Amicus Curiae Brief — Watson v. Philip Morris Companies, Inc.

OVS

No. 05-1284

IN THE

Supreme Court of the Anited States

LISA WATSON, ET AL.,

Petitioner,

Vv.

PHILIP MORRIS COMPANIES, INC., ET AL.,

Respondents.

On Writ of Certiorari to the United States

Court of Appeals for the Eighth Circuit

BRIEF FOR THE BLUE CROSS AND BLUE SHIELD

ASSOCIATION AS AMICUS CURIAE

IN SUPPORT OF NEITHER PARTY

ANTHONY F. SHELLEY

Counsel of Record

DUNCAN N. STEVENS

KELLY BUSBY

MILLER & CHEVALIER CHARTERED

655 15th Street NW, Suite 900

Washington, D.C. 20005

(202) 626-5800

TABLE OF CONTENTS

Se GE FFE E ID cccrcnsmncscemecesorenesntengyervnncianseenes it

INTEREST OF THE AMICI CURIAE ............ccsccesseseeseseeees l

SUMMARY OF ARGUMENT .............c:scsssssssssssesssserseseseees 2

I. SECTION 1442(a)(1) BROADLY

ENCOMPASSES REMOVAL BY

tL, aaa 3

Il. | GOVERNMENT CONTRACTORS

ACTING PURSUANT TO SPECIFIC

GOVERNMENT DIRECTIVES

QUALIFY FOR REMOVAL UNDER

SELES ALA 6

Ill. | PRIVATE PARTIES ADMININSTERING

FEDERAL PROGRAMS ENJOY ESPE-

CIALLY BROAD REMOVAL RIGHTS

ny 9

IV. THECOURT’S STANDARD FOR

REMOVAL BY A PRIVATE PARTY

UNDER § 1442(a)(1) SHOULD EMBRACE

GOVERNMENT CONTRACTORS

ACTING UNDER SPECIFIC DIRECTIONS

AND ENTITIES ADMINISTERING

FEDERAL PROGRAMS. ........-sccsssssscssssseesesssesesee 14

Se I cnieteninioprientenpatisaseiesinbeimmiinesinnmensinnmnnite 16

il

TABLE OF AUTHORITIES

Page

CASES

Akin v. Big Three Indus., Inc.,

Se. SUI. SED GDA TE, BOD) .ccccccccocccecvsscvesveseccesses 8

Alabama Dental Ass'n v. Blue Cross & Blue Shield

of Ala., Inc., 2007 U.S. Dist. LEXIS 685 (M.D.

RR Fs a OD wr iniciosicinninsasnicieainibiintiabipiniiatnesiabinanticeion 12

Allen v. Allen,

291 F. Supp. 312 (S.D. Towa 1968) ................:cssssesssenees 10

Arizona v. Manypenny,

ee ND iadenierniecicisiinstesieisinininsinsiinnidinciiitataail 5, 6, 13

Arnold v. Blue Cross & Blue Shield,

973 F. Supp. 2d 726 (S.D. Tex. 1997) ............ssceseesssseeees 9

Bakalis v. Crossland-Sav. Bank,

781 F. Supp. 140 (E._D.N.Y. 1991) ...............cccsscsssesseee 14

Barr v. Matteo,

a ED i ncciscctccndciinnninainjciptamnnanitaniaiiihiianaibininnd 6

California v. H&H Ship Serv. Co.,

1995 U.S. App. LEXIS 30986 (9th Cir. Oct. 17,

IFAT ssontessdanieciisinhiphicisegnseeniniegiienniosuvubbinnisdsenveienssapiniaiiemnsnnantoet 6

Camacho v. Autoridad de Telefonos de Puerto Rico,

868 F.2d 482 (Ist Cir. 1989) 00... eeeeeeeeeeeees 5,6, 7,9

Colorado v. Symes,

a ITE stcienisccceccnieiisinnitiidicicimabiesinntnicictiiaedesiiiamiael 4

ii

Dixon v. Georgia Indigent Legal Servs., Inc.,

388 F. Supp. 1156 (S.D. Ga. 1974)........ccccsccsceseeseeeeneeeee 13

Ely Valley Mines, Inc. v. Hartford Accident & Indem.

Co., 644 F.2d 1310 (9th Cir. 1981)... cece ceeseseeeeeeenees 6

First Nat'l Bank v. Bank of Bellevue,

341 F. Supp. 960 (D. Neb. 1972) .........ssssesecssseeseseeeeseees 14

Freeze v. Coastal Bend Foot Specialist,

2006 U.S. Dist. LEXIS 87156 (S.D. Tex. Dec. 1,

PTE chiens easirisiiuinnaibinitinsesiepeennianemeninatittentennnnmeneae .10

Fung v. Abex Corp.,

816 F. Supp. 569 (N.D. Cal. 1992) ...........csssesssnrseseees 8,9

Greene v. Citigroup, Inc.,

2000 U.S. App. LEXIS 11350 (10th Cir. May 19,

UTD nsidcislbiiatialnliddatnnteclnicimpiangitieaniniianateibaliindanaininiinesitl 6

