Pennino v. Reilly-Benton Company, Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

PHYLLIS PENNINO, ET AL CIVIL ACTION

VERSUS NO. 21-363

REILLY-BENTON COMPANY, INC., ET AL SECTION: “B” (5)

ORDER AND REASONS

Before the Court are Defendants Avondale Industries, Inc.,

F/K/A Northrop Grumman Ship Systems, Inc., N/K/A Huntington

Ingalls Incorporated, Albert L. Bossier, Jr., and Lamorak

Insurance Company’s1 (“Defendants”) Notice of Removal, Rec. Doc.

1, Plaintiffs Phyllis Pennino and Sally Pennino’s Motion to Remand,

Rec. Doc. 18, Defendants’ Memorandum in Opposition to Plaintiff’

Motion to Remand, Rec. Doc. 23, and Defendants’ Notice of

Supplemental Authority, Rec. Doc. 25.

For the following reasons, IT IS ORDERED that the motion to

remand is DENIED.

FACTS AND PROCEDURAL HISTORY

Salvador Pennino died on December 11, 2017 of lung cancer.

Rec. Doc. 18-1 at 2. Plaintiffs Phyllis Pennino and Sally Pennino

are, respectively, the surviving spouse and child of Mr. Pennino.

Id. Plaintiffs filed their petition individually and on behalf of

1 Defendants Notice of Removal, at 3, n.1 indicates that the Lamorak Insurance

Company was improperly named as OneBeacon America Insurance Company in the

original complaint.

Mr. Pennino against Defendants in the Civil District Court for

Orleans Parish, alleging that Mr. Pennino was exposed to asbestos

on a daily basis while he was employed by Avondale Shipyards

(Avondale) from the “mid 1950s through at least the late 1970s.”2

Rec. Doc. 1-1 at 1, 15. Plaintiffs’ further allege Mr. Pennino

died from asbestos-related lung cancer as a result of his exposure

while working at Avondale. Id.

On January 20, 2021, Lee Addison McDaniel, III was deposed.

Rec. Doc. 1-2 at 4. Mr. McDaniel testified that he knew Mr. Pennino

from when Pennino worked at Avondale as a welder from 1963 to 1967.

See Rec. Doc. 1-2 at 2. Mr. McDaniel testified to witnessing Mr.

Pennino hanging ductwork on Lykes Lines vessels. See id. at 3.

The United States Maritime Administration (MARAD) contracted

with Avondale to build ships through the Merchant Marine Act of

1936, 46 U.S.C. §§ 1101-1294, et seq.; see Rec. Doc. 23 at 3-6.

Defendants allege that Lykes Line vessels were built at Avondale

as a result of the Merchant Marine Act under the specifications of

MARAD and other governmental agencies. Id. at 5.

Defendants received Mr. McDaniel’s deposition transcript on

January 29, 2021, and subsequently filed a Notice of Removal on

February 19, 2021, claiming that the Mr. McDaniel’s deposition

transcript qualified as an “other paper” for the purposes of 28

2 On April 11, 2019, Plaintiffs produced a copy of Mr. Pennino’s Social

Security Earnings to Avondale indicating that he was only employed by

Avondale from 1964 to 1967. See Rec. Doc. 18-4 at 6.

U.S.C § 1446(b)(3), and was the basis for removal. See Rec. Doc.

1 at 3. Defendants further assert this Court has subject matter

jurisdiction over this case under 28 U.S.C. §§ 1441, 1442, and

1446. See Rec. Doc. 1 at 3.

Plaintiffs filed their Motion to Remand thereafter on March

22, 2021 alleging that the removal was untimely. Id. at 4.

LAW AND ANALYSIS

Federal officer removal allows for a civil action commenced

in state court to be removed to federal court if the action is

related to an officer, person acting under that officer, or agency

of the United States when that entity is acting “for or relating

to” the color of such office. 28 U.S.C. § 1442(a)(1). The removing

defendant bears the burden of demonstrating federal subject matter

jurisdiction exists, and therefore that removal was proper. Breaux

v. Gulf Stream Coach, Inc., No. CIV.A.08-893, 2009 WL 152109, at

*1 (E.D. La. Jan. 21, 2009) (citing Jernigan v. Ashland Oil, Inc.,

989 F.2d 812, 815 (5th Cir. 1993). Unlike other forms of removal

that are strictly construed in favor of remand, the federal officer

removal statute is liberally construed in favor of removal. Neal

v. Ameron Int'l Corp., 495 F. Supp. 3d 375, 382 (M.D. La. 2020);

See Breaux, 2009 WL 152109, at *1.

