed trustee to marshal assets.
- The Commissioner sued Allstate in California state court seeking contract and tort damages and a declaration of Allstate’s obligations under reinsurance agreements.
- Allstate removed the case to federal district court based on diversity jurisdiction and moved to compel arbitration under the Federal Arbitration Act.
- The Commissioner moved to remand, arguing Burford abstention because federal litigation could disrupt California’s insurance-insolvency regime, particularly due to disputed state-law setoff issues being litigated in related state proceedings.
- The district court invoked Burford abstention and remanded the entire case to state court without deciding the arbitration motion.

## Issues

1. Whether an abstention-based remand order is appealable under 28 U.S.C. § 1291, or instead is unreviewable under 28 U.S.C. § 1447(d).
2. Whether Burford abstention permits a federal court to dismiss or remand a removed action seeking only legal relief (damages), rather than equitable or discretionary relief.

## Decision

- The Court held that the abstention-based remand order was appealable under § 1291 and not barred by § 1447(d).
- The Court held that Burford abstention does not authorize dismissal or remand in a damages-only action; at most, a stay may be appropriate in limited circumstances.
- The Court concluded the district court’s remand was an improper application of Burford because the suit sought damages.
- The judgment below was affirmed insofar as it rejected Burford-based remand of the damages action, with clarification that abstention in such cases should not end the federal action.

## Legal Principles

- Section 1447(d) bars appellate review only for remand orders based on the grounds specified in § 1447(c) (lack of subject-matter jurisdiction or procedural defects in removal); an abstention-based remand is outside that bar.
- An abstention-based remand that surrenders federal jurisdiction and places the parties effectively out of federal court is immediately appealable as a collateral order under § 1291.
- Burford abstention is a narrow exception to the general obligation of federal courts to exercise jurisdiction and is aimed at avoiding federal interference with certain complex state administrative schemes and sensitive state-law policy questions.
- Federal courts may dismiss or remand on abstention grounds only when the relief sought is equitable or otherwise discretionary; when the plaintiff seeks damages, the federal court generally may not dismiss or remand and may instead consider a stay to avoid conflict with state proceedings.

## Conclusion

The Court ruled that an abstention-based remand is immediately appealable and that Burford abstention cannot be used to remand or dismiss a removed damages action; if abstention concerns exist in such a case, the federal court’s proper tool is generally a stay rather than termination of the federal forum.


Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996)