Kuwait Pearls Catering Company, WLL v. Kellogg Brown & Root Services, Inc
Filing
23
OPINION AND ORDER OF DISMISSAL granting 4 Motion to Dismiss. This case is DISMISSED without prejudice under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction based on the political question and act of state doctrines. Case terminated on 3/31/2016..(Signed by Judge Melinda Harmon) Parties notified.(rhawkins)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
KUWAIT PEARLS CATERING COMPANY,§
WLL,
§
§
Plaintiff,
§
§
VS.
§
§
KELLOGG BROWN & ROOT SERVICES, §
INC.,
§
§
Defendant.
§
ENTERED
March 31, 2016
David J. Bradley, Clerk
Civ. A. H-15-0754
OPINION AND ORDER OF DISMISSAL
The above referenced cause alleges, purportedly under
Texas state law, (1) breach of a subcontract1 for Defendant Kellogg
1
The United States as sovereign may contract for the
property or services it needs; that contracting is known as
procurement or acquisition.
See, e.g., In re American Boiler
Works, 220 F.2d 319, 321 (3d Cir. 1955)(“In the absence of
constitutional inhibitions the sovereign can make such contract as
it pleases and no one can object.”); Shepard Engineering Co. v.
United States, 289 F.2d 681, 682 (8th Cir. 1961). The main purpose
of a government procurement contract is to acquire services or
property for the direct benefit of the United States Government.
The key regulation governing federal procurement is the Federal
Acquisition Regulation (“FAR”), effective as of April 1, 1984,
which is published in the Federal Register and Title 48, of the
Code of Federal Regulations. See generally, 1 West’s Fed. Admin.
Prac. § 601 (database updated July 2015).
Under the first subcontract KBR had with KPCC, KPCC
built a removable dining facility at a military base in Kirkuk,
Iraq in 2006-07. First Amended Complaint, #12, Ex. 1.
KBR’s
second subcontract with KPCC, the one at issue in this case, was
for KPCC to provide dining services at this facility. This second
subcontract, awarded by KBR to KPCC on September 1, 2010, No.
GCA90M-VC-SDF0920, was subject to a U.S. federal government
contract, an indefinite-delivery-indefinite quantity (“ID/IQ”)
contract, awarded to KBR and administered by the Department of the
Army under the Logistics Civil Augmentation Program (“LOGCAP III
Contract” or “LOGCAP III”), under which the Army issued “task
orders” to KBR to provide various services, including food
services for hundreds of thousands of troops in military dining
facilities (“DFACs”) on military bases throughout Iraq on a costreimbursement or fixed-price basis, to support Operation Iraqi
Freedom. #1, Ex. 5, Declaration of Cheryl Ritondale.
-1-
Brown & Root Services, Inc. (“KBR”) to lease one of Plaintiff
Kuwait Pearls Catering Company, WLL’s (“KPCC’s”) dining facilities
and for KPCC to operate food services for U.S. troops at that
military dining facility (“DFAC”) in Kirkuk, Iraq, designated
Forward Operation Base (“FOB”) Warrior (C7),” during Operation
Iraqi Freedom, and (2) fraud in the inducement.
This case was
removed from state court pursuant to 28 U.S.C. § 1442 (federal
officer removal) and §§ 1331 and 1441 (federal question). Pending
before the Court are two motions with overlapping and intertwined
substantive legal issues: (1) KPCC’s motion to remand (instrument
#11) and (2) KBR’s motion to dismiss pursuant to Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6)(#4).
KPCC contends that the second subcontract required KBR
to lease the FOB Warrior (C7) and all the equipment needed to
operate the DFAC and that it also gave KBR the option to purchase
the DFAC on behalf of the United States.
KPCC claims that KBR
represented that it intended to purchase the facility.
The
Original
the
Petition
asserts
that
KBR
and
KPCC
negotiated
purchase of FOB Warrior (C7) by KPCC from April to July 11, 2011.
KPCC’s suit alleges that KBR breached the subcontract by failing
to purchase the DFAC at FOB Warrior (C7) on behalf of the United
States
Government
and
that
KBR
committed
fraud
in
falsely
representing to KPCC that KBR would purchase the facility.
-2-
With supporting documentary evidence,2 KBR claims that
in these negotiations it acted at the direction of the United
States
Government
and
that
it
ultimately
discontinued
negotiations, also under the direction of the United
the
States,
which tightly controlled KBR in its role operating the DFACs on
military bases in Iraq.
KBR explains that in October 2011 it was
informed that the United States considered the DFACs to be “real
property” that had to be turned over to the Government of Iraq
after the withdrawal of U.S. troops,3 pursuant to Article 5, ¶ 1,
at 4, of an Agreement Between the United States of America and the
Republic of Iraq on Withdrawal of United States Forces from Iraq
and the Organization of their Activities during Their Temporary
Presence in Iraq (the “Security Agreement”), executed on November
17, 2008 and effective as of January 1, 2009, Ex. 7 to #1; also
Ex. 2 to #5).
This Security Agreement set the deadline of
December 31, 2011 for withdrawal of all American military forces
and stated, “Iraq owns all buildings, non-relocatable structures
and
assemblies
connected
to
the
soil
that
exist
on
agreed
facilities and areas, including those that are used, constructed,
altered, or improved by the United States Forces.”
Ex. 7 to #1,
2
See #1, Exhibit 5, Ritondale Decl. ¶¶ 3, 7-11; Ex. 5A,
4/2/11 email from Procuring Contracting Officer Kathie Potter to
M. Young at KBR regarding DFACS and Equipment, at KBR00231-32.
3
See #1, Exhibit 5B, email from U.S. Deputy Program
Director for LOGCAP Robert Thompson regarding DFAC at Kirkuk and
Tikrit, at KBR00247-48; 10/17/11 email from M. Young (KBR) to R.
Thompson; 10/17/11 email from K. Potter to M. Young at KBR0024647; 10/18/11 email from N. Bull (KBR) to K. Potter, at KBR0024546; Ex. 5C, USF-I Memorandum, Subject: Determination of Dining
Facilities at Kirkuk and Tikrit as Real Property and Equipment as
Personal Property (Nov. 1, 2011), at KBR0028.
-3-
Art. 5, ¶ 1, at 4.
It also called for the handover to the Iraqi
Government of all military bases, facilities, and related real
property upon the withdrawal of U.S. forces.
Id. at ¶¶ 2, 6, at
4-5.
KPCC responds that this explanation for the United
States’ decision not to purchase the facility “made no logical
sense” because the 2009 Security Agreement was entered into more
than a year before the subcontract, and the subcontract made no
mention of the Security Agreement.
If KBR’s explanation is true,
it
to
was
never
possible
for
KBR
meet
the
terms
of
the
subcontract, and thus KPCC was denied the very consideration for
which it had bargained.
KPCC claims that in one of a series of
emails in which the United States Government acknowledged that its
failure
to
honor
the
purchase
option
was
a
breach
of
the
subcontract, KBR admonished that it would be liable to KPCC under
the subcontract if the FOB Warrior (C7) were seized by the United
States Government without just compensation, i.e., a “taking”
under the Fifth Amendment.
Moreover, KPCC points out that after
KBR notified KPCC that it would not purchase the facility, KBR
continued to use it without making any further lease payments and
refused to reimburse KPCC for its costs.
In addition, according
to the express term of the subcontract, the decision to purchase
FOB Warrior (C7) was within the “sole discretion” of KBR.4
4
Section 4.5.2 of the subcontract provides,
For leased Assets, the CONTRACTOR may, at its
sole discretion at any time during the lease,
unilaterally opt to purchase the Assets at
the Purchase Price less any lease payments
-4-
KBR contends that it removed this case to this Court
based on its assertion of five affirmative defenses in state court
that vested jurisdiction exclusively in the federal courts:
“(1)
a claim of derivative sovereign immunity, (2) involving nonjusticiable political questions; (3) the act of state doctrine;
(4)
the
government
contractor
defense;
and
(5)
the
Defense
Production Act of 1950,” § 1 et seq., 50 App. U.S.C.A. § 2061, et
seq.,
#11 at p.4.
KPCC argues that none of these defenses is sufficient to
support a removal of this case to federal court.
Furthermore,
although KBR insists that it can remove the suit because it was
acting under the direction of a federal officer under 28 U.S.C. §
1442(a)(1), KPCC insists that KBR was not acting as an agent of
the United States Government in performing the subcontract and
that KBR retained “sole discretion” in its performance and in
making its own decision not to purchase the FOB Warrior (C7).
Therefore the federal removal statute, 28 U.S.C. § 1442, does not
apply to KBR.
that have been made.
Nothing in this
SUBCONTRACT shall obligate the CONTRACTOR to
exercise the option; however, at any time the
total lease payments made to SUBCONTRACTOR
equals the quoted purchase price of a leased
asset, the obligation of the CONTRACTOR to
pay monthly lease payments ceases.
If the
option to purchase is exercised, title to the
asset passes to the CONTRACTOR upon full
payment of the Purchase Price minus lease
payments.
-5-
Because the removal/remand issue determines whether this
Court has jurisdiction to rule on the motion to dismiss, the Court
addresses the motion to remand first.
As a threshold matter, KPCC contends that in this breach
of contract and fraud in the inducement case Texas law governs and
there are no federal questions or federal statutes that will
resolve the issues in this action.
KBR correctly points out that
Texas law does not govern this case.
KPCC drew its erroneous
conclusion from the subcontract’s provision in section 11.0 5,
“Alternative Dispute Resolution” clause, which by its own terms
does not apply here:
“AS AN EXCLUSIVE SUBSTITUTE FOR INITIATING
ANY ACTION IN LAW OR EQUITY IN ANY COURT OR OTHER JUDICIAL
PROCESS, THE PARTIES AGREE THAT THE FOLLOWING DISPUTE RESOLUTION
PROCEDURE SHALL BE COMPLIED WITH: . . . .”
Complaint,
#12,
Exhibit
1,
at
000039,
First Amended
Instead
the
2010
subcontract incorporated the FAR (see footnote 1)(at 000034),
clause 52.233-4 (at 000035) for “Applicable Law for Breach of
Contract Claim” (Oct. 2004), which states “United States law will
apply to resolve any claim of breach of this contract.” 48 C.F.R.
§ 52.233-4 (emphasis added).
Relevant Law:
The
“federal
Federal Officer Jurisdiction
officer“
statute,
28
U.S.C.
§
1442(a)(1)(“Federal officers or agencies sued or prosecuted”), as
amended effective November 2011, provides in relevant part,
(a) A civil action or criminal prosecution
that is commenced in a State court and that
is against or directed to any of the
following may be removed by them to the
district court of the United States for the
-6-
district and division embracing the place
wherein it is pending:
(1) The 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 or on account of any right, title
or authority claimed under any Act of
Congress
for
the
apprehension
or
punishment
of
criminals
or
the
collection of the revenue.
“Acting under” has usually been interpreted to require “some
federal directives of particular detail that relate to the conduct
for which the person seeking to remove is being sued in state
court.”
Kristine Cordier Karnezis, “Who is ‘Person Acting Under’
Officer of United States of Any Agency Thereof for Purposes of
Availability of Right to Remove State Action to Federal Court
Under 28 U.S.C.A. § 1442(a)(1),” 166 A.L.R. Fed. 297 (2000). Most
courts have ruled that corporations can be “persons” within the
meaning of § 1442(a)(1).
Id. “The courts generally support the
proposition that persons are ‘acting under’ a federal officer for
purposes of removing actions against them to federal court, under
28 U.S.C.A. § 1442(a)(1), when the activities forming the basis of
the
suit
against
them
were
performed
pursuant
to
federal
directives (at §4),” “or pursuant to a federal officer’s ‘direct
orders or comprehensive and direct regulations.’” Id. at § 2[a].
In Watson v. Philip Morris Companies, Inc., 551 U.S. 142, 151-52
(2007), the Supreme Court construed the phrase as meaning not only
subject to the instruction, direction of” a federal officer, but
also a private person’s “effort to assist, or to help carry out,
-7-
the duties of a federal superior.”
That “help or assistance
necessary to bring a private person within the scope of the
statute does not include simply complying with the law”; “under”
requires being “subordinate or subservient to,” “[s]ubject to
guidance, tutorship, or direction of.”
Id. at 151-52.
See also
Bell v. Thornburg, 743 F.3d 84, 88-89 (5th Cir. 2014).
“The purpose of this [federal officer] removal statute
is to protect the lawful activities of the federal government from
undue state interference.
