Williams v. Todd Shipyards Corp

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

____________________

No. 97-20442
____________________

SYLVIA SANTOS WILLIAMS; ET AL.

Plaintiffs,

DORIS GILBEATH; ET AL.

Intervenors-Plaintiffs,

ELNORA MAE CLEMENTS; SANDRA EARLENE DODSON,

Intervenors-Plaintiffs-Appellants,

versus

TODD SHIPYARDS CORPORATION,

Defendant-Appellee.

Appeal from the United States District Court
for the Southern District of Texas
(H-95-CV-4592)

July 21, 1998

Before BARKSDALE, BENAVIDES, and DENNIS, Circuit Judges.

PER CURIAM:*
This appeal presents only one issue: whether Todd Shipyards

Corporation established jurisdiction in district court under the

federal officer removal statute, 28 U.S.C. § 1442(a)(1), concerning

an action for gross negligence filed in Texas state court. We

AFFIRM.

*
Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
 I.

From 1939 to 1951, Earl W. Clements was employed as a

boilermaker by Todd in its Galveston, Texas, shipyard. He died in

1995, at age 87, from pulmonary asbestosis, which he allegedly

acquired from exposure to asbestos products while so employed.

Todd’s Galveston shipyard repaired, refitted, and converted

vessels. Prior to the United States entering World War II, Todd

did both commercial work for private parties and contract work for

the United States Maritime Commission. After the United States

entered the war, Todd worked almost exclusively under government

contract on ships owned or operated by the Navy, Army, or United

States Maritime Commission.

In this regard, all work performed on the vessels was subject

to specifications, as well as health and safety standards, issued

by the Government. Additionally, government inspectors monitored

and inspected the work done on the ships and materials used. And,

upon completion of a vessel, the Government conducted dock and sea

trials to ensure that the work conformed to contract

specifications.

Suit was filed against Todd in 1994 in Texas state court. In

August 1995, there were four interventions, including by Clements’

widow and daughter (Appellants). Each intervention concerned

different employment periods, occupations, and diseases. Two of

the intervenor groups, including Appellants, alleged asbestos

exposure between 1939 and 1968.

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 In September 1995, Todd removed all of the claims to federal

court. With regard to Appellants, Todd removed pursuant to the

federal officer removal statute, 28 U.S.C. § 1442(a)(1).

The plaintiffs moved to remand, contending that the district

court lacked jurisdiction because: the cases arose under the Texas

Workers’ Compensation Act and were non-removable under 28 U.S.C. §

1445(c); Todd had failed to establish jurisdiction under §

1442(a)(1) as to Appellants and another intervenor; and Todd had

failed to state a basis for removal as to the original plaintiffs

and other intervenors. The district court denied the remand motion

as it related to the Appellants and another intervenor, ruling

jurisdiction had been established under § 1442(a)(1).

As to Appellants, Todd then successfully moved for summary

judgment on the basis that their claims were discharged by Todd’s

bankruptcy.

II.

At issue is only whether the district court erred in refusing

to remand. The federal officer removal statute, 28 U.S.C. §

1442(a)(1), permits removal by “[a]ny officer of the United States

or any agency thereof, or person acting under him, for any act

under color of such office....” We review de novo the denial of a

remand motion. See, e.g., Sherrod v. American Airlines, Inc., 132

F.3d 1112, 1117 (5th Cir. 1998); Allen v. R&H Oil & Gas Co., 63

F.3d 1326, 1336 (5th Cir. 1995).

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 The Supreme Court, in one of its many examinations of §

1442(a) or its predecessors, has stated that the purpose of the

federal officer removal statute is found in the notion that

the Federal Government can act only through
its officers and agents, and they must act
within the States. If, when thus acting, and
within the scope of their authority, those
officers can be arrested and brought to trial
in a State court, for an alleged offense
against the law of the State, yet warranted by
the Federal authority they posses, and if the
general government is powerless to interfere
at once for their protection,—if their
protection must be left to the action of the
State court,—the operations of the general
government may at any time be arrested at the
will of one of its members.

