PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
JOHN PALMER; STACEY PALMER,
Plaintiffs-Appellees,
and
UNITED STATES DEPARTMENT OF
AGRICULTURE, Farm Service Agency,
Third Party Defendant-
Appellee,
v. No. 06-1151
CITY NATIONAL BANK, of West
Virginia,
Defendant-Appellant,
and
STUART KAUFMANN; BANK ONE,
N.A.,
Defendants.
Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Robert C. Chambers, District Judge.
(2:05-cv-00458)
Argued: May 23, 2007
Decided: August 16, 2007
Before NIEMEYER and GREGORY, Circuit Judges, and
David C. NORTON, United States District Judge for the
District of South Carolina, sitting by designation.
2 PALMER v. CITY NATIONAL BANK
Affirmed by published opinion. Judge Gregory wrote the opinion, in
which Judge Niemeyer and Judge Norton joined.
COUNSEL
ARGUED: Ancil Glenn Ramey, STEPTOE & JOHNSON, Charles-
ton, West Virginia, for Appellant. Isaac J. Lidsky, Appellate Staff,
Civil Division, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Appellees. ON BRIEF: Scott E. Johnson,
STEPTOE & JOHNSON, Charleston, West Virginia, for Appellant.
Peter D. Keisler, Assistant Attorney General, Gary Call, United States
Attorney, Michael S. Raab, Appellate Staff, Civil Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellees.
OPINION
GREGORY, Circuit Judge:
The doctrine of derivative jurisdiction requires that a federal
court’s jurisdiction over a removed case mirror the jurisdiction that
the state court had over the action prior to removal. In this appeal, the
district court applied the doctrine and dismissed a removed third-party
claim against federal agency defendants because the state court did
not possess jurisdiction over those defendants. Derivative jurisdiction
has been frequently criticized and Congress has eliminated the doc-
trine for cases removed under 28 U.S.C. § 1441, the general removal
statute. This abrogation, however, did not extend to cases removed
under other provisions. Thus, our precedent, in accord with the statu-
tory removal scheme, dictates the application of the derivative-
jurisdiction doctrine in cases removed under the federal-officer
removal statute, 28 U.S.C. § 1442. No authority exists for creating an
exception to the doctrine that would apply in this case. Furthermore,
application of derivative jurisdiction in this case does not violate the
Equal Protection or Due Process Clauses of the Constitution. Accord-
ingly, we affirm the district court’s dismissal of the third-party claim.
PALMER v. CITY NATIONAL BANK 3
I.
The facts of this appeal are straightforward. City National Bank of
West Virginia issued a series of three loans to John and Stacey
Palmer. City National alleges that the loans were made in reliance
upon the guarantee of the Farm Service Agency ("FSA") of the U.S.
Department of Agriculture ("USDA"). After City National issued the
loans, the Palmers became delinquent with their payments, and the
FSA did not make payment on the loans. City National then fore-
closed on the Palmers’ farm. Thereafter, the Palmers brought suit in
the Circuit Court of Kanawha County, West Virginia, against City
National, alleging, inter alia, fraud and breach of contract. City
National moved for leave to file a third-party complaint against the
FSA and USDA (the "federal defendants"). The motion was granted,
and City National served a third-party complaint upon the federal
defendants, alleging that the FSA failed to honor the loan guarantees
and seeking indemnity and contribution.
Pursuant to 28 U.S.C. § 1442(a)(1) (2000), the federal defendants
filed a notice of removal, based on their status as federal agencies.
After removal to the United States District Court for the Southern
District of West Virginia, the federal defendants filed a motion to dis-
miss the third-party complaint pursuant to Federal Rule of Civil Pro-
cedure 12(b)(1) and to remand the remaining claims to state court.
The federal defendants argued that in cases removed under
§ 1442(a)(1) the doctrine of derivative jurisdiction applied and the
district court’s jurisdiction was identical to the state court’s jurisdic-
tion prior to removal. Because the United States had not waived its
sovereign immunity to contract and tort suits in state court, the state
court lacked jurisdiction over the federal defendants. Thus, the federal
defendants argued, the district court also lacked jurisdiction. Relying
on the derivative-jurisdiction doctrine, the district granted the motion
to dismiss, holding that the state court did not have jurisdiction over
the third-party claim and thus the district court lacked jurisdiction
over the claim as well. The district court remanded the remaining
claims. This appeal followed.
II.
