MARY RIGGS, as Personal Representative of the ESTATE OF JONATHAN NEIL UDALL, for the benefit of the ESTATE OF JONATHAN NEIL UDALL, and PHILIP AND MARLENE UDALL as Next of Kin and Natural Parents of JONATHAN NEIL UDALL, deceased, Plaintiff-Appellee, v. AIRBUS HELICOPTERS, INC., Defendant-Appellant, v. MATTHEW HECKER; DANIEL FRIEDMAN; BRENDA HALVORSON; GEOFFREY EDLUND; ELLING B. HALVORSON; JOHN BECKER; ELLING KENT HALVORSON; LON A. HALVORSON; SCOTT BOOTH; PAPILLON AIRWAYS, INC., DBA Papillon Grand Canyon Helicopters; XEBEC LLC, Defendants-Appellees.
No. 18-16396
United States Court of Appeals, Ninth Circuit
September 20, 2019
D.C. No. 2:18-cv-00912-JCM-GWF
FOR PUBLICATION
Appeal from the United States District Court for the District of Nevada
James C. Mahan, District Judge, Presiding
Argued and Submitted February 14, 2019
San Francisco, California
Filed September 20, 2019
Before: Mary M. Schroeder, Diarmuid F. O‘Scannlain, and Johnnie B. Rawlinson, Circuit Judges.
Opinion by Judge Rawlinson;
Dissent by Judge O‘Scannlain
SUMMARY*
Federal Officer Removal Statute
The panel affirmed the district court‘s order granting motions to remand to state court a case that had been removed to federal court pursuant to
Following a fatal helicopter crash, plaintiffs filed suit in Nevada state court against the owners of the helicopter and the manufacturer, Airbus Helicopters, Inc. Airbus removed the action to federal court on the basis of
Federal Aviation Administration regulations set forth standards for certification of helicopters. Pursuant to
Agreeing generally with the Seventh Circuit, and applying Watson v. Philip Morris Cos., 551 U.S. 142 (2007), the panel held that Airbus failed to meet the “acting under” requirement of
Dissenting, Judge O‘Scannlain wrote that Airbus acted under a federal agency because it undertook duties on the FAA‘s behalf, and the majority‘s contrary holding misunderstood the FAA‘s regulatory regime and misapplied Watson.
COUNSEL
Carter G. Phillips (argued), Sidley Austin LLP, Washington, D.C.; Yvette Ostolaza and Robert S. Velevis, Sidley Austin LLP, Dallas, Texas; David R. Carpenter, Sidley Austin LLP, Los Angeles, California; James J. Pisanelli
Patrick J. Kearns (argued), Wilson Elser Moskowitz Edelman & Dicker LLP, San Diego, California, for Defendants-Appellees.
Lauren L. Haertlein, General Aviation Manufacturers Association, Washington, D.C., for Amicus Curiae General Aviation Manufacturers Association.
OPINION
RAWLINSON, Circuit Judge:
Appellant-Defendant Airbus Helicopters, Inc. (AHI) appeals the district court‘s order granting motions to remand to state court. AHI contended that it properly removed this case to federal district court pursuant to
I. BACKGROUND
In February, 2018, John Udall, a resident of the United Kingdom, was killed in a helicopter crash while touring the Grand Canyon. The helicopter (Crashed Helicopter) was owned and operated by several of the Hecker Defendants1 and manufactured by AHI.
Plaintiff-Appellee Mary Riggs (Riggs) filed this action in Nevada state court against AHI and the Hecker Defendants, alleging that the Crashed Helicopter was defectively designed because the fuel tank was not crash-resistant, and could not withstand an impact of a minimal or moderate nature without bursting into flames and engulfing the passenger compartment.2
AHI removed the case to federal district court, asserting
While the motions to remand were pending before the district court, AHI moved to dismiss the lawsuit pursuant to
The district court granted Hecker and Riggs‘s motions to remand. Noting that we have not directly addressed
II. STANDARD OF REVIEW
“We review de novo a district court‘s decision to remand a removed case...” Corona-Contreras v. Gruel, 857 F.3d 1025, 1028 (9th Cir. 2017) (citation omitted).