It allows suits to be removed despite
the non-federal cast to the complaint and reflects a congressional
policy that federal officers and the federal government itself
require the protection of a federal forum.”
Leonard v. Board of
Supervisors of Louisiana State University and Agr. and Mechanical
College, Civ. A. No. 13-565-JJB-SCR, 2014 WL 2197042, at *2 (M.D.
La. Jan. 17, 2014), adopted, 2014 WL 2203876 (May 27, 2015).
As
the Supreme Court opined in Willingham v. Morgan, 395 U.S. 402,
406 (1969), quoting Tennessee v. Davis, 100 U.S. 257, 263 (1880),
the federal government
‘can only act 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 State court,
for an alleged offense against the law of the
State, yet warranted by the Federal authority
they possess, 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.’
For this very basic reason, the right of
removal under § 1442(a)(1) is made absolute
-8-
whenever a suit in a state court is for any
act
‘under
color’
of
federal
office,
regardless
of
whether
the
suit
could
originally have been brought in a federal
court.
Federal jurisdiction rests on a
‘federal interest in the matter,’ . . . the
very basic interest in the enforcement of
federal law through federal officials.
See also State of La. v. Sparks, 978 F.2d 226, 232 (5th Cir.
1992)(main purpose of statute is to “prevent federal officers who
simply comply with a federal duty from being punished by a state
court for doing so.”).
There are significant differences between the federal
officer removal statute, 28 U.S.C. § 1442(a)(1), and the general
federal question removal statute, 28 U.S.C. § 1441. The latter is
strictly construed in favor of remand, while the federal officer
removal
statute
is
liberally
construed.
Legendre
v.
Anco
Insulations, Inc., Civ. A. No. 12-94-JJB-SCR, 2012 WL 2064537, at
*1 (M.D. La. May 14, 2012); Arizona v. Manypenny, 451 U.S. 232,
242 (1981)(“the policy favoring [federal officer] removal should
not be frustrated by a narrow, grudging interpretation of §
1442(a)(1)”).
At
minimum,
the
federal
officer
statute
is
sufficiently broad “to cover all cases where federal officials can
raise a colorable defense arising out of their duty to enforce
federal law” and to have those defenses litigated in the federal
courts.
Willingham, 396 U.S. at 406-07.
A defendant does not
have to show that it will prevail on all of its asserted federal
defenses; a showing that at least one of its federal defenses is
plausible is sufficient.
Mesa v. California, 489 U.S. 121, 129
(1989); Willingham, 395 U.S. at 409.
-9-
See also Jefferson County,
Ala. v. Acker, 527 U.S. 423, 431 (1999)(“Under the [exceptional]
federal officer removal statute, suits against federal officers
may be removed despite the nonfederal cast of the complaint; the
federal-question element is met if the defense depends on federal
law.”). There is no requirement under § 1442(a)(1) that the court
must
have
original
jurisdiction
over
the
plaintiff’s
claim;
instead, in contrast to the general removal statute, the case may
be removed where no federal question is apparent on the face of
the plaintiff’s well pleaded complaint, but where a federal
question arises in a defense. St. Bernard Port, Harbor & Terminal
District v. Violet Dock Port, Inc. LLC, Civ. A. No. 11-8, 809 F.
Supp. 2d 524, 530 (E.D. La. Feb. 7, 2012).
defendants
need
1442(a)(1).
to
join
in
the
notice
Nor do all of the
of
removal
under
§
Ely Valley Mines, Inc. v. Hartford Accident & Indem.
Co., 644 F.2d 1310, 1315 (9th Cir. 1981).
To remove a case from state court under the federal
officer
statute,
the
defendant,
who
bears
the
burden
of
establishing that jurisdiction exists, must “(1) demonstrate that
it is a ‘person’ within the meaning of the statute; (2) establish
that it acted pursuant to a federal officer’s directions and that
a causal nexus exists between the defendant’s actions under the
color of federal office and the plaintiff’s claims; and (3) assert
a colorable federal defense to state-law liability.”
Government
Contract Disputes § 22:9 (2015 ed.); Winters v. Diamond Shamrock
Chemical Co., 149 F.3d 387, 398(5th Cir. 1998), cert. denied, 526
U.S. 1034 (1999).
Most courts, including the Fifth Circuit, have
held that corporations can be “persons” within the meaning of the
-10-
statute.
See Winters v. Diamond Shamrock Chemical Co., 901 F.
Supp. 1195, 1197 (E.D. Tex. 1995)(“We have previously held that
corporate entities qualify as ‘person’ under § 1442(a)(1), aff’d,
149 F.3d 387 (5th Cir. 1998), cert. denied, 526 U.S. 1034 (1999);
International Primate Protection League, No. 93-3067, at 2 (5th
Cir. May 4, 1994)(unpublished opinion).”), cert. denied, 526 U.S.
1034 (1999).
For the causal connection prong, the defendant must
show there is a causal connection between what the defendant has
done under federal authority and plaintiff’s state-law claims,
between the asserted official authority and the charged conduct.
Willingham, 395 U.S. at 409. The federal direction must be
sufficiently detailed to prove that there is a substantial federal
interest
involved in the activity.
Winters, 901 F. Supp. 195.
The last prong, a colorable federal defense, is one grounded in
federal law and arising out of the removing party’s compliance
with the demands of a federal officer.
U.S. 121, 129-30 (1989).5
Mesa v. California, 489
“Federal officer removal must be
predicated on the allegation of a colorable federal defense.” Id.
See also State of Texas v. Carley, 885 F. Supp. 940, 942 (W.D.
Tex. 1994)(“Appropriate removal of a State action by a federal
officer under 28 U.S.C. § 1442(a) requires enunciation of a
federal defense by one who is a federal officer or acting under
the authority of a federal officer.”).
5
“The defense need only be
For example, in Winters v. Diamond Shamrock Chemical
Co., 149 F.3d at 399-400, the Fifth Circuit found the Government’s
specification of the chemical composition, packaging, and delivery
of Agent Orange was sufficient exertion of control to constitute
federal direction under § 1442(a)(1).
-11-
plausible; its ultimate validity is not determined at the time of
removal.”
Magnin v. Teledyne Continental Motors, 91 F.3d 1424,
1427 (11th Cir. 1996), citing Mesa, 480 U.S. at 129.
KBR’s answer to the complaint asserts several federal
defenses:
derivative sovereign immunity, government contractor
defense, political question doctrine, and immunity under the
Defense Production Act.
KBR subsequently added the act of state
doctrine to these defenses.
Generally the United States is immune from suit unless
it waives that immunity. United States v. Mitchell, 445 U.S. 535,
538 (1980).
Under the Federal Employees Liability Reform and
Tort Compensation Act (“FTCA”), 28 U.S.C. §§ 1346, et seq., the
United States waived its sovereign immunity to tort actions, but
with some exceptions, including one for an entity performing a
discretionary
act
on
discretionary
function
judgment or choice.”
behalf
is
of
one
the
that
federal
“involves
Government.
an
element
A
of
Berkovitz ex rel. Berkovitz v. United
States, 486 U.S. 531, 536 (1988).
The discretionary function
exception, 28 U.S.C. § 2680, states that “provisions of this
chapter . . . shall not apply to--(a) Any claim based upon an act
or omission of an employee of the Government, exercising due care,
in the execution of a statute or regulation, whether or not such
statute or regulation be valid, or 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,
however,
applies
only
to
suits
-12-
against
the
Government,
its
employees,
and
agents.”
It
expressly
excludes
contractors and employees of the government.
independent
28 U.S.C. §§ 2674
and 2671 (“[T]he term ‘Federal Agency’ . . . does not include any
contractor with the United States . . . . ‘Employee of the
government’ includes (1) officers or employees of any federal
agency, members of the military or naval forces of the United
States, member of the National Guard . . . , and persons acting on
behalf of a federal agency in an official capacity . . . and (2)
any officer or employee of a Federal public defender organization
. . . .” The discretionary function exception includes both these
terms.
A “critical element in distinguishing an agency from a
contractor is the power of the Federal Government ‘to control the
detailed physical performance of the contractor.’”
Law v. Aetna
Life Ins. Co., No. 5:09-cv-116-DCB-JMR, 2011 WL 4529627, at *5
(S.D. Miss. Sept. 28, 2011), citing United States v. Orleans, 425
U.S. 807, 814 (1976)(quoting Logue v. United States, 412 U.S. 521,
528 (1973)).
KBR has asserted a government contractor defense.
The
government contractor defense is related to the FTCA’s retaining
sovereign
immunity
for
claims
“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 employee of
the Government, whether or not the discretion involved be abused.”
28 U.S.C. § 2680(j). Some courts have held that a private federal
government
contractor
is
protected
by
derivative
sovereign
immunity if it shows that (1) it “was working pursuant to the
authorization and direction of the federal government” and that
-13-
(2) “the acts of which the plaintiff complained fell within the
scope of those government directives.”
See, e.g., In re World
Trade Center Disaster Site Litig., 521 F.3d 169, 196 (2d Cir.
2008), citing Yearsley v. W.A. Ross Const. Co., 309 U.S. 18, 20-21
(1940).
See also Pettiford v. City of Greensboro, 556 F. Supp. 2d
512, 539 (M.D.N.C. 2008)(“Courts have recognized a brand of
derivative immunity relating to work primarily arising from the
performance of government contracts.
The doctrine of derivative
federal sovereign immunity arose as an exception to federalism and
is based on the notion that the immunity traditionally afforded
the federal government should extend under limited circumstances
to certain parties who carry out its will.”).
The government
contractor defense applies to both service and supply contracts.
Hudgens v. Bell Helicoptors/Textron, 328 F.3d 1329, 1334 (11th Cir.
2003).
The concept of derivative sovereign immunity is rooted
in Yearsley v. W.A. Ross Const. Co., 309 U.S. 18 (1940).
In
Yearsley, id. at 20-21, the Supreme Court held that a contractor
that built dikes in the Missouri River pursuant to a contract with
the federal government could not be held liable for erosion damage
caused by its construction because the contract for it was
authorized by an act of Congress and, as the Court concluded, when
“authority to carry out the project was validly conferred, that
is, if what was done was within the constitutional power of
Congress, there is no liability on the part of the contractor for
executing its will.”
Only if the agent or officer of the
Government exceeded his authority or his authority was not validly
-14-
conferred can he be held liable for his conduct causing injury to
another.
Id. at 21.
See also Filarsky v. Delia, 132 S. Ct. 1657,
1665-66 (2012)(holding that a private individual temporarily
retained by the government to carry out its work is entitled to
seek
qualified
immunity
from
suit
under
§
1983;
“immunity
‘protect[s] the government’s ability to perform its traditional
functions.’ It does so by helping to avoid ‘unwarranted timidity’
in the performance of public duties, ensuring that talented
candidates are not deterred from public service, and preventing
harmful distractions from carrying out the work of government that
can often accompany damages suits. . . .
Indeed, it is often when
there is a particular need for specialized knowledge or expertise
that the government must look outside its permanent work force to
secure the services of private individuals. [citations omitted]”).
In Ackerson v. Bean Dredging LLC, 589 F.3d 196 (5th Cir.
2009), the Fifth Circuit applied Yearsley to claims against
private
contractors
Engineers
to
dredge
who
contracted
the
with
Mississippi
the
River
Army
and
Corps
who
of
caused
environmental damage to the property of local residents, but found
that plaintiffs failed to plead facts showing that the dredging
defendants did not execute the dredging as required by the Army
Corps of Engineers, as well as by the specific permits and
authorizations
it
obtained,
nor
that
they
violated
relevant
regulations.
“While Yearsley established that a private corporation
performing
governmental
functions
pursuant
to
contractually
delegated authority will not be liable in tort to third parties,
-15-
it is also acknowledged that an agent or officer of the Government
purporting to act on its behalf, but in actuality exceeding his
authority, shall be liable for his conduct causing injury to
another.”
In re KBR, Inc., 736 F. Supp. 2d 954, 967 (D. Md.
2010), citing Yearsley, 309 U.S. at 21.
Derivative sovereign
immunity is also not available to federal contractors who perform
their obligations under the contract negligently.
Yearsley, 309
U.S. at 20-21; Ackerson v. Bean Dredging LLC, 589 F.3d 196, 207
(5th Cir. 2009).