Whether at the suggestion of the parties or otherwise, this Court
has an obligation to verify the existence of appellate jurisdiction
4 PALMER v. CITY NATIONAL BANK
before considering the merits of an appeal. See Hyman v. City of Gas-
tonia, 466 F.3d 284, 286-87 (4th Cir. 2006). 28 U.S.C. § 1447(d) pro-
hibits this Court from exercising appellate jurisdiction over an order
remanding a removed case to state court for lack of subject-matter
jurisdiction. See 28 U.S.C. § 1447(c), (d); Thermtron Prods., Inc. v.
Hermansdorfer, 423 U.S. 336, 346 (1976), overruled on other
grounds by Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 714-15
(1996). In this case, because both the stated reason and the only plau-
sible legal explanation for the remand order was the district court’s
lack of subject-matter jurisdiction over the case following the dis-
missal of the federal defendants, the remand was made pursuant to 28
U.S.C. § 1447(c). See Powerex Corp. v. Reliant Energy Servs., Inc.,
551 U.S. __, __, 127 S. Ct. 2411, 2417-18 (2007). As such, this case
falls within the ambit of the § 1447(d) bar on appellate review. "Sev-
eral cases, however, provide for limited exceptions to the reach of
§ 1447(d)." Nordan v. Blackwater Sec. Consulting, LLC (In re Black-
water), 460 F.3d 576, 582 (4th Cir. 2006). The exception fashioned
by City of Waco v. U.S. Fidelity & Guaranty Co., 293 U.S. 140
(1934), allows for limited review of collateral issues, even if the
remand order itself is insulated from review under § 1447(d). See,
e.g., In re Blackwater, 460 F.3d at 586.
In Waco, a third-party defendant removed a state case on the
grounds of diversity. 293 U.S. at 141. Following removal, the district
court determined that the third-party defendant had not been
impleaded properly, and dismissed the third-party claim. Id. at 141-
42. The dismissal destroyed diversity jurisdiction and, accordingly,
the district court remanded the remaining claims to state court. Id. at
143. Viewing the district court’s decree as embodying three separate
orders, the Supreme Court held that the City of Waco could appeal
from the order dismissing the third-party claim. Id. The Court noted
that the remand itself could not be appealed, but that "in logic and in
fact the decree of dismissal preceded that of remand and was made
by the District Court while it had control of the cause." Id. Further-
more, if the dismissal were not appealable, it would be conclusive
upon the City of Waco. Id. This Court restricts the applicability of the
Waco exception to purportedly reviewable orders that (1) have a pre-
clusive effect upon the parties in subsequent proceedings and (2) are
severable, both logically and factually, from the remand order itself.
In re Blackwater, 460 F.3d at 586.
PALMER v. CITY NATIONAL BANK 5
After oral argument in this case, the Supreme Court issued its opin-
ion in Powerex, 551 U.S. ___, 127 S. Ct. 2411, clarifying the scope
of the Waco exception. Accordingly, we must consider Powerex to
decide whether we continue to possess appellate jurisdiction in this
matter before considering the merits of City National’s appeal. Cf.
Hyman, 466 F.3d at 286-87 (concluding after oral argument that court
lacked appellate jurisdiction).
Powerex concerned a suit by various plaintiffs in state court against
certain energy companies, alleging that the companies conspired to
fix prices in violation of California law. See 127 S. Ct. at 2414. In
turn, the energy defendants filed cross-claims for indemnity against,
among others, two federal government agencies, a Canadian govern-
mental entity (BC Hydro), and Powerex, a wholly owned subsidiary
of BC Hydro. Id. The cross-defendants removed to federal court, with
the federal agencies relying on § 1442(a) and BC Hydro and Powerex
relying on § 1441(d) and their status as foreign states under the For-
eign Sovereign Immunities Act of 1976 ("FSIA"), 28 U.S.C.
§ 1603(b)(2). Id.
The plaintiffs moved to remand the case to state court, arguing that
Powerex was not a foreign state and that the cross-claims against the
U.S. agencies and BC Hydro were barred by sovereign immunity. Id.
The district court concluded that (1) the federal agencies were
immune from suit in state court; (2) BC Hydro enjoyed sovereign
immunity under the FSIA; and (3) Powerex did not qualify as a for-
eign state under the FSIA. Id. at 2414-15. The district court then
remanded the entire case to state court. Id. at 2415. The federal agen-
cies and Powerex appealed. The former argued that the district court
should have dismissed them outright because of sovereign immunity.