Mesa v. California, 489 U.S. 121, 126 (1989) (quoting Tennessee v.

Davis, 100 U.S. 257, 263 (1879)).

Similarly, our court has stated that “the purpose of the

[federal officer] removal statute is to prevent federal officers or

persons acting under their direction from being tried in state

court for acts done within the scope of their federal employment.”

Peterson v. Blue Cross/Blue Shield of Texas, 508 F.2d 55, 58 (5th

Cir.), cert. denied, 422 U.S. 1043 (1975) (emphasis added).

Peterson noted that § 1442(a)(1)’s scope is not narrow, but rather

“[a]t the very least, it is broad enough to cover all cases where

federal officers can raise a colorable defense arising out of their

duty to enforce federal law.” Id. (emphasis added).

Pursuant to its plain language, the federal officer removal

statute requires Todd to demonstrate that: (1) it is a “person”,

(2) asserting a colorable claim to a federal defense, and (3) there

is a causal nexus between the claims asserted by the plaintiff and

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the acts performed under color of federal office. See Mesa, 489

U.S. at 125, 129, 131. For this three prong test, Appellants’ do

not dispute that Todd is a “person” within the meaning of §

1442(a)(1). Rather, they contend that Todd failed to satisfy the

second and third prongs.

A.

In its removal notice, and concerning the second prong for §

1442(a)(1) removal, Todd stated that it raised a colorable claim to

a federal defense by intending to rely on the government contractor

defense, as set forth in Boyle v. United Technologies Corp., 487

U.S. 500 (1988). That “defense ... generally immunizes government

contractors from civil liability arising out of the performance of

federal procurement contracts.” Bailey v. McDonnell Douglas Corp.,

989 F.2d 794, 797 (5th Cir. 1993). The Boyle government contractor

defense provides:

Liability for design defects in military
equipment cannot be imposed, pursuant to state
law, 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 (emphasis added).

Concerning this defense, Appellants assert only that Todd

failed to establish the third element. Restated, Appellants claim

that Todd did not establish that it warned the Government about the

dangers of asbestos that were known to Todd, but not known to the

Government. Regarding this third element, Boyle stated: “The third

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condition is necessary because, in its absence, the displacement of

state tort law would create some incentive for the manufacturer to

withhold knowledge of risks, since conveying that knowledge might

disrupt the contract but withholding it would produce no

liability.” Id. at 512.

As discussed, the removing party is required to only raise a

“colorable” claim to a federal defense. In other words, for

removal purposes, the party is not required to prove success on the

defense. See Mesa, 489 U.S. at 133; Magnin v. Teledyne Continental

Motors, 91 F.3d 1424, 1427 (11th Cir. 1996) (“defense need only be

plausible; its ultimate validity is not to be determined at the

time of removal.”); Jamison v. Wiley, 14 F.3d 222, 238 (4th Cir.

1994) (“defendant need not prove that he will actually prevail on

his federal immunity defense in order to obtain removal”). This is

because, as the Court has stated, “one of the most important

reasons for removal is to have the validity of the defense of

official immunity tried in a federal court.” Mesa, 489 U.S. at 133

(emphasis added). Consequently, in that this appeal concerns only

the removal, our focus is not on whether Todd would have succeeded

at trial on the Boyle defense, but only on whether, for removal

purposes, Todd raised a “colorable” claim to it.

In response to Appellants’ remand motion, Todd included the

following: an affidavit from a former Todd employee discussing the

nature of Todd’s work during the World War II time period and the

level of government supervision and direction; an index to the

“Specifications For The Conversion Of Hull No. MCE-20 Into A

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Training Ship”, issued by the United States Maritime Commission in

January 1942; an index to the Gulf Coast Safety Conference from

December 1943, sponsored by the United States Maritime Commission

and the United States Navy; and a document entitled “Minimum

Standards for the Control of Health in Contract Shipyards of

Maritime Commission and Navy” (Minimum Standards). The latter

provides detailed government information regarding exposure to

asbestos.

