Cabalce v. Thomas E. Blanchard & Associates, Inc.
797 F.3d 720
| 9th Cir. | 2015Background
- VSE contracted with the Treasury Executive Office for Asset Forfeiture to store and destroy fireworks seized by federal agencies; the contract labeled VSE an independent contractor, required VSE to obtain insurance, and required coordination/approval of destructions by the seizing agency.
- VSE subcontracted storage and destruction work to Donaldson Enterprises; Donaldson and VSE developed the destruction plan and obtained permits; the government reviewed/approved the plan but did not prepare it.
- While dismantling fireworks at a commercial storage unit, workers (employees of Donaldson) caused a catastrophic explosion that killed multiple people; plaintiffs (families/estate representatives) sued VSE in Hawaii state court under negligence, strict liability, and related theories.
- VSE removed the state actions to federal court under 28 U.S.C. § 1442(a)(1) (federal-officer removal), asserting it acted under federal direction and raising colorable federal defenses: government-contractor defense and derivative sovereign immunity.
- The district court dismissed VSE’s third-party FTCA claims against the United States (independent-contractor and discretionary-function exceptions) and remanded the plaintiffs’ suits to state court, finding no government control over day-to-day destruction and that VSE/Donaldson devised the plan.
- VSE appealed; the Ninth Circuit affirmed the remand, holding VSE failed to show the required causal nexus to federal control and failed to establish colorable federal defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1442 federal-officer removal applies (causal nexus) | Plaintiffs: VSE acted independently and is subject to state law tort claims | VSE: acted under federal direction/controls when storing and destroying seized fireworks | Court: No—VSE failed to prove by a preponderance that the government exercised the requisite control or supervision creating a causal nexus |
| Whether VSE has a colorable government-contractor defense (Boyle) | Plaintiffs: defense inapplicable; VSE’s work not governed by detailed government specs | VSE: compliance with federal contract/specs immunizes it from state tort liability | Court: No—Ninth Circuit precedent limits Boyle-based defense to military-equipment design contractors and VSE showed no detailed, continuous government specification/approval |
| Whether VSE is entitled to derivative sovereign immunity (Yearsley) | Plaintiffs: VSE exercised independent discretion and cannot claim derivative immunity | VSE: performed delegated governmental function and so is immune | Court: No—Yearsley requires lack of contractor discretion; record shows VSE/Donaldson devised plan and had discretion |
| Whether the district court properly applied FTCA/independent-contractor analysis in dismissing third-party claims against the U.S. | Plaintiffs/US: government delegated destruction; independent-contractor exception bars FTCA liability | VSE: government retained supervising control, so FTCA claim against U.S. is viable | Court: Agree with district court—record shows government relied on contractor expertise and did not exercise day-to-day control; independent-contractor/discretionary-function exceptions apply |
Key Cases Cited
- Watson v. Philip Morris Cos., 551 U.S. 142 (2007) (defining "acting under" a federal officer as involving subjection, guidance, or control)
- Boyle v. United Tech. Corp., 487 U.S. 500 (1988) (government-contractor defense for military-equipment design when government approved precise specifications and contractor conformed)
- Yearsley v. W.A. Ross Constr. Co., 309 U.S. 18 (1940) (derivative sovereign immunity where contractor had no discretion and acted pursuant to government authorization)
- Leite v. Crane Co., 749 F.3d 1117 (9th Cir. 2014) (federal-officer removal requires causal nexus and a colorable federal defense; defendant bears burden by preponderance)
- In re Hanford Nuclear Reservation Litig., 534 F.3d 986 (9th Cir. 2008) (derivative immunity limited when contractor had discretion in design)
- Getz v. Boeing Co., 654 F.3d 852 (9th Cir. 2011) (government-contractor defense protects contractors who comply with government specifications; government approval must involve detailed review)
- Snell v. Bell Helicopter Textron, Inc., 107 F.3d 744 (9th Cir. 1997) (noting Ninth Circuit has applied government-contractor defense in military-equipment context)
- Autery v. United States, 424 F.3d 944 (9th Cir. 2005) (district courts may weigh evidence when jurisdictional facts are disputed)