Pitre v. Huntington Ingalls Inc.

         SECTION “R” (5)

          ORDER AND REASONS

          SARAH S. VANCE UNITED STATES DISTRICT JUDGE.

         Before the Court is plaintiffs' motion to remand to state court, ^[1] and Defendants Huntington Ingalls, Inc. and Lamorak Insurance Company's motion for review of the Magistrate Judge's order granting plaintiffs leave to amend their complaint.^[2] For the following reasons, the Court denies both motions.

         I. BACKGROUND

         This case arises out of alleged asbestos exposure at Avondale Shipyard in Avondale, Louisiana.^[3] Stewart Pitre worked as a pipefitter for Avondale Shipyard from 1963 to 1972.^[4] Mr. Pitre developed lung cancer, allegedly as a result of exposure to asbestos at Avondale Shipyard, and passed away on July 15, 2016.^[5]

         On April 6, 2017, Mr. Pitre's wife and children filed an action in state court for wrongful death and survival.^[6] Plaintiffs named numerous defendants, including Huntington Ingalls, Inc. (Avondale) and Foster Wheeler, LLC.^[7] Plaintiffs' original petition included, among other causes of action, failure to warn and other negligence claims against Avondale, and strict products liability and failure to warn claims against Foster Wheeler.^[8]Foster Wheeler allegedly produced boilers with asbestos-containing insulation that Mr. Pitre came into contact with aboard vessels at Avondale.^[9]On June 30, 2017, plaintiffs filed a first amended petition adding Occidental Chemical Corporation as a defendant, and asserting strict liability claims against both Avondale and Occidental Chemical.^[10]

         On June 27, 2017, Chester Rodrigue, a former coworker of Mr. Pitre's, testified in a deposition that he worked with Mr. Pitre on Destroyer Escorts built by Avondale.^[11] Avondale and its alleged insurer, Lamorak Insurance Company, removed this case to federal court on July 24, 2017.^[12] Avondale and Lamorak argue that they are entitled to remove this matter under 28 U.S.C. § 1442(a)(1) because plaintiffs' claims are for or related to acts performed under color of federal office while Avondale was acting under the authority of an officer of the United States.^[13] The notice of removal asserts that removal is timely because it came within 30 days of Mr. Rodrigue's testimony, which provided the first notice that Mr. Pitre's alleged injuries were connected to asbestos-containing materials on Destroyer Escorts built by Avondale for the U.S. Navy.^[14] See 28 U.S.C. § 1446(b)(3).

         On August 23, 2017, plaintiffs requested leave to file an amended complaint to delete their strict liability claims against Avondale.^[15] Magistrate Judge North granted plaintiffs leave to amend.^[16] Avondale and Lamorak Insurance now appeal Judge North's decision.^[17] Plaintiffs oppose defendants' appeal, and move to remand this action to state court.^[18]

         II. LEGAL STANDARD

         The federal officer removal statute permits an officer of the United States, “or any person acting under that officer, ” to remove to federal court a civil action or criminal prosecution brought against them “in an official or individual capacity, for or relating to any act under color of such office . . . .” 28 U.S.C. § 1442(a)(1). The party asserting jurisdiction under this statute bears the burden of establishing that federal jurisdiction exists. Winters v. Diamond Shamrock Chem. Co., 149 F.3d 387, 397 (5th Cir. 1998).

         The purpose of the federal officer removal provision is to protect the lawful activities of the federal government from undue state interference. See Willingham v. Morgan, 395 U.S. 402, 405-06 (1969). Because the federal government “can act only through its officers and agents, ” it has a strong interest in ensuring that the states do not hinder those officers in the execution of their duties. Id. at 406-07 (quoting Tennessee v. Davis, 100 U.S. 257, 263 (1880)). The federal officer removal statute “authorizes removal of the entire case even though only one of its controversies might involve a federal officer or agency.” IMFC Prof. Servs. of Fla. v. Latin Am. Home Health, Inc., 676 F.2d 152, 158 (5th Cir. Unit B 1982).

         Because of its broad language and unique purpose, the federal officer removal statute has been interpreted to operate somewhat differently from the general removal provision. Unlike the general removal statute, which must be “strictly construed in favor of remand, ” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002), the federal officer removal provision must be liberally construed. Watson v. Philip Morris Co., Inc., 551 U.S. 142, 147 (2007). A case against a federal officer may be removed even if a federal question arises as a defense rather than as a claim apparent from the face of the plaintiff's well-pleaded complaint. See Jefferson County, Ala. v. Acker, 527 U.S. 423, 431 (1999). Additionally, removal under § 1442(a)(1) does not require the consent of codefendants. See Humphries v. Elliott Co., 760 F.3d 414, 417 (5th Cir. 2014).

