Opposition Brief — Blackwater Security Consulting, LLC v. Nordan, 127 S. Ct. 1381 (2007) (No. 06-857)

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No. 06-857

IN THE

Supreme Court of the United States

BLACKWATER SecuRITY CONSULTING, LLC, et a/.,

Petitioners,

Vv.

RICHARD P. NorDAN, efc.,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

Unitep StaTEs Court OF APPEALS

FOR THE FourtuH Circuit

BRIEF IN OPPOSITION FOR RESPONDENT

RICHARD P. NORDAN

Davip F. KirBy DanieL J. CALLAHAN

WiLLiaM B. BystTRYNSK! Counsel of Record

Kirsy & Hoxit, LLP BRIAN J. McCorMACK

P.O. Box 31665 Marc P. MILes

Raleigh, NC 27622 CALLAHAN & Biaine, APLC

(919) 881-2111 3 Hutton Centre Drive

Ninth Floor

Santa Ana, CA 92707

(714) 241-4444

Counsel for Respondent

Richard P. Nordan

206169 g

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

TABLE OF CONTENTS

TABLE OF CITED AUTHORITIES

SUMMARY OF REASONS TO DENY THE

PETITION

STATEMENT OF THE CASE. ....6--sscucee: ae

A. Facts Regarding the Underlying Action....

B. The Proceedings Below

REASONS FOR DENYING THE PETITION

The Petition Rests Exclusively on Non-

Existent Factual Findings and = an

Undetermined Question of Law. ..........

Fourth Circuit’s Application of 28 U.S.C.

§ 1447(d) Was Proper

A. A Remand Order Based on Lack of

Subject Matter Jurisdiction is not

Reviewable

Blackwater’s Reliance on this Court's

Pending Review of Osborn v. Haley is Not

COMMIGTIIEE. oon is hacen cweeer ene

Congress Expressly Intended to Prohibit

Appellate Review of Remand Orders.

The Severable Order Exception to Section

1447(d) Does Not Apply in this Case.

Contents

E. There is No Justification for Creating a

New Exception to Section 1447(d). ..

lll. There Is No Relevant Unsettled Question

Concerning The Abolished Derivative

Jurisdiction Doctrine.

A. The Derivative Jurisdiction Doctrine was

Abolished by Congress and Every Circuit

Recognizes the Abolition..

The Defense Base Act Does Not Apply.

Upon a Finding of Lack of Jurisdiction,

the District Court Must Remand. .....

The Futility Exception to Section 1447(c)

Does not Apply.

The Claim of Differential Treatment of

the Abolished Derivative Jurisdiction

Doctrine is a Red Herring.

CONCLUSION

RESPONDENTS APPENDIX

TABLE OF CITED AUTHORITIES

Cases

Aliota v. Graham, 984 F.2d 1350 (3" Cir. 1993) ...

Amalgamated Clothing Workers of America v.

Richmond Brothers Co., 348 U.S. 511 (1955)

Bell v. City of Kellogg, 922 F.2d 1418 (9" Cir. 1991)

Bradshaw vy. General Motors Corp., 805 F.2d 110

(3 Cir. 1986)

Briscoe v. Bell, 432 U.S. 404 (1977)

Carpenter v. Dalrymple, 894 F.2d 407 (6" Cir. 1990)

Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) ...

Chick Kam Choo v. Exxon Corp., 486 U.S. 140 (1988)

City of Chicago v. International College of Surgeons,

522 U.S. 156 (1997)

Page

16

Cited Authorities

City of Waco v. U.S. Fidelity and Guarantee Co., 293

U.S. 140 (1934)

Emrich vy. Touche Ross & Co., 846 F.2d 1190 (9° Cir.

Foval v. First Nat’l Bank of Commerce, 841 F.2d 126

(5™ Cir. 1988)

Franchise Tax Board of California v. Construction

Laborers Vacation Trust for Southern California,

43 U.S. 1 (1983)

Geddes v. American Airlines, Inc., 321 F.3d 1349 (1 Ith

General Investment Co. v. Lake Shore & Michigan

So. Railway Co., 260 U.S. 261 (1922)

Gravitt v. Southwestern Bell Telephone Co., 430 US.