III. DISCUSSION
Before turning to the issue before us, we first review the statutory framework that sets the stage for our decision.
Congress has charged the Federal Aviation Administration (FAA) with regulating aviation safety in the United States pursuant to the Federal Aviation Act,
After demonstrating compliance with the FARs, an aircraft owner may obtain a certificate from the FAA approving the aircraft‘s design. See
To help ameliorate the effect of the FAA‘s limited resources,
Pursuant to
The ongoing dispute in this appeal is whether AHI satisfies the “acting under” prong of
As a private party, AHI must demonstrate that it was “involved in an effort to assist, or to help carry out, the duties or tasks of the federal superior” to satisfy the “acting under” requirement of
In Watson v. Philip Morris Cos., Inc., 551 U.S. 142, 145-47 (2007), the United States Supreme Court addressed
Morris had never been delegated legal authority from a federal agency. See id. at 156.
Although we have not directly addressed removal under
noted that the actions taken by the private entity “must go beyond simple compliance with the law and help officers fulfill other basic governmental tasks.” Id. (citation and alterations omitted).
We ultimately concluded that the private insurer was “acting under” a federal officer. Not only did the OPM enter into a contract with the private insurer for a negotiated fee, the contract also authorized the insurer to pursue subrogation benefits that would otherwise be pursued by OPM. See id. at 1246-47. But for the actions of the private insurers, OPM would not be reimbursed when an employee successfully pursued a third-party for payment of healthcare expenses incurred by the employee. See id. at 1247. OPM delegated to the private insurer the authority to pursue subrogation claims on behalf of the government. See id. at 1247. Under these circumstances, we concluded that the private insurer was “acting under” a federal officer. Id. We reasoned that the pursuit of subrogation claims took the private insurer “well beyond simple compliance with the law and helped [federal] officers fulfill other basic governmental tasks. Id. (quoting Watson, 551 U.S. at 153) (alteration and internal quotation marks omitted).
We recently grappled with the “acting under” requirement of
required “export licenses from the federal government.” Id. at 1098. The two companies subsequently had a falling out over the provisions in the export licenses. See id. Consequently, Fidelitad filed an action against Insitu asserting, among other claims, that Insitu improperly delayed shipment of Fidelitad‘s order. See id. at 1097. Insitu moved for removal under
We held that in order to invoke
We focused on the fact that no federal officer directed Insitu to delay the orders. See id. at 1100. Nevertheless, Insitu maintained that it was “acting under” a federal officer because the delay was for the purpose of ensuring compliance with the International Traffic in Arms Regulation,
We explained that Watson involved allegations that a cigarette company sold cigarettes that delivered more tar and nicotine than advertised. See id. The company removed the case on the basis that it was acting under the direction of a federal officer by using a required test protocol that was “closely monitored by the federal government.” Id. We described the Supreme Court as unpersuaded by the company‘s position, noting its holding that removal was not appropriate even though “a federal agency directs, supervises, and monitor‘s a company‘s activities in considerable detail.” Id. (citation and internal quotation marks omitted). According to our reading of Watson in Fidelitad, extensive “federal regulation alone” did not suffice to meet the “acting under” requirement of
Finally, in Fidelitad we acknowledged that government contractors may “act under federal officers.” Id. (citation omitted). But, we clarified, the government did not contract with Insitu and the regulation and export licenses did not “establish the type of formal delegation that might authorize Insitu to remove the case.” Id. at 1101 (quoting Watson, 551 U.S. at 156) (alteration omitted).
The dissent seeks to minimize the persuasive power of Fidelitad by commenting that a different statutory regime was involved. See Dissenting Opinion, p. 30 n.3. However, the dissent‘s summary comment elides the fact that we were confronted with the identical issue in Fidelitad that we resolve in this case, whether the “acting under” requirement of
Our analysis in Fidelitad is generally consistent with the approach taken by the Seventh Circuit in Lu Junhong, the case relied on by the district court. Lu Junhong involved a dispute over the design of a plane that broke apart during flight while landing in San Francisco. See id. at 807. After being initially sued in state court, Boeing contended that it was entitled to removal under
The Seventh Circuit rejected Boeing‘s argument. See id. at 810. The court reasoned that “we know from [Watson] that being regulated, even when a federal agency directs, supervises, and monitors a company‘s activities in considerable detail, is not enough to make a private firm a person ‘acting under’ a federal agency.” Id. at 809 (citation and internal quotation marks omitted).