The Supreme Court has urged courts to refrain from “a narrow,

grudging interpretation of § 1442(a)(1).” Willingham v. Morgan,

395 U.S. 402, 407 (1969). The Federal Officer Removal Statute does

not require that the district court have original jurisdiction

over the plaintiff’s claims and may be removed even if a federal

question arises as a defense rather than a claim in the plaintiff’s

complaint. See Latiolais v. Huntington Ingalls, Inc., 951 F.3d

286, 296 (5th Cir. 2020)(citing Mesa v. California, 489 U.S. 121,

126 (1989)); Reulet v. Lamorak Ins. Co., No. CV 20-404-BAJ-EWD,

2021 WL 1151568, at *4 (M.D. La. Mar. 4, 2021), report and

recommendation adopted, No. CV 20-00404-BAJ-EWD, 2021 WL 1151517

(M.D. La. Mar. 25, 2021). Therefore, the Fifth Circuit allows

federal officers to remove cases to federal court beyond the scope

of federal question removal. Reulet, 2021 WL 1151568, at *4 (M.D.

La. Mar. 4, 2021).

Fifth Circuit precedent previously interpreted the “for or

relating to” clause in the federal removal statute as requiring

defendants to show “that a causal nexus exists between the

defendants' actions under color of federal office and the

plaintiff's claims;” more recent decisions by the Fifth Circuit

have moved away from this approach, and instead, considered whether

there is a “direct causal nexus” between the removing defendant's

conduct and a federal officer's instructions. See St. Charles

Surgical Hosp., L.L.C. v. Louisiana Health Serv. & Indem. Co., 990

F.3d 447, 452–53 (5th Cir. 2021); Neal v. Ameron Int'l Corp., 495

F. Supp. 3d 375, 379 (M.D. La. 2020). Under this approach, the

defendant must show (1) it has asserted a colorable federal

defense, (2) it is a “person” within the meaning of the statute,

(3) it acted pursuant to a federal officer's directions, and (4)

the charged conduct is connected or associated with an act pursuant

to a federal officer's directions.3 Latiolais, 951 F.3d at 296.

A. Removal Was Timely

Defendants’ removal was timely. There are two ways to remove

an action under §1442. First, you may remove the case after

receiving an initial pleading that qualifies for removal. 28 U.S.C.

§ 1446(b)(1). The removing party has 30 days to remove the action

upon receiving an initial pleading that “affirmatively reveals on

its face that” the case is removable. Hutchins v. Anco Insulations,

Inc., No. CV 19-11326, 2021 WL 1961664, at *1 (E.D. La. May 17,

2021) (citing Chapman v. Powermatic, Inc., 969 F.2d 160 (5th Cir.

1992)).

When the initial pleading is not removable under § 1446(b)(1),

the second way a defendant may file a Notice of Removal is if they

receive “a copy of an amended pleading, motion, order or other

paper” from which it may first be ascertained that the case is or

has become removable. 28 U.S.C. § 1446(b)(3). Much like §

1446(b)(1), the removing party has 30 days to file their Notice of

3 Plaintiffs do not contest elements 2, 3 or 4. Plaintiffs pled, but do not

substantiate in their memorandum that Defendants have not asserted a

colorable defense. See Rec. Doc. 18 at 2. Therefore, our analysis will only

examine whether Defendants have asserted a colorable defense.

Removal upon receiving a copy of the satisfactory “amended

pleading, motion, order or other paper.” Id.

The Fifth Circuit’s standard of review for whether something

qualifies as an “other paper” under § 1446(b)(3) must be

“unequivocally clear and certain” to start the 30-day time limit

for a Notice of Removal and “should not be one which may have a

double design.” Bosky v. Kroger Texas, LP, 288 F.3d 208, 211-212

(5th Cir. 2002).

Evidence such as oral testimony is not considered an “other

paper” under § 1446(b)(3). Morgan v. Huntington Ingalls, Inc., 879

F.3d 602, 608 (5th Cir. 2018) (“plain meaning of, purpose of, and

policy considerations behind § 1446(b) all support the conclusion

that oral testimony at a deposition does not constitute ‘other

paper.’). However, the Fifth Circuit and this Court have found

that the transcript of a deposition can constitute an “other paper”

for the purposes of § 1446(b). Morgan, 879 F.3d at 612 (“We adopt

a bright-line rule today: Section 1446(b)(3)’s removal clock

begins ticking upon receipt of the deposition transcript.”).