Powerex argued that it was a foreign state under the FSIA and thus
entitled to remove. The plaintiffs argued that § 1447(d) barred both
appeals. The Ninth Circuit rejected the invocation of § 1447(d), con-
cluding that the provision did not bar it from reaching issues of law
decided by the district court prior to remand. Id.
After concluding that § 1447(d) applies to remands for lack of
subject-matter jurisdiction even where the removal itself was proper,
and that the remand of the district court was based on a lack of
subject-matter jurisdiction, the Supreme Court noted that the Ninth
6 PALMER v. CITY NATIONAL BANK
Circuit relied upon the Waco exception in rejecting the application of
§ 1447(d). Id. at 2419. The Court held that Waco "does not permit an
appeal when there is no order separate from the unreviewable remand
order." Id. The Court continued, noting that Powerex "can point to no
District Court order, separate from the remand, to which it objects and
to which the issue of its foreign sovereign status is material." Id. In
conclusion, Powerex’s "invocation of Waco amounts to a request for
one of two impermissible outcomes: an advisory opinion as to its
FSIA status that will not affect any order of the District Court, or a
reversal of the remand order." Id. After concluding that no other
exception to § 1447(d) existed, the Court vacated the relevant portion
of the Ninth Circuit’s judgment and remanded with instructions to
dismiss for want of jurisdiction. Id. at 2421.
Our most recent discussion of the Waco doctrine made clear that
"the purportedly reviewable order [must] have a conclusive effect
upon the parties’ substantive rights." In re Blackwater, 460 F.3d at
586. We require that the challenged order have a preclusive effect in
subsequent proceedings to satisfy the conclusiveness requirement. Id.
In addition,"the reviewable decision [must] be able to be ‘disaggre-
gated’ from the remand order itself." Id. Thus, "logical and factual
severability, along with conclusiveness, are central requirements of
Waco’s exception to § 1447." Id.
The requirements set forth in In re Blackwater governing the appli-
cability of the Waco exception conform to Powerex’s recent pro-
nouncement. Both requirements ensure that the appealed order is a
truly separate order from the remand order and that any action taken
by this Court on appeal does not affect the remand order. The conclu-
siveness requirement guarantees that any purportedly appealable deci-
sion is a binding decision on the merits, and not a mere finding of the
district court that may be relitigated in the state court upon remand.
See, e.g., id. at 590 ("[T]he district court’s finding that complete pre-
emption did not create federal removal jurisdiction will have no pre-
clusive effect on a subsequent state-court defense of federal
preemption."). Similarly, by requiring logical and factual severability,
the disaggregation requirement mandates that any purportedly review-
able decision made by the district court was actually prior to the
remand order and was a legally discrete conclusion. The severability
requirement ensures that the appealable decision was truly distinct
PALMER v. CITY NATIONAL BANK 7
from the remand decision and not "merely a subsidiary legal step[ ]
on the way to [the district court’s] determination that the case was not
properly removed." Nutter v. Monongahela Power Co., 4 F.3d 319,
322 (4th Cir. 1993) (quotation marks omitted). If a decision of the dis-
trict court meets both requirements of In re Blackwater, the decision
is truly a separate order from that of the remand and thus reviewable
under our precedent and Powerex.
The conclusion that the In re Blackwater requirements satisfy
Powerex is supported by Justice Scalia’s discussion of the Waco
exception in his dissent in Osborn v. Haley, 549 U.S. ___, 127 S. Ct.
881, 909 (2007). Osborn concerned the question of whether § 1447(d)
barred appeal of a district court’s refusal to substitute the United
States as a defendant in a removed action brought against a federal
employee under the Westfall Act, 28 U.S.C. § 2679, resulting in a
remand of the action to state court. 127 S. Ct. at 893-96. The majority
viewed the Westfall Act’s certification and substitution regime as
directly conflicting with § 1447(d), and thus framed the issue as
choosing between two "forum-selecting rule[s]." Id. at 896. Because
the certification and substitution process was "[t]ailor-made for West-
fall Act cases," the majority concluded that Congress intended it to
take precedence over § 1447(d). Id.
