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Argued: February 14, 2001

Petitioner appeals from a judgment entered on February 10, 2000, based on an order of the same date, denying his petition for a writ of habeas corpus pursuant to 28 U.S.C. � 2254 (Jack B. Weinstein, Judge). We find that the district court erred in using its discretion under 28 U.S.C. � 2254(b)(2) to deny an unexhausted claim on the merits when the petitioner has “made a substantial showing of the denial of a constitutional right” sufficient to warrant a certificate of appealability under 28 U.S.C. � 2253(c)(2). We therefore vacate the judgment and remand the case so that the district court may either dismiss the petition without prejudice, or, if appropriate, retain jurisdiction over the petition and stay further proceedings pending the exhaustion of state remedies.

Judge Leval dissents by separate opinion.

 
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