For example, the Minimum Standards has a section on the

recommended respiratory protective equipment for shipyards, which

advises that, in order to provide protection from asbestos dust, an

airline respirator and dust respirator are needed. Moreover, a

section entitled “A Guide for Prevention of Industrial Disease in

Shipyards” lists asbestosis as one of the seven common types of

disease. The document states that asbestosis is associated with

the tasks of handling, sawing, cutting, molding, and welding rod

salvage. In that regard, in order for those tasks to be performed

safely, segregation of dusty work, special ventilation, the wearing

of respirators, and periodic medical examinations were recommended.

The Minimum Standards also includes detailed information

regarding ventilation standards within shipyards. In sum, it more

than reveals an awareness by the Government of the hazards of

asbestos.

As discussed, the government contractor defense requires,

inter alia, that the contractor inform the Government of any

dangers in the use of equipment that are known to the contractor,

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but not known to the Government. Boyle, 487 U.S. at 512. The

evidence presented by Todd establishes that, during the World War

II time period, the Government knew of the dangers of asbestos. At

the very least, such evidence establishes a “colorable” claim to

the government contractor defense, sufficient for the second prong

of the three prong test for § 1442(a)(1) removal.

B.

As discussed, the third — and only other contested —

requirement for Todd’s § 1442(a)(1) removal is to demonstrate a

causal nexus between the claims asserted in this action by the

Appellants (to include Clements’ exposure to asbestos) and the acts

performed by Todd under color of federal office. Mesa, 489 U.S. at

131-32 (citing Maryland v. Soper, 270 U.S. 9, 33 (1926)).

Appellants maintain that Todd failed to satisfy this third element,

by asserting, erroneously, that Todd is required to prove that it

used asbestos at the direction of government officials. Along this

line, Appellants contend that Todd failed to produce evidence that

direct federal orders or exact specifications called for its use.

In determining what level of government direction is required

to satisfy the requisite causal nexus, we agree, of course, with

the district court that “[t]he mere fact that a corporation

participates in a regulated industry is insufficient to support

removal, absent a showing that the particular conduct is closely

linked to detailed and specific regulations.” Williams v. Todd

Shipyards Corp, No. H-95-4592, slip op. at 8 (S.D. Tex. April 2,

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1996) (citing Bakalis v. Crossland Sav. Bank, 781 F. Supp. 140,

144-45 (E.D.N.Y. 1991)).

For example, our court has found § 1442(a)(1) removal proper

when an action was filed against a private bank serving military

installations, where the bank operated only through powers

enumerated in Treasury Department letters and filed monthly reports

with that department. State of Tex. ex rel. Falkner v. National

Bank of Commerce, 290 F.2d 229 (5th Cir.), cert. denied 368 U.S.

832 (1961). As another example, we upheld such removal in Noble v.

Employers Ins. of Wausa, 555 F.2d 1257 (5th Cir. 1977), where suit

was brought by a VA hospital patient against the insurer of a

surgeon employed by the VA. Our court found that the surgeon was

a person acting under a federal officer, because he acted under the

immediate supervision of the Administration of Veteran Affairs,

which evaluated his performance and determined his working

conditions. Id. at 1258-59.

In sum, our decisions indicate that detailed supervision

and/or direction by a federal official or authority is sufficient

to satisfy the causal nexus prong. Accord Guillory v. Ree’s

Contract Service, Inc., 872 F. Supp. 344, 346 (S.D. Miss. 1994)

(whether “defendant was ‘acting under’ a federal officer depends on

the ‘level of official control’, ... [specifically] whether the

defendant acted sufficiently under the direction of a federal

officer in the performance of the acts that form the basis of the

suit.”); Fung v. Abex Corp., 816 F. Supp. 569, 572 (N.D. Cal. 1992)

(“control requirement can be satisfied by strong government

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intervention and the threat that a defendant will be sued in state

court ‘based upon actions taken pursuant to federal direction’.”).