Almost fifty years after Yearsley, in Boyle v. United
Technologies Corp., 487 U.S. 500 (1988)(a wrongful death action
was
brought
against
an
independent
contractor
who
supplied
military helicopter to the United States after the helicopter
crashed), “in the context of government contractors claiming
immunity under the [FTCA],” the Supreme Court held that “federal
common law displaces state tort law [only] if (1) the matter
involves a uniquely federal interest [such as the procurement of
military equipment] and (2) there is a significant conflict
between the federal interest or policy and the operation of state
law, or the application of state law must frustrate the specific
policy
objectives
of
federal
legislation,”
such
that
“the
contractor could [not] comply with its contractual obligations and
the state prescribed duty of care.”
Id. at 507, 509.
In accord,
In re Katrina Canal Breaches Litig., 620 F.3d 455, 460 (5th Cir.
2010). “The conflict with federal policy need not be as sharp as
that which must exist for ordinary preemption when Congress
legislates ‘in a field in which the States have traditionally
-16-
occupied.’‘”
Boyle, 487 U.S. at 507, quoting Rice v. Santa Fe
Elevator Corp., 331 U.S.
218, 230 (1947).
In Boyle, 487 U.S. at
502 (holding that there was a unique federal interest in the
government’s
procuring
obligations
military
and
rights
equipment
from
under
private
its
contracts
parties
and
for
that
government contractor Sikorsky Division of United Technologies
Corporation could not be held liable for an allegedly defective
helicopter design that caused the death of a marine copilot
because the design met the requirements of the military contractor
defense), the Supreme Court addressed the “government contractor
defense”
in
dealing
with
the
question
whether
a
contractor
providing military equipment to the United States Navy could be
immune from state tort liability for the design defect of a
helicopter that purportedly caused the death.
The Supreme Court
concluded that there must be a “uniquely federal interest” with a
significant conflict between federal policy and the state law, or
that application of state law would frustrate specific objections
of federal legislation, which justifies displacing state law with
federal common law.
487 U.S. at 504, 507-08.6
The Supreme Court
found unique federal interests in that case in the obligations and
rights of the United States under its contracts, the liability of
federal officers for official acts, and civil liabilities arising
6
In Boyle, “the state-imposed duty of care that is the
asserted basis of the contractor’s liability (specifically, the
duty to equip helicopters with the sort of escape-hatch mechanism
petitioner claims was necessary) is precisely contrary to the duty
imposed by the Government contract (the duty to manufacture and
deliver helicopters with the sort of escape-hatch mechanism shown
by the specifications).” 487 U.S. at 509.
-17-
out of federal procurement contracts relating to national defense.
Id. at 504-06.
To warrant this derivative immunity for design
defects in military equipment, the contractor must show that he
complied
with
three
requirements:
(1)
“reasonably
precise
specifications” approved by the federal government; (2) equipment
by the contractor that met these specifications; and (3) a warning
to the federal government by the contract of a defect unknown to
the government.”
Id. at 512.7
“The very essence of the defense
is to ‘prevent the contractor from being held liable when the
government is actually at fault,’ for ‘[w]hen a contractor acts
under the authority and direction of the United States, it shares
in the immunity enjoyed by the Government.’”
In re World Trade
Center Disaster Site Litig., 456 F. Supp. 2d 520, 562 (S.D.N.Y.
2006).
If, however, the private contractor acts independently
from the precise government directions and approvals, the private
contractor is not entitled to the defense.
7
Id.
In addition, the
The Boyle court observed, 487 U.S. at 512-13,
The first two of these conditions would
assure that the suit is within the area where
the policy of the “discretionary function”
would be frustrated--i.e., they assure that
the design feature in question was considered
by a Government officer, and not merely by
the contractor itself. The third 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.
We adopt this provision lest our effort to
protect discretionary functions perversely
impede them by cutting off information highly
relevant to the discretionary decision.
-18-
government must supervise and control the contractor’s acts. Id.
In sum, “under Yearsley, a government contractor is not subject to
suit if (1) the government authorized the contractor’s actions and
(2) the government ‘validly conferred’ that authorization, meaning
it acted within its constitutional power.”
In re KBR, Inc., Burn
Pit Litig., 744 F.3d 326, 342 (4th Cir. 2014)(citing Yearsley, 309
U.S. at 20-21), cert. denied sub nom. KBR, Inc. v. Metzger, 135 S.
Ct. 1153 (2015). In In re Katrina Canal Breaches Litig., 620 F.3d
455, in which the contractor’s allegedly negligent and improper
actions in fulfilling a contract with the Army Corps of Engineers
caused flood damage,
the Fifth Circuit reversed the district
court’s summary judgment granting immunity to the contractor on
the grounds that the Army Corps of Engineers’
specifications for
the work at issue (regarding the composition of the material used
as backfill or application of any testing process on it before
approval) were not reasonably precise.
The Fifth Circuit, however, has ruled that “Yearsley
itself countenances against its application to deprive the federal
court
of
jurisdiction.
Yearsley
does
not
discuss
sovereign
immunity or otherwise address the court’s power to hear the case.
. . . Based on the Supreme Court’s actions in Yearsley, we hold
that concluding Yearsley is applicable does not deny the court of
subject-matter jurisdiction.” Ackerson, 589 F.3d at 207-08.
In
accord, Adkisson v. Jacobs Engineering Group, Inc., 790 F.3d 641,
646-47 (6th Cir. 2015). As noted earlier, there is no agency
requirement for government-contractor immunity under Yearsley.
-19-
See, e.g., Ackerson, 589 F.3d at 204-07.
See also footnote 14 of
this Opinion and Order.
“Throughout
the
history
of
the
federal
judiciary,
political questions have been held to be nonjusticiable and
therefore not a ‘case or controversy’ as defined by Article III”
of the federal Constitution.
Occidental of Umm al Qaywayn, Inc.
v. A Certain Cargo of Petroleum Laden Aboard Tanker Dauntless
Colocotronis, 577 F.2d 1196, 1202 (5th Cir. 1978), cert. denied,
442 U.S. 928 (1979).
As the Fifth Circuit opined in Lane v.
Halliburton, 529 F.3d 548, 557 (5th Cir. 2008),
“Questions in their nature political, or
which are, by the constitution and laws,
submitted to the executive, can never be made
in this court.” Marbury v. Madison, 1 Cranch
137, 5 U.S. 137, 170 . . . (3803).
This
“political question” doctrine reflects the
principle that, under our Constitution, there
are some questions that cannot be answered by
the judicial branch. Out of due respect for
our coordinate branches and recognizing that
a court is incompetent to make final
resolution
of
certain
matters,
these
political
questions
are
deemed
‘nonjusticiable.’ See Baker [ v. Carr, 369
A declination of
U.S. 186, 198 (1962)].8
8
The Baker Court concluded, “Political questions are
labeled “nonjusticiable’ because there is an undeniable difference
between finding no federal jurisdiction at the outside of a case
and declaring that a particular matter is inappropriate for
judicial resolution only after some consideration of the merits.
In
the
instance
of
nonjusticiability,
consideration of the cause is not wholly and
immediately foreclosed; rather, the Court’s
inquiry necessarily proceeds to the point of
deciding whether the duty asserted can be
judicially
identified
and
its
breach
judicially determined, and whether protection
for the right asserted can be judicially
molded.”
-20-
jurisdiction under the doctrine presupposes
that another branch of government is both
capable of and better suited for resolving
the “political” question.
See Vieth v.
Jubelirer, 541 U.S. 267, 277 . . . (2004)’
Japan Whaling Ass’n v. Am. Cetacean Soc., 478
U.S. 221, 229-30 . . . (1986).
The political question doctrine applies to cases that “revolve
around policy choices and value determinations constitutionally
committed for resolution to the halls of Congress or the confines
of the Executive Branch.”
The
doctrine
Japan Whaling Ass’n, 478 U.S. at 230.
perceives
the
judiciary
as
“fundamentally
underequipped to formulate national policies or develop standards
for matters not legal in nature.”
Id.
Out of deference to the
other branches under separation of powers, the doctrine holds that
such cases are not subject to judicial review.
U.S.
186,
210
(1962)(“The
Baker v. Carr, 369
nonjusticiability
of
a
political
question is primarily a function of the separation of powers.”).
“[T]he
Supreme
Court
clearly
recognized
that
the
political
question doctrine partakes not only of the existence of separation
of powers, but also of the limitation of the judiciary as a
decisional body.” Occidental of Umm al Qaywayn, 577 F.2d at 1203,
citing Coleman v. Miller, 307 U.S. 433 (1939).
In Baker v. Carr, 369 U.S. at 217, the Supreme Court
identified six factors to determine whether there is a political
question: “[1] a textually demonstrable constitutional commitment
of the issue to a coordinate political department; or [2] a lack
of judicially discoverable and manageable standards for resolving
Lane, 529 F.3d at 557-58, citing Baker, 369 U.S. at 198.
-21-
it;9 or [3] the impossibility of deciding without an initial
policy determination of a kind clearly for nonjudicial discretion;
or [4] the impossibility of a court’s undertaking independent
resolution without expressing lack of the respect due coordinate
branches of government; or [5] an unusual need for unquestioning
adherence to a political decision already made; or [6] the
potentiality of embarrassment from multifarious pronouncements of
various departments on one question.”
Aircraft Corp.,
F. Supp. 3d
Carpenter v. Sikorsky
, 2015 WL 1893146, at *9 (C.D.
Cal. Apr. 27, 2015), citing Baker v. Carr at 210).
A case must be
dismissed for lack of jurisdiction on political question grounds
if, and only if, the case requires the court to determine a
question possessing one of these six factors.
Baker, 369 U.S. at
217; Occidental, 577 F.2d at 1201.
For a private party to invoke the doctrine to argue that
judicial resolution of the case is not appropriate, it must show
9
As noted in McMahon, 502 F.3d 1331, 1363 (11th Cir.
2007), “Courts have frequently held that certain military
judgments are outside the competence of courts.”
One example
cited was Akepe v. USA, 105 F.3d 1400, 1404 (11th Cir. 1997), in
which the appellate court opined,
In order to determine whether the Navy
conducted the missile firing drill in a
negligent manner, a court would have to
determine how a reasonable military force
would have conducted the drill. . . .
Decisions relative to training result from a
complex, subtle balancing of many technical
and military considerations, including the
trade-off between safety and greater combat
effectiveness. . . . [C]ourts lack standards
with which to assess whether reasonable care
was taken to achieve military objectives
while minimizing injury and loss of life.
-22-
(1) that the asserted claims require examination of some decision
by the executive or legislative branch, and (2) the decision is
insulated from judicial review.
McMahon v. Presidential Airways,
F.3d 1331, 1359 (11th Cir. 2007).
Inc., 502
The Fifth Circuit
“has consistently ‘followed the command that matters implicating
foreign affairs and military relations and military affairs are
generally
beyond
the
authority
adjudicative powers.’”
or
competency
of
a
court’s
Spectrum Stores, Inc. v. Citgo Petroleum
Corp., 632 F.3d 938, 950 (5th Cir. 2011), citing Lane, 529 F.3d at
559 (“This court has followed the command that matters implicating
foreign relations and military affairs are generally beyond the
authority or competency of a court’s adjudicative powers.”).
Nevertheless,
“it
is
error
to
suppose
that
every
case
or
controversy which touches foreign relations lies beyond judicial
cognizance”;
one
determination.
must
apply
the
Baker
factors
in
that
Baker, 369 U.S. at 211.
In a contract covered by section 707 of the Defense
Production Act of 1950, 50 U.S.C. § 4557,10 no person can be held
liable for compliance with a rule, regulation or order issued
under the Act.
The statute provides, “No person shall be held
liable for damages or penalties for any act or failure to act
resulting directly or indirectly from compliance with a rule,
regulation, or order issued pursuant to this Act [sections 20612170, 2171, and 2172 of this Appendix], notwithstanding that any
such rule, regulation, or order shall thereafter be declared by
10
Formerly cited as 50 App. U.S.C.A. § 2157.
-23-
judicial or other competent authority to be invalid . . . .”
at
50
U.S.C.
§
2157.
“Section
707
of
the
Act
Id.
immunized
contractors who were forced under threat of criminal sanction to
perform
contracts
for
the
Defense
Department
from
certain
liabilities stemming from the performance of those contracts.”
Ryan v. Dow Chemical Co., 781 F. Supp. 934, 945 (E.D.N.Y. 1992),
aff’d on other grounds, 996 F.2d 1425 (2d Cir. 1993), cert. denied
sub nom. Ivy v. Diamond Shamrock Chemicals Co., 510 U.S. 1140
(1994).
order’
That “[t]he LOGCAP III Contract was designated a ‘rated
contract,
[made]
its
performance
mandatory
under
the
Defense Production Act of 1950 . . . 50 U.S.C. § 2061-2171
The
willful failure to perform a rated order contract carries a
criminal penalty
See id. § 2071(a) and 2073).”