In dissent, Justice Scalia did not view the Westfall Act as conflict-
ing with § 1447(d) and analyzed whether the district court’s refusal
to substitute the United States as a defendant fell within the Waco
exception to § 1447(d). See id. at 908-09 (Scalia, J., dissenting). Jus-
tice Scalia concluded:
[T]here is a crucial distinction between [Waco] and
[Osborn]: In Waco, reversal of the dismissal would not have
subverted the remand. There was no question that the suit
would proceed in state court regardless of whether the
diverse party was rightfully or wrongfully dismissed.
Nowhere did the Waco Court so much as hint that the Dis-
trict Court might need to reexamine its remand order; to the
contrary, it was clear that the remand would occur, no mat-
ter what . . . . In other words, the remand order and the dis-
missal order were truly "separate orders"; we could review
8 PALMER v. CITY NATIONAL BANK
—even reverse—the dismissal order without affecting the
remand or its impact on the case.
Id. (citation omitted) (quoting Waco, 293 U.S. at 142). Justice Scalia
noted that if the appeals court substituted the United States as defen-
dant, but did not vacate the remand order as per § 1447(d), the case
would return to state court styled as Osborn v. United States and
would be immediately dismissed because federal district courts have
exclusive jurisdiction over FTCA actions. Id. Thus, Justice Scalia
concluded, "unlike in Waco, the District Court’s decision on a prelim-
inary matter—here, Westfall Act certification—is inextricably inter-
twined with the remand order. Since that is so, there is no jurisdiction
to review either determination." Id. at 909-10.
The conclusiveness and disaggregation requirements of In re
Blackwater accord with Justice Scalia’s persuasive discussion of
when a purportedly reviewable order is truly separate from a remand
order. A district court decision that has a preclusive effect on the par-
ties and that is logically and factually separable from the remand
order is a decision that can be reviewed by this Court without affect-
ing the remand order. Reversal of an independently binding decision,
separated from the remand order logically and factually, would not
undermine the remand order itself. In sum, the In re Blackwater
requirements are sufficient to ensure that this Court reviews only
decisions that are separate orders from unreviewable remand orders
in keeping with the holding of Powerex.
Thus, in order to determine whether we have appellate jurisdiction
over City National’s appeal, we must decide whether the district
court’s application of derivative jurisdiction and its subsequent dis-
missal of the United States meet the In re Blackwater requirements.
The first requirement is that "the purportedly reviewable order have
a conclusive effect upon the parties’ substantive rights." In re Black-
water, 460 F.3d at 586. "We have interpreted this conclusiveness
requirement to mean that the challenged order must have a preclusive
effect in subsequent proceedings." Id. In this case, City National chal-
lenges an order dismissing the federal defendants from the case
entirely. The dismissal cannot be revisited by the state court on
remand, because the federal defendants are no longer parties to the
action and were not subject to the remand order. Cf. Nutter, 4 F.3d
PALMER v. CITY NATIONAL BANK 9
at 322 (concluding that district court’s jurisdictional findings incident
to remand could be relitigated in state court and thus the findings
were not conclusive upon the parties). As in Waco, if the dismissal
is not reversed, it is "conclusive upon" City National. 293 U.S. at 143.
In addition to conclusiveness, In re Blackwater requires that a pur-
portedly reviewable decision be logically and factually severable from
the remand order. 460 F.3d at 586. This requirement is satisfied in the
instant case. To begin, the decision on derivative jurisdiction neces-
sarily preceded the remand, because the dismissal of the federal
defendants was the very action that deprived the court of jurisdiction
and necessitated the remand. See, e.g., Beauclerc Lakes Condo. Ass’n
v. City of Jacksonville, 115 F.3d 934, 935 (11th Cir. 1997) ("Where
. . . the remand is a consequence of the dismissal of claims creating
federal jurisdiction, that dismissal is reviewable on appeal."). Further-
more, the dismissal is logically separable from the remand order. The
issue of the application of derivative jurisdiction is wholly separate
from the reason for the remand. Although the remand was necessi-
tated by the dismissal that resulted from the application of the
derivative-jurisdiction doctrine, the legal basis of the remand—lack of
subject-matter jurisdiction—did not depend on the district court’s
interpretation of derivative jurisdiction. In other words, the applica-
tion of derivative jurisdiction was not a subsidiary legal step to the
district court’s determination that the case had to be remanded. Cf. In
re Blackwater, 460 F.3d at 590; Nutter, 4 F.3d at 321. The federal
defendants properly removed the case under § 1442(a)(1) because
they were federal officers. Only after the district court dismissed the
claims against the federal defendants did it analyze whether a remand
was necessitated because of a lack of jurisdiction. Accordingly, the
decision from which City National appeals was legally distinct from
the remand order.
