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Recent Fifth Circuit Ruling a Relief to United States Government Equipment Suppliers

Posted in Asbestos Litigation, Complex Torts, Litigation Trends, Products Liability

battleshipIt is no secret that, in many instances, injured tort plaintiffs would prefer to file their cases in state court as opposed to federal court. One of the many reasons for this preference is that the Federal Rules of Civil Procedure place express limits on the amount of discovery available to parties.  Further, the Federal Rules of Evidence tend to be more stringent, as are requirements for expert witnesses.  These, and the notion that federal courts tend to grant motions to dismiss and motions for summary judgment more frequently and award lower verdicts, means that plaintiffs would often rather file their cases in state court and conversely, defendants often prefer to litigate these cases in federal court. Consequently, when possible, defendants often will remove a case filed in state court to the applicable U.S. District Court where the state action was pending. One such method of removal is found in 28 U.S.C. § 1442(a)(1), the federal-officer removal statute. Specifically, § 1442(a)(1) allows a defendant that acted under any United States agency or officer to remove a plaintiff’s suit to federal court if any of the alleged claims or defenses relate to “any act under color of such office.” This is a frequently used tool of military contractors to get their government contractor defense heard by a federal court.

Government contractor immunity is a recognized federal defense based on public policy (See Boyle v. United Technologies Corp., 487 U.S. 500 (1988)). It is an offshoot of the governmental immunity doctrine codified in 28 U.S.C. § 2680, which insulates the federal government from suit in relation to the performance of its discretionary actions. Military contractors may be extended the benefits of §2680 in a product liability action if they can demonstrate that: (1) the government “approved reasonably precise specifications” for their product; (2) the product conformed to those specifications; and (3) the contractor warned the government about the dangers in the use of the product that were known to it but not to the government.”  Boyle, 487 U.S. at 512.

Military contractors of all stripes expressed a collective sigh of relief on January 20, 2017, when the Fifth Circuit Court of Appeals fortified the federal officer removal statute in Zeringue v. Crane Co., 2017 WL 279496 (5th Cir. 2017), a decision which overturned the Eastern District of Louisiana’s remand of an asbestos plaintiff’s suit to Orleans Parish District Court. In Zeringue, the Plaintiff filed suit in Louisiana state court alleging that he first was exposed to asbestos while serving aboard U.S. Navy ships during the 1950s. Crane, one of more than twenty defendants in the case, was a major supplier of asbestos-containing valves, among other equipment, to the Navy. Accordingly, Crane invoked the federal officer removal statute so that it could litigate the case in federal district court. It argued that removal was proper because “any product [Zeringue] alleges Crane Co. manufactured for or supplied to the Navy (and any product literature, labeling, or warnings that accompanied the product) would be subject to Navy specifications and requirements.” Zeringue, 2017 WL 279496 at *1. As such, Crane argued that “[f]ederal officers exercised their discretion regarding whether (1) asbestos was used in the product, and (2) whether a warning would accompany the product.” Id.

In support of its position, Crane proffered three affidavits. The first, from Crane’s Vice-President for Environment, Heath, and Safety, stated that “all equipment supplied by Crane Co. to the Navy was built in accordance with [Navy] specifications” which “governed all aspects of a piece of equipment.” Id. at *4. The second affidavit was prepared by a former admiral in command of operation and maintenance of Navy ships who explained that “[e]quipment could not have been installed aboard Navy vessels unless it was first determined by the Navy to be in conformity with all applicable Navy specifications.” Id. Finally, a former Navy physician that oversaw naval industrial hygiene testified that “the Navy’s knowledge of asbestos dangers ‘has been quite complete when compared to available knowledge over time, and at least by the early 1940s, the Navy had become a leader in the field of occupational medicine relating to, among other things, asbestos dust inhalation exposure.’” Id.

The District Court, however, sided with Zeringue in his attempt to return the case to state jurisdiction. Notably, the District judge agreed that Crane “allege[d] all the elements for…federal officer removal” and “provided evidence that permitted a ‘plausibl[e] assum[ption] that any equipment that Crane built for the Navy was indeed subject to detailed specifications.’” Id. at *1. Yet, Zeringue’s case was sent back to the state court because the federal court did not believe Crane proved that the Navy exercised discretion over the equipment Crane supplied.

Crane appealed the District Court’s ruling to the Fifth Circuit, which thoroughly rejected the lower court’s holding. The appeals court explained that a federal defense, such as government-contractor immunity, must only be colorable to permit federal jurisdiction. A colorable federal defense is one that is material, not “wholly insubstantial and frivolous,” and not made solely for the purpose of obtaining federal jurisdiction. Id. at *2. The Circuit Court noted that the affidavits submitted by Crane, although not conclusive, fell well within the scope of colorability:

[The documents] are not definitive proof that Zeringue’s asbestos exposure resulted from the Navy’s—not Crane’s—discretionary decision, nor are they definitive proof that Crane did not need to supply the Navy with information regarding the dangers of asbestos because of the Navy’s existing knowledge. But definitive proof is not necessary for removal, and the military specifications and affidavits do suffice as a non-insubstantial and non-frivolous basis upon which Crane may assert government-contractor immunity.

Id. at *4. (Emphasis added).

In sum, the Fifth Circuit has joined a number of other federal Circuit Courts in holding that a removing defendant need not win its case on removal.  Instead, the removing defendant need only demonstrate that it has a colorable federal claim or defense in order to litigate the case in federal court.