Accordingly, a defendant who fails to file a timely Notice of

Removal waives that right. Brown v. Demco, Inc., 792 F.2d 478, 481

(5th Cir. 1986).

The deposition transcript of Lee McDaniel III was the first

“other paper” to satisfy the standard for removal set forth in §

1446(b)(3), because the Plaintiff’s Petition did not indicate what

ships the plaintiff had worked on while employed at Avondale and

therefore could not have been the basis of removal. See Rec. Doc.

1-1; See Chapman v. Powermatic, Inc., 969 F.2d at 163 (1992); See

also Bosky v. Kroger Texas, LP., 288 F.3d at 211 (5th Cir. 2002).

Mr. McDaniel’s deposition transcript “affirmatively reveals

on its face that” the case is removable. Mr. McDaniel confirmed he

knew Mr. Pennino and observed him working on Lykes Line vessels.

See Rec. Doc. 1-2 at 5-6.

Plaintiffs assert that the social security earning statements

provided to the Defendants in 2019 were considered “other papers,”

and therefore Defendants waived their rights to remove years ago.

See Rec. Doc. 18-1 at 6.

However, this argument is unpersuasive because the social

security statements slips established that Mr. Pennino worked for

Avondale during the period of 1964 to 1967, See Doc. Rec. 18-4 at

6, but failed to “affirmatively reveals on its face that” Mr.

Pennino’s work at Avondale included working on Lykes Line vessels.

Plaintiffs assert that the Defendants “should have readily

ascertained” Mr. Pennino had worked on Lykes Line vessels during

his time at Avondale because the period in which Defendants knew

Lykes Line ships were built at Avondale overlapped with the period

of time indicated by Mr. Pennino’s social security slips.

Apart from this information, the social security slips

contain no indication of Pennino’s occupational responsibilities

at the shipyard. The slips fail to “affirmatively reveals on

[their] face” the removability of the case and are inapposite of

the Fifth Circuit’s precedent regarding defendants’ subjective

knowledge. Assuming that Defendants subjectively knew Mr. Pennino

worked on Lykes Lines vessels when the document itself only

provides a date that overlaps with potential periods when federal

contracts were worked on is not unequivocal notice. Finding

otherwise would lead to the overuse of defensive removability in

an effort to avoid waiving the privilege to remove at every avenue

of discovery.

Plaintiffs alternatively claim that the time for removal

began within 30 days of receiving the Plaintiffs’ master discovery

responses based on similar reasoning. Nothing in the record

indicates that any “other paper” provided during discovery

“affirmatively reveals on its face” that the case was removable

and Plaintiffs have failed to include any evidence or citations

substantiating this claim.

The deposition transcript of Lee McDaniel III was the first

time the Defendants affirmatively established Mr. Pennino had

worked on Lykes Line vessels at Avondale. As such, the 30 day

period for removal under § 1446(b)(3) began on January 29, 2021,

and Defendants filed a timely Notice of Removal on February 19,

2021. Thus, Defendants notice of removal was timely.

B. The Voluntary-Involuntary Rule Does Not Apply

The voluntary-involuntary rule is a judicially created

principle that states a non-removable action may only become

removable by a voluntary act of the plaintiff. Crockett v. R.J.

Reynolds Tabacco Co., 436 F.3d 529, 532 (5th Cir. 2006) (citing

Weems v. Louis Dreyfus Corp., 380 F.2d 545, 547 (5th Cir. 1967)).

Despite no reference to the rule in the text of §1446(b)(3), the

Fifth Circuit has continued to recognize the voluntary-involuntary

rule. Weems, 380 F.2d at 548 (finding that the intended effect of

§ 1446(b)(3) is to allow for a non-removable case to later become

removable, whereas the voluntary-involuntary rule typically

resolves what materials make a case removable).

However, the Fifth Circuit has also recognized exceptions to

the rule, such as when a non-diverse or in-state defendant is

dismissed on account of fraudulent joinder. Crockett, 436 F. 3d

at 532 (citing Insinga v. LaBella, 845 F. 2d 249, 254 (11th Cir.