Were we to reverse the dismissal of the federal defendants, the
remand order would not be "subverted." The remand order did not
include the federal defendants, and the state-court proceedings
between the Palmers (as plaintiffs) and City National (as defendant)
will proceed regardless of any action we take on this appeal. Thus, as
in Waco, the suit will proceed in state court regardless of whether the
federal defendants were correctly dismissed. See Osborn, 127 S. Ct.
at 909 (Scalia, J., dissenting). By contrast, in Powerex, Powerex was
10 PALMER v. CITY NATIONAL BANK
a party to the remand order. If the district court’s decision on
Powerex’s foreign sovereign status were reversed, any appellate court
action regarding Powerex would, by necessity, affect the remand
order. If the appellate court chose to reverse the district court, but
could take no action, then its decision on Powerex’s foreign sovereign
status would have been "an advisory opinion as to [Powerex’s] FSIA
status." Powerex, 127 S. Ct. at 2419.
Thus, the requirements of In re Blackwater are satisfied: City
National appeals from a ruling of the district court that is conclusive
as well as logically and factually severable from the remand order.
Because the issue of the district court’s application of derivative juris-
diction is a reviewable order wholly separate from its remand order,
we have appellate jurisdiction to consider City National’s appeal
under the Waco exception to § 1447(d).
III.
We review de novo a dismissal for lack of subject-matter jurisdic-
tion. Welch v. United States, 409 F.3d 646, 650 (4th Cir. 2005).
A.
The derivative-jurisdiction doctrine arises from the theory that a
federal court’s jurisdiction over a removed case derives from the
jurisdiction of the state court from which the case originated. As the
Supreme Court explained in Lambert Run Coal Co. v. Baltimore &
Ohio Railroad Co., 258 U.S. 377, 382 (1922), "[t]he jurisdiction of
the federal court on removal is, in a limited sense, a derivative juris-
diction. If the state court lacks jurisdiction of the subject-matter or of
the parties, the federal court acquires none, although it might in a like
suit originally brought there have had jurisdiction." The application
of the doctrine often resulted in the dismissal of removed actions that
were within the exclusive jurisdiction of the federal courts, because
the state court where the action was filed lacked jurisdiction. See, e.g.,
id. (dismissing removed action based on violation of Interstate Com-
merce Commission rule because federal courts have exclusive juris-
diction over such suits); Emrich v. Touche Ross & Co., 846 F.2d 1190
(9th Cir. 1988) (dismissing portion of removed case brought under
Securities Act of 1934 because federal courts have exclusive jurisdic-
PALMER v. CITY NATIONAL BANK 11
tion over such suits). Such results were inefficient and "the subject of
a great deal of deserved criticism." 14B Charles Allan Wright, Arthur
R. Miller, & Edward H. Cooper, Federal Practice & Procedure:
Jurisdiction 3d § 3722, at 481, 487 (3d ed. 1998); see, e.g., Washing-
ton v. Am. League of Prof’l Baseball Clubs, 460 F.2d 654, 658-59
(9th Cir. 1972) (characterizing the derivative-jurisdiction doctrine as
a "kind of legal tour de force that most laymen cannot understand,
particularly in a case where the federal court not only has subject mat-
ter jurisdiction, but has exclusive subject matter jurisdiction"); Welsh
v. Cunard Lines, Ltd., 595 F. Supp. 844, 846 (D. Ariz. 1984)
("‘[D]erivative jurisdiction’ is an archaic concept that impedes justice.
It is out of tune with the federal rules. Courts and commentators
agree, and urge that, while derivative jurisdiction may be justified
conceptually, it leads to unfortunate results and should be aban-
doned.").
Accordingly, in 1985, Congress amended the general removal stat-
ute, 28 U.S.C. § 1441, by adding § 1441(e): "The court to which such
civil action is removed is not precluded from hearing and determining
any claim in such civil action because the State court from which such
civil action is removed did not have jurisdiction over that claim."