723 (1977)

Gully y. First National Bank, 299 U.S. 109 (1936)

Hollis vy. Florida State Univ., 259 F.3d 1295 (11 Cir.

Cited Authorities

International Primate Protection League vy.

Administrators of Tulane Ed. Fund, 500 U.S. 72

Kokkonen v. Guardian Life Insurance Company of

America, 511 U.S. 375 (1994)

Lambert Run Coal Co. y. Baltimore & Ohio R.R., 258

U.S. 377 (1922)

Lloyd v. FDIC, 22 F.3d 335 (1* Cir. 1994)

M.AJ.N. v. Commissioner Main Dept. Of Human

Servs., 876 F.2d 1051 (1% Cir. 1989)

Metropolitan Life Insurance Co. v. Taylor, 481 U.S.

58 (1987)

Nordlicht v. New York Telephone Co., 799 F.2d 859

(2"° Cir. 1986)

North Dakota y. Fredericks, 940 F.2d 333 (8° Cir.

Nutter v. Monongahela Power Company, 4 F.3d 319

(4 Cir. 1993)

Osborn vy. Haley, 127 S.Ct. 2017 (2006)

Osborn v. Haley, 422 F.3d 359 (6" Cir. 2006)

Quackenbush y. Allstate Insurance Company, 517

U.S. 706 (1996)

Page

Cited Authorities

Railway Labor Executives Assoc. v. Pittsburgh &

L.E.R. Co., 858 F.2d 936 (3d Cir. 1988)

Rivet v. Regions Bank of Louisiana, 522 U.S. 470

Roach v. West Virginia Regional Jail and Correctional

Facility Authority, 74 F.3d 46 (4" Cir. 1996) .

Roddy v. Grand Truck Western Railroad, Inc. , 395 F.3d

318 (6° Cir. 2005)

Romney v. Lin, 105 F.3d 806 (2d Cir. 1997)

Rosciszewski v. Arete Assocs., 1 F.3d 225 (4" Cir.

Sheet Metal Workers’ International Association v.

Carter, 450 U.S. 949 (1981)

State of Oklahoma v. Jan Graham and Chickasaw

Nation, 846 F.2d 1258 (10" Cir. 1988)

Taylor v. Anderson, 234 U.S. 74 (1914)

Thermtron Products v. Hermansdorfer, 423 U.S. 336

United States v. Brandt Construction Co., 826 F.2d

643 (7 Cir. 1987)

Volvo of America v. Schwarzer, 429 U.S. 1331 (1976)

Page

18

16

Cited Authorities

Page

Vorhees v. Naper Aero Club, Inc., 272 F.3d 398 (7th

Cir. 2001)

Whitman v. Raley’s Inc., 886 F.2d 1177 (9" Cir. 1989)

Statutes

28 U.S.C. § 1441 (e)

28 U.S.C. § 1441(f)

28 U.S.C. § 1447(c) passim

28 U.S.C. § 1447(d) passim

SP a PONE 6c 8K ORES thee ee cee eie eo 7, 27

42 U.S.C. § 165 1(a)

Rules

Sup. Ct. R. 10

Other Authorities

Judicial Improvements Act of 1985, Pub L. No.

99-336, § 3, 100 Stat. 633 (1986)

|

SUMMARY OF REASONS TO DENY THE PETITION

Following Blackwater’s removal of this case, the District

Court found it lacked subject matter jurisdiction and remanded

it back to the state court, pursuant to 28 U.S.C. § 1447(c).

Blackwater appealed, and the Fourth Circuit dismissed the

appeal, since 28 U.S.C. § 1447(d) prohibits appellate review of

a remand order based on lack of subject matter jurisdiction.

There are no compelling reasons to grant Blackwater’s

Petition, as required by Supreme Court Rule 10. The Petition

does not call into controversy any stated rule of law, nor present

a decision which conflicts with decisions of this Court or any

other federal court. Instead, Blackwater is simply discontent

with the manner in which the well-settled law applies. Simply

put, Blackwater requests preferential treatment of its case, in a

manner different than what is prescribed by the laws set forth

by Congress and interpreted by the courts.