In discussing its rejection of Boeing‘s argument that it, unlike Philip Morris in Watson, possessed formal delegation from the FAA of the authority to certify compliance, the Seventh Circuit explained:
[T]his [authority] is still a power to certify compliance, not a power to design the rules for airworthiness. The FAA permits Boeing to make changes to its gear after finding that the equipment as modified meets the FAA‘s standards; it does not permit Boeing to use gear that meets Boeing‘s self-adopted criteria.
Id. at 810 (emphasis in the original).
The Seventh Circuit interpreted Watson as requiring the delegation of “rule making” authority rather than “rule compliance” certification to meet the “acting under” standard. Id. The Seventh Circuit suggested that, at a minimum, Boeing would have to be delegated “a power to issue conclusive certification of compliance.” Id. (emphasis in the original). Because Boeing‘s self-certification was not binding on either the FAA or a reviewing court, the Seventh Circuit determined that Boeing did not come within the “acting under” provision of
The district court in this case adopted the Seventh Circuit‘s “rule making-compliance” distinction in finding that AHI was not “acting under” a FAA delegation. Although we cited Lu Junhong with approval in Fidelitad, 904 F.3d at 1100, we notably did not incorporate the Seventh Circuit‘s rule-making-rule compliance dichotomy. Rather, we referenced Lu Junhong for the proposition that compliance with the law “does not bring a private actor within the scope of the federal officer removal statute” and neither does delegation of authority “to self-certify compliance with the relevant regulations.” Id. (quoting Lu Junhong, 729 F.3d at 808-10).
We are persuaded by the consistent reasoning of Watson, Goncalves, and Fidelitad to conclude that the district court committed no error in finding that AHI was not “acting under” a federal officer by virtue of becoming an FAA-certified Designation holder with authority to issue Supplemental Certificates. AHI concedes that, as a Designation holder, it “must perform all delegated functions
AHI concedes that it cannot make design changes without approval from the FAA. At oral argument, AHI even acknowledged that the FAA has the authority to rescind any action taken by AHI in connection with the certification process. These facts demonstrate that AHI was duty-bound to follow prescriptive rules set forth by the FAA, thus falling within the “simple compliance with the law” circumstance that does not meet the “acting under” standard. Goncalves, 865 F.3d at 1247; see also Fidelitad, 904 F.3d at 1100. In sum, AHI‘s actions as an issuer of Supplemental Certificates fit squarely within the precept of mere compliance with regulatory standards and outside the “acting under” provision of
We foreshadowed the outcome of this case in Fidelitad, noting with approval the determination in Lu Junhong, 792 F.3d at 808–10, that an “airplane manufacturer was not acting under a federal officer... although federal law gave the manufacturer authority to self-certify compliance with the relevant regulations.” 904 F.3d at 1100. In keeping with our analysis in Fidelitad, we hold that AHI was not acting under a federal officer although federal regulations gave AHI authority to issue Supplemental Certificates in accordance with FAA regulations. See id. Although we agree generally with the holding of Lu Junhong, as we did in Fidelitad, we decline to adopt the rulemaking-rule compliance distinction articulated by the Seventh Circuit and relied on by the district court. See Lu Junhong, 792 F.3d at 810. We are content to rely on the more clearly articulated common analyses from Watson, Goncalves, and Fidelitad focusing on whether the private entity is engaged in mere compliance with federal regulations. See e.g., Fidelitad, 904 F.3d at 1100.