Group Health, Inc. v. Blue Cross Ass'n,

587 F. Supp. 887 (S.D.N.Y. 1984)................000+ 10,11, 12

Gulati v. Zuckerman,

723 F. Supp. 353 (E.D. Pa. 1969) ..............-ccecssecosseecsseses 8

Gurda Farms, Inc. v. Monroe County Legal

Assistance Corp.,

358 F. Supp. 841 (S.D.N.Y. 1973) -.cscccccsseesessseeseesseees 7, 13

Hazen v. § .Hills Nat’l Bank,

oY 8: lw, 6

Heckler v. Community Health Servs. of Crawford

County, Inc., 467 U.S. 51 (1984) ..........scsssssssresessseereees 12

iV

Holton v. Blue Cross & Blue Shield of South

Carolina, 56 F. Supp. 2d 1347 (M.D. Ala. 1999).......... 12

Indianapolis v. Chase Nat'l Bank,

ee Oe re Pnccitecenieninicseninsnsinerenctaccantavensenserssesesnorn 5

Int'l Primate Protection League v. Administrators of

Tulane Educ. Fund, 500 U.S. 72 (1991) ......cccccscesseeecereees 9

Jefferson County v. Acker,

Be ee persis dncnsicipneeiitnenininnncmnnnncsiamitineines 4,5

Krangel v. Crown,

791 F. Supp. 1436 (S.D. Cal. 1992) ........cccccsscssecseseeeeeeees 9

Kuenstler v. Occidental Life Ins. Co.,

292 F. Supp. 532 (C.D. Cal. 1968) ............sssssesersereereees 10

Magnin v. Teledyne Cont’l Motors,

91 F.3d 1424 (11th Cir. 1996)... eescsesseesseeseenseenens 10

Matranga v. Travelers Ins. Co.,

gg , eee 13

Midland Psychiatric Assocs., Inc. v. United States,

145 F.3d 1000 (8th Cir. 1998)... et ceeceseeeesseeeseeeeees 13

Miller v. Diamond Shamrock Co.,

ee 6

Neurological Assocs. v. Blue Cross/Blue Shield of

Fla., Inc., 632 F. Supp. 1078 (S.D. Fla. 1986)............... 10

Noble v. Employers Ins. of Wausau,

Le Be e.g , ener 6

Oregon v. Cameron,

290 F. Supp. 36 (D. Or. 1968)..........cccve.ccsssccesscerseesessees 13

Pack v. AC & S, Inc.,

838 F. Supp. 1099 (D. Md. 1993) 0... eeeseeseseeeeeeneeenees 8

Pani v. Empire Blue Cross Blue Shield,

1996 U.S. Dist. LEXIS 19054 (S.D.N.Y. Dec. 23,

SUMED nccssecssenevsceniansictosemnieniesiemiiinanieal 10, 11

Pani v. Empire Blue Cre .s Blue Shield, c

BS2 F356 G7 COB CU. 190 G) cncccccnssercctecsesenscsastetimmmenisiaa 6, 13

Parks v. Guidant Corp.,

402 F. Supp. 2d 964 (N.D. Ind. 2005) ..........:scscseereeseeeeees 5

Peterson v. Blue Cross/Blue Shield of Tex.,

SOB FAG SS (5G COs. BOTS) cccccccecsssccostesssssivineammnt 4, 6, 10

Peterson v. Weinberger,

SOB F.26 45 (Ss Cis. 1977) scccccocccccesscsncsonnnsnssvonscnsscmmasnte 10

Pine View Gardens, Inc.-v. Mutual of Omaha Ins.

Co., 485 F.2d 1073 (D.C. Cir. 1973) ........000. annie 13

Roberts v. Hay,

1992 U.S. Dist. LEXIS 22720 (N.D. Ala. June 9,

SOD) ...-..ssecsssssevocsemimtsitnguatamainialii essseeansenstttnnnes 10

Ryan v. Dow Chem. Co.,

781 F. Supp. 934 (E.D.N.Y. 1992) ...... ssesseeseeeeeenees 9, 12

Shamrock Oil & Gas Corp. v. Sheets

313 U.S. 100 (1941)... cca. coeseeseeeesensesenencanensensneensenene 5

Tennessee v. Davis,

100 U.S. 257 (1880). -+-----++s+++ssseseeesnenesnsnsnsnnensnsennsnnnannnns 4

Texas ex rel. Falkner v. Nat'l Bank of Commerce,

290 F.2d 229 (Sth Cis. 1961)............cecrcrccsccereorcceseseers 6, 14

Thompson v. Community Ins. Co.,

1999 U.S. Dist. LEXIS 21725 (S.D. Ohio Mar. 3,

BIO p aceressssenasensesnsessessssqnesssnnennsnesnssencesesnsocseoussecss 9,10, 11

