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Ninth Circuit denies requests to remand former Pearl Harbor machinists' asbestos lawsuits

By Heather Isringhausen Gvillo | Apr 29, 2014

SAN FRANCISCO (Legal Newsline) - On Friday, a federal appeals court denied requests from former U.S. Navy servicemen and their families to remand their asbestos lawsuits to state courts, affirming a Hawaii federal court's decision that the federal officer removal statute had been met.

Plaintiffs Douglas P. Leite and David Thompson worked as machinists at the Pearl Harbor Naval Shipyard in Hawaii, where they allege they were injured by asbestos exposure. They claim the defendants failed to warn them of the hazards of working with and around asbestos-containing equipment sold to the Navy.

Leite and Thompson filed separate complaints in state court, which were removed to federal court under the federal officer removal statute.

In response, the claimants requested the district court to remand the actions back to state court, claiming the defendants had not provided sufficient evidence of the factual requirements for removal jurisdiction.

District judges J. Michael Seabright and Leslie E. Kobayashi denied both plaintiffs' motions to remand their cases to state court.

Leite and Thompson appealed the decision, and the two appeals were later consolidated to a single one.

Judge Paul J. Watford delivered the published opinion Friday, focusing entirely on Crane Co. because it was the only defendant to file a brief on appeal. Judges Alex Kozinski and Raymond C. Fisher joined in the decision.

Watford explained that the federal officer removal statute "authorizes removal of civil actions brought against any person 'acting under' an officer of the United States 'for or relating to any act under color of such office.'"

In order for the statute to apply, Crane is responsible for showing that it is a "person" within the statute's guidelines; a causal nexus exists between the claimants' complaint and actions Crane Co. took pursuant to a federal officer's direction; and it has a "colorable" federal defense to the claims.

The appeals court found that Crane provided evidence and alleged facts to satisfy each of the requirements.

Crane Co.'s evidence included testimonial and documentary supporting its claims, including affidavits from retired Rear Admiral David Sargent, Jr.; retired Rear Admiral Roger Horne, Jr.; Dr. Samuel Forman, a medical doctor who conducted extensive research on the extent of the Navy's knowledge of asbestos hazards; and Anthony Pantaleoni, Crane Co.'s Vice President of Environment, Health and Safety.

Sargent and Horne provided affidavits describing the Navy's procurement policies, including military specifications regulating the warnings that equipment manufacturers were to provide.

Forman also discussed the Navy's awareness of risks associated with asbestos exposure, opining that the Navy "always knew at least as much about asbestos hazards as equipment manufacturers like Crane."

However, the claimants countered arguments and evidence provided by Crane Co., objecting to portions of the affidavits for containing speculative expert opinion testimony and calling them improper opinions.

They further argued that, without speculative opinions, Crane Co. would not have satisfied each of the requirements for removal jurisdiction.

Watford wrote that the claimant's arguments raise several procedural questions that have not yet been squarely addressed:

-May a defendant establish removal jurisdiction by adequately alleging the necessary facts, or must the defendant prove those facts before the case may proceed in federal court;

-If actual proof is required, must the district court resolve evidentiary challenges to the defendant's evidence before deciding whether removal jurisdiction exists; and

-If the existence of jurisdiction turns on disputed factual issues, should the district court resolve those issues itself or instead leave them to be resolved by the trier of fact?

The appeals court addressed these questions by looking at cases where defendants moved to dismiss claims in federal court for lack of subject-matter jurisdiction, concluding the same rules apply in the case at hand.

A plaintiff must allege appropriate facts, not just legal conclusions, complying with pleading standards in order to make a claim for specific jurisdiction.

"Assuming compliance with those standards, the plaintiff's factual allegations will ordinarily be accepted as true unless challenged by the defendant," Watford wrote.

However, a defendant may challenge jurisdictional allegations through a "facial" attack, which accepts the truth of the allegations but asserts that they "are insufficient on their face to invoke federal jurisdiction."

The court resolves "facial" attacks by accepting the allegations as true and drawing reasonable inferences in the plaintiffs' favor and then determines if the allegations are sufficient enough as a legal matter to invoke jurisdiction.