In regard to the requisite causal nexus, Todd stated in its

removal notice:

Todd, within the relevant times asserted
either (a) operated facilities under
directives from United States Government
officials, (b) built and/or repaired Navy
and/or Governmental vessels under design and
specification criteria established by a
federal officer of the United States or an
agency thereof, or person acting under him,
(3) performed government work under the
supervision of a federal officer of the United
States or an agency thereof, or person acting
under him, (4) operated under the supervision
of a federal officer of the United States or
an agency thereof, or person acting under him
(5) performed work on government owned and
operated property during all or part of the
relevant times, and (6) may have used asbestos
insulation because it was the only
commercially available insulation material
which could be used to accomplish the process
which was required by the federal officer.
Under such circumstances, Todd ... [was] under
the supervision of a federal officer under
Section 1442(a).

(Emphasis added.)

And, as noted, in responding to the remand motion, Todd

presented, inter alia, the affidavit of a Todd employee from 1939

to 1983, concerning the Government’s detailed supervision and

direction:

Todd performed the repairs according to
specifications issued or approved by the Navy
and/or Maritime Commission. The Navy and/or
Maritime Commission inspectors were actually
onboard the vessels while work was being done.
The inspectors closely monitored and reviewed
Todd’s work to ensure that the specifications
were followed and that the work was done to
their satisfaction. The inspectors had the

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 power to change the way the work was done and
to require it to be re-done. When a vessel
was completed, the Navy and/or Maritime
Commission conducted dock and sea trials to
ensure that the work was done in conformity
with specifications and to approve the results
of the repair or refitting.

It is evident that, during World War II, the Government,

through the United States Maritime Commission and the United States

Navy, specifically controlled and directed Todd’s work, including

the use of asbestos. As discussed supra, it supervised Todd’s

performance at all relevant times and required Todd to construct

and repair the vessels in accordance with contract specifications.

Moreover, Navy and/or Maritime Commission inspectors were onboard

the vessels while work was being done and had the power to change

the manner in which it was performed. The Government also

performed sea and dock trials to ensure that the vessels were

completed according to the specifications.

None of the evidence presented by Todd states that the

Government “directed” Todd to use asbestos. Presumably, such a

directive would have been in the Specifications for Ship

Conversion; but, Todd filed only the index to the document, which

makes no mention of asbestos use. On the other hand, and as

discussed, the Government gave detailed directions regarding the

vessels and was more than well-aware of the dangers from asbestos

use. In any event, to satisfy the causal nexus requirement, Todd

is not required to produce evidence that the Government directed it

to use asbestos. As shown, it is enough instead that the evidence

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shows comprehensive and detailed direction and control by the

Government.

Again, at the removal stage, Todd is not required to establish

success on the merits. In other words, the removal proceeding is

not a merits proceeding on whether Todd was directed by the

Government to use asbestos. Instead, again, Todd is only required

to show a causal connection between Appellants’ claims concerning

asbestos exposure and Todd’s performance as a federal contractor.

Needless to say, it has more than done so. In short, Todd has

satisfied the causal nexus portion of the three prong test for §

1442(a)(1) removal.

III.

For the foregoing reasons, the judgment is

AFFIRMED.

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DENNIS, Circuit Judge, dissenting,

I respectfully dissent.

Federal jurisdiction to permit removal of the present case

from state court under 28 U.S.C. § 1442(a)(1) has not been

established. Todd did not (1) allege a colorable federal defense

or (2) demonstrate that it was acting under the direction of a

federal officer when it engaged in the conduct that gave rise to

plaintiff’s state law cause of action.

1.

Removal of a state action by a federal officer or a person

acting under a federal officer pursuant to 28 U.S.C. § 1442 (a)(1)

“must be predicated on the allegation of a colorable defense.”