Venezia v. Robinson,

16 F.3d 209 (7th Cir. 1994).........ccccscseeesseneeenenenenenenenees 6

Virden v. Altria Group, Inc.,

304 F. Supp. 2d 832 (N.D. W. Va. 2004) ........ 6, 9, 13, 14

Watson v. Philip Morris Cos.,

420 F.3d 852 (Sth Cir. 2005)...............cccscccscoccsssseessessees 14

Willingham v. Morgan,

ee passim

Winters v. Diamond Shamrock Chemical Co.,

of fof. ls passim

STATUTES

BF tie 0 0 canenstniestencentapetmenntemsemenspenmnesenetmnenenemasetemamannts 9

En |

FP ics Bd STO C0 BER eccccnecnssenscccenezsnnescereevmaseemmesnsnssnssans l

i 5

RD eee passim

SO A. Be CIO C0 BR ereccnccnscternesesnccneccezczenesnsssneneneseesnsenesen 1

vii

Federal Courts Improvements Act of 1996, Pub. L.

ee

INTEREST OF THE AMICUS CURIAE

The Blue Cross and Blue Shield Association

(“BCBSA”) is the national association of Blue Cross and

Blue Shield companies. It comprises thirty-nine

independent, locally owned Blue Cross and Blue Shield

Plans. The Blue Cross and Blue Shield companies, through

relationships with federal, state, and local government

entities, employers, employee benefits plans, and individual

subscribers, administer or insure health benefits for over 90

million Americans. In their relationships with the federal

government, Blue Cross and Blue Shield Plans (often in

conjunction with BCBSA) administer or insure health

benefits under various federal programs through contracts

with federal agencies, including: Medicare, which provides

health benefits to the elderly (see 42 U.S.C. §§ 1395 et seq.);

the Federal Employees Health Benefits Program (“FEHBP”),

which provides health benefits to federal employees and

annuitants and their dependents (see 5 U.S.C. §§ 8901-

8914); and Tricare (formerly known as the Civilian Health

and Medical Program of the Uniformed Services, or

“CHAMPUS”), which provides health benefits to dependents

of individuals in military service (see 10 U.S.C. §§ 1071 et

seq. y

This case involves the construction of 28 U.S.C.

§ 1442(a)(1), a statute that permits the removal of state court

suits, in delineated circumstances, to federal court by

agencies and officers of the United States and “any person

acting under” them. In particular, in a matter of first

impression for this Court, the case focuses on the extent to

which a private party appropriately is deemed to be acting

under a federal agency or officer, so as to invoke

§ 1442(a)(1). As entities involved, through government

' In accordance with Rule 37.6, BCBSA certifies that counsel for a party

did not author this brief in whole or in part and that no entity other than

BCBSA, its members, or its counsel made a monetary contribution to the

preparation or submission of the brief.

contracts, in the administering or insuring of health benefits

under federal benefits programs, BCBSA’s members have

successfully relied on § 1442(aX1) in prior instances.

Because the Court’s decision in this case may establish the

governing standard for a private party’s removal of a state

court action under § 1442(a)(1), thereby potentially affecting

the continued ability of BCBSA’s members to invoke the

statute, BCBSA has an interest in this case.

BCBSA, however, takes no position on the correct

outcome for the case. Its interest is in the Court’s

establishment of the proper legal standard for a private

party’s removal of a state court action under § 1442(a)(1), a

standard that should be consistent with the substantial body

of existing case law readily allowing government

contractors, especially those administering significant federal

health benefits programs, the right to remove actions to

federal court.

Counsel for the parties have filed letters with the Clerk

of the Court consenting to the filing of all amicus briefs in

this case.

SUMMARY OF ARGUMENT

The Eighth Circuit’s decision in this case raises the

question of who properly is deemed a “person acting under”

a federal officer or agency for purposes of removal under

§ 1442(a)(1), a statute that this Court has long given a liberal

construction. As the lower courts have consistently held, the

operative language can encompass private parties. Its

extension in appropriate circumstances to private parties

derives from the fact that, with increasing frequency, the

government must rely on relationships with private entities to

accomplish its many objectives.

Though the courts thus far have not established a hard-

and-fast rule for determining when a private party is “acting

under” a federal officer or agency, two-lines of authority

have emerged under which the courts agree that private

parties may invoke § 1442(a\(1). First, the courts have

regularly held that the statute covers government contractors

who are sued under state law for actions taken at the

direction of a federal officer or agency. Second, the courts

agree that private entities (including government contractors)

who administer on-going federal programs, in particular

federal health benefits programs, are entitled to remove

under § 1442(a)(1). In the latter decisions, removal is

warranted even if the government has not specifically

directed the activities at issue in the case, so long as the

plaintiff's allegations arise from actions taken by the private

party in the course of administering the federal program.

The Respondents’ situation does not fall squarely within

the confines of these decisions, and BCBSA takes no

position on whether the Court should further extend

§ 1442(a)(1) to cover this case. At a minimum, however, the

Court should, in resolving the question in this matter, ensure

that any standard established for the removal of actions by

private parties under § 1442(a)(1) is broad enough to allow

for removal in situations similar to those involved in the

government-contractor and federal-programs precedents.