Judicial Improvements Act of 1985, Pub. L. No. 99-336, § 3, 100
Stat. 633, 637 (1986) (codified as amended at 28 U.S.C.A. § 1441(f)
(2007)). Following the 1985 amendment, this Court continued to
apply the doctrine for removals effectuated under sections other than
§ 1441, including § 1442. See Kasi v. Angelone, 300 F.3d 487, 504
n.6 (4th Cir. 2002) ("[A] federal court’s jurisdiction upon removal
under § 1442(a)(1) is derivative of the state court’s jurisdiction
. . . ."); United States v. Williams, 170 F.3d 431, 433 (4th Cir. 1999)
(same); Cromer, 159 F.3d at 879 (same); Boron Oil Co. v. Downie,
873 F.2d 67, 70 (4th Cir. 1989) (same); accord In re Elko County
Grand Jury, 109 F.3d 554 (9th Cir. 1997) (applying derivative-
jurisdiction doctrine in case removed under § 1442); Edwards v. U.S.
Dep’t of Justice, 43 F.3d 312 (7th Cir. 1994) (same). The Eighth Cir-
cuit, however, read the amendment as abrogating the entire doctrine,
regardless of the method of removal. See North Dakota v. Fredericks,
940 F.2d 333, 337 (8th Cir. 1991) ("[T]he policy of Congress under-
lying new § 1441(e) supports the complete abandonment of the
derivative-jurisdiction theory, even though the words of the statute
clearly do not reach this far.").
12 PALMER v. CITY NATIONAL BANK
B.
Whether the Eighth Circuit correctly interpreted the 1986 amend-
ment is academic, because in 2002 Congress again amended § 1441,
creating a new § 1441(e) and redesignating the prior § 1441(e) as
§ 1441(f) and slightly changing its language. 21st Century Depart-
ment of Justice Appropriations Authorization Act, Pub. L. No. 107-
273, § 11,020(b)(3)(A), 116 Stat. 1758, 1827 (2002). Thus, the new
§ 1441(f) reads: "The court to which a civil action is removed under
this section is not precluded from hearing and determining any claim
in such civil action because the State court from which such civil
action is removed did not have jurisdiction over that claim." Id.
(emphasis added).
Commentators speculate that the amendment was intended to
endorse the Fredericks approach and be the death knell of derivative
jurisdiction for all removals. See, e.g., 14B Charles Allan Wright,
Arthur R. Miller, & Edward H. Cooper, Federal Practice & Proce-
dure: Jurisdiction 3d § 3721, at 191 (2007 Supp.). Yet these same
commentators conclude that the amendment did not accomplish this
purpose: "[N]ew § 1441(f) limits the abrogation of the derivative
jurisdiction doctrine to cases removed under 28 U.S.C.A. § 1441." Id.
The legislative history of the 2002 amendment is "sparse," Glorvigen
v. Cirrus Design Corp., No. 06-2661, 2006 WL 3043222, at *3 (D.
Minn. Oct. 24, 2006), and the Conference Report on the amendment
does not discuss the reason for the modification to current § 1441(f),
see H.R. Conf. Rep. 107-685, reprinted in, 2002 U.S.C.C.A.N. 1120,
1151. Thus, there is no legislative history to support the view that
Congress intended to embrace Fredericks and eliminate the
derivative-jurisdiction entirely. Courts examining the amendment
have agreed with this conclusion. See, e.g., Barnaby v. Quintos, 410
F. Supp. 2d 142, 144 (S.D.N.Y. 2005) ("In amending the statute in
2002, and replacing less precise language with much more specific
language, Congress left no doubt that Section 1441(f) applies only to
removals under Section 1441 and not to removals under any other
section of the United States Code.").
Following the 1985 amendment to § 1441, this Court has applied
the derivative-jurisdiction doctrine in several cases involving removal
under § 1442. Whatever the intent of the 2002 amendment, its result
PALMER v. CITY NATIONAL BANK 13
was that § 1441(f) is more clear than former § 1441(e) in abrogating
derivative jurisdiction only with respect to removals effectuated under
§ 1441. Thus, our holdings in Kasi, Williams, and Cromer are
strengthened, rather than weakened, by the enactment of the new
§ 1441(f). Accordingly, because the plain language of § 1441(f) limits
the abrogation of derivative jurisdiction to removals under § 1441 and
because our precedent holds that the doctrine is viable for removals
under § 1442, the doctrine applies to the removal at issue in this case.
C.
City National urges that we create and apply an exception to the
derivative-jurisdiction doctrine because West Virginia law compelled
City National to implead the federal defendants or waive its claims
against them. There is no authority in this Circuit or any other that
would allow us to craft specific exceptions to the derivative-
jurisdiction doctrine based on state rules of procedure. Because the
application of the derivative jurisdiction doctrine affects a district
court’s jurisdiction over the case, case-specific exceptions are not
appropriate. In this case, the state court did not possess jurisdiction
over City’s third-party claim against the federal defendants. Accord-
ingly, the district court did not gain proper jurisdiction of the claim
upon its removal.