Martin v.
Halliburton, 618 F.3d 476, 480 (5th Cir. 2010).
KPCC’s Motion to Remand (#11)
KPCC argues that KBR was not acting as an agent of the
United States and that it retained discretion in the performance
of its work.
Although KBR claims removal jurisdiction under §
1442(a)(1), KPCC maintains that KBR had no authority to breach a
contract with a third-party vendor.
Nor was it acting as an
official of the government in choosing, in its “sole discretion,”
to breach the subcontract.
KPCC quotes Judge Keith Ellison’s
opinion in McGee v. Arkel Int’l, LLC,11 716 F. Supp. 2d 572, 575
(S.D. Tex. 2010):
11
The other two defendants in McGee were KBR Technical
Services, Inc. and Kellogg, Brown & Rooter Services, Inc.
-24-
To establish that a person was “acting under”
a federal officer, the defendant must show a
causal nexus between the conduct charged in
the plaintiffs’ claims and the acts performed
by the defendant at the direction of federal
authority.
Willingham [395 U.S. at 409];
Arness v. Boeing North American, Inc., 997 F.
Supp. 1268, 1274 (C.D. Cal. 1998).
The
federal officer must have “direct and
detailed control over the defendant” such
that “the acts that form the basis for the
suit were performed pursuant to an officer’s
direct orders or to comprehensive and
detailed regulations.” Ryan v. Dow Chemical
Co., 781 F. Supp. 934, 947 (E.D.N.Y. 1993);
Arness, 997 F. Supp. at 1273 (quoting Fung v.
Abex Corp., 816 F. Supp. 569. 572 (N.D. Cal.
1992).
However,
if
the
corporation
“establishes only that the relevant acts
occurred under the general auspices of
federal direction then it is not entitled to
28 U.S.C. § 1442(a)(1) removal.” Arness v.
Boeing North American, Inc., 997 F. Supp. at
1273 . . . .
In accord, Good v. Armstrong World Indus., 914 F. Supp. 1125, 1128
(E.D. Pa. 1996).
This Court observes that in McGee, Judge Ellison ruled
in favor of KBR and denied the motion to remand.
Judge Ellison
specifically found that KBR was acting in complete compliance with
the direct and specific orders that it received from the military,
that KBR had no discretion, and that all the work was performed
under the direct and detailed control of the military.
KPCC insists such was not the case in this action:
nothing
in
the
directive
from
the
United
States
government
instructed KBR not to pay KPCC the contractually agreed upon price
for the dining facility or how to breach the contract with KPCC,
so KPCC insists that § 1442 does not apply.
-25-
KPCC also contends that KBR’s affirmative defenses lack
merit and are not sufficient to create removal jurisdiction, and
therefore the case should be remanded. This Court would point out
that KPCC erroneously applies the law relating to standard of the
general removal statute for federal question jurisdiction, 28
U.S.C. §§ 1441(a), to argue there was no basis for the removal
under the federal officer removal statute, § 1442(a)(1):
KPCC
claims that removal is only permissible if a federal cause of
action is pleaded on the face of the petition by a plaintiff who
is the master of his complaint, or that the narrow exception for
state-law claims requiring the resolution of federal law applies,
while a federal defense to a state law claim will not support
federal question jurisdiction.
Louisville & Nashville R.R. v.
Motley, 211 U.S. 149, 152 (1908); Caterpillar, Inc. v. Williams,
482 U.S. 386,392-93 (1987); Grabble & Sons Metal Prods., Inc. v.
Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005).
But see pages 9-10
of this Opinion and Order.
KPCC also argues that derivative sovereign immunity does
not apply because the Texas Supreme Court recently held that
sovereign immunity does not extend to government contractors sued
for their own conduct. Brown & Gay Engineering, Inc. v. Olivares,
461 S.W. 3d 117, 124 (Tex. 2015)(holding that sovereign immunity
does not extend to private independent contractors hired on a
government contract and exercising independent discretion for the
-26-
actions allegedly causing the plaintiff’s loss, for which they
were sued).12
KBR’s Response (#19)
KBR argues, and the Court concurs, that KBR properly
removed this case under 28 U.S.C. § 1442(a)(1) because the
evidence it has submitted establishes that United States federal
officers directed and controlled KBR’s actions in negotiations to
purchase the DFAC at FOB Warrior (C7) on behalf the United States
Government and has thus established the existence of federal
jurisdiction.
The Court also has federal question jurisdiction
under 28 U.S.C. §§ 1331 and 1441 (1) because the case arises
“under the Constitution, laws or treaties of the United States”
and
involves
uniquely
federal
interests
and
(2)
because
adjudication of KPCC’s claims will require the Court to resolve
substantial disputed questions of federal law.
Specifically KBR
points out that KPCC’s claims require the Court to interpret the
provisions
of
relationship
the
between
Security
the
Agreement
Security
and
Agreement
to
and
analyze
the
substantial
federal laws governing the classification and disposal of “foreign
excess real property” by the Executive branch agencies, including
the Department of Defense.
See 40 U.S.C. §§ 701, et seq. (2002);
10 U.S.C. §§ 2662, et seq., (2011); 41 C.F.R. § 102-171, et seq.;
Department of Defense Directive 4165.06 (Nov. 18, 2008); and
Department of Army Regulation 405-90 (May 10, 1985).
KBR also
lists provisions of the Federal Acquisition Regulation that govern
12
As noted earlier, Texas law does not apply here.
p. 6 of this Opinion and Order.
-27-
See
the award and administration of subcontracts under federal prime
contracts, such as LOGCAP III.
In addition to the evidence attached to its Original
Petition, Notice of Removal (#1), and First Amended Complaint
(#12), KBR now submits a recently obtained declaration of Kathie
Potter
(“Potter”),
government
Procuring
Contracting
Officer-
Forward (“PCO-Forward”) serving in Iraq, “with direct and frequent
interaction with KBR and its personnel regarding their duties and
responsibilities under the LOGCAP III contract,” from November
2010-April 2012, who administered the LOGCAP III Contract and
directed KBR’s actions in its interactions with KPCC.
Exhibit 1.
#19-1,
KBR emphasizes that this declaration evidences the
following events of the United States government’s direction and
control of KBR’s actions that are in dispute:
(1) Federal
officers approved the subcontract agreement between KBR and KPCC
to provide DFAC food service at operational facilities at FOB
Warrior (C7), ¶ 5; (2) Potter directed KBR to negotiate with KPCC
to purchase FOB Warrior (C7) DFAC and its equipment13 in the spring
of 2011, as USF-I began closing numerous bases and facilities in
Iraq and arranged to continue operations at other sites under the
new mission of supporting the Office of Security Cooperation-Iraq
(“OSC-I”), as FOB Warrior (C7) was to remain operational, ¶ 6; (3)
Potter
was
aware
that
in
2008
the
United
States
and
Iraqi
Governments negotiated the Security Agreement (Exhibit B)for
withdrawal of U.S. forces from Iraq, ¶ 7; (4) toward the end of
13
Potter’s April 2, 2011 email to KBR, attached as
Exhibit A.
-28-
2011, following a review by its J7 directorate and its Office of
the Staff Judge Advocate, “USF-I determined that the DFAC building
at FOB Warrior (C7) was real property under the terms of the
Security Agreement’s Article 5, and under MNF-I Policy, and
informed
LOGCAP
officials
that
the
United
States
could
not
purchase the DFAC because ownership rested with the land, which
under the Security Agreement was the Government of Iraq,” ¶ 8; (5)
Potter accordingly directed KBR to suspend negotiations in late
2011; (6) Potter directed KBR to instruct KPCC not to remove or
damage the DFAC building, fixtures or equipment that the United
States determined to be real property, ¶ 9; (7) Potter directed
KBR to purchase only movable DFAC kitchen equipment from KPCC, ¶¶
8-9, Ex. C.; and (8) KBR followed Potter’s instructions, ¶ 9.
Court’s Decision
As
will
be
discussed
in
further
detail,
KBR
has
satisfied the requirements for removal under § 1442(a)(1).
Its
evidence establishes that contrary to KPCC’s allegations that the
decisions to purchase the DFAC for the United States or to allow
KPCC to demobilize the facility were in KBR’s “sole discretion,”
the United States specifically directed and controlled KBR’s
actions in its ongoing discussions with KPCC, the heart of KPCC’s
claims, and thus KBR has met the “acting under” element in
assisting the government in conducting operations in Iraq by
providing food services to troops at military dining facilities
that were constructed and operated by KBR-managed subcontractors
and
in
negotiating
government.
leases
or
purchases
on
behalf
of
the
KBR has also met the second, “causal nexus” element
-29-
of
the
federal
officer
removal
test
in
demonstrating
the
relationship between KPCC’s claims and KBR’s actions under and in
compliance with specific directions of the United States.
It has
also satisfied the third element for federal officer removal,
assertion
of
colorable
federal
defenses,
in
its
factual
allegations supporting derivative sovereign immunity and the
government contractor defense, the political question doctrine,14
and the Defense Production Act of 1950, as well as its new
defense, act of state doctrine.
KPCC incorrectly claims that KBR
must prevail on the merits of its federal defenses for proper
removal; as noted by this Court earlier, KBR needs only to present
one plausible defense, and need not prove it, to meet the standard
for federal officer removal under § 1442(a)(1), and it has more
than done so.
Mesa v. California, 489 U.S. at 129;
Magnin v.
Teledyne Continental Motors, 91 F.3d at 1427 (“The defense need
only be plausible; its ultimate validity is not determined at the
time of removal.”).
With respect to the three-prong test for federal officer
removal under § 1442(a)(1),
Winters, 149 F.3d at 398, there is no
14
As one example, KPCC’s claims implicate the first
Baker factor, a “textually demonstrable constitutional commitment
of the issue to a coordinate political department,” because war
and foreign policy decisions are constitutionally committed to the
Executive Branch: the doctrine of political question typically
precludes judicial review of decisions made by the Executive
during war time, while the “resolution of a territorial dispute
between foreign powers . . . is a matter[] that the President is
constitutionally privileged to address.” Lane, 529 F.3d at 559,
560, citing Occidental of Umm al Qaywayn, Inc. v. A Certain Cargo
of Petroleum, 577 F.2d 1196, 1203 (5th Cir. 1978)(“The resolution
of a territorial dispute between sovereigns . . . is a political
question which we are powerless to decide.”), cert. denied, 442
U.S. 928 (1979).
-30-
dispute that KBR, a corporation, is a “person” within the meaning
of
the
statute.
Id.
at
1197.
With
documentary
evidence,
including the declarations of Cheryl Ritondale and Kathie Potter,
KBR has established that it acted pursuant to a federal officer’s
(Potter’s) directions and that a causal nexus exists between the
KBR’s actions under the color of and pursuant to directions from
a federal officer and KPCC’s claims (that KBR breached its promise
to purchase the DFAC on behalf of the United States and prevented
KPCC from demobilizing the DFAC and taking it back to Kuwait and
that KBR committed fraud in failing to timely inform KPCC that the
United States decided not to purchase the facility and in inducing
KPCC to enter into a subcontract when KBR knew or should have
known that KPCC did not own the facility).
at 409.
Willingham, 395 U.S.
KBR has also asserted several colorable federal defenses
to state-law liability, as discussed below.
Mesa v. California,
489 U.S. at 129-30.
KBR states a plausible claim for derivative sovereign
immunity
in
directed”
showing
by
the
that
United
conferred”
contract.
mistakenly
claims
that
its
actions
States
Yearsley,
KBR
is
were
government
309
only
U.S.
“authorized
under
at
entitled
a
“validly
20-22.
to
and
KPCC
sovereign
derivative immunity as a government contractor if it proves that
it was “acting as a pure agent” of the government.
to Remand at 12.
Pl.’s Motion
See Ackerson, 589 F.3d at 204-06 (rejecting
plaintiffs’ argument that the federal contractor must show it is
-31-
an agent of the government before invoking its immunity).15
15
In Bynum v. FMC Corp., 770 F.2d 556, 564 (5th Cir.
1985), the Fifth Circuit stated, “[I]t is the law at least in this
Circuit that the contractor must be an agent of the government
before invoking its [government-contractor] immunity.”
Nevertheless in 2009 in Ackerson, 589 F.3d at 204-06
(footnote citations omitted), the Fifth Circuit went to great
lengths to explain why, despite this statement in Bynum, a
contractor does not need to have an agency relationship with the
government for the government-contractor defense:
This statement is not definitive, nor
binding, as the Plaintiffs suggest.