         III. DISCUSSION

         A. Appeal of Magistrate Judge's Order

         Magistrate Judge North granted plaintiffs leave to amend their complaint to remove strict liability claims against Avondale.^[19] Avondale and Lamorak Insurance appeal this decision, arguing that plaintiffs' amendment is improper.^[20] Magistrate judges are empowered to “hear and determine” certain non-dispositive pretrial motions, including a motion for leave to amend. 28 U.S.C. § 636(b)(1)(A); see also PYCA Indus., Inc. v. Harrison Co. Waste Water Mgmt. Dist., 81 F.3d 1412, 1421 n.11 (5th Cir. 1996). If a party is dissatisfied with a magistrate judge's ruling, it may appeal to the district court. Fed.R.Civ.P. 72(a). When a timely objection is raised, the district court will “modify or set aside any part of the order that is clearly erroneous or is contrary to law.” Id.; see also 28 U.S.C. § 636(b)(1)(A). The Court reviews the magistrate judge's “factual findings under a clearly erroneous standard, while legal conclusions are reviewed de novo.” Moore v. Ford Motor Co., 755 F.3d 802, 806 (5th Cir. 2014) (internal citation omitted). A factual “finding is ‘clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948).

         The order granting plaintiffs leave to amend their complaint is not clearly erroneous or contrary to law. Courts will “freely give leave [to amend] when justice so requires.” Fed.R.Civ.P. 15(a). The Court considers multiple factors in determining whether it is appropriate to grant leave, including “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962).

         Avondale and Lamorak Insurance appear to argue that plaintiffs' amendment is in bad faith because it is intended to defeat federal jurisdiction, and that the amendment is futile because it cannot destroy federal jurisdiction.^[21] Plaintiffs represent that the addition of strict liability claims against Avondale in the first amended petition was an inadvertent error.^[22] Plaintiffs explain that they requested leave to amend in state court to add a new defendant, Occidental Chemical Corporation, and never requested leave to add new claims against Avondale.^[23] But plaintiffs acknowledge that their second amended complaint is intended to support their motion to remand.^[24]

         The magistrate judge could reasonably have concluded that plaintiffs' amendment seeks to correct a good faith error, and was not made in bad faith. Plaintiffs are dropping substantive claims against Avondale that they might otherwise have pursued, and are not engaging in merely superficial manipulation of the pleadings to defeat federal jurisdiction. See Enochs v. Lampasas Co., 641 F.3d 155, 160 (5th Cir. 2011) (noting that a “motion to amend [the] complaint to delete the federal claims is not a particularly egregious form of forum manipulation, if it is manipulation at all”). Avondale relies on the Fifth Circuit's unpublished opinion in Bouie v. Equistar Chemicals, L.P., 188 F. App'x 233 (5th Cir. 2006), to argue that plaintiffs' amendment should be disallowed.^[25] But the Bouie court held only that the district court did not abuse its discretion in denying leave to amend after finding futility and bad faith, not that a complaint can never be amended to remove federal claims. Id. at 238-39.

         Avondale asserts that plaintiffs' amendment is futile because it cannot destroy federal jurisdiction.^[26] Federal question jurisdiction under the federal officer removal statute arises out of the existence of a federal defense in the notice of removal. See Mesa v. California, 489 U.S. 121, 136 (1989). If a case is properly removed, the Court acquires supplemental jurisdiction over nonfederal claims. See IMFC Prof. Servs. of Fla., 676 F.2d at 158-59; see also Wilde v. Huntington Ingalls, Inc., 616 F. App'x 710, 715 n.24 (5th Cir. 2015). Thus, the post-removal “elimination of the federal officer from a removed case does not oust the district court of jurisdiction (except where there was no personal jurisdiction over the officer).” See IMFC Prof. Servs. of Fla., 676 F.2d at 159.