The decisions are well-established, are well-reasoned, are

consistent with § 1442(a)(1)’s purposes, and have never been

questioned by Congress.

ARGUMENT

I. SECTION 1442(a)(1) BROADLY ENCOMPASSES

REMOVAL BY PRIVATE PARTIES

Under 28 U.S.C. § 1442(a)(1), a “civil action or

criminal prosecution commenced in a State Court . . . may be

removed . .. to the [appropriate] district court of the United

States” if it is brought against “[t]he United States or any

agency thereof or any officer (or any person acting under

that officer) of the United States or of any agency thereof,

sued in an official or individual capacity for any act under

color of such office.” The statute has a lineage dating back -

to 1815, with Congress having enacted the current iteration

in 1948 and amended it in 1996. See Willingham v. Morgan,

395 U.S. 402, 405 (1969); Federal Courts Improvements Act

of 1996, Pub. L. No. 104-317, § 206(a), 110 Stat. 3847,

3850.

Section 1442(a)(1)’s purpose “is not hard to discern.”

Willingham, 395 U.S. at 406. It is designed to “protect”

federal authorities “from interference by hostile state courts.”

Id. at 405. In this regard, from the time of its first decisions

addressing the statute, the Court has emphasized:

[T]he Federal Government “can act only

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

a State court, for an alleged offence 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.”

Id. at 406 (quoting Tennesseé v. Davis, 100 U.S. 257, 263

(1880)). .

Because the statute “‘is an incident of federal

supremacy,” it is to be given a “broad application.”

Peterson v. Blue Cross/Blue Shield of Tex., 508 F.2d 55, 58

(Sth Cir. 1975) (quoting Willingham, 395 U.S. at 405);

accord Winters v. Diamond Shamrock Chem. Co., 149 F.3d

387, 398 (Sth Cir. 1998) (listing decisions involving

§ 1442(a)(1) that “not[e] Supreme Court requirement of

liberal interpretation”). Section 1442(a)(1) “is not ‘narrow’

or ‘limited,”” Willingham, 395 U.S. at 406 (quoting

Colorado v. Symes, 286 U.S. 510, 517 (1932)), and this

Court has repeatedly rejected “a ‘narrow, grudging

interpretation’ of the statute.” Jefferson County v. Acker,

5

527 U.S. 423, 431 (1999) (quoting Willingham, 395 U.S. at

407); accord Arizona v. Manypenny, 451 U.S. 232, 242

(1981). The statute’s liberal interpretation thus stands in

contrast to other removal provisions, such as 28 U.S.C.

§ 1441 (permitting removal based on diversity of citizenship

or the existence of a federal question), which sometimes has

been afforded a “strict construction.” Indianapolis v. Chase

Nat'l Bank, 314 U.S. 63, 76 (1941); Shamrock Oil & Gas

Corp. v. Sheets, 313 U.S. 100, 108 (1941); see also Jefferson

County, 527 U.S. at 430-31. .

Applying the rule of liberal interpretation to

§ 1442(a)(1)’s requirement that removal be available to

federal authorities sued “for any act under color of [their]

office” (28 U.S.C. § 1442(a)(1)), the Court has said: “At the

very least, [the statute] . . . is broad enough to cover all cases

where federal officers can raise a colorable defense arising

out of their duty to enforce federal law.” Willingham, 395

U.S. at 406-07 (citation omitted). Indeed, “‘one of the most

important reasons for removal is to have the validity of the

defense of official immunity tried in a federal court.”

Jefferson County, 527 U.S. at 431 (quoting Willingham, 395

U.S. at 407)).

Also consistent with § 1442(a)(1)’s broad scope, and

especially pertinent for the question in this case, is the

courts’ interpretation of the statutory language authorizing

removal by “any officer (or any person acting under that

officer) of the United States or of any agency thereof.” 28

U.S.C. § 1442(a)(1) (emphasis added). Applying that

language, the courts universally have held that “the reach of

section 1442(a)(1) extends to private persons.” Camacho v.

Autoridad de Telefonos de Puerto Rico, 868 F.2d 482, 486

(ist Cir. 1989) (emphasis added). Hence, “{a}lthough the

primary beneficiaries of § 1442(a) are federal officers and

agencies, a private party may also invoke the statute.” Parks.

v. Guidant Corp., 402 F. Supp. 2d 964, 967 (N.D. Ind. 2005).

The statute “clearly contemplates that a private actor can

claim its protection when it is threatened with liability for

actions taken on behalf of a federal officer.” Virden v. Altria

Group, Inc., 304 F. Supp. 2d 832, 845 (N.D. W. Va. 2004).’

The extension of § 1442(a)(1)’s removal authority to

private persons makes good sense in light of the increasing

frequency with which the government must use private

means to accomplish its objectives. “The complexities and

magnitude of governmental activity have become so great

that there must of necessity be a delegation and redelegation

of authority as to many functions... .” Barr v. Matteo, 360

U.S. 564, 573 (1959). That includes delegation to, for

instance, “officers of lower rank in the executive hierarchy’

or... private contractors.” Pani v. Empire Blue Cross Blue

Shield, 152 F.3d 67, 73 (2d Cir. 1998). No less than federal

officers and agencies, private persons to whom the

government has delegated its functions should be entitled,

where their “official duties” are questioned under state law,

to “a trial upon the merits of the state-law question free from

local interests or prejudice.” Arizona v. Manypenny, 451

U.S. at 241, 242.