They may also challenge jurisdiction through a "factual" attack, which contests the truth of the plaintiffs' factual allegations by introducing evidence outside of the pleadings.

The court resolves "factual" attacks by requiring the plaintiffs to support jurisdictional allegations with "competent proof," Watford explained.

When a defendant challenges jurisdiction, the plaintiff must prove by a preponderance of the evidence that all requirements showing proper jurisdiction have been met: personhood, causal nexus and a colorable federal defense.

As for removal jurisdiction, defendants seeking removal must allege the underlying facts supporting each of the requirements rather than simply offering legal conclusions, Watford added.

Like with defendant challenges, a plaintiff may request the case be remanded back to state court by filing a facial or factual attack.

Watford explained that in the case at hand, the plaintiffs do not raise a facial attack on Crane Co.'s jurisdictional allegations, but they did raise a factual attack by contesting the truth of Crane Co.'s allegations regarding its causal nexus and colorable federal defense requirements.

Crane Co.'s only federal defense is the government contractor defense, which requires the defendant to prove that the Navy exercised its discretion and approved certain warnings for Crane Co.'s product, that it provided the required warnings and that it warned the Navy about asbestos hazards that were known to the defendant by not the Navy.

Watford stated that Crane Co.'s affidavits establish that it does have a colorable federal defense.

Horne and Sargent stated in their affidavits that the Navy issued detailed military specifications governing the form and content of all warnings equipment manufacturers were required to provide, both on the equipment itself and the accompanying technical manuals.

Further, the Navy was involved in preparing the technical manuals, including safety information about equipment operation "only to the extent directed by the Navy."

The two went as far as stating the equipment manufacturers could not include warnings beyond those specifically required and approved by the Navy, and that Navy specifications did not require manufacturers to include warnings about asbestos dangers.

"These statements, which are supported by an adequate foundation based on the affiants' knowledge of Navy procurement policies, establish a colorable showing that the Navy exercised its discretion and approved certain warnings for Crane's products," Watford stated.

Horne and Sargent added that if Crane Co. had asked for approval on asbestos warnings, the Navy would have rejected them.

However, the claimants contend the opinion testimony is "entirely speculative and unreliable and therefore can never be established by admissible evidence."

Watford responded by stating the court doesn't need to address the claimants' objections because Crane Co. made a colorable showing based on Horne and Sargent's affidavits.

He added that the two experts are competent enough to provide testimony regarding those facts.

"[T]here's nothing speculative about what, in their view, the Navy's procurement policies actually required," Watford wrote.

"Contrary to plaintiffs' assumption, Crane need not prove that the Navy would have forbidden it to issue asbestos warnings had Crane requested the Navy's approval," he added.

The appeals court held that Crane Co. also established a colorable showing through Pantaleoni's testimony.

Pantaleoni claimed the Crane Co. equipment sold to the Navy complied with military specifications, including warning requirements.

In fact, an outside vendor's equipment would not have been installed aboard Navy vessels unless it complied with all applicable specifications, Sargent confirmed in his affidavit.

Forman's affidavit further proves a colorable showing that the Navy knew at least as much about asbestos hazards as the equipment manufacturers, essentially leaving nothing for Crane Co. to warn the Navy about.

Noting Crane Co.'s sufficient evidence to support removal to district court, Watford explained that at this point, the defendant must only prove that its government contractor defense is in fact meritorious or "colorable," but it "need not win his case before he can have it removed."

Based on the same evidence, Crane Co. also proved that a causal nexus exists between the claimants' complaints and the actions the defendant took at the direction of a federal officer.

In this case, the very thing the claimants focus their complaint on - Crane Co.'s failure to warn about asbestos hazards - was allegedly performed under direction of the Navy.

"Crane may not be right - indeed, it may be that the Navy had nothing to do with Crane's failure to warn," Watford wrote. "But the question 'whether the challenged act was outside the scope of [Crane's] official duties, or whether it was specifically directed by the federal Government, is one for the federal - not state - courts to answer.'"

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com

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