The
Bynum court acknowledged that Yearsley only
contains an “apparent requirement that the
contractor
possess
an
actual
agency
relationship with the government” and that
“federal courts certainly have not always
required such a relationship.” Additionally,
this statement is dicta, and we have never
held that Yearsley requires a common-law
agency relationship between the government
and a contractor.
The language regarding agency on which the
plaintiffs rely appears in an introductory
section of the Bynum opinion entitled, “Legal
Background,” which provided “a brief overview
. . . of the [modern government contractor]
defense’s historic analogues and the reasons
provided by federal and state courts for the
adoption of the modern defense.”
After
concluding its discussion of the legal
background, the court set forth a federal
common-law defense for military-equipment
manufacturers, without discussing, applying,
or citing Yearsley. Therefore, the court’s
statements
regarding
Yearsley
were
unnecessary to its holding and constitute
nonbinding dicta.
The court’s statement in Bynum is not
compelled by our prior case law. The Bynum
court cited to Whitaker v. Harvell-Kilgore
Corp. in support of its statement that a
contractor must be an agent of the government
before invoking its immunity. In Whitaker,
we held that a manufacturer of grenades and a
manufacturer of fuses were not agents of the
government and therefore not entitled to
immunity after a grenade prematurely exploded
-32-
Furthermore other remedial options are available to
KPCC instead of suing KBR for breach of contract, including an
action
against
the
United
States
Government,
which
during an Army training exercise. The Bynum
court’s reliance on Whitaker to support its
understanding of Yearsley is problematic,
however, because Whitaker does not cite
Yearsley.
Additionally, the case Whitaker
does cite to support its holding, Powell v.
United States Cartridge Co., is a Fair Labor
Standards Act case that likewise does not
cite Yearsley. Most importantly, both Bynum
and Whitaker addressed military-contractor
product liability and not public-works
contractor liability as in Yearsley.
The
application of the contractor defense in the
context of military-equipment manufacturers
is an area of law that has since been
arguably distinguished from the general
Yearsley
defense
in
Boyle
v.
United
Technologies Corp. and its progeny.
The Supreme Court’s decision in Yearsley does
not
require
a
public-works
contractor
defendant to establish a traditional agency
relationship with the government. Yearsley
does use the word “agent” but also uses
“contractor” and “representative.”
Most
notably, the Yearsley court did not examine
the relationship between the contractor
defendant and the government to determine
whether the contractor defendant was in fact
acting as an agent or whether the contractor
acted within the scope of any agency
relationship.
Instead, the court merely
noted that setting aside the plaintiffs’
takings claim, “there is no contention, or
basis for one, that if the contractor was
acting for the Government in prosecuting its
work in aid of navigation without the taking
of property, the contractor would be subject
to the asserted liability.”
Other courts applying Yearsley have likewise
not discussed an agency requirement. . . .
(discussing Myers v. United States, 323 F.2d
580 (9th Cir. 1963), as an example).
-33-
in
its
sovereign
capacity,
sovereign
Iraq
and
entered
into
subsequently
a
Security
interpreted
Agreement
that
with
Security
Agreement allegedly to effect a “taking” of property that was
allegedly owned by KPCC.
Yearsley, 309 U.S. at 21-22, clearly
indicates that KPCC may be entitled to just compensation from the
United States Government for the alleged “taking” under the Fifth
Amendment of the Constitution, but KBR cannot be held liable for
following the Government’s contractual directives:
[I]n the case of a taking by the Government
of private property . . . , it cannot be
doubted
that
the
remedy
to
obtain
compensation from the Government is as
comprehensive as the requirement of the
Constitution, and hence it excludes liability
of the Government’s representatives lawfully
acting on its behalf in relation to the
taking.
Id.
This Court agrees with KBR makes a plausible claim in
its political question doctrine defense because it would require
the
judiciary
to
second-guess
“policy
choices
and
value
determinations constitutionally committed for resolution to the
halls of Congress or the confines of the Executive Branch.” Japan
Whaling Ass’n, 478 U.S. at 230. Because the issue here implicates
the first, second, fourth and sixth factors set out in Baker v.
Carr, 369 U.S. at 217, to prevail, KPCC would have to show that it
owned the DFAC in dispute, thus implicating a quintessential
foreign policy decision that is constitutionally committed to the
Executive Branch, i.e., the decision to concede that under the bilateral Security Agreement the Iraqi government owns the land and
real property on designated U.S. military bases.
-34-
KBR argues that
the issue implicates the second factor because there are no
judicially
manageable
standards
for
resolving
on
the
merits
whether the United States military appropriately designated the
DFAC
in
dispute
as
“real
property,”
and
thus
whether
government’s contractual directives to KBR were in error.
the
The
fourth and sixth Baker factors would be at issue if, years after
the United States withdrew its forces from Iraq, the judiciary
disagreed with the terms of the Security Agreement negotiated by
the Executive Branch or with how the military applied those terms
to on American military base in Iraq.16
KBR now points out that the acts of state doctrine also
applies because KPCC’s claims question the sovereign acts of the
Iraqi government.17 KPCC has admitted that the Security Agreement
16
Contending that there is no political question here,
KPCC disagrees about the application of the Baker factors. #13 at
p. 18-19.
It argues that there is no textually demonstrable
constitutional commitment of the issues to a coordinate political
department because KBR does not cite to any section of the
Constitution that reserves the issue of contract compliance to the
Executive or Legislative branch of government. KPCC insists that
there are judicial standards for resolving this
breach of
contract case which courts use every day. It asserts that the
Court
can
undertake
an
independent
resolution
without
disrespecting the coordinate branches of government, and just as
KBR is responsible for its own contractual obligations, the
Government is responsible for its, and KBR can seek redress
against the Government under its contract. Finally KPCC states
there is no potential for embarrassment from multifarious
pronouncements of various departments and that KBR fails to
explain how this element is even implicated in this case.
17
Chief Justice Fuller, speaking for a unanimous United
States Supreme Court in Underhill v. Hernandez, 168 U.S. 250
(1897), described the act of state doctrine as follows:
Every sovereign state is bound to respect the
independence of every other sovereign state,
and the courts of one country will not sit in
judgment on acts of the government of another
-35-
done within its own territory.
Redress of
grievances by reason of such acts must be
obtained through the means open to be availed
of by sovereign powers as between themselves.
Some courts have concluded the act of state doctrine
“does not operate by depriving courts of jurisdiction; rather it
functions as a doctrine of abstention.”
Riggs Nat’l Corp. &
Subsidiaries v. Commissioner of the IRS, 163 F.3d 1363, 1367 & n.5
(D.C. Cir. 1999); in accord, Hunt v. Mobil Oil Corp., 550 F.2d 68,
74 (2d Cir. 1977), cert. denied, 434 U.S. 904 (1977); Mannington
Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1292 (3d Cir.
1979).
The Ninth Circuit, in DeRoburt v. Gannett Co., Inc., 733
F.2d 701, 702-03 (9th Cir. 1984), has held that the act of state
doctrine
although similar to the sovereign immunity
doctrine, is distinguishable in several
significant
aspects.
Where
sovereign
immunity addresses the jurisdiction of the
court, the act of state doctrine “is a
prudential
doctrine
designed
to
avoid
judicial action in sensitive areas.” Inter.
Ass’n of Machinists, Etc. v. OPEC, 649 F.2d
1354, 1359 (9th Cir. 1981). Further, in Banco
Nacional de Cuba v. Sabbatino, 376 U.S. 398,
. . . (1964(, the Court recognized that the
doctrine ws not compelled by the nature of
sovereignty, by international law, or by the
text of the Constitution. 376 U.S. at 42123. . . . Rather, it derives from the
judiciary’s
concern
for
its
possible
interference with the conduct of foreign
affairs by the political branches of the
government. . . . [I]t is a balancing test
with the critical element being the potential
for interference with our foreign relations.
As such, courts should seek to avoid passing
on the validity of foreign acts . . . .
The Fifth Circuit finds relevant the nonjusticiable
political question doctrine and the absence of judicially
manageable standards for resolving challenges:
In their external relations, sovereigns are
bound by no law; they are like our ancestors
before the recognition or imposition of the
social contract. A prerequisite of law is a
recognized
superior
authority
whether
delegated from below or imposed from above-36-
is “valid, binding, and enforceable” in its motion to remand at
page 21. The Security Agreement states that the United States and
Iraq have agreed that “Iraq owns all buildings, non-relocatable
structures, and assemblies connected to the soil that exist on
agreed facilities.”
Ex. 1, Potter Decl., ¶ 7, Ex. B.
It also
states that the DFAC located on FOB Warrior (C7) was one of the
“agreed facilities” subject to Iraqi ownership.
C.
Id., ¶ 8-9, Ex.
Nevertheless KPCC‘s lawsuit challenges Iraq’s assertion of
ownership over that DFAC, thus requiring this Court to decide
whether Iraq’s sovereign claim was wrongful, illegal or otherwise
nonbinding.
Under the act of state doctrine, where a United
States court is asked to decide the legitimacy of a foreign
government’s ownership to property located
within its sovereign
territories, the case must be dismissed, even where the claims are
brought
solely
against
private
entities.
See,
e.g.,
Banco
Nacional de Cuba v. Sabbatino, 376 U.S. 398, 436-37 (1964)(holding
that Cuba’s taking of a sugar shipment within its borders was an
act of state);
Oetjen v. Cent. Leather Co., 246 U.S. 297, 302-03
(1918)(holding that Mexican government’s seizure of property for
military purposes was an act of state).18
Moreover, as noted, the
where there is no recognized authority, there
is no law.
Because no law exists binding
these sovereigns and allocating rights and
liabilities, no method exists to judicially
resolve their disagreements.
Occidental of Umm al Qaywayn, 577 F.2d at 1204-05.
18
KPCC objects that the act of state doctrine does not
apply here, where the issue is the conduct and actions of KBR, not
the validity of a foreign government’s official act or of the
Security Agreement or the policy decisions of the Republic of
-37-
Fifth Circuit interprets the act of state doctrine as ground in
the political question doctrine.
KBR’s government contractor defense is also plausible
because, as the evidence reflects, the United States devised
detailed specifications regarding the timing and subject matter of
KBR’s
discussions
with
KPCC,
KBR
complied
with
those
specifications, and KBR explicitly notified the government of the
risks and potential liabilities that might arise if the United
States expropriated KPCC’s property (Ex. 2, Ritondale Decl. ¶ 10,
Ex. 5B).
Finally
KBR’s
Defense
Production
Act
defense
is
plausible because KPCC is suing KBR as a direct consequence of its
compliance with the PCO-Forward’s contractual directives under
LOGCAP III (a “rated order” issued pursuant to the Act).
Because the Court agrees with KBR as a matter of law
that it has properly removed this case under § 1442(a)(1) and
because
KBR
has
supported
its
arguments
with
persuasive
documentary evidence, the Court denies KPCC’s motion to remand.
Iraq. See W.S. Kirkpatrick & Co. v. Environmental Tectoics Corp.,
Int’l, 493 U.S. 400, 404 (1990); Af-Cap Inc. v. Republic of Congo,
383 F.3d 381, 372 n.14 (5th Cir. 2004)(“the act of state doctrine
applies only when the dispute implicates the legitimacy of public
acts undertaken by a sovereign nation”), clarified on other
grounds on rehearing, 389 F.3d 503 (5th Cir. 2004). Here KPCC
concedes that the Security Agreement is a valid, binding and
enforceable agreement by and between the United States and
Republic of Iraq, but argues that it does not apply to the facts
here, but only to “agreed facilities and areas,” and FOB Warrior
(C7) was not one of the agreed facilities because it was not
turned over to the Iraqi Government by July 30, 2009. Indeed, it
argues, if it were part of the Security Agreement, there was no
need for the second subcontract with its optional purchase of the
Facility.
-38-
KBR’s Motion to Dismiss Pursuant to
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6)
Standards of Review
Rule 12(b)(1)
“When a motion to dismiss for lack of jurisdiction ‘is
filed in conjunction with other Rule 12 motions, the court should
consider the Rule 12(b)(1) jurisdictional attack before addressing
any attack on the merits.”
Crenshaw-Logal v. City of Abilene,
Texas, No. 11-10264, 2011 WL 3363872, *1 (5th Cir. Aug. 4, 2011),
quoting Ramming v. United States, 281 F.3d 158, 161 (5th Cir.