Mesa v. California, 489 U.S. 121, 129 (1989). Assertion of a

colorable federal defense is more than a procedural requirement for

removal; it is the very source of the court’s constitutional

jurisdiction over the claim. “[I]t is the raising of [the

colorable federal defense] in the officer’s removal petition that

constitutes the federal law under which the action against the

federal officer arises for Art. III purposes.” Id. at 136. The

majority and the district court mistakenly found that Todd had

alleged a colorable Government contractor defense.

The Supreme Court plainly stated that the Government

contractor defense “shields contractors from tort liability for

products manufactured for the Government in accordance with

Government specifications, if the contractor warned the United

States about any hazards known to the contractor but not to the

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Government.” Hercules Inc. v. United States, 516 U.S. 417, 422

(1996)(citing Boyle v. United Technologies Corp., 487 U.S. 500, 512

(1988)). The plaintiffs’ state law action against Todd, however,

falls outside the scope of that federal defense because it is based

not on liability for products manufactured by Todd for the

government but upon Todd’s alleged gross negligence in not

protecting its own employee from the hazards of products

manufactured and supplied to Todd by third persons. Todd’s

potential federal Government contractor defense against liability

to hypothetical plaintiffs who might claim to have been harmed by

products manufactured by Todd for the government is plainly

inapplicable and irrelevant to, and therefore not a colorable

defense against, the plaintiffs’ gross negligence action against

Todd.

Moreover, there is no basis for extending the Government

contractor defense to cover the present case. The narrow

constitutional basis for judicial formulation of a Government

contractor defense against liability for product design defects

recognized in Boyle v. United Technologies Corp., supra, provides

no support for a judge-made rule immunizing contractors from

liability for their grossly negligent acts or omissions in cases

such as the one presented here.

The Supreme Court in Erie R. Co. V. Tompkins, 304 U.S. 64, 78

(1938) held that: “Except in matters governed by the Federal

Constitution or by Acts of Congress, the law to be applied in any

case is the law of the State.” In pronouncing that “[t]here is no

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federal general common law,” id., the Erie Court rejected the

notion that the grant of diversity jurisdiction to federal courts

is itself authority to fashion rules of substantive law.

Accordingly, “absent some congressional authorization to formulate

substantive rules of decision, federal common law exists only in

narrow areas [of uniquely federal interests].” Texas Indust., Inc.

V. Radcliff Materials, Inc., 451 U.S. 630, 640, 641

(1981)(footnotes omitted).

The Supreme Court in Boyle v. United Technologies Corp.,

supra, recognized a new category of “uniquely federal interests,”

i.e., the Government’s interest in the procurement of military

equipment as affected by product design claims by third persons

against government contractors. The new category was a synthesis

drawn from two pre-existing categories, viz., the interest in

administering the obligations to and rights of the United States

under its contracts and the interest in regulating the civil

liability of federal officials for actions taken in the course of

their duty.

In Boyle, however, the Court admonished: “That the procurement

of equipment by the United States is an area of uniquely federal

interest [] merely establishes a necessary, not a sufficient,

condition for the displacement of state law. Displacement will

occur only where . . . a ‘significant conflict’ exists between an

identifiable ‘federal policy or interest and the [operation] of

state law,’ or the application of state law would ‘frustrate

specific objectives’ of federal legislation[.]” Boyle, 487 U.S. at

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507 (footnote and citations omitted). The Court indicated that if

the state law duty sought to be imposed upon the person contracting

with the Government was either identical to or not contrary to the

duty imposed by the Government contract, so that “[t]he contractor

could comply with both its contractual obligations and the state-

prescribed duty of care,” state law would not generally be pre-

empted. Id. at 509. On the other hand, in a situation such as

that in the Boyle case itself, in which “the state-imposed duty of

care . . . is precisely contrary to the duty imposed by the

government contract” there can be, but not always is, a

“‘significant conflict’ between the state law and a federal policy

or interest.” Id.