1988)). While the Fifth Circuit has not explicitly acknowledged

federal officer removals as another exception to the voluntary-

involuntary rule, this Court has warned that the policy

considerations underlying federal officer removal and judicial

economy “warrant a departure from the voluntary-involuntary rule”

under certain fact patterns. Hutchins, 2021 WL 1961664, at *2.

In Hutchins, defendants received written “status cards”4 from

their expert that the ships in question were built under the

directions of a federal officer and removed the matter to federal

court. Id. Like the case at bar, the plaintiff in Hutchins

contended that the defendant expert’s written notice was the

voluntary act of the defendants, not plaintiff. Id.5

The Court acknowledged that this was the case, but concluded

that an exception should be made to the voluntary-involuntary rule

in cases where federal officer removal is the sole grounds for

subject matter jurisdiction because of the policy considerations

underlying federal officer removal and the “waste of judicial

economy which would ultimately result from remanding” Hutchins,

2021 WL 1961664, at *2-3.

Consistent with the reasoning in Hutchins, application of the

voluntary-involuntary would result in a waste of judicial

resources in this case as well, and would serve to undermine the

Supreme Court’s direction that § 1446 should be interpreted

liberally in cases where federal officer removal forms the sole

basis for removal. Id.; see also Morgan v. Huntington Ingalls,

Inc., 879 F.3d 602, 607 n. 10 (5th Cir. 2018).

4 Vessel “status cards” were provided to corporate defendant Continental by

its own retained expert. Hutchins, 2021 WL 1961664 at *2; See Rec. Doc. 25-1

at 4.

5 As here, the case was a wrongful death suit involving asbestos exposure

during the construction of ships contracted by the federal government.

Hutchins, 2021 WL 1961664 at *2, at *1.

C. Federal Officer Removal Was Proper

To survive the removal stage, defendants only need to

articulate a federal defense’s “colorable” applicability to the

plaintiff’s claims. See Willingham, 395 U.S. at 407; See also

Dempster v. Lamorak Ins. Co., 435 F. Supp. 3d 708, 729 (E.D. La.

2020). An asserted federal defense is colorable if (1) the United

States approved reasonably precise specifications; (2) the

equipment conformed to those specifications; and (3) the supplier

warned the United States about the dangers in the use of the

equipment that were known to the supplier but not to the United

States. Boyle, 487 U.S. 500 at 512. The federal defense cannot be

“immaterial and made solely for the purpose of obtaining

jurisdiction” or “wholly insubstantial and frivolous.” Latiolais,

951 F.3d at 297.

The Fifth Circuit and this Court have previously found that

Avondale’s MARAD (U. S. Maritime Administration) vessels,

including Lykes Line ships, were created as a result of

governmental contracts between Avondale and MARAD, and fell within

the purview of federal officer removal. See Wilde v. Huntington

Ingalls, Inc., 616 F. App’x 710, 713 (5th Cir. 2015); See also

Reulet, 2021 WL 1151568, at *1.

As explained infra, the federal officer removal statute is

liberally construed in favor of removal. 28 U.S.C. § 1442(a)(1);

Neal v. Ameron Int'l Corp., 495 F. Supp. 3d 375, 382 (M.D. La.

2020); See Breaux, 2009 WL 152109, at *1.

Under the foregoing circumstances and standards, defendants

have met their burden of demonstrating colorable federal defenses

for application of federal jurisdiction and removal to federal

court. Thus far, undisputed evidence demonstrates that Lykes Line

C4-S-66a cargo ships were built at Avondale pursuant to the

Merchant Marine Act, and administered by MARAD pursuant to 46

U.S.C. §§ 1101-1294, et seq.; and constructed with oversight from

various governmental authorities and specifications requiring

Avondale to use and install asbestos-containing materials. Rec.

Doc. 23 at 3-6. As in Latiolais, and solely in the removal context,

this civil action relates to an act under color of federal office

and law. To be “colorable,” the asserted federal defense need not

be “clearly sustainable,” as section 1442 does not require a

federal official or person acting under him “to ‘win his case

before he can have it removed.’” See Latiolais v. Huntington

Ingalls, Inc., 951 F.3d 286, 296 (5th Cir. 2020).

New Orleans, Louisiana this 26th day of August, 2021

______________________________________

SENIOR UNITED STATES DISTRICT JUDGE