Il. GOVERNMENT CONTRACTORS ACTING

PURSUANT TO SPECIFIC GOVERNMENT

DiRECTIVES QUALIFY FOR REMOVAL UNDER

§ 1442(a)(1)

Section 1442(a)(1)’s operative language with respect to

removal by private persons focuses the inquiry on whether

the party is “acting under” a federal officer or agency.

? Accord Miller v. Diamond Shamrock Co., 275 F.3d 414, 418 (Sth Cir.

2001); Greene v. Citigroup, Inc., 2000 U.S. App. LEXIS 11350, at *6

(10th Cir. May 19, 2000); Winters, 149 F.3d at 398; California v. H&H

Ship Serv. Co., 1995 U.S. App. LEXIS 30986, at *4-*5 (9th Cir. Oct. 17,

1995); Venezia v. Robinson, 16 F.3d 209, 212 (7th Cir. 1994);-Camacho,

868 F.2d at 487; Ely Valley Mines, Inc. v. Hartford Accident & Indem.

Co., 644 F.2d 1310, 1313 (9th Cir. 1981); Noble v. Employers Ins. of

Wausau, 555 F.2d 1257, 1259 (Sth Cir. 1977); Peterson, 508 F.2d at 58;

Hazen v. S. Hills Nat'l Bank, 414 F.2d 778, 779 (10th Cir. 1969); Texas

ex rel. Falkner v. Nat'l Bank of Commerce, 290 F.2d 229, 230 (Sth Cir.

1961).

Following from that language, the widespread rule is that

removal is available to private parties “who act under the

direction of federai officers.” Camacho vy. Autoridad de

Telefonos de Puerto Rico, 868 F.2d 482, 486 (Ist Cir. 1989)

(emphasis added); accord Winters v. Diamond Shamrock

Chem. Co., 149 F.3d 387, 399 (Sth Cir. 1998); Gurda Farms,

Inc. v. Monroe County Legal Assistance Corp., 358 F. Supp.

841, 844 (S.D.N.Y. 1973).

There so far, however, has been “no precise standard for

the extent of control necessary to bring... [a private]

individual with[in] the ‘acting under’ clause.” Gurda Farms,

358 F. Supp. at 844. As one district court has put it: “The

number and complexity of federal institutions and programs

would render impossible the formulation of such a standard.

What it comes down to is. that the court in each case must

ascertain to what extent defendants act under federal

direction and to what extent as independent agents.” Jd.

Though no precise formulation exists for determining

when a private party acts sufficiently under the direction of a

federal officer to invoke -§1442(a)(1), the courts have

coalesced around certain principles. One is that a

government contractor acting pursuant to _ specific

instructions imposed by the government may remove a state

court suit in which it is sued for its actions pursuant to those

instructions. Several decisions prove the point. For

instance, in Winters, the plaintiff sued a manufacturer of

Agent Orange, alleging under state law that the product was

defective and cancer-causing» The Fifth Circuit upheld the

manufacturer’s removal of the case to federal court under

§ 1442(a)(1). Reviewing the evidence, the court was

“convinced that the government’s detailed specifications

concerning the make-up, packaging, and delivery of Agent

Orange, the compulsion ‘to provide the product to the

government’s specifications, and the on-going supervision

the government exercised over the formulation, packaging,

and delivery of Agent Orange is all quite sufficient to

8

demonstrate that the defendants acted pursuant to federal

direction.” Winters, 149 F.3d at 399-400.

In Akin v. Big Three Indus., Inc., 851 F. Supp. 819 (E.D.

Tex. 1994), the “[p]laintiff> allege{d] multiple adverse health

affects resulting from work performed on jet engines

manufactured for the United States Air Force.” Jd. at 821.

The manufacturer performed the work pursuant to

government contracts, and the court upheld the

manufacturer’s removal of the case from state court to

federal court under § 1442(a)(1). “Plainly, when a

government contractor builds a product pursuant to Air

Force specifications and is later sued because compliance

with those specifications allegedly causes personal injuries,”

§ 1442(a)(1)’s “requirement is satisfied.” Akin, 851 F. Supp.

at 823-24.

In Fung v. Abex Corp., 816 F. Supp. 569 (N.D. Cal.

1992), the plaintiffs brought a state court action for injuries

resulting from exposure to asbestos while on naval ships

“constructed by General Dynamics pursuant to federal

contract.” Jd. at 571. Finding removal proper under

§ 1442(a){1), the court said: the government “monitored

General Dynamics’ performance at all times and required the

defendant to construct and repair the vessels in accordance

with the applicable and approved specifications incorporated

into the contracts”; “all contract supplies were subject to

inspection, test, and approval by the government”; and “[t]he

government also performed extensive dock and sea trials on

the submarines prior to commission, to ensure complete

conformity with design specifications.” Fung, 816 F. Supp.

at 572-73.

These decisions, and others like them, see, e.g., Pack v.

AC & S, Inc., 838 F. Supp. 1099 (D. Md. 1993); Gulati v.

Zuckerman, 723 F. Supp. 353 (E.D. Pa. 1989), set forth the

established rule that, under § 1442(a)(1), “removal is proper

when the lawsuit arises out of actions taken by a government

contractor at the direction of a federal officer.” Akin, 851 F.

Supp. at 823. In such instances, the government “exercise[s]

‘direct and detailed’ control” over the private actions at

issue, satisfying “the ‘acting under’ requirement of

§ 1442(a)(1).” Fung, 816 F. Supp. at 573 (quoting Ryan v.

Dow Chem. Co., 781 F. Supp. 934, 947 (E.D.N.Y. 1992)).’

Ill. PRIVATE PARTIES ADMINISTERING FED-

ERAL PROGRAMS ENJOY ESPECIALLY

BROAD REMOVAL RIGHTS UNDER § 1442(a)(1)

Another point of consensus among the courts is that

private entities assisting in the administration of federal

programs, particularly federal health benefits programs, may

remove state court actions under § 1442(a)(1) when sued for

actions falling within their official functions. These cases

* Courts also now agree that the term “person” in § 1442(a)(1) does not

refer simply to private individuals, but also to private corporations. See,

e.g., Winters, 149 F.3d at 398; Camacho, 868 F.2d at 486; Virden v.

Altria Group, Inc., 304 F. Supp. 2d 832, 844 (N.D. W. Va. 2004);

Thompson v. Community Ins. Co., 1999 U.S. Dist. LEXIS 21725, at *9

(S.D. Ohio Mar. 3, 1999). After this Court’s decision in /nternational

Primate Protection League v. Administrators of Tulane Educ. Fund, 500

U.S. 72 (1991), where the Court in reviewing a predecessor to the current

§ 1442(aX1) found that the statute permitted removal by individual

federal officers but not agencies, a few courts read “person acting under”

a federal officer to embody a similar principle excluding collective

entities as opposed to individuals. See Arnold v. Blue Cross & Blue

Shield, 973 F. Supp. 2d 726, 739 (S.D. Tex. 1997); Krangel v. Crown,

791 F. Supp. 1436, 1442 (S.D. Cal. 1992); cf Virden, 304 F. Supp. at 844

(noting that the “majority position” was always that corporations could

be “persons” under § 1442(a)(1)). In 1996, Congress enacted the current

statutory language expressly providing agencies with a removal! right,

thereby “overrul[ing] the Supreme Court’s ruling in 1991 that a federal

officer, but not a federal agency, could effect removal pursuant to the

statute.” Winters, 149 F.3d at 397. Because § 1442(a)(1) in no manner

currently evinces in any of its parts an intent to cover solely individuals,

there should be no question that a corporation can be a person under

§ 1442(a)(1). See 1 U.S.C. § 1 (“[iJn determining the meaning of any

Act of Congress, unless the context indicates otherwise -- . . . the words

‘person’ and ‘whoever’ include corporations, companies, associations,

firms, partnerships, societies, and joint stock companies, as well as

individuals”).

10

contrast with the decisions authorizing removal for

government contractors acting pursuant to direct and detailed

governmental instructions, in that courts have allowed

private parties administering government programs (who

also typically are government contractors) to remove state

court lawsuits even where there is-no evidence that the

government specifically directed the activities at issue. It is

enough that the defendant’s “relationship to the plaintiff

‘derived solely from [his] official duties.”” Magnin yv.

Teledyne Continental Motors, 91 F.3d 1424, 1427-28 (11th

Cir. 1996) (quoting Willingham v. Morgan, 395 U.S. 402,

409 (1969)).

To this effect, many courts have recognized that

Medicare fiscal intermediaries and carriers responsible for,

among other things, approving or denying Medicare claims

are persons acting under federal officers for purposes of

§ 1442(a)(1). E.g., Peterson v. Blue Cross/Blue Shield of

Tex., 508 F.2d 55, 58 (Sth Cir. 1977); Peterson v.

Weinberger, 508 F.2d 45, 51 (Sth Cir. 1977); Freeze v.

Coastal Bend Foot Specialist, 2006 U.S. Dist. LEXIS 87156,

at *9 (S.D. Tex. Dec. 1, 2006); Thompson v. Community Ins.

Co., 1999 U.S. Dist. LEXIS 21725 (S.D. Ohio Mar. 3, 1999);

Pani v. Empire Blue Cross Blue Shield, 1996 U.S. Dist.

LEXIS 19054 (S.D.N.Y. Dec. 23, 1996); Roberts v: Hay,

1992 U.S. Dist. LEXIS 22720, at *22-*23 (N.D. Ala. June 9,

1992); Neurological Assocs. v. Blue Cross/Blue Shield of

Fla., Inc., 632 F. Supp. 1078, 1080 (S.D. Fla. 1986); Group

Health Inc. v. Blue Cross Ass'n, 587 F. Supp. 887, 890-91

(S.D.N.Y. 1984);. Kuenstler v. Occidental Life Ins. Co. , 292

F. Supp. 532, 534-35 (C.D. Cal. 1968); Allen v. Allen, 291 F.

Supp. 312, 314 (S.D. lowa 1968). The decisions in

Thompson, Group Health Inc., and Pani are particularly

instructive as to the breadth of the private party’s removal

rights.

In Thompson, the defendant was a health maintenance

organization (“HMO”) under contract with the Health Care

Financing Administration (“HCFA”), the predecessor of the

11

Centers for Medicare and Medicaid Services; under the

contract, the HMO was responsible for processing Medicare

claims and reimbursing service providers. When the HMO

elected to reduce its service area, enrollees brought suit in

state court, and the HMO removed the case to federal court

under § 1442(a)(1). The court denied a motion to remand,

noting that the HMO’s contracts with the enrollees were “a

product of the federal government delegating its

administrative obligations to the Defendant.” Thompson,

1999 U.S. Dist. LEXIS 21725, at *12-*13. The court noted

that “Defendant’s relationship with the Plaintiffs was

governed, from its inception through its ultimate termination,

by a multitude of contractual, administrative, and statutory

regulations” imposed by HCFA. Jd. Though the HMO’s

service-area reduction was not “pursuant to a direct order” of

HCFA, the HMO’s actions nonetheless were under the

direction of a federal officer because the HMO was subject

to “comprehensive and detailed regulations.” /d. at *20.

In Group Health, Inc., resting on § 1442(a)(1), the court

denied a motion to remand even though the plaintiff alleged

that the intermediary -- in denying reimbursement for

medical services -- exceeded the scope of the authority

delegated by the government:

The actions of Blue Cross at issue here were

taken in Blue Cross’s role as fiscal

intermediary. Those actions thus were taken

under color of the office of the Secretary of

HHS, regardless of whether Blue Cross’s

initial determination was right or wrong,

negligently or properly given, and regardless

of whether Blue Cross should have consulted

with, or did consult, HHS before giving the

advice.

Group Health, Inc., 587 F. Supp. at 891. Likewise, in Pani,

the court recognized that Medicare fiscal intermediaries “act

as agents” of the federal government, and do so even when

12

they act “negligently or exceed{] [their] authority under the

Medicare Act.” Pani, 1996 U.S. Dist. LEXIS 19054, at *4.

The relevant question, the court held, is “whether Pani’s

relationship with Empire derived solely from the latter’s

official duties,” and since it did, removal under § 1442(a)(1)

was proper. /d.; see generally Heckler v. Cmty. Health

Servs. of Crawford County, Inc., 467 U.S. 51, 60, 65 (1984)

(treating Medicare intermediaries as government “agents”’).

Private entities administering other federal health

benefits programs have enjoyed similarly broad removal

rights under § 1442(a)(1). In Holton v. Blue Cross and Blue

Shield of Sowth Carolina, 56 F. Supp. 2d 1347 (M.D. Ala.

1999), the court upheld removal under § 1442(a)(1) by a

carrier administering a CHAMPUS plan for dependents of

military service personnel. The carrier “act[s] as an agent of

the United States” in that capacity. Jd. at 1351-52. And in

Alabama Dental Ass'n v. Blue Cross & Blue Shield of

Alabama, Inc., 2007 U.S. Dist. LEXIS 685, at *25 (M.D.

Ala. Jan. 3, 2007), the court found removal under

§ 1442(a)(1) proper in a suit against a carrier administering

an FEHBP plan for federal employees and annuitants and

their dependents. The court ruled that, because the defendant

had contracted with the United States Office of Personnel

Management (“OPM”), which “exercised supervisory

authority over the claims process for providers who seek

reimbursement” for services supplied to FEHBP enrollees,

the defendant was “acting under” OPM: the agency had

“delineated a specific administrative regime” for assessing

claims, and the defendant acted in compliance with OPM’s

directives. Jd. at *23-*25.

In each of these many instances, the expansive removal

rights stem from the fact that the state court suits implicate

substantial, continuing federal programs. “The insurers act

as continuing conduits for government policy and the state

court lawsuits had the potential to interfere with an ongoing

federal program.” Ryan v. Dow Chem. Co., 781 F. Supp.

934, 951 (E.D.N.Y. 1992). Treating them as persons acting

13

under the government for removal purposes therefore “is

consistent with the statutory goal [in § 1442(a)(1)]... to

prevent suits from inhibiting federal policy.” Virden v.

Altria Group, Inc., 304 F. Supp. 2d 832, 844 (N.D. W. Va.

2004). Even absent specific directions from the government

on the particular matter at issue in the case, removal lies in

these circumstances, for there is a “federal interest in the

matter.” Willingham, 395 U.S. at 406 (internal quotation

marks omitted).