The Petition requests (1) a resurrection of the derivative

jurisdiction doctrine abolished by Congress in 1986 [28 U.S.C.

§ 1441(e)], and (2) the creation of a new exception to 28 U.S.C.

§ 1447(d) which prohibits review of a remand order based on

lack of subject matter jurisdiction. Both requests ask this Court

to judicially modify the express rules of law enacted by Congress

to benefit Blackwater’s defense in this case. Respondent

respectfully submits that these Congressional enactments should

not be rewritten to assist Blackwater in escaping liability for

causing the deaths of four Americans.

First, despite Congress having expressly abolished the

derivative jurisdiction doctrine in 1986 by its amendment to 28

U.S.C. § 1447(e), Blackwater asks this Court to breathe life

back into the doctrine to support its argument that although the

District Court lacks subject matter jurisdiction over this case, it

should have dismissed the case instead of remanding it. If the

derivative jurisdiction doctrine is revived, Blackwater contends

that the District Court could not have remanded the case, because

the state court lacks jurisdiction.

2

The flaw with this argument (in addition to the fact that the

doctrine has been abolished) is that it assumes, without

establishing, that the state court lacks jurisdiction over the case.

Blackwater contends that the state court lacks jurisdiction

because the worker’s compensation law under the Defense Base

Act [42 U.S.C. § 1651] provides for an exclusive remedy and

bars suit for damages. However, the fundamental problem with

Blackwater’s argument lies in the fact that the applicability of

the DBA has never been decided in this case. At this point, the

exclusive remedy provision of the DBA is merely a theoretical

defense being asserted by Blackwater, nothing more. Both of

the lower courts recognized that the determination of coverage

under the DBA has not been decided.

Without a determination of the applicability of the DBA to

this case, Blackwater cannot establish that the state court lacks

jurisdiction. Without establishing that the state court lacks

jurisdiction, Blackwater cannot establish that the District Court

should have dismissed the case under the derivative jurisdiction

doctrine, instead of remanding it. Without establishing that the

derivative jurisdiction doctrine would even apply to this case,

there is no reason for this Court to review Blackwater’s request

to resurrect it from the abolition by Congress.

Second, for more than 100 years, this Court has found that

an order remanding an action to state court for lack of subject

matter jurisdiction is not reviewable by appeal, mandamus, or

otherwise. Nonetheless, Blackwater asks this Court to find that

this prohibition against appellate review (enacted by Congress

in 1887 and upheld by this Court for the past century) should

be modified to accommodate Blackwater’s defense in this case.

There is no controversy or split among the federal Circuits

concerning the application of 28 U.S.C. § 1447(d). Instead,

Blackwater is simply discontent with the proper application of

Section 1447(d)', which results in this case being litigated in

State court.

1. All statutory references are to Title 28 of the United States Code,

unless otherwise indicated.

3

In all, there are no compelling reasons which would justify

granting the instant Petition. Blackwater’s two issues are

fundamentally flawed, in that they are exclusively premised on

findings of facts which do not exist and the application of an

alleged defense under the DBA which has not yet been

determined. “A petition for a writ of certiorari is rarely granted

when the asserted error consists of erroneous factual findings

or the misapplication of a properly stated rule of law.” Sup. Ct.

R. 10. Here, there are no factual findings relating to Blackwater’s

alleged defense under the DBA and no contention that any of

the relevant rules of law are not properly stated—just

Blackwater’s argument that they were misapplied. Hence,

Respondent respectfully contends that there are no compelling

reasons for granting the instant Petition.

STATEMENT OF THE CASE

A. Facts Regarding the Underlying Action.

On January 5, 2005, Plaintiff Richard P. Nordan, as

Ancillary Administrator for the separate Estates of Scott S.

Helvenston, Mike R. Teague, Jerko Gerald Zovko, and Wesley

J.K. Batalona,, filed a Complaint in North Carolina Superior

Court, Wake County, alleging two state law causes of action for

wrongful death and fraud. The Complaint alleges a detailed set

of facts regarding Blackwater’s intentional conduct in causing

the deaths of Scott S. Helvenston, Mike R. Teague, Jerko

Geraldo Zovko, and Wesley J.K. Batalona (“Decedents”), as

well as Blackwater’s intentional conduct of fraudulently

inducing the Decedents to enter into their respective Independent

Contractor Service Agreements.

