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From Products Liability Law Daily, August 11, 2014

Shipyard workers ask High Court to overrule government contractor defense decision

By John W. Scanlan, J.D.

Two former shipyard workers have petitioned the U.S. Supreme Court to reverse the Ninth Circuit’s ruling that their asbestos-related claims against a Navy equipment supplier were properly removed to federal court on the ground that the supplier had alleged facts sufficient to support a colorable government contractor defense. The workers argued that the Ninth Circuit had improperly relied solely on expert opinions about the Navy’s specifications for the equipment rather than considering the specifications themselves (Leite v. Crane Co., Docket No. 14-119, July 31, 2014).

Background. Douglas Leite and David Thompson worked as civilian machinists in the Pearl Harbor Naval Shipyard in Hawaii during the 1950s, 1960s, and early 1970s. Both later developed asbestos-related diseases. They separately filed state tort law claims against a number of equipment manufacturers, alleging that the companies failed to warn them of the hazards of asbestos from their products which they sold to the U.S. Navy, as required by Hawaii law. Crane Co., which was one of the defendants, removed both cases to federal court under the federal officer removal statute. Leite and Thompson filed interlocutory appeals after their motions for remand were denied. The Ninth Circuit consolidated the two cases for appeal, finding that there were procedural questions of first impression: whether a defendant must prove necessary facts or simply allege them in order to establish removal jurisdiction; if it must prove them, whether evidentiary challenges to that evidence must be resolved before the court determines whether removal jurisdiction exists; and if the question of removal jurisdiction turns on disputed facts, whether the district court should resolve those issues or leave them for the trier of fact.

Ninth Circuit’s decision. The Ninth Circuit held that removal jurisdiction existed under the federal officer removal statute because Crane could establish a colorable federal defense and a causal nexus between the machinists’ claims and Crane’s actions. Two retired rear admirals testified that the Navy had issued detailed specifications on the content and form of all warnings to be provided by equipment manufacturers on the equipment and in their manuals, the Navy was directly involved in preparing the manuals, manufacturers could not include warnings beyond those required by the Navy, and the Navy specifications did not include manufacturers’ warnings about asbestos. A Crane vice president testified that all equipment sold by Crane to the Navy complied with all Navy specifications, including those on warnings, and one of the admirals stated that the equipment could not have been installed on a Navy vessel unless it was in full compliance with all relevant specifications. Crane’s failure to warn about asbestos hazards was both the basis for the machinists’ claims and the actions that it performed under the Navy’s direction; therefore, whether it was liable to the machinists was a question for a federal court to decide.

Questions presented. The machinists asked the Supreme Court to answer two questions about the Ninth Circuit’s opinion that they asserted placed that court in conflict with opinions of the First, Second, Fifth, and Seventh Circuits:

  1. Can federal officer removal jurisdiction be based solely upon an expert affidavit stating that the Navy issued “detailed specifications” on warnings (to colorably meet the element of “reasonably precise specifications” under Boyle v. United Technologies Corp., 487 U.S. 500 (1988)), without considering the plain language of the Navy specifications at issue which is vague in general, thus conflicting with over one hundred years of federal evidentiary law that holds experts cannot opine on the meaning of documents and regulations?
  2. Whether a causal nexus to support federal officer removal jurisdiction under 28 U.S.C. §1442 can be established solely by accepting the federal contractor’s contentions that it acted under the direction of a federal officer in committing the act that allegedly violated state law, or whether there must be some admissible evidence of causal connection as required by this Court’s case law.

Reasons offered for granting the petition. Accusing the Ninth Circuit of having “ignored basic principles of federal evidentiary law,” the machinists asserted that its decision would give removal jurisdiction to any private contractor who produced an affidavit from an expert on the meaning of federal regulations, and that a court would not have to consider the actual language of the specifications, but could consider only an opinion of an expert witness on the specifications.

Far from being the “detailed specifications” as determined by the Ninth Circuit, the machinists argued that the plain language of the specifications for the equipment at issue was minimal and general. According to the machinists, the record contained only two detailed Navy specifications on warnings; these specifications authorized manufacturers to give state-law warnings regardless of the Navy’s labeling decisions, they said. The only evidence offered by Crane to support removal consisted of expert affidavits by three experts stating that the Navy had detailed specifications that would have prevented Crane from warning about asbestos even if it had tried to do so; this, the machinists stated, was a lowering of the jurisdictional bar for removal. They said that the court did not examine the actual language of the specifications to determine whether they were reasonably precise.

Federal officer removal jurisdiction may not be based solely on expert affidavits that Navy specifications are “detailed,” the machinists argued. Expert testimony may not be proffered to establish the meaning of a law or regulation, as one could always find an expert to testify that actions alleged to have violated state law were covered by a reasonably precise specification. When the court ignored the plain meaning of the specification and instead followed the “ipse dixit” opinions of Crane’s experts, it allowed the experts to usurp the court’s role.

Finally, the machinists asserted that the Ninth Circuit had ignored Supreme Court precedent that competent evidence is required to find a causal connection, and argued that the Ninth Circuit also had lowered the bar on this issue when it found a causal nexus based upon Crane’s mere allegations that it had acted under the Navy’s direction. According to a dissent by Justice Scalia in Jefferson County v. Acker, 527 U.S. 423 (1999), which they said that the Ninth Circuit cited for the proposition that the court must credit the defendant’s theory of the case, the causation element is only satisfied for removal when a federal officer is sued “for any act under color of office or in the performance of [official] duties.” The court must focus on the grounds for liability that the plaintiff actually did assert, not those upon which the plaintiff could have asserted, Scalia stated. The present two cases involved only Crane’s alleged failure to warn shipyard workers about the hazards of asbestos; this was the act to which the courts must look in weighing the existence of a causal connection, the machinists said, and this causal nexus must be supported by admissible evidence rather than only contentions on a defendant’s theory of the case.

The case number is 14-119.

Attorneys: Gary O. Galiher (Galiher Law Firm) for Douglas P. Leite.

Companies: Crane Co.

MainStory: TopStory JurisdictionNews DefensesLiabilityNews AsbestosNews SupremeCourtNews

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