         The Court nevertheless has discretion to relinquish supplemental jurisdiction and remand to state court if an amended complaint eliminates the federal question in a case. See Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 346, 357 (1988); see also Sewell v. Sewerage & Water Bd. of New Orleans, 697 F. App'x 288, 291, 293 (5th Cir. 2017). Magistrate Judge North thus correctly concluded that it is within the Court's discretion to consider an amended complaint within the context of a motion to remand.^[27] See Carnegie-Mellon Univ., 484 U.S. at 357 (explaining that the “district court can consider whether the plaintiff has attempted to manipulate the forum” when deciding whether remand is appropriate). That the amended complaint does not automatically destroy federal jurisdiction weighs in favor, rather than against, permitting amendment. Cf. Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987) (explaining that courts should scrutinize an amendment that would destroy federal jurisdiction more closely than an ordinary amendment).

         Accordingly, the Court finds no error in Magistrate Judge North's order granting plaintiffs leave to amend their complaint. Avondale and Lamorak Insurance's appeal is denied.

         B. Motion to Remand

         Plaintiffs argue that, in light of the amended complaint, the Court lacks subject matter jurisdiction and this case must be remanded to state court.^[28]But, as explained above, the Court's jurisdiction is based on the notice of removal, not the amended complaint. See IMFC Prof. Servs. of Fla., 676 F.2d at 159; see also Bartel v. Alcoa S.S. Co., Inc., 805 F.3d 169, 172 n.2 (5th Cir. 2015). Although an amended complaint deleting federal claims may permit a discretionary remand, it does not destroy federal jurisdiction over a validly removed case. Here, the Court finds that remand is not justified. Avondale's notice of removal is valid, and the Court properly acquired jurisdiction over this matter. Further, Foster Wheeler was not affected by plaintiffs' amended complaint, and remains entitled to a federal forum under the federal officer removal statute.

         1. Jurisdiction at Removal

         Avondale removed this case to federal court based on its work as a military contractor.^[29] The Fifth Circuit has adopted a three-part test to determine whether a government contractor may invoke 28 U.S.C. § 1442(a)(1). The contractor must show that: (1) it is a “person” within the meaning of the statute; (2) it acted pursuant to a federal officer's directions, and a causal nexus exists between its actions under color of federal office and the plaintiffs' claims; and (3) it has a colorable federal defense to the plaintiffs' claims. Winters, 149 F.3d at 398-400.

         Plaintiff's first amended state court petition, which formed the basis for removal, names Avondale and Occidental Chemical Corporation as “Premises Defendants.”^[30] The amended petition asserts a strict liability claim against the Premises Defendants under Louisiana Civil Code article 2317 for Mr. Pitre's injuries as a result of asbestos exposure.^[31] Avondale argues that it is a person under the statute, it was acting under an officer of the United States, the use and installation of asbestos-containing materials was required by its contracts with the U.S. Navy, and it has colorable federal defenses to plaintiffs' claims under both Boyle v. United Technologies Corp., 487 U.S. 500 (1988), and the Longshore and Harbor Workers' Compensation Act.^[32]

         Circuit precedent strongly supports Avondale's right to remove this matter based on plaintiffs' strict liability claims for asbestos exposure. Under nearly identical factual circumstances, the Fifth Circuit held that Avondale is a person within the meaning of the statute, and that it satisfied the causal nexus requirement between its work as a military contractor and the plaintiffs' strict liability claims for asbestos exposure under Louisiana Civil Code article 2317. See Savoie v. Huntington Ingalls, Inc., 817 F.3d 457, 462, 463-66 (5th Cir. 2016). The Savoie court found a sufficient causal relationship because “[t]he strict liability claims rest on the mere use of asbestos, and that use at the shipyard was pursuant to government directions via contract specifications.” Id. at 465; see also Winters, 149 F.3d at 400.

         The evidence before the Court indicates that the U.S. Government required the use of asbestos at Avondale for most of the time period between 1963 and 1972 when Mr. Pitre was employed there. Avondale submits the affidavits of Commander Thomas McCaffery, Edward Blanchard, and Danny Joyce.^[33] McCaffery, a retired Commander in the U.S. Navy (Reserve), attests that the contracts between Avondale and the U.S. Government to build warships specified the materials that could be used in the construction of U.S. Navy ships.^[34] He further represents that, until mid-1969, all approved pipe insulation products for use on pipes whose normal operating temperature exceeded 370 degrees Fahrenheit contained asbestos.^[35]

         Blanchard, a former supervisor and vice-president at Avondale, attests that all aspects of work on federal vessels at Avondale were performed under the close and detailed surveillance of the U.S. Navy and other federal agencies.^[36] Further, Blanchard states that federal inspectors retained ultimate decision-making authority over all construction, and that every component installed on a Navy vessel had to be on the Navy's list of qualified products.^[37] Joyce, a former industrial hygienist at Avondale, represents that he has reviewed the contracts and specifications pertaining to the construction of federal vessels at Avondale.^[38] He states that federal inspectors monitored the site to ensure that the supplies used were those required by the contracts and specifications, including asbestos-containing insulation and other asbestos-containing materials.^[39]