These decisions also comport with this Court’s

instruction that § 1442(a)(1) should be available to “enable{]}

the defendant to have the validity of his immunity defense

adjudicated in a federal forum.” Arizona v. Manypenny, 451

U.S. 232, 242 (1981). Numerous courts have held that

entities administering federal health benefits programs can

assert the same official and sovereign immunities as the

government itself, in light of their close relationship with the

government and their delegated responsibilities. E.g., Pani

v. Empire Blue Cross Blue Shield, 152 F.3d 67, 72-74, 1003-

05 (2d Cir. 1998) (official immunity); Midland Psychiatric

Assocs., Inc. v. United States, 145 F.3d 1000, 1003-05 (8th

Cir. 1998) (official immunity); Matranga v. Travelers Ins.

Co., 563 F.2d 677 (Sth Cir. 1977) (sovereign immunity);

Pine View Gardens, Inc. v. Mutual of Omaha Ins. Co., 485

F.2d 1073, 1074 (D.C. Cir. 1973) (sovereign immunity).

Because the entities can invoke governmental immunities,

whose litigation is at the heart of § 1442(a)(1), the statute

should be readily available to them.

Finally, even outside of the arena of health benefits, the

courts have liberally applied § 1442(a)(1) if the private

parties were engaged in the administration of an on-going

federal grogram. E.g., Gurda Farms, Inc. v. Monroe County

Legal Assistance Corp., 358 F. Supp. 841, 844-45 (S.D.N.Y.

1985) (federal program for providing legal services to

indigent migrant workers); Dixon v. Georgia Indigent Legal

Services, Inc., 388 F. Supp. 1156, 1162 (S.D. Ga. 1974)

(same); Oregon v. Cameron, 290 F. Supp. 36, 37 (D. Or.

14

1968) (program establishing Volunteers In Service To

America (VISTA)); see also Texas ex rel. Falkner v. Nat'l

Bank of Commerce, 290 F.2d 229 (Sth Cir. 1961) (pregram

establishing banks on military bases); First Nat'l Bank v.

Bank of Bellevue , 341 F. Supp. 960 (D. Neb. 1972) (same).

IV. THE COURT’S STANDARD FOR REMOVAL BY

A PRIVATE PARTY UNDER § 1442(a)(1)

SHOULD EMBRACE GOVERNMENT CON-

TRACTORS ACTING UNDER SPECIFIC -

DIRECTIONS.AND ENTITIES ADMINISTERING

FEDERAL PROGRAMS

The Respondents in this case (i.e., the defendant in the

underlying action who invoked § 1442(a)(1)) is neither a

government contractor acting pursuant to specific directions

nor a party administering an on-going federal program.

Instead, it falls on the continuum further afield from

government involvement, where the private party, in the

Eighth Circuit’s view, participated in a heavily regulated

industry and acted pursuant to “comprehensive, detailed

regulation{s}.” Watson v. Philip Morris Cos., 420 F.3d 852,

857 (8th Cir. 2005).

BCBSA takes no position on whether § 1442(a)(1)

extends to Respondents’ situation. But insofar as the Court

must, in resolving this case, address the circumstances under

which a private party is a “person acting under” a federal

officer or agency, the Court should establish a standard

broad enough to encompass government contractors

implementing government specifications and _ entities

(including contractors) who administer continuing federal

programs. “If the [private] actor is effectively an agent or

employee of the government because its activities are

controlled and funded by the government, it is entitled to the

same jurisdictional protection as the government itself.”

Virden v. Altria Group, Inc., 304 F. Supp. 2d 832, 846 (N.D.

W. Va. 2004); accord Bakalis v. Crossland Sav. Bank, 781

F. Supp. 140, 145 (E.D.N.Y. 1991) (private actors “so

15

intimately involved with government functions as to occupy

essentially the position of an employee of the government”

may remove under § 1442(a)(1)).

The decisions permitting government contractors and

entities administering federal programs to remove state court

actions pursuant to § 1442(a)(1) are legion and span many

decades; they are well-reasoned; and Congress necessarily

was aware of the decisions when it amended the statute in

1996 but did not alter the language regarding “person(s]

acting under” federal officers and agencies. The Court

should incorporate the reasoning and results of these

precedents into any standard it formulates for removal by

persons acting under federal authorities. In the end,

“Congress has decided that federal officers, and indeed the

Federal Government itself, require the protection of a federal

forum,” and extending § 1442(aX1) to government

contractors acting pursuant “, the government’s specific

directives and to parties administering the government’s on-

going programs is in full accord with Congress’s intention.

Willingham v. Morgan, 395 U.S. 402, 406-07 (1969).

16

CONCLUSION

The Court should formulate a standard under

§ 1442(a)(1) that, at a minimum, allows for removal by

government contractors acting pursuant to specific

government directives and by government contractors and

other private entities administering federal programs.

Respectfully submitted,

ANTHONY F. SHELLEY

Counsel of Record

DUNCAN N. STEVENS

KELLY BUSBY |

° MILLER & CHEVALIER CHARTERED

655 15th Street, NW

Suite 900

Washington, D.C. 20005

(202) 626-5800

February 2007