Mandatory Abstention is Required when Foreign Law Claims are Brought in Conjunction with State Law Claims

(Excerpt) When a case is wrongfully removed from state court, mandatory abstention provides moving parties with a way to remand their non-core claims. 28 U.S.C. § 1334(c)(2) provides the framework for a motion that would require a federal district court to abstain. Congress enacted the statute to allow a party to litigate state claims in state court when the case was only removed to federal court because of its relation to a bankruptcy case. The case law interpreting the statute has created a five-step test to determine when mandatory abstention is required. The Third Circuit in Stoe articulated that: upon a timely motion under § 1334(c)(2), a district court must abstain if (1) the proceeding is based on a state law claim or cause of action; (2) the claim or cause of action is “related to” a case under title 11, but does not “arise under” title 11 and does not “arise in” a case under title 11; (3) federal courts would not have jurisdiction over the claim but for its relation to a bankruptcy case; (4) an action “is commenced” in a state forum of appropriate jurisdiction; and (5) the action can be “timely adjudicated” in a state forum of appropriate jurisdiction. This test is typically applied to cases that only deal with state law claims, which leaves unanswered whether mandatory abstention is available when foreign law claims are brought in conjunction with state law claims. This memorandum examines this question by analyzing the five-step test articulated in Stoe and outlining how the addition of foreign law claims implicates mandatory abstention in bankruptcy cases