Finally, AHI relies heavily on the district court decision of Estate of Hecker v. Robinson Helicopter Co., 2013 WL 5674982 (E.D. Wash. 2013). In Hecker, the plaintiff brought an action in state court, asserting state law claims for wrongful death, negligence, and products liability arising from a helicopter crash. See id. at *1. There, as here, the helicopter manufacturer removed the case to federal court under
IV. CONCLUSION
AHI inspected and certified its aircraft pursuant to FAA regulations and federal law and could not make any structural or design changes without the consent of the FAA. The Supreme Court decision in Watson and our decisions in Goncalves and Fidelitad fully support the proposition that AHI‘s mere compliance with federal regulations did not satisfy the “acting under” requirement of
AFFIRMED.
O‘SCANNLAIN, Circuit Judge, dissenting:
The federal officer removal statute authorizes a defendant in a state court civil action to remove the case to federal court if it is “acting under” a federal agency.
I respectfully dissent.
I
This case turns on the interaction between two statutes: the Federal Aviation Act, see
A
1
In the Federal Aviation Act, Congress charged the FAA with the duty to establish “minimum standards required in the interest of safety” for the “design, material, construction, quality of work, and performance of aircraft, aircraft engines, and propellers.”
Besides imposing substantive safety standards, the Act also creates a “multistep certification process to monitor the aviation industry‘s compliance.” United States v. S.A. Empresa de Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 804 (1984). Before an aircraft can lawfully take flight, the FAA must issue a series
manufactured, performs properly, and meets the regulations and minimum standards prescribed [by the FAA].”
Together, these certification requirements prohibit a manufacturer (or the aircraft‘s eventual owner) from altering an aircraft‘s design without the FAA‘s approval. Instead, if a manufacturer wishes to make changes, it must seek one of two possible certificates. If a “proposed change . . . is so extensive that a substantially complete investigation of compliance . . . is required,” then the manufacturer must seek a new type certificate from the FAA.
2
Perhaps because of this elaborate certification process, Congress offered the FAA an unusual tool to ease its regulatory burden: the authority to delegate its duties to the private sector. Specifically, the Act states:
(d) DELEGATION.—(1) Subject to regulations, supervision, and review the Administrator may prescribe, the Administrator may delegate to a qualified private person . . . a matter related to (A) the examination, testing, and inspection necessary to issue a certificate under this chapter; and (B) issuing the certificate.”
Since 1927, the FAA and its predecessor agency have established programs delegating its certification authority to the private sector—either to individual engineers or to organizations. Establishment of Organization Designation Authorization Program, 70 Fed. Reg. 59,932, 59,932 (Oct. 13, 2005) (codified at
Under such program, the FAA authorizes “ODA Holders” to “perform specified functions on behalf of the Administrator.”
Since 2009, Airbus has been a “Supplemental Type Certification ODA.” Id. ¶¶ 2–6, at 5. In this capacity, Airbus has the authority to “develop and issue supplemental type certificates . . . and related airworthiness certificates.” Id. Airbus may issue such certificates both for its own aircraft or for those of other applicants. See id. ¶ 11–7, at 88. Although the FAA may revoke Airbus‘s ODA status or reconsider its issuance of a specific certificate, see
B
The federal officer removal statute permits a defendant to remove to federal court a state court action brought against
“[t]he United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity, for or relating to any act under color of such office . . . .”
II
Because the FAA delegates to ODA Holders its formal legal authority to issue certificates, I conclude, in respectful disagreement with the majority‘s analysis, that Airbus “act[s] under” the FAA.
A
1
Beginning with the text, the Federal Aviation Act compels the conclusion that
Confirming Congress‘s mandate, the FAA itself describes the ODA Program as a delegation of legal authority. Under the program, ODA Holders like Airbus function as “representatives of the Administrator” and “perform[] a delegated function.” ODA Rule, 70 Fed. Reg. at 59,933; see also
Altogether, Congress and the FAA expressly said—time and again—that the agency indeed “delegate[s]” to private persons (like Airbus) the authority to issue certificates, and Watson counsels that a “delegation of legal authority” satisfies
2
I am not alone in this view. The Eleventh Circuit came to the same conclusion in Magnin v. Teledyne Cont‘l Motors, 91 F.3d 1424 (11th Cir. 1996), and the Solicitor General has endorsed that court‘s holding. In its briefing for Watson, the Solicitor General argued that the defendant could not seek removal under the federal officer removal statute (as the Supreme Court later held), but it cited Magnin to support the argument that “a private citizen delegated authority to inspect aircraft by the [FAA] acts under a federal officer in conducting such an inspection and issuing a certificate of airworthiness.” Brief for the U.S. as Amicus Curiae Supporting Petitioners at 26, Watson, 551 U.S. 142 (No. 05-1284). “The critical point,” the Solicitor General continued, “is that the individual acts on behalf of the FAA Administrator in conducting the inspection.” Id.
