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From Products Liability Law Daily,June 23, 2017

Naval boiler maker can remove asbestos suit under government-contractor defense

By Georgia D. Koutouzos, J.D.

The industrial boiler manufacturer Foster Wheeler LLC was entitled to remove a state tort action to federal court under the federal officer removal statute based on the company’s assertion that it had government-contractor immunity, a federal appellate panel ruled. The manufacturer met the removal statute’s three substantive requirements, the panel found, reversing and remanding the Maryland federal trial court’s determination that the company lacked a colorable federal defense and that it had not engaged in government-directed conduct that was causally related to the failure to warn claims on behalf of a shipyard worker who had died from mesothelioma allegedly caused by his exposure to asbestos (Sawyer v. Foster Wheeler LLC, June 22, 2017, Niemeyer, P.).

After a former shipbuilder developed mesothelioma and ultimately died as a result of that disease, his family and personal representative brought suit in Maryland state court against Foster Wheeler and several other defendants. The suit alleged that the man’s death had been caused by his exposure to asbestos while assembling boilers at the shipyard and that the defendants had failed to warn him of the dangers of asbestos, a component of the boilers.

The company removed the action to federal court under the federal officer removal statute (28 U.S.C. §1442(a)(1)), claiming that it manufactured the boilers under a contract with the U.S. Navy and, as such, possessed a colorable federal defense of government-contractor immunity. The plaintiffs move to remand the case to state court, arguing that Foster Wheeler’s notice of removal was untimely because it had been filed more than 30 days after the company learned that it had a possible federal defense and that, in any event, the boiler manufacturer failed to meet the three substantive requirements of the federal officer removal provision: (1) it did not act under the direction of a federal officer; (2) it did not possess a colorable federal defense; and (3) it did not engage in government-directed conduct causally related to the plaintiffs’ claims.

The trial court granted the plaintiffs’ motion to remand, finding as a threshold matter that the timeliness of Foster Wheeler’s notice of removal was "a close question" but that the notice’s timeliness was assumed due to the conclusion that the boiler manufacturer failed to make a sufficient showing that it had a colorable federal defense. In any event, the conduct for which the company had been sued was not causally connected to official authority, the trial court determined. Foster Wheeler appealed the trial court’s ruling.

Government-contractor immunity. The appeal raised the single issue of whether a government contractor was entitled to remove a state tort action to federal court under the federal officer removal statute based on the contractor’s assertion that it had a colorable federal defense of government-contractor immunity, the appeals court said.

With respect to the first of the removal statute’s three substantive requirements, there could be no question that Foster Wheeler was acting under the Navy when it constructed the boilers with asbestos that allegedly harmed the decedent. When a private entity is involved, U.S. Supreme Court precedent has interpreted the phrase "acting under" as contemplating a relationship where the government exerts some subjection, guidance, or control, and where the private entity engages in an effort to assist, or to help carry out, the duties or tasks of the federal superior. The High Court also instructed that the phrase "acting under" is broad and is to be liberally construed in favor of the entity seeking removal. Accordingly, courts have unhesitatingly treated the "acting under" requirement as satisfied where a contractor seeks to remove a case involving injuries arising from equipment that it manufactured for the government. Thus, in the case at bar, Foster Wheeler’s status as a Navy contractor readily satisfied the requirement that it must have "acted under" the Navy, as used in the removal statute.

Furthermore, the company also asserted a colorable federal defense, i.e., the defense of government-contractor immunity, to the plaintiffs’ claims. Foster Wheeler satisfied all of the criteria for showing a colorable government-contractor defense in failure-to-warn cases, namely: (1) it showed that the Navy exercised intense direction and control over all written documentation to be delivered with its naval boilers, including those manufactured by Foster Wheeler; (2) the company actually gave the warnings that were required by the Navy; and (3) the company credibly demonstrated that the Navy’s knowledge of asbestos-related hazards exceeded the manufacturer’s knowledge during the relevant time period. Thus, Foster Wheeler made at least a colorable showing that the government exercised discretion in requiring the company to provide certain notices and warnings, having full knowledge of the dangers involved. The fact that the government did not prohibit the company from giving additional warnings—and may not even have considered requiring additional warnings—did not undermine the colorability of the immunity defense.

Finally, Foster Wheeler established a sufficient connection between the charged conduct and asserted official authority. While the removal statute requires that the act in question be "for or relating to" the federal office, the trial court applied the requirement for a strict causal connection between the two. In so doing, the lower court imposed a stricter standard of causation than that recognized by the statute. The record in the case showed that the Navy was aware of the dangers of asbestos; that it required the use of asbestos in boilers for which it had contracted with the company to manufacture; that it provided for a comprehensive set of warnings, but not all possible warnings; and that Foster Wheeler had complied with the Navy’s requirements. Therefore, the boiler manufacturer’s alleged failure to give warnings to shipyard employees clearly was related to the performance of its contract with the Navy.

Accordingly, the trial court’s conclusion that Foster Wheeler did not meet the substantive requirements of the federal officer removal statute was reversed and remanded. Permitting the manufacturer to remove the case served the overarching policy of giving government contractors a federal forum in which to present their federal immunity defense and thereby avoiding possible state court hostility to the defense that could undermine federal interests.

The case is No. 16-1530.

Attorneys: Demetrios A. Karas (Law Offices of Peter G. Angelos) for Janya Sawyer. Erik David Nadolink (Wheeler Trigg O'Donnell, LLP) and John Charles Ruff (Dehay & Elliston, LLP) for Foster Wheeler LLC.

Companies: Foster Wheeler LLC

MainStory: TopStory DefensesLiabilityNews JurisdictionNews AsbestosNews MarylandNews NorthCarolinaNews SouthCarolinaNews VirginiaNews WestVirginiaNews

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