The Complaint also alleges facts conceming certain contracts

under which the Decedents were performing work for Blackwater.

Essentially, the Decedents were working for Blackwater to

provide private security escorts for the catering services of two

foreign corporations: ESS Support Services Worldwide

(“ESS”), a Cyprus corporation and Regency Hotel and Hospital

Company (“Regency”), a Kuwaiti company. [CompI.7]

4

The factual allegations contained in the Complaint give nse

to two state law causes of action for wrongful death and fraud.

Blackwater made false representations to the Decedents to

induce them to enter into their respective Independent Contractor

Service Agreements, and travel to Iraq and surrounding countries

to provide private security services for ESS’s catering division.

The Decedents entered into their respective Independent

Contractor Service Agreements in reliance on Blackwater’s

representations that they would be provided with certain

protections, tools and information to allow them to perform

their jobs and to secure their safety.

More specifically, the Decedents were told by Blackwater

that:

A. Each security mission would be handled by a team of

no less than six members;

B. Each security mission would be performed in armored

vehicles;

C. The security teams would be comprised of at least two

armored vehicles, with at least three security

contractors in each vehicle, which would provide for a

driver, a navigator and a rear gunner,

D. The rear gunner would have a heavy automatic weapon,

allowing the gunner to fight off any attacks from the

rear;

E. They would be given at least 24-hours notice prior to

any security mission;

F. Each security mission would be subject to a Risk

Assessment completed prior to the mission and that if

the threat level was too high, they would have the

option of not performing the mission,

G. They would be afforded the opportunity to review the

travel routes, gather intelligence about each mission,

do a pre-trip inspection of the route and determine the

proper logistics to carry out the security detail; and

"Ht. They would arrive in the Middle East to have at least

21 days prior to any operations to become acclimated

5

to the area, learn the lay of the land, and gather

intelligence and learn safe routes in the area. [Pet. App.

35a-36a|

Nevertheless, in an effort to cut costs and improve its bottom

line, corporate Blackwater did not provide the Decedents with

these promised protections, tools or information. From Baghdad,

the Decedents were sent on a security mission prior to the

commencement date of the contract with ESS. The Decedents

were sent out on this security mission without the required six-

man team, without armored vehicles, without a rear gunner in

each vehicle, without heavy machine weapons, without a Risk

Assessment, without a pre-trip inspection of the route, and

without even so much as a map of the area. [Compl. {15] With

three empty ESS flatbed trucks in their charge, the Decedents

ultimately became lost, and ended up driving through the center

of Fallujah. (Compl. 16] This was at a time when even the

U.S. military would not travel into the heart of Fallujah. (Compl.

17]

As the Decedents were lost, without the needed protections,

tools or information that Blackwater had represented they would

have, the Decedents were ambushed by insurgents in Fallujah,

who literally walked up behind the vehicles and shot all four

men with small arms at close range. [Compl. {{17] Their bodies

were pulled into the streets and burned, and their charred remains

were beaten and dismembered. Ultimately, two of the burnt

bodies were strung up from a bridge over the Euphrates River

for all the world to see. Id.

Based on the factual allegations contained in the Complaint,

the action does not state a claim “arising under” the Constitution,

a treaty or any law of the United States. Instead, the Complaint

strictly alleges two state law causes of action against an

American corporation, over which the federal courts lack

jurisdiction to consider.

6

B. The Proceedings Below.

Shortly after the Complaint was filed in North Carolina

state court, Blackwater removed the case to federal court on

January 24, 2005, pursuant to 28 U.S.C § 1441. Blackwater

contended that there exists original jurisdiction under 28 U.S.C.

§ 1331 because its federal defense under the Defense Base Act

(“DBA”) provides for complete preemption of state law.

Following removal, Blackwater moved to dismiss the case,

claiming that the exclusive remedy provision of the DBA

forecloses any suit for damages.

Respondent Richard P. Nordan, as the administrator of the

Decedents’ estates, filed a motion for remand, arguing that the

District Court was without subject matter jurisdiