                              In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 05-3670
GLEN HOLMSTROM, derivatively on
behalf of OFFICEMAX, INCORPORATED,
                                                   Plaintiff-Appellee,
                                  v.

GARY PETERSON,
                                               Defendant-Appellant.
                          ____________
             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
               No. 05 C 2714—Marvin E. Aspen, Judge.
                          ____________
      ARGUED FEBRUARY 14, 2006—DECIDED JULY 3, 2007
                          ____________


  Before BAUER, RIPPLE and WILLIAMS, Circuit Judges.
  RIPPLE, Circuit Judge. Glen Holmstrom, a citizen of New
Jersey, brought this shareholder derivative action in Illinois
state court against officers and directors of OfficeMax,
Incorporated. The suit was removed to federal court by
one of those directors, Gary Peterson, an Ohio citizen,
based on diversity of citizenship. Mr. Holmstrom then
moved to remand the case to state court. The district court
granted the motion to remand, and Mr. Peterson appealed
the district court’s decision. For the reasons set forth in this
2                                                No. 05-3670

opinion, we dismiss the appeal for lack of appellate
jurisdiction.


                              I
                     BACKGROUND
  After Mr. Holmstrom brought this shareholder derivative
action in Illinois state court, Mr. Peterson removed the
action to the United States District Court for the Northern
District of Illinois on the basis of diversity of citizenship.
Now in district court, Mr. Holmstrom moved to remand
the case because the complaint also named an Illinois
citizen as a defendant, and, thus, removal was barred by
the forum defendant rule. See 28 U.S.C. § 1441(b). Mr.
Peterson contended, however, that § 1441(b) only pre-
cluded removal when a resident of the forum state
actually is joined and served as a defendant at the time of
removal. Here, at the time Mr. Peterson removed the
case, the Illinois citizen had not been properly joined and
served.
  The district court recognized that the language of
§ 1441(b) only prohibits removal in diversity cases when
one of the “parties in interest properly joined and served as
defendants is a citizen of the State in which such action is
brought.” Id. (emphasis added). Thus, literally applied,
the forum defendant rule, as embodied in § 1441(b), would
not preclude Mr. Peterson’s removal because, at the time
he removed the case, no Illinois defendant had been
joined and served. However, the district court concluded
that the reason for limiting the forum defendant rule to
situations where a citizen of the forum state is properly
joined and served is to ensure that parties do not name
citizens of the forum state solely for the purpose of pre-
venting removal, without any intention of effecting ser-
No. 05-3670                                                       3

vice on the forum-state defendant. Because there was no
indication that Mr. Holmstrom had named the Illinois
defendant in his complaint only to prevent removal, the
district court held that literal application of the forum
defendant rule in this case would defeat the purpose of the
statute. The district court, therefore, granted Mr.
Holmstrom’s motion to remand. Mr. Peterson appealed.


                                 II
                          DISCUSSION
  Mr. Peterson asserts that the district court erred when it
determined that the forum defendant rule barred removal
of this case even though, at the time of removal, no
citizen of the forum state properly had been joined and
served in this action. Mr. Peterson claims that the district
court’s application conflicts with the plain language of
§ 1441(b) and constitutes an impermissible, judicially
crafted exception to the forum defendant rule. However,
before we may proceed to the merits of Mr. Peterson’s
appeal, we must determine whether we have appellate
jurisdiction.
    Section 1447(d) of Title 28 of the United States Code1


1
    Section 1447 reads:
      (a) In any case removed from a State court, the district court
      may issue all necessary orders and process to bring before
      it all proper parties whether served by process issued by
      the State court or otherwise.
      (b) It may require the removing party to file with its clerk
      copies of all records and proceedings in such State court or
                                                    (continued...)
4                                                    No. 05-3670

prohibits review of a district court’s order remanding a
case to state court subject only to one exception not rele-
vant here. 28 U.S.C. § 1447(d) (“An order remanding a
case to the state court from which it was removed is not
reviewable on appeal or otherwise . . . .”). Although the
language of the statute appears absolute, the Supreme
Court held in Thermtron Products, Inc. v. Hermansdorfer, 423
U.S. 336 (1976), that § 1447(d) must be read in pari materia
with § 1447(c). Id. at 345-46. Thus, the review prohibition


1
    (...continued)
       may cause the same to be brought before it by writ of
       certiorari issued to such State court.
     (c) A motion to remand the case on the basis of any defect
     other than lack of subject matter jurisdiction must be
     made within 30 days after the filing of the notice of removal
     under section 1446(a). If at any time before final judgment
     it appears that the district court lacks subject matter juris-
     diction, the case shall be remanded. An order remanding
     the case may require payment of just costs and any actual
     expenses, including attorney fees, incurred as a result of the
     removal. A certified copy of the order of remand shall be
     mailed by the clerk to the clerk of the State court. The State
     court may thereupon proceed with such case.
     (d) An order remanding a case to the State court from which
     it was removed is not reviewable on appeal or otherwise,
     except that an order remanding a case to the State court
     from which it was removed pursuant to section 1443 of this
     title shall be reviewable by appeal or otherwise.
     (e) If after removal the plaintiff seeks to join additional
     defendants whose joinder would destroy subject matter
     jurisdiction, the court may deny joinder, or permit joinder
     and remand the action to the State court.
28 U.S.C. § 1447.
No. 05-3670                                                       5

is limited to remand orders based on those grounds
specified in § 1447(c). Id. The two grounds specified in
§ 1447(c) are: (1) any defect other than lack of subject
matter jurisdiction and (2) lack of subject matter jurisdic-
tion. 28 U.S.C. § 1447(c). Because failure to comply with
§ 1441(b)’s forum defendant rule does not result in a lack of
subject matter jurisdiction, see Hurley v. Motor Coach Indus.,
Inc., 222 F.3d 377, 380 (7th Cir. 2000), the issue before this
court is whether failure to satisfy the forum defendant rule
constitutes a defect other than lack of subject matter
jurisdiction for purposes of § 1447(c). If it does, 28 U.S.C.
§ 1447(d) bars appellate review of a remand order based
on such a failure.


A. History of § 1447(c)2
    As set forth above, § 1447(c) provides that:
      A motion to remand the case on the basis of any defect
      other than lack of subject matter jurisdiction must be
      made within 30 days after the filing of the notice of
      removal under section 1446(a). If at any time before
      final judgment it appears that the district court lacks
      subject matter jurisdiction, the case shall be remanded.
28 U.S.C. § 1447(c). The language of § 1447(c), however, has
changed several times over the years, and the courts’
current interpretation of § 1447(c) reflects this history.
  At the time the Supreme Court decided Thermtron
Products, § 1447(c) read in pertinent part:


2
  The history of this section also is set forth in Powerex Corp. v.
Reliant Energy Services, Inc., No. 05-85, slip op. at 3-7 (U.S. June
18, 2007).
6                                                 No. 05-3670

    If at any time before final judgment it appears that the
    case was removed improvidently and without juris-
    diction, the district court shall remand the case, and
    may order the payment of just costs.
Thermtron Prods., 423 U.S. at 342. Although this version of
§ 1447(c) spoke in terms of “improvident” removal, it was
construed by the courts to mean removals that were
defective in terms of the statutory conditions that Congress
had placed on removal. A removal was improvident if
there was a “legal defect in the removal.” Sheet Metal
Workers Int’l Ass’n v. Seay, 693 F.2d 1000, 1005 (10th Cir.
1982). As this court explained, it was “logical and reason-
able to interpret the term to mean noncompliance with
Congress’ specific and detailed statutory provisions.”
Rothner v. City of Chicago, 879 F.2d 1402, 1411 (7th Cir.
1989). On the other hand, removal and remand orders
based on doctrines such as forum non conveniens, absten-
tion or supplemental jurisdiction were held to be outside
of § 1447(d)’s prohibition because they were not tied to
the statutory criteria for removal. See Snapper, Inc. v. Redan,
171 F.3d 1249, 1255 (11th Cir. 1999).
  Section 1447(c) was amended in 1988. The new language
provided:
    A motion to remand the case on the basis of any defect
    in removal procedure must be made within 30 days
    after the filing of the notice of removal under section
    1446(a). If at any time before final judgment it ap-
    pears that the district court lacks subject matter juris-
    diction, the case shall be remanded.
28 U.S.C. § 1447(c) (1994). The 1988 amendments sought to
confirm the courts’ narrow reading of § 1447(c) by replac-
ing the term “improvidently” with “defect in the removal
No. 05-3670                                                7

procedure.” Thus, under this version, courts uniformly
continued to consider remands based on forum selection
clauses, abstention and supplemental jurisdiction to be
beyond the statute’s ambit. See Snapper, 171 F.3d at 1256-57.
However, the primary importance of the 1988 amendment
lay in the establishment of a time limit for bringing
nonjurisdictional motions to remand, not in defining the
breadth of remand decisions falling within the scope of
§ 1447(c). See Snapper, 171 F.3d at 1256 n.13.
  As noted by the Eleventh Circuit, “[a]lthough the 1988
language of § 1447(c) worked well in the contexts of forum
selection clauses, abstention, and supplemental jurisdic-
tion, the language proved more troublesome for the
courts in another context,” specifically, application of the
forum defendant rule. Id. at 1257. Some courts believed that
failure to comply with the forum defendant rule was
substantive in nature. However, “[r]ecognizing that it
would make little sense to exempt such a remand from the
30-day time limit of § 1447(c), most courts held that the 30-
day time limit of § 1447(c) did apply.” Id. at 1258. Other
courts, however, refused to follow this path, resulting in a
conflict among the circuits. “It is in this context,” the
Eleventh Circuit explains, that the next amendment to
§ 1447(c) “must be understood.” Id.
  The statute was amended in 1996 to produce the current
version:
    A motion to remand the case on the basis of any defect
    other than lack of subject matter jurisdiction must be
    made within 30 days after the filing of the notice of
    removal under section 1446(a). If at any time before
    final judgment it appears that the district court lacks
    subject matter jurisdiction, the case shall be remanded.
8                                                No. 05-3670

28 U.S.C. § 1447(c). The committee report accompanying
the 1996 amendments to § 1447(c) noted that the intent of
the 1988 amendment to § 1447(c) “was to impose a 30-day
limit on all motions to remand except in those cases
where the court lacks subject matter jurisdiction.” H.R.
Rep. No. 104-799, at 2 (1996). The report noted that the
wording of the 1988 amendment had not expressed this
intent clearly enough, and that the lack of clarity had led
to different interpretations by different courts. Id. Pre-
sumably the lack of clarity to which the report referred
was the phrase “defect in removal procedure,” as that was
the only language removed by the 1996 amendment. Thus,
it would appear that the 1996 amendment was designed
to ensure that all remand motions based on defects other
than lack of subject matter jurisdiction were made within
30 days to ensure judicial efficiency. Indeed, “[t]he revised
language would seem to address neatly the issue that had
concerned courts under the 1988 version, suggesting
that a removal in violation of § 1441(b) is subject to the 30-
day time limit.” Snapper, 171 F.3d at 1258.
  Although the language of § 1447(c) has been amended,
the history does not reflect fundamental changes in con-
gressional views concerning which remand orders
should be subject to appellate review. Instead, the history
reflects a congressional fine-tuning of § 1447(c) in an
attempt to identify motions to remand that are grounded in
the precise directions that Congress has placed in the
Judicial Code to govern removal, i.e., the “legal requisites”
for removal, see Snapper, 171 F.3d at 1253, from remand
orders based on situations completely divorced, both
conceptually and practically, from the considerations
that control the removal procedure.
No. 05-3670                                                 9

B. Reviewability of Orders Involving the Forum Defen-
   dant Rule
   The question, therefore, becomes whether failure to
comply with the forum defendant rule set forth in § 1441(b)
is a “defect other than subject matter jurisdiction,” as that
term has come to be understood, subject to the review
prohibition of § 1447(d). We believe that failure to
comply with the forum defendant rule is, indeed, a de-
fect in the removal that bars this court’s review.
  As noted above, the legislative history of § 1447(c)
suggests that the substitution of “defect other than sub-
ject matter jurisdiction” for “defect in removal procedure”
was meant to address the reticence of some courts to
include the forum defendant rule within § 1447(c)’s
coverage. Furthermore, even prior to the 1996 amendments,
most of the courts had resolved that the forum defendant
rule was, in fact, subject to the 30-day time limit of
§ 1447(c). See Snapper, 171 F.3d at 1258 (collecting cases).
  In Hurley v. Motor Coach Industries, Inc., 222 F.3d 377 (7th
Cir. 2000), this court addressed a similar question—
whether compliance with the forum defendant rule is
jurisdictional, such that the defect could be raised at any
time, or whether compliance was nonjurisdictional and
therefore subject to waiver. After reviewing the approaches
of other courts, this court concluded: “In short, the case
as it arrived in federal court met every requirement for
federal jurisdiction: it simply took the wrong path, in a
sense, because there was an in-state defendant. This, we
think, is more a matter of removal procedure, and hence
waivable, than a matter of jurisdiction.” Id. at 380 (empha-
10                                                  No. 05-3670

sis added).3
  As noted above, Hurley is in line with the majority of
other circuits. Interpreting the 1988 version of § 1447(c),
the Fifth Circuit explained in In re Shell Oil Co., 932 F.2d
1518 (5th Cir. 1991), the term “defect in removal proce-
dure,” in connection with § 1447(c)’s 30-day time limit for
motions to remand, was intended to distinguish those
grounds for remand based on defects present at the time
of removal from those that may arise later in the litigation.
See id. at 1521 (discussing David D. Siegel, Commentary on
1988 Revision of Section 1447, 28 U.S.C.A. § 1447 (West Cum.
Supp. 1991)). The court noted that, by focusing on defects


3
  One decision of this court, Benson v. SI Handling Systems, Inc.,
188 F.3d 780 (7th Cir. 1999), suggested in passing that defects
referenced in § 1447(c) were those set forth in § 1446. See id. at
782 (“[T]he Court deems § 1447(d) linked to § 1447(c), which
authorizes remands for lack of jurisdiction and defects in
removal procedure (as § 1446 defines those procedural require-
ments).”). However, before this court in Bensen was the thresh-
old question whether the district court’s order, which remanded
on the basis that the attempted removal was successive, was
subject to the bar of § 1447(d). In determining whether a
successive removal fell within one of the categories of removals
for which § 1447(d) bars review, the court did not limit its
inquiry into the procedural dictates of § 1446, but explored the
requirements set forth for removal as found within the Judicial
Code: “Neither § 1447(c) nor anything else in the sections of the
Judicial Code devoted to removal forbids successive removals.
The rule against them—if there is such a rule—is an extra-
statutory judicial invention, and thus subject to the appellate
process.” Id. Consequently, nothing in Bensen suggests a
narrow definition of “defect” that would exclude the forum
defendant rule.
No. 05-3670                                                  11

that existed at the time of removal, § 1447(c)’s 30-day time
limit was intended to “prevent a party who is aware of a
defect in removal procedure from using the defect as
insurance against later unfavorable developments in
federal court.” In re Shell Oil Co., 932 F.2d at 1522 (quoting
14A Charles Alan Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice & Procedure § 3739, at 95 (2d ed.
Supp. 1990)) (internal quotation marks omitted). In that
light, the Fifth Circuit concluded that the term “defect in
removal procedure” referred to “all non-jurisdictional
defects existing at the time of removal,” including fail-
ure to comply with the forum defendant rule. In re Shell
Oil Co., 932 F.2d at 1522-23.
  The Third Circuit adopted this reasoning in Korea
Exchange Bank, New York Branch v. Trackwise Sales Corp., 66
F.3d 46 (3d Cir. 1995), when it held that the forum defen-
dant rule was a procedural requirement subject to
§ 1447(c)’s 30-day time limit. Id. at 50-51. In all, nine of the
ten circuits (including the Third and Fifth Circuits) that
have considered the matter have reached the same con-
clusion. See Lively v. Wild Oats Mkts., Inc., 456 F.3d 933,
940 & 942 (9th Cir. 2006) (collecting cases).
  Thus, failure to comply with the forum defendant rule is
a defect in removal subject to § 1447(d)’s jurisdictional bar.


C. The District Court’s Decision
  Mr. Peterson attempts to avoid § 1447(d)’s jurisdictional
bar by asserting that the district court actually did not
apply § 1441(b), but rather applied a judicially crafted
exception to it. We cannot accept his reasoning. The district
court’s handling of the unique situation of lack of service
12                                                No. 05-3670

on all defendants, including the resident defendant,
whether correct or erroneous, is simply an interpretation of
§ 1441(b). Any remand order falling within the scope of
§ 1447(c) lies outside our jurisdiction, regardless of the
correctness of the district court’s reasoning. See Kircher v.
Putnam Funds Trust, 547 U.S. ___, 126 S. Ct. 2145, 2153
(2006); Thermtron, 423 U.S. at 351; Cook v. Wikler, 320 F.3d
431, 435 (3d Cir. 2003); In re Cont’l Cas. Co., 29 F.3d 292, 293
(7th Cir. 1994); Rothner, 879 F.2d at 1407. Where jurisdiction
is lacking, this court is not at liberty to recharacterize the
basis of the district court’s judgment in the interest of
correcting a perceived error in statutory interpretation. See
Kircher, 126 S. Ct. at 2158 (Scalia, J., concurring); see also
Powerex Corp. v. Reliant Energy Servs., Inc., No. 05-85,
slip op. at 9 (U.S. June 18, 2007) (holding that review of a
district court’s characterization of the basis of its remand
order “should be limited to confirming that that character-
ization was colorable”).
  Furthermore, the district court’s ruling in this case is not
an “extra-statutory judicial invention” of the sort we
recognized in Benson v. SI Handling Systems, Inc., 188 F.3d
780 (7th Cir. 1999). In Benson, the district court had not
interpreted a statute but had applied a judicial rule not
found anywhere in Congress’ carefully crafted statutory
scheme. Specifically, the district court had concluded
that successive removal of cases was impermissible
even though all other requirements for removal had been
met, i.e., other than being successive, there was no defect at
the time of removal. We noted that because nothing “in the
sections of the Judicial Code related to removal forbids
successive removal,” any such rule necessarily was “an
extra-statutory judicial invention, and thus subject to
appellate review.” Id. at 782. Such is not the case here. One
No. 05-3670                                                13

need look no further than § 1441(b) to discover that the
forum defendant rule forbids removal when a properly
joined and served party is a citizen of the forum state. The
district court’s application of that rule in this case is
simply a judicial gloss on the statute, akin to a finding of
substantial compliance with a statutory mandate.
   The approach urged by Mr. Peterson is unsound for
other reasons. First, the Supreme Court recently noted
that appellate review of a remand order based on a dis-
trict court’s erroneous construction of even a juris-
dictional statute is available “[o]nly in the extraordinary
case.” Osborn v. Haley, 127 S. Ct. 881, 895-96 (2007). Accord-
ing to Mr. Peterson’s reasoning, a clever litigant, inter-
ested in obtaining appellate review of an unfavorable
remand order, need only recast an alleged error in apply-
ing the removal and remand provisions of the Judicial
Code as a “judicially crafted exception to the statute.” This
result “collide[s] head on with § 1447(d)” by allowing
routine review of remand orders. Id. at 895-96.
  Mr. Peterson’s approach also runs contrary to the very
purpose of § 1447(d). The statute expresses the policy of
Congress to prevent delay in the trial of remanded cases by
protracted litigation about jurisdictional issues or other
defects in the removal process by immunizing remand
orders “issued on the grounds specified in § 1447(c)” from
appellate review. Thermtron, 423 U.S. at 351. Inviting
appellate review of remand orders based on a judicial
gloss on the removal statutes in the guise of a “judicially
crafted exception to the statute” would frustrate that
policy.
  No less important, such a rule would be at odds with the
principle that jurisdictional rules—including appellate
14                                                No. 05-3670

jurisdictional rules—should be clear. See Lapides v. Bd. of
Regents of Univ. Sys. of Georgia, 535 U.S. 613, 621 (2002). Just
when a district court’s application of a statute slips from
being an allegedly erroneous remand decision, for which
we have no jurisdiction to review, see Kircher, 126 S. Ct. at
2153, to a “judicially crafted exception to the statute” is
unclear. Whatever the virtues of an approach like the
one Mr. Peterson urges us to adopt, it lacks the certainty
that appellate jurisdictional rules should embody.


                         Conclusion
  For these reasons, we conclude that this court lacks
jurisdiction over Mr. Peterson’s appeal. The appeal is
dismissed for lack of appellate jurisdiction.
                                             APPEAL DISMISSED

A true Copy:
        Teste:

                           _____________________________
                           Clerk of the United States Court of
                             Appeals for the Seventh Circuit




                     USCA-02-C-0072—7-3-07