Fredericks is not to the contrary. Rather than creating an exception,
the Eighth Circuit abrogated the entire doctrine on the basis of its
view of the equity of the statute. See Fredericks, 940 F.2d at 337-38
(discussing doctrine of the equity of the statute and concluding that
Congress had "given [courts] more than a hint" as to its disapproval
of derivative jurisdiction, thus justifying its complete abrogation). As
explained above, we cannot reach such a result in this case because
the amendment to the removal statute since Fredericks has made it
more, rather than less, clear that the abrogation contained within
§ 1441 applies only to removals under that section.
IV.
City National raises two constitutional arguments that the applica-
tion of the derivative jurisdiction in this case violates both the Equal
Protection and Due Process Clauses. Both of these arguments fail.
14 PALMER v. CITY NATIONAL BANK
A.
In considering an equal protection challenge, "a statutory classifi-
cation that neither employs inherently suspect distinctions nor bur-
dens the exercise of a fundamental constitutional right will be upheld
if the classification is rationally related to a legitimate state interest."
Star Scientific Inc. v. Beales, 278 F.3d 339, 351 (4th Cir. 2002). If,
however, the regulation impinges on a fundamental right or contains
inherently suspect distinctions, "we exercise strict scrutiny review,
upholding the statute only if it is narrowly tailored to serve a compel-
ling state interest." Plyler v. Moore, 100 F.3d 365, 373 (4th Cir.
1996).
In this case, City National claims that application of derivative
jurisdiction in a case removed under § 1442, when the doctrine would
not be applied in a case removed under § 1441, unconstitutionally
burdens its fundamental right of access to the courts. The district
court’s application of derivative jurisdiction prevented City National
from litigating its claims against the federal defendants in the
removed action. City National remains free to bring a separate action
against the federal defendants in an appropriate forum, i.e., the Court
of Federal Claims, for its contract action, in accordance with the
Tucker Act, and a district court, for its indemnity claims, in accor-
dance with the FTCA. Thus, any fundamental right of judicial access
that City National has to bring its claims has not been infringed upon
as City National has not yet availed itself of the appropriate federal
fora for resolving its claims against the federal defendants. Cf. Lewis
v. Casey, 518 U.S. 343 (1996) (discussing actual-injury requirement
as prerequisite to suit alleging violation of fundamental right of access
to courts); McCoubrey v. Kellogg, Krebs & Moran, 7 Fed. App’x 215,
222 (4th Cir. 2001) ("The application of the statute of limitations in
a given suit, not its potential to bar a future suit, is what raises a due
process claim.").
City National argues that if it brought a subsequent suit for indem-
nity or contribution against the federal defendants in a proper forum,
any court would apply West Virginia compulsory joinder law to bar
the action. Even assuming, arguendo, that this hypothesis is correct,
the operation of a substantive rule of law to bar a suit does not violate
the right of access to a judicial forum. See Plyler, 100 F.3d at 373
PALMER v. CITY NATIONAL BANK 15
("Simply put, the Inmates have confused the right of access to the
courts with the scope of the available substantive relief."); cf. Dinh v.
Rust Int’l Corp., 974 F.2d 500, 502 (4th Cir. 1992) ("[T]here is no
federal or state constitutional right to the continued existence of com-
mon law causes of action.").
Thus, the application of the derivative-jurisdiction doctrine in this
case does not burden City National’s fundamental right to access the
courts. As such, our review proceeds under the rational-basis stan-
dard. See, e.g., Plyler, 100 F.3d at 373 (citing FCC v. Beach
Commc’ns, Inc., 508 U.S. 307, 313 (1993)). Under this standard, we
afford the challenged statute a strong presumption of validity and will
reject a challenge to the statute unless there are no reasonably con-
ceivable facts that could provide a rational basis for the classification.