Ultimately, the Court decided that a “significant conflict”

between federal interests and state law in the context of

Government procurement can be identified and adjusted by the

discretionary function exception to the Federal Tort Claims Act

which excludes “[a]ny claim . . . based upon the exercise or

performance or the failure to exercise or perform a discretionary

function or duty on the part of a federal agency or an employee of

the Government, whether or not the discretion involved be abused,”

28 U.S.C. § 2680(a). Applying this rule, the Court concluded that

the selection of the appropriate design for military equipment to

be used by the armed forces is a discretionary function, so that

state law which holds Government contractors liable for design

defects in military equipment does in some circumstances present a

“significant conflict” with federal policy and must be displaced.

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In its stead, the Court adopted a federal common law rule of

decision which had been formulated by the Fourth and Ninth

Circuits: “Liability for design defects in military equipment

cannot be imposed, pursuant to state law, 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.

The claims to which Todd seeks to assert the federal

Government contractor defense are state law claims for acts of

gross negligence allegedly committed by Todd which caused the

plaintiffs to sustain asbestos-related injuries while working at

the Todd Shipyard. Specifically, the plaintiffs’ complaint alleges

that their employer, Todd Shipyards, failed to take adequate

precautions necessary to maintain a safe workplace or to warn its

employees of or to protect them from the hazards of exposure to

asbestos products manufactured and supplied to Todd Shipyard by

third persons.

Under the principles set forth by the Supreme Court in

Hercules and Boyle, Todd failed to allege a federal Government

contractor defense that is colorable, i.e., plausible or

superficially reasonable. The Government contractor defense

shields contractors from tort liability for products manufactured

for the Government in accordance with Government specifications, if

the contractor warned the Government of hazards known to the

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contractor but not to the Government. Hercules, 516 U.S. at 422.

The Government contractor defense is not relevant, applicable,

plausible, or colorable in the present case because the plaintiffs

seek to hold Todd liable only for its grossly negligent employee

management conduct, not for products manufactured by Todd for the

Government. Moreover, in the present case, Todd failed to allege

or demonstrate that a “significant conflict” exists with federal

policy. Todd did not allege any facts demonstrating that it could

not comply with both its contractual obligations and the state

prescribed duty of care to avoid acts or omissions of gross

negligence in the management of its employees. Consequently, the

present case clearly does not involve the “significant conflict”

that occurs when the operation of state law interferes with or

threatens the Government’s discretionary function in “the selection

of the appropriate design for military equipment.” Boyle, 487 U.S.

at 511. Because no significant conflict exists, there is no

justification for a displacement of state law, and the federal

common law rule known as the Government contractor defense is

clearly not applicable, plausible, or colorable.

2.

I also disagree with the majority’s conclusion that Todd

qualifies as a person “acting under” an officer of the United

States.

Section 1442(a)(1) permits removal only for a person acting

under a federal officer for acts under color of such office. As

the majority notes, the Supreme Court has interpreted this to

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require a showing of some causal nexus between what the defendant

has done under official authority and the suit against the

defendant. Maryland v. Soper, 270 U.S. 9, 33 (1926). In other

words, the removing party must establish that it is being sued as

a result of the acts it performed under federal control.

Todd is being sued for gross negligence and the claim is

limited to failure to take adequate precautions in the workplace

and failure to warn its employees of the hazards of asbestos.

While Todd presented some evidence that shows that the government

supervised and monitored the construction of its ships -- including

evidence that the government provided design specifications,

monitored product development, and tested the product --, Todd’s

evidence does not establish that the government exercised “detailed

supervision and/or direction” over the working conditions at Todd

Shipyard. The only evidence relating to workplace safety is a copy

of government specifications setting out the “minimum standards”

for on-site medical services, including a discussion about

asbestos, and for safety supplies for employees working with

hazardous materials, including asbestos. This evidence does not

establish that the government prevented Todd from adopting more

protective standards or that the government’s degree of control was

such that it, in effect, took over workplace safety. For these

reasons I believe that Todd fails to demonstrate that it was acting

under the direction of a federal officer when it engaged in the

conduct that gave rise to the plaintiffs’ cause of action.

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