         As noted above, Chester Rodrigue's deposition testimony indicates that Mr. Pitre worked on Destroyer Escorts built by Avondale for the U.S. Navy.^[40] The Court finds that Avondale has shown a sufficient causal nexus between Avondale's actions under color of federal office and plaintiffs' strict liability claims for use of asbestos. Because Avondale satisfies the causal nexus standard as it was applied by the Fifth Circuit in Savoie, 817 F.3d 457 and Winters, 149 F.3d 387, the Court need not address Avondale's argument that the 2011 amendments to the federal officer removal statute created a less demanding causal nexus requirement.^[41]

         Avondale has also presented a colorable defense of federal contractor immunity. The federal defense need only be colorable, not clearly sustainable, and a federal “officer need not win his case before he can have it removed.” See Willingham, 395 U.S. at 406-07; see also Acker, 527 U.S. at 432. The Fifth Circuit has explained that “a non-colorable federal defense is a defense that is immaterial and made solely for the purpose of obtaining jurisdiction or that is wholly insubstantial and frivolous.” Zeringue v. Crane Co., 846 F.3d 785, 790 (5th Cir. 2017). Federal contractors are immune from suit when “(1) the United States approved reasonably precise specifications; (2) the equipment conformed to those specifications; and (3) the supplier warned the United States about the dangers in the use of the equipment that were known to the supplier but not to the United States.” Boyle, 487 U.S. at 512.

         As outlined above, Avondale has provided evidence that the U.S. Navy required it to comply with precise specifications, including the use of asbestos-containing pipe insulation.^[42] Avondale's affidavits also indicate that federal monitors ensured that vessels built by Avondale conformed to contract specifications.^[43] See Miller v. Diamond Shamrock Co., 275 F.3d 414, 420 (5th Cir. 2001) (explaining that evidence of inspections, and “[a]cceptance and use of an item following its production can establish that the item conformed to its specifications”).

         Further, the evidence suggests that the U.S. Government was at least as knowledgeable about the dangers of asbestos as Avondale. Joyce attests that Avondale did not have any information regarding the hazards of asbestos that was not known by the federal government, including the U.S. Navy.^[44] Avondale also offers the deposition testimony of Dr. Richard Lemen, a retired Assistant Surgeon General of the United States, who testified that the U.S. Public Health Service collected and reviewed scientific literature on asbestos beginning in the 1930s.^[45]

         The Fifth Circuit has held that a U.S. Navy contractor had a colorable federal defense against a strict liability claim for asbestos exposure when evidence existed that military specifications required the use of asbestos, and the Navy had as much or more knowledge about the dangers of asbestos exposure as the contractor. See Zeringue, 846 F.3d at 791-92. This case presents similar circumstances, and the Court finds that Avondale has stated a colorable defense of federal contractor immunity to plaintiffs' strict liability claims. See Savoie v. Penn. Gen. Ins. Co., No. 15-1220, 2017 WL 2391264, at *6-7 (E.D. La. 2017) (holding that Avondale presented a colorable defense of federal contractor immunity to strict liability claims for asbestos exposure). Because the Court finds a colorable federal contractor immunity defense under Boyle, it need not reach Avondale's argument that it also has a colorable federal defense under the Longshore and Harbor Workers' Compensation Act.^[46]

         Plaintiffs do not seriously contest that their strict liability claims against Avondale are removable under 28 U.S.C. § 1442(a)(1).^[47] Plaintiffs instead maintain that their strict liability allegations against Avondale were brought in error, and have since been deleted in the amended complaint.^[48]As discussed above, a good faith error may justify granting leave to amend. But plaintiffs' error does not create a jurisdictional defect in the notice of removal. Accordingly, the Court finds that Avondale's notice of removal is valid and that federal jurisdiction exists over this matter.

         2. Claims Against Foster Wheeler

         Plaintiffs argue that, even if the Court properly acquired jurisdiction, the amended complaint has removed the federal question in this case and the Court has discretion to remand the remaining state law claims.^[49] But, although plaintiffs' amended complaint deleted the strict liability claims as to Avondale, plaintiffs continue to press strict liability claims against Foster Wheeler.^[50] Foster Wheeler asserts in its opposition to the motion ...