Id. (citing Heller v. Doe, 509 U.S. 312, 319 (1993) and Beach, 508
U.S. at 313)). On this appeal, City has the burden of disproving the
existence of any conceivable basis that would support the abrogation
of derivative jurisdiction under § 1441, but not under § 1442. Id. (cit-
ing cases). Under rational-basis review, we "do not sit as a superlegis-
lature to judge the wisdom or desirability of legislative policy
determinations." City of New Orleans v. Dukes, 427 U.S. 297, 303
(1976) (per curiam). "Once we have determined that there exists a
plausible reason for the congressional action—and regardless of
whether that reasoning actually motivated Congress—our inquiry is
at an end." Plyler, 100 F.3d at 374.
Removal under § 1441 and removal under § 1442 serve two differ-
ent ends: "Section 1441 relates to the rights of individuals. Section
1442, although dealing with individuals, vindicates also the interests
of government itself; upon the principle that it embodies ‘may depend
the possibility of the general government’s preserving its own exis-
tence.’" Bradford v. Harding, 284 F.2d 307, 310 (2d Cir. 1960) (quot-
ing Tennessee v. Davis, 100 U.S. 257, 262 (1880)). In addition, the
sections apply in two distinct scenarios. Section 1441 is the general
removal statute and affords the defendant the right to remove a case
to federal court through invocation of that court’s original subject-
matter jurisdiction to hear the case. See § 1441(a)-(b). By contrast,
federal-officer removal provides a mechanism for federal officers to
have their federal defenses adjudicated in a federal forum. See Wil-
lingham v. Morgan, 395 U.S. 402, 407 (1969) ("[O]ne of the most
16 PALMER v. CITY NATIONAL BANK
important reasons for [federal officer] removal is to have the validity
of the defense of official immunity tried in a federal court."); Koli-
bash v. Comm. on Legal Ethics of the W. Va. Bar, 872 F.2d 571, 576-
77 (4th Cir. 1989) ("The federal officer removal statute permits a state
action to be adjudicated on the merits in a federal court ‘free from
local interests or prejudice.’" (quoting Arizona v. Manypenny, 451
U.S. 232, 241-42 (1981))). Original subject-matter jurisdiction of the
district court is not a requirement for removal under § 1442.
The distinctions between general removal and federal-officer
removal provide plausible reasons for the congressional action at
issue in this case. For example, because any case removed under
§ 1441 could have originally been brought in federal court, Congress
may have thought it irrelevant whether the state court had jurisdiction
over the action prior to removal. On the other hand, a case removed
under § 1442 may not have had original federal jurisdiction, and thus
Congress decided to retain the traditional rule that removal jurisdic-
tion is derivative of state court jurisdiction prior to removal. In addi-
tion, Congress may have viewed federal-officer removal as
guaranteeing a federal prerogative—adjudication of federal defenses
in a federal forum—in as narrow a manner as possible, allowing a
federal officer to remove, but mandating that the jurisdiction of the
federal court over the removed action derive solely from the state
court’s jurisdiction. Although the derivative-jurisdiction doctrine may
be arcane or inefficient, our inquiry is one of mere rationality.
Accordingly, we reject City National’s equal protection argument as
there is a conceivable rational basis for Congress abrogating deriva-
tive jurisdiction for removals effectuated via § 1441, but retaining the
doctrine for cases removed under § 1442.
B.
Finally, City National argues that depriving it of the right to sue the
federal defendants amounts to a deprivation of its property interests
without due process of law.
To prove a due process claim, a litigant must show that it was
deprived of a protected interest without due process of law. See, e.g.,
Elmco Props., Inc. v. Second Nat’l Fed. Sav. Ass’n, 94 F.3d 914, 920
(citing Board of Regents v. Roth, 408 U.S. 564, 571 (1972)). As dis-
PALMER v. CITY NATIONAL BANK 17
cussed above, the application of the derivative-jurisdiction doctrine in
this case does not bar City National from instituting a separate pro-
ceeding against the federal defendants in an appropriate forum. Given
this conclusion, the district court’s dismissal of City National’s third-
party complaint did not deprive it of any potential claim against the
federal defendants. Cf. id. (discussing deprivation of property interest
where statutory scheme did not allow late filing and withdrew juris-
diction over claim from all other courts). Because the district court’s
dismissal of the third-party complaint did not deprive City National
of a property interest, City National cannot state a due process viola-
tion.
V.
For the foregoing reasons, we conclude that we possess jurisdiction
over City National’s appeal, but deny that appeal because the district
court properly applied the doctrine of derivative jurisdiction in con-
cluding that it did not possess subject-matter jurisdiction over City
National’s third-party claims against the federal defendants. Accord-
ingly, we affirm the ruling of the district court.
AFFIRMED