B
Despite the clear evidence of delegation, the majority concludes that Airbus‘s actions as an ODA Holder constitute mere “compliance” with FAA regulations. See Maj. Op. at 16–18. With respect, I believe the majority is wrong.
The majority‘s critical error is that it conflates Airbus‘s two distinct roles as a manufacturer and as an FAA delegee. Specifically, an ODA Holder acts as either the regulated party or the regulator—depending on the specific function performed. It is true, of course, that all manufacturers—in their capacity as manufacturers—must comply with the FAA‘s numerous safety standards whenever they design or build an aircraft. But as an ODA Holder, the organization also acts as a “representative[] of the Administrator.” ODA Rule, 70 Fed. Reg. at 59,933. In this capacity, the manufacturer is “legally distinct from” the organization, and its “authority . . . to act comes from an FAA delegation.” Id. Put differently, the manufacturer doffs its “aviation industry hat” and dons its “FAA hat,” and so clad, the ODA Holder exercises the agency‘s statutory authority to issue certificates.
Perhaps because the issuance of certificates so obviously constitutes an exercise of the FAA‘s governmental power, the majority seeks to recast the ODA Program as a “self-certification” regime. See Maj. Op. at 16–18 (emphasis added). The majority borrows such reasoning from Lu Junhong v. Boeing Co., where the Seventh Circuit compared a manufacturer‘s authority to issue certificates to “a person filing a tax return” compelled to certify that he reported his income “honestly.” 792 F.3d 805, 809 (7th Cir. 2015). Such “certified compliance,” the court reasoned, was indistinguishable from other forms of “ordinary compliance” deemed insufficient to satisfy
Once again, the majority—as Lu Junhong before it—evinces its misunderstanding of the regulatory regime. Although an ODA Holder issuing a certificate must ensure that the aircraft complies with the FAA‘s safety standards, the organization‘s issuance of the certificate does more; it stamps the FAA‘s imprimatur on the aircraft. In so doing, the ODA Holder exercises a power derived from the agency and independent from its responsibilities as a manufacturer. Indeed, the FAA authorizes ODA Holders like Airbus to issue certificates “to an applicant other than the ODA Holder“—thus confirming that such power cannot be reduced to self-certification. ODA Order, ¶ 11-6, at 88 (emphasis added). And because the nature of the certification authority should not fluctuate depending on who is granted the certificate, the mere fact that Airbus certifies its own aircraft has no bearing on whether it “act[s] under” the FAA.
In short, a true self-certification regime (as with the taxpayer attesting to his income) involves an affirmation that the regulated party completed his duty; an ODA Holder‘s “certification” conveys the agency‘s formal approval to the aircraft.
2
The majority‘s flawed understanding of the ODA Program blinds it to the differences between this case and Watson. There, the defendant—Philip Morris—argued that the FTC had “delegated authority” to test cigarettes for tar and nicotine, and that it “‘act[ed] under’ officers of the FTC” when it conducted such testing. Watson, 551 U.S. at 154 (emphasis removed). But the Supreme Court “found no evidence of any delegation of legal authority from the FTC to the industry association“—the “fatal flaw” in Philip Morris‘s argument. Id. at 156 (emphasis added). Accordingly, the Court found no reason to treat “the FTC/Philip Morris relationship as distinct from the usual regulator/regulated relationship.” Id. at 157.
Eager to
III
The federal officer removal statute allows those who labor on the federal government‘s behalf, and are therefore sued in state court, to have such case tried in a federal forum. In this case, the FAA authorized Airbus to issue certificates that the agency would otherwise issue on its own, and such delegation satisfies
I respectfully dissent.