2001); see also Randall D. Wolcott, MD, PA v. Sebelius, 635 F.3d
757, 762 (5th Cir. Mar. 15, 2011); Fed. R. Civ. P. 12(h)(3).
If
a complaint could be dismissed for both lack of jurisdiction and
for failure to state a claim, “the court should dismiss only on
the jurisdictional ground under [Rule] 12(b)(1), without reaching
the question of failure to state a claim under [Rule] 12(b)(6).”
Crenshaw-Logal, 2011 WL 3363872, *1, quoting Hitt v. City of
Pasadena, 561 F.2d 606, 608 (5th Cir. 1977).
this
practice
opinions
and
are
to
barring
preclude
courts
courts
without
from
The reasons behind
issuing
advisory
jurisdiction
prematurely dismissing a case with prejudice.’”.
“‘from
Id., citing
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101 (1998),
and Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).
Rule 12(b)(1) allows a party to move for dismissal of an
action for lack of subject matter jurisdiction.
The party
asserting that subject matter exists, here the plaintiff, must
bear the burden of proof by a preponderance of the evidence for a
-39-
12(b)(1) motion.
New Orleans & Gulf Coast Ry. Co. v. Barrois, 533
F.3d 321, 327 (5th Cir. 2008); Ramming v. United States, 281 F.3d
158, 161 (5th Cir. 2001). In reviewing a motion under 12(b)(1) the
court may consider (1) the complaint alone; (2) the complaint
supplemented by undisputed facts evidenced in the record; or (3)
the complaint supplemented by undisputed facts plus the court’s
resolution of disputed facts. Williamson v. Tucker, 645 F.2d 404,
413 (5th Cir. 1981).
A
motion
to
dismiss
for
lack
of
subject
matter
jurisdiction under Rule 12(b)(1) is characterized as either a
“facial” attack, i.e., the allegations in the complaint are
insufficient to invoke federal jurisdiction, or as a “factual”
attack, i.e., the facts in the complaint supporting subject matter
jurisdiction are questioned.
In re Blue Water Endeavors, LLC,
Bankr. No. 08-10466, Adv. No. 10-1015, 2011 WL 52525, *3 (E.D.
Tex. Jan. 6, 2011), citing Rodriguez v. Texas Comm’n of Arts, 992
F. Supp. 876, 878-79 (N.D. Tex. 1998), aff’d, 199 F.3d 279 (5th
Cir. 2000). A facial attack happens when a defendant files a Rule
12(b)(1)
motion
without
accompanying
evidence.
Paterson
v.
Weinberger, 644 F.2d 521, 523 (5th Cir. 1981). In a facial attack,
allegations in the complaint are taken as true.
Blue Water, 2011
WL 52525 at *3, citing Saraw Partnership v. United States, 67 F.3d
567, 569 (5th Cir. 1995).
If it is a factual attack, the
Court may consider any evidence (affidavits, testimony, documents,
etc.) submitted by the parties that is relevant to the issue of
jurisdiction.
Id., citing Irwin v. Veterans Admin., 874 F.2d
1092, 1096 (5th Cir. 1989).
A defendant making a factual attack
-40-
on a complaint may provide supporting affidavits, testimony or
other admissible evidence. Patterson v. Weinberger, 644 F.3d 521,
523 (5th Cir. 1981).
The plaintiff, to satisfy its burden of
proof, may also submit evidence to show by a preponderance of the
evidence that subject matter jurisdiction exists.
Id.
The
court’s consideration of such matters outside the pleadings does
not convert the motion to one for summary judgment under Rule
56(c).
Robinson v. Paulson, H-06-4083, 2008 WL 4692392 at *10
(S.D. Tex. Oct. 28, 2008), citing Garcia, 104 F.3d at 1261.
“Unlike in a facial attack where jurisdiction is determined upon
the basis of allegations of the complaint, accepted as true[,]
when a factual attack is made upon federal jurisdiction, no
presumption
of
truthfulness
attaches
to
the
plaintiffs’
jurisdictional allegations, and the court is free to weigh the
evidence and satisfy itself as to the existence of its power to
hear the case.
In a factual attack, the plaintiffs have the
burden of proving that federal jurisdiction does in fact exist.”
Evans v. Tubbe, 657 F.2d 661, 663 (5th Cir. 1981).
a
factual
attack
on
subject
matter
jurisdiction
In resolving
under
Rule
12(b)(1), the district court, which does not address the merits of
the suit,19 has significant authority “‘to weigh the evidence and
19
As the court explained in Taylor v. Dam, 244 F. Supp.
2d 747, 753 (S.D. Tex. 2003),
It is well settled that “a district court has
broader power to decide its own right to hear
the case than it has when the merits of the
case are reached.”
[Williamson v. Tucker,
645 F.2d 404, 413 (5th Cir.). cert. denied,
454 U.S. 897 (1981).] “Jurisdictional issues
are for the court--not the jury--to decide,
-41-
satisfy itself as to the existence of its power to hear the
case.’”
Robinson v. Paulson, No. H-06-4083, 2008 WL 4692392, *10
(S.D. Tex. Oct. 22, 2008), quoting Garcia v. Copenhaver, Bell &
Assocs., 104 F.3d 1256, 1261 (11th Cir. 1997), and citing Clark v.
Tarrant County, 798 F.2d 736, 741 (5th Cir. 1986). The attack here
is factual, with KBR submitting substantial documentary evidence
supporting its arguments.
A court may sua sponte raise a Rule 12(b)(1) motion to
dismiss for lack of subject matter jurisdiction at any time.
Westland Oil Development Corp. v. Summit Transp. Co., 481 F. Supp.
15 (S.D. Tex. 1979), aff’d, 614 F.2d 768 (1980).
See also Kidd v.
Southwest
545
Airlines
Co.,
891
F.2d
540,
(5th
Cir.
1990)(“[F]ederal courts must address jurisdictional questions sua
sponte when the parties’ briefs do not bring the issue to the
court’s attention.”).
The Court’s dismissal of a case for lack of subject
matter jurisdiction is not a judgment on the merits and does not
preclude the plaintiff from pursuing his claim in a court that
whether they hinge on legal or factual
determinations.
Id.
To determine whether
jurisdiction exists, the court will generally
resolve any factual disputes from the
pleadings and the affidavits submitted by the
parties. See Espinoza v. Missouri Pac. R.R.
Co., 754 F.2d 1247, 1248 n.1 (5th Cir. 1985).
The court may also conduct an evidentiary
hearing and “may hear conflicting written and
oral evidence and decide for itself the
factual issues which determine jurisdiction.”
Williamson, 645 F.2d at 413; see Menchaca v.
Chrysler Credit Corp.,613 F.2d 507, 511-12
(5th Cir.), cert. denied, 449 U.S. 953 . . .
(1980).
-42-
properly has jurisdiction.
Hitt v. City of Pasadena, 561 F.2d
606, 608 (5th Cir. 1977).
Rule 12(b)(6)
When a district court reviews a motion to dismiss
pursuant to Fed. R. Civ. P. 12(b)(6), it must construe the
complaint in favor of the plaintiff and take all well-pleaded
facts as true. Randall D. Wolcott, MD, PA v. Sebelius, 635 F.3d
757, 763 (5th Cir. 2011), citing Gonzalez v. Kay, 577 F.3d 600, 603
(5th Cir. 2009).
The plaintiff’s legal conclusions are not
entitled to the same assumption. Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009)(“The tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal
conclusions.”), citing Bell Atlantic Corp. v. Twombly, 556 U.S.
662, 678 (2007); Hinojosa v. U.S. Bureau of Prisons, 506 Fed.
Appx. 280, 283 (5th Cir. Jan. 7, 2012).
“While a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, . . . a
plaintiff’s
obligation
‘entitle[ment]
to
to
relief’
provide
the
requires
more
‘grounds’
than
of
his
labels
and
conclusions, and a formulaic recitation of the elements of a cause
of action will not do . . . .”
Bell Atlantic Corp. v. Twombly,
127 S. Ct. 1955, 1964-65 (2007)(citations omitted).
“Factual
allegations must be enough to raise a right to relief above the
speculative level.”
Id. at 1965, citing 5 C. Wright & A. Miller,
Federal Practice and Procedure
§ 1216, pp. 235-236 (3d ed.
2004)(“[T]he pleading must contain something more . . . than . .
.
a statement of facts that merely creates a suspicion [of] a
-43-
legally cognizable right of action”). “Twombly jettisoned the
minimum notice pleading requirement of Conley v. Gibson, 355 U.S.
41 . . . (1957)[“a complaint should not be dismissed for failure
to state a claim unless it appears beyond doubt that the plaintiff
can prove no set of facts in support of his claim which would
entitle him to relief”], and instead required that a complaint
allege enough facts to state a claim that is plausible on its
face.”
St. Germain v. Howard,556 F.3d 261, 263 n.2 (5th Cir.
2009), citing In re Katrina Canal Breaches Litig., 495 F.3d 191,
205 (5th Cir. 2007)(“To survive a Rule 12(b)(6) motion to dismiss,
the plaintiff must plead ‘enough facts to state a claim to relief
that is plausible on its face.’”), citing Twombly, 127 S. Ct. at
1974). “‘A claim has facial plausibility when the pleaded factual
content allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’”
Montoya v.
FedEx Ground Package System, Inc., 614 F.3d 145, 148 (5th Cir.
2010), quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
The
plausibility standard is not akin to a “probability requirement,”
but asks for more than a “possibility that a defendant has acted
unlawfully.”
Twombly, 550 U.S. at 556.
Dismissal is appropriate
when the plaintiff fails to allege “‘enough facts to state a claim
to relief that is plausible on its face’” and therefore fails to
“‘raise a right to relief above the speculative level.’” Montoya,
614 F.3d at 148, quoting Twombly, 550 U.S. at 555, 570.
In Ashcroft v. Iqbal, 556 U.S. at 679, the Supreme Court
stated that “only a complaint that states a plausible claim for
relief survives a motion to dismiss,” a determination involving “a
-44-
context-specific task that requires the reviewing court to draw on
its judicial experience and common sense.” “[T]hreadbare recitals
of the elements of a cause of action, supported by mere conclusory
statements do not suffice” under Rule 12(b).
1949.
Iqbal, 129 S. Ct. at
The plaintiff must plead specific facts, not merely
conclusory allegations, to avoid dismissal.
Collins v. Morgan
Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). “Dismissal
is proper if the complaint lacks an allegation regarding a
required element necessary to obtain relief . . . .“
Rios v. City
of Del Rio, Texas, 444 F.3d 417, 421 (5th Cir. 2006), cert. denied,
549 U.S. 825 (2006).
When a plaintiff’s complaint fails to state a claim, the
court should generally give the plaintiff at least one chance to
amend the complaint under Rule 15(a) before dismissing the action
with prejudice.
Great Plains Trust Co v. Morgan Stanley Dean
Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002)(“District courts
often afford plaintiffs at least one opportunity to cure pleading
deficiencies before dismissing a case, unless it is clear that the
defects are incurable or the plaintiffs advise the court that they
are unwilling or unable to amend in a manner that will avoid
dismissal.”); United States ex rel. Adrian v. Regents of the Univ.
of Cal., 363 F.3d 398, 403 (5th Cir. 2004)(“Leave to amend should
be freely given, and outright refusal to grant leave to amend
without
a
justification
.
.
.
is
considered
an
abuse
of
discretion. [citations omitted]”). The court should deny leave to
amend if it determines that “the proposed change clearly is
frivolous
or
advances
a
claim
-45-
or
defense
that
is
legally
insufficient on its face . . . .”
6 Charles A. Wright, Arthur R.
Miller & Mary Kay Kane, Federal Practice and Proc. § 1487 (2d ed.
1990).
KBR’s Motion to Dismiss (#4, and Supporting Memorandum, #5)
Interwoven with the arguments addressed regarding the
motion to remand, KBR’s motion to dismiss asserts three distinct
reasons to dismiss all KPCC’s claims:
(1) KBR is entitled to
derivative sovereign immunity because it acted in accordance with
express contractual directions from the United States; (2) under
Rule 12(b)(1) the Court lacks subject matter jurisdiction because
it cannot review the merits of Plaintiff’s claims or KBR’s
defenses without addressing nonjusticiable political questions20;
and (3) under Rule 12(b)(6) KPCC fails to state a claim upon which
relief may be granted because adjudication of KPCC’s claims would
require the Court to invalidate sovereign acts of state by the
Republic of Iraq.21
KBR describes in detail with supporting documentary
evidence the specific instructions the United States Government
continually gave to KBR, and which KBR followed, regarding the
20
These “foreign policy determinations and discretionary
decisions by executive branch officials in a war theater” include
“(1) the propriety of the terms negotiated and agreed to between
the United States and the newly established government of Iraq in
2008; (2) the U.S. military’s subsequent interpretation and
application of those terms to the DFAC at issue in this lawsuit.”
#5 at p.2.
21
KPCC’s “allegations implicitly but necessarily
contest Iraq’s ownership rights to the DFAC under the terms of the
2008 agreement with the United States.
KPCC cannot prevail
against KBR without first establishing that Iraq’s ownership
interst in DFAC is illegitimate.” #5 at p.2.
-46-
DFAC and the decision ultimately to not purchase it because
ownership rested with the sovereign Government of Iraq under the
Security
Agreement,
sovereignty.
the
#5 at 3-8.
provisions
of
which
emphasized
that
Citing relevant cases, KBR therefore
argues that KPCC’s claims should be dismissed under Rule 12(b)(1)
because KBR is entitled to derivative sovereign immunity for
actions it took regarding the DFAC at the specific direction in
written documents from the United States Government.
Yearsley,
309
U.S.
18;
Ackerson,
589
F.3d
196;
See, e.g.,
Mangold
v.
Analytical Servs., Inc., 77 F.3d 1442, 1337-48 (4th Cir. 1996)(“If
absolute immunity protects a particular governmental function, no
matter how many times or to what level that function is delegated,
it is a small step to protect that function when delegated to
private contractors, particularly in light of the government’s
unquestioned need to delegate governmental functions.”); Murray v.
Northrup Grumman Info. Tech., Inc., 444 F.3d 169, 175 (2d Cir.
2006)(holding
that
a
private
contractor
hired
to
perform
a
“quintessential governmental function” is absolutely immune from
liability under state law for actions taken in the course of its
official duties). Here the challenged conduct was well within the
scope of KBR’s official duties under a validly conferred federal
contract, as KPCC’s petition concedes.
KBR
dismissed
further
again
contends
under
Rule
KPCC’s
12(b)(1)
claims
should
because
also
they
be
raise
nonjusticiable political questions. Baker v. Carr, 369 U.S. 186.
Addressing KPCC’s claims would require the Court to inquire into
the reasonableness of the United States’ foreign policy decisions
-47-
regarding the normalization of relations with a foreign sovereign
after
a
long
period
of
armed
conflict.
Such
matters
are
undisputedly committed to the executive and legislative branches
of the United States Government and thus not subject to judicial
review.
KPCC’s Response (#13)
Reiterating its previous arguments that the Security
Agreement between the United States and Iraq was signed on
September
17,
subcontract
2008
in
September 2010.
and
dispute
thus
was
between
in
KBR
effect
and
long
KPCC
was
before
signed
the
in
The Security Agreement does not reference FOB
Warrior (C7) nor list it as an “agreed facility.”
KPCC now
highlights the fact that under Security Agreement’s express terms,
the list of agreed facilities had to be turned over to Iraq upon
entry of the Security Agreement in 2008 and all property subject
to the Security Agreement had to be turned over to Iraq by June
2009.
#13, Ex. 6.
KPCC argues that FOB Warrior (C7) could not
have been a part of the Security Agreement because it if were, KBR
could not have contracted with KPCC to construct the dining
facility on it in 2010. Therefore this case does not question the
validity or policy reasons for the Security Agreement, which is
irrelevant to the issues in this suit.
Moreover, as indicated
earlier, the second subcontract, Ex. 1 at ¶ 4.5.2, states that the
contractor may “at its sole discretion at any time during the
lease, unilaterally opt to purchase the Assets.”
KPCC emphasizes
that nothing in the subcontract makes performance or purchase of
the
facility
contingent
upon
approval
-48-
by
the
United
States
Government.
While ¶ 6.1.1 gave KBR the right to assign the use of
the property to the United States Government, KBR did not do so.
KPCC summarizes, “In this case KBR contracted to lease and then
purchase a dining facility that was erected by KPCC.
KBR leased
the facility and when the time came to pay the remaining purchase
price, it refused to pay.
p.9.
That is a breach of contract.”
#13 at
KBR both refused to pay for the facility and refused to
allow KPCC to pick it up, a second breach of the contract.
Instead KBR kept using the facility, but failed to pay for it,
again breaching the contract.
KPCC contends that derivative sovereign immunity does
not apply here because it is suing KBR under KBR’s own contract
for its own decision in its “sole discretion” not to purchase or
return the facility, and therefore KBR can be held accountable for
its decision.22
KPCC maintains that KBR was an independent
22
The Court earlier ruled that Texas law, and therefore
the Texas Supreme Court’s opinion in Brown & Gay, which addressed
state law concepts of derivative sovereign immunity, and not the
common law principles addressed by the Fifth Circuit in Yearsley
and Ackerson, does not control in this suit.
Moreover, KBR points out that its motion to dismiss
relies on the derivative sovereign immunity principles in
Yearsley, 309 U.S. at 22 (holding that liability for loss of
property caused by a contractor acting at the direction of the
federal government rests only with the government, not the
contractor), and Ackerson, 589 F.3d at 207 (holding that a
contractor acting at the federal government’s direction cannot be
held liable for damages caused by the government’s instructions)
that a contractor performing its duties within the scope of a
federal government contract is immune from third-party liability
allegedly arising from that performance.
Nevertheless KPCC
ignores KBR’s reliance on these two cases and applies the Texas
Supreme Court’s opinion in Brown & Gray. KBR highlights the fact
that Brown & Gray, itself, distinguishes its facts from the
results in Yearsley and Ackerson, where there was no diversion
from the government’s instructions and where “the alleged cause of
the injury was not the independent action of the contractor, but
-49-
contractor of the United States Government, not a common law
agent.
Furthermore, KPCC asserts, when the Government does
business with a third party, it waives sovereign immunity.
Franconia Assocs. v. United States, 536 U.S. 129, 141 (2002)(“Once
the United States waives its immunity and does business with its
citizens,
it
immunity.”).
does
so
much
as
a
party
never
cloaked
with
“‘When the United States enters into contract
relations, its rights and duties therein are governed generally by
the law applicable to contracts between private individuals.’”
Id., quoting Mobile Oil Exploration & Producing Southeast, Inc. v.
United States, 530 U.S. 604, 607 (2000).
If the United States
waives its sovereign immunity, KBR waives its derivative sovereign
immunity, too.
KPCC further asserts that derivative sovereign
immunity under federal law is simply a product of common law,
applies only to tort actions and does not apply to contract
actions.
See Bixby v. KBR, Inc., 748 F. Supp. 2d 1224, 1242 (D.
Or. 2010).
Furthermore,
argues
KPCC,
immunity
“must
be
affirmatively justified, and does not flow automatically from the
government’s retained sovereign immunity.”
1345-56.
It
maintains
that
KBR
has
not
McMahon, 502 F.3d at
given
reasons
nor
the action taken by the government through the contractor.”
Response, Ex. 5 at p.13. In the case before this Court KPCC does
not claim that KBR acted negligently or deviated at all from the
instructions and direction of the United States, and in fact could
not in light of the contemporaneous documentary evidence submitted
by KBR; instead KPCC charges that KBR made the wrong decision in
obeying those directions and should have let KPCC remove the DFAC
from FOB Warrior (C7) or KBR should have purchased the property
from KPCC despite the military’s determination that it was not
KPCC’s property to sell. #18 at p.6.
-50-
presented
any
evidence
justifying
an
extension
of
sovereign
immunity to itself.
KPCC also insists there are no political questions
involved regarding the legitimacy of the Security Agreement nor
the decision of the United States Government in entering into it.
Nor will the Court be reviewing a political decision made by
another branch of government.
The issue of this case is not the
validity of the Security Agreement, but whether KBR breached its
subcontract with KPCC.
KBR is seeking only damages for that
breach and/or for fraudulently inducing KPCC into the contract,
but not injunctive relief or a declaration that the Security
Agreement is void or voidable. KPCC claims without authority that
a lawsuit only for damages “is typically free from any political
question.”
#13 at p.15.
KPCC further contends that KBR has repeatedly tried to
argue the existence of a political question in tort cases filed
against it for various illegal acts in Iraq and Afghanistan.
example, in
For
Bixby v. KBR, a plaintiff class sued KBR for exposure
to toxic chemicals (sodium dichromate and resultant hexavalent
chromium) while members were stationed in Iraq and on duty at the
Qarmat Ali water plant.
sovereign immunity.
question
doctrine
KBR lost on its claim for derivative
The court also held that the political
does
not
preclude
jurisdiction
where
a
government contractor is being sued for the performance of a
government contract, particularly when the contractor is permitted
any measure of discretion.
Bixby v. KBR, Inc., 748 F. Supp. 2d
-51-
at 1239-40.23 Bixby cites several cases involving KBR in which the
court rejected KBR’s argument that the political question doctrine
precluded jurisdiction, including Lane v. Halliburton, 529 F.3d
548, 554 (5th Cir. 2008).
In Lane, in which Halliburton employees
sued KBR in tort for injuries they suffered when their truck was
attacked by Iraqi insurgents, the Fifth Circuit went through the
six Baker factors and, disagreeing with the district court,
concluded none of them was present.24
In particular it found that
KBR’s decisions were not political because KBR “is not part of any
23
This Court observes that the soldiers’ claims against
KBR in Bixby were state law claims for negligence and fraud.
24
KBR later responds (#18 at p. 10 n.2.) by noting that
in Lane, 529 F.3d at 568, the Fifth Circuit in its conclusion
wrote,
We recognize the difficulty presented by
cases that arise at least in part in a war
zone.
There are constitutional as well as
practice considerations that may prevent
judicial resolution.
It appears, though,
that these tort-based claims of civilian
employees against their civilian employers
can be separated from the political questions
that loom so large in the background. . . .
It is conceivable that further development of
the facts on remand will again send this case
toward the political question barrier.
Permitting this matter to proceed now does
not preclude the possibility that the
district court will again need to decide
whether a political question inextricably
arises in this suit.
KBR points out that it ultimately prevailed in this litigation on
other grounds, i.e,, preemption by the Defense Base Act, 42 U.S.C.
§ 1651, but that the Fifth Circuit continued to recognize the
potential application of the political question doctrine although
because of this preemption it chose “not to consider whether we
have jurisdiction to entertain [KBR’s] alternative grounds” of
political question, government contractor defense and combatant
activities exception. Fisher v. Halliburton, 667 F.3d 602, 606
(5th Cir. 2012).
-52-
coordinate branch of the federal government” and “[t]he court will
be asked to judge KBR’s policies and actions, not those of the
military or Executive Branch.” 529 F.3d at 560, 563. KPCC argues
that in this case this Court will be asked to question KBR’s
actions and its decision to pay or not to pay for the facility in
its sole discretion.
KPCC, citing examples (# 13 at p.17 n.3) notes that
while KBR can sue the United States Government under LOGCAP III
and LOGCAP IV, KPCC has no contractual privity with the United
States Government and cannot do so.25
Moreover, there was no
obstacle to KBR’s paying KPCC and then challenging the Government.
If KBR wanted its contractual obligations to be contingent on the
Government’s approval, it could have stated so in the contract,
but did not.
Finally and alternatively, if the Court decides that the
political question and act of state doctrines do not apply to this
case, if therefore that FOB Warrior (C7) was one of the agreed
facilities in the Security Agreement, and if that fact was known
in November 2008 when the Security Agreement was executed or at
latest in June 2009 when all agreed upon property was turned over
to Iraq, then KPCC has a claim for promissory estoppel and/or
fraud.
In the second subcontract entered into in September 2010,
KBR represented that it would pay rent to KPCC for a set time or
would
purchase
the
Facility,
and
KPCC
relied
on
that
representation when it built the Facility at FOB Warrior (C7). If
25
This Court observes that a contract is not required
for a takings claim under the Fifth Amendment.
-53-
the Facility is subject to the Security Agreement, KBR knew or
should have known that any building erected on the site would
immediately become property of the Iraqi Government.
Therefore
KBR was either without authority to execute the second subcontract
and it is void or it was the product of fraudulent inducement or
it fails for lack of mutuality, and KPCC is entitled to recover
out-of-pocket damages for its reliance on KBR’s representations.26
In sum, KPCC highlights that this is a breach of
contract case. KBR voluntarily entered into these commitments and
thus waived any potential claim of immunity.
It entered into the
second subcontract two years after the Security Agreement and is
now
attempting
to
use
it
to
avoid
its
obligations
in
an
unjustified use of the doctrines raised in its defenses.
KBR’s Reply (#18)
KBR first argues that KPCC’s claims against KBR are
barred by derivative sovereign immunity.
KBR reiterates much of what it summarized about Potter’s
numerous,
ongoing,
specific
directions,
the
government’s
decisions, and KBR’s compliance with them, supported by Potter’s
declaration, emails and a November 1, 2011 memorandum, asserted
regarding the motion to remand.
26
It now contends, “The instant
KBR disagrees with this assertion and with KPCC’s
claim of fraudulent inducement and points out that the Security
Agreement does not mention by name any specific facility to be
transferred, including the FOB Warrior DFAC. It was only in late
2011, during the closing months of the United States’ military
presence in Iraq, and long after performance pursuant to the
second subcontract had begun, that the United States determined
that the FOB Warrior DFAC fell within the terms of the Security
Agreement and was thus the property of Iraq. #18 at p.14 n.6.
-54-
lawsuit, despite KPCC’s protestations to the contrary, is at its
core a challenge to the government’s 2011 designation of the FOB
Warrior DFAC as Iraqi government property. . . . The government’s
decision undeniably constitutes a military and foreign policy
judgment
regarding
the
proper
application
of
the
Security
Agreement and was made in furtherance of the United States
military’s previous determination that ‘an effective transfer of
functional facilities [in Iraq] is critical to enabling our Iraqi
partners to assume increased security responsibility.’”
p.2, citing Memorandum re:
#18 at
Return of Closure of Bases and
Facilities, issued by Raymond T. Odierno, Commanding General,
Multi-National Force--Iraq (Apr. 20, 2009)(Ex. 2).
KPCC not only
disagrees with the military’s decision and fails to recover from
the Government for a taking of its property, but KPCC also wants
to hold KBR “liable, as a surrogate for the United States, for
obeying the military’s directives.
against
KBR
runs
afoul
of
As such, KPCC’s lawsuit
derivative
sovereign
immunity
principles, the political question doctrine, and the act of state
doctrine,
and
should
be
grounds.”
dismissed
on
one
or
more
of
these
Id. at pp. 2-3.
While KPCC complains that KBR is being sued under its
own contract and for its own decision not to purchase or return
the [DFAC]” (Response at 10), § 4.4.2 of the subcontract said the
decision whether to purchase was in KBR’s “sole discretion.”
So
by itself the decision not to purchase, whether made independently
by KBR or pursuant to directions from the United States, cannot
constitute a breach of contract.
-55-
KBR maintains that KPCC’s “real” claim is for loss of
its ownership interest in the FOB Warrior DFAC, the value of which
KPCC seeks to recover from KBR as damages.
Response at p.8.
KBR
emphasizes that the decision to designate the DFAC as Iraqi
government property was undisputedly made by the military, not by
KBR.
Potter’s declaration (#Ex. 1 to #18, ¶¶3 and 5) states that
“the United States used private contractors and subcontractors to
provide a variety of essential logistical support services,” one
of which was KBR, and “[w]ith the approval of the United States,
KBR used subcontractors to support DFAC food service operations
and operational facilities, including the DFAC at FOB Warrior.”
KPCC argues that KBR could have allowed KPCC to remove
the DFAC from FOB Warrior or could have purchased the property
from KPCC despite the military’s determination that it was not
KPCC’s property to sell because the subcontract gave it the “sole
discretion” to do so.
KBR points out that the actual language of
¶ 4.5.2 of the subcontract does not say that; instead it states
that KBR “may, at its sole discretion at any time during the
lease, unilaterally opt to purchase the [DFAC]. . . . Nothing in
this SUBCONTRACT shall obligate [KBR] to exercise this option.”
Nor does the subcontract authorize or require KBR to disregard the
decisions of the United States, which the subcontract identifies
as the ultimate “Owner” of and “Client” for the work being
performed.
It further states in ¶ 6.1.1 that “the right to use
any piece of real estate, buildings or property being possessed
and/or controlled by the [United States] is given to [KBR] by the
[United States] and the right to sue can be revoked by the [United
-56-
States] at any time.”
See also KPCC’s response, Ex. 1 at p.4 (“No
legal liability on the part of [KBR] for any payment [to KPCC] may
arise until . . . funds are made available [by the United
States].”).
KPCC also contends that derivative sovereign immunity
cannot apply to breach of contract actions because it is a common
law extension of the Federal Tort Claims Act. Response at pp. 1112.
KBR points out that Yearsley was issued by the Supreme Court
in 1940, six years before Congress passed the Federal Tort Claims
Act.
In response to KPCC’s assertion that “if the [United
States Government] waives its sovereign immunity when it contracts
with private parties, so, too, does KBR” (Response at p. 11), KBR
insists that KPCC has not identified anything that suggests that
the
United
states
waived
its
sovereign
immunity
for
such
inherently governmental functions such as negotiation and entering
into a Security Agreement with the government of Iraq nor its
later decision to hand over the FOB Warrior DFAC to Iraq, nor that
KBR agreed to assume liability for the losses arising from such
sovereign acts.
Filarsky, 132 S. Ct. at 1666 (recognizing that
derivative sovereign immunity protects non-governmental actors
from being “left holding the bag--facing full liability for
actions taken in conjunction with government employees who enjoy
immunity for the same activity.”).
In sum, argues KBR, the foreign policy and military
decisions of the United States are out of KBR’s control, and
derivative sovereign immunity bars KPCC from holding KBR liable
-57-
for the consequences of those governmental decisions.
Yearsley,
309 U.S. at 22 (“In the case of a taking by the Government of
private property for public use . . . the remedy to obtain
compensation from the Government is as comprehensive as the
requirement of the Constitution, and hence it excludes liability
of the Government’s representatives lawfully acting on its behalf
in relation to the taking.”).
Second, KBR reiterates that KPCC’s claims challenge
foreign
policy
and
military
decisions
and
thus
raise
nonjusticiable political questions warranting their dismissal.
KPCC’s two main arguments against the application of the political
question doctrine are contrary to the law:
(1) that “when a
plaintiff seeks only damages, the lawsuit is typically free from
any political question” (Response at 15); and (2) that the
question
of
Agreement,
this
but
case
whether
(Response at 14).
is
not
KBR
the
validity
reached
its
of
the
contract
Security
with
KPCC
KBR cites a number of cases seeking damages
that were dismissed based on the political question doctrine. #18
at pp.9-10. Regarding the second argument, KBR has shown that not
only the terms of the Security Agreement are at issue, but also
the
United
States
military’s
subsequent
interpretation
application of those terms to the DFAC in dispute.
and
Not only has
KPCC admitted that this case will require the Court to determine
if the FOB Warrior DFAC falls within the terms of the Security
Agreement,
but
the
military,
as
part
of
its
discretionary
withdrawal of United States troops from Iraq, determined that it
did. The political question doctrine is intended to bar just such
-58-
judicial second guessing in this litigation.
Taylor v. KBR, 658
F.3d 402, 411-12 (4th Cir. 2011)(“[T]he district court correctly
concluded that a decision on the merits of Taylor’s negligence
claim would require the judiciary to question ‘actual, sensitive
judgments made by the military[,] . . . whether . . . the Marines
made a reasonable decision . . . . [S]uch an assessment . .
beyond the scope or judicial review.
. is
In these circumstances,
therefore, the political question doctrine deprived the district
court
of
jurisdiction
negligence claim.”).
to
adjudicate
the
merits
of
Taylor’s
KBR observes that in Taylor the Fourth
Circuit rejected the claim made in this case by KPCC that the
political question doctrine does not apply where a contractor has
partial or even substantial discretion about how it carries out
its obligations; instead the Fourth Circuit concluded that a case
may raise political questions even where the contractor, which was
also KBR in that case, is “nearly insulated from direct military
control and was itself solely responsible for the safety of all
‘camp residents during all contractor operations,’” because the
issue is not whether the contractor has discretion but whether the
case “will require the judiciary to question actual, sensitive
judgments made by the military[,]” i.e., “whether . . . the
Marines made a reasonable decision.”
Taylor, 658 F.3d at 411.
KBR insists that the governmental decision making about the
application of the Security Agreement to the DFAC is “inextricably
intertwined with the merits of KPCC’s case against KBR.”
p.10.
This Court agrees.
-59-
#18 at
KBR rejects KPCC’s attempt to define this lawsuit as a
simple breach of contract action and insists that it cannot be
separated from the integral involvement of the United States
Government
and
the
military’s
determination
that
it
was
“imperative that we set the conditions for the [Government of
Iraq] and the ISF to effectively assume security responsibility
and build stability in Iraq.”
#18, Ex. 2, Memorandum from Gen.
Odierno regarding Return or Closure of Bases and Facilities. Part
of that process was the return to Iraq of the FOB Warrior DFAC.
Potter’s declaration demonstrates that the military only made the
decision
regarding
the
DFAC
after
substantial
review
and
consultation with the USF-1 command structure. To prevail in this
case, KPCC must challenge the military’s 2011 determination and
thereby require discovery from the numerous civilian and military
personnel involved in the transition and raise the potentiality of
embarrassment
from
conflicting
pronouncements
by
various
governmental entities and employees regarding the propriety of the
terms and conditions under which the United States military forces
withdrew from Iraq.
See Martin v. Halliburton, 618 F.3d 476, 488
(5th Cir. 2010)(“Because the basis for [the political question
doctrine and other immunity and preemption defenses] is respect
for the interests of the Government in military matters, district
courts should take care to develop and resolve such defenses at an
early
stage
while
avoiding,
to
the
extent
possible,
any
interference with military prerogatives.”).
Finally KBR reiterates that the act of state doctrine
also prevents KPCC from challenging the transfer of ownership
-60-
interest in the DFAC to the Government of Iraq and Iraq’s current
ownership of it. W.S. Kirkptrick, 493 U.S. at 404; Banco Nacional
de Cuba, 376 U.S. at 421-37.
Court’s Decision
This Court agrees with KBR that KPCC views this case far
too narrowly, in essence cutting the breach of contract and fraud
in the inducement claims completely out of their highly relevant
and influential context, which is vital to evaluating KPCC’s
claims and understanding the relevance, significance, and force of
KBR’s defenses.
For the reasons delineated above, the Court
ORDERS that KPCC’s motion to remand is DENIED.
As noted, if a complaint could be dismissed for both
lack of jurisdiction and for failure to state a claim, “the court
should dismiss only on the jurisdictional ground under [Rule]
12(b)(1), without reaching the question of failure to state a
claim under [Rule] 12(b)(6).”
Crenshaw-Logal, 2011 WL 3363872,
*1, quoting Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir.
1977).
Moreover, because dismissal of a case for lack of subject
matter jurisdiction is not a judgment on the merits and is without
prejudice, it would not preclude KPCC from pursuing a takings
claim or other remedy against the United States in the Court of
Claims.
Hitt, 561 F.2d at 608.
The Court agrees with KBR that the government contract
defense, the political question doctrine, the DPA, and the act of
state doctrine all apply under the facts here to preclude the
Court from ruling on the issues in this case.
-61-
Nevertheless, only
the political question doctrine, in which the act of state
doctrine is grounded according to the Fifth Circuit,27 deprives the
Court of subject matter jurisdiction so as to trigger application
of Rule 12(b)(1).
concluded
that
As indicated earlier, the Fifth Circuit has
the
government
contractor
defense
is
not
jurisdictional; therefore claims that fall under its rubric cannot
be dismissed under Rule 12(b)(1).
See also Ackerson, 589 F.3d at
207-08 (“Yearsley itself countenances against its application to
deprive the federal court of jurisdiction. Yearsley does not
discuss sovereign immunity or otherwise address the court’s power
to hear the case. . . . Based on the Supreme Court’s actions in
Yearsley, we hold that concluding Yearsley is applicable does not
deny the court of subject-matter jurisdiction.”).
The Defense
Production Act, like the federal contractor defense, provides
federal contractors with a federal defense of immunity from
liability.
Hercules, Inc. v. United States, 516 U.S. 417, 429
(1996); Martin v. Halliburton, 618 F.3d 476, 485 (5th Cir. 2010).
Accordingly, the Court
27
Occidental of Umm al Qaywayn, 577 F.2d at 1204-05.
-62-
ORDERS that this case is DISMISSED without prejudice
under Federal Rule of Civil Procedure 12(b)(1) for lack of subject
matter jurisdiction based on the political question and act of
state doctrines.
SIGNED at Houston, Texas, this
31st
day of
March ,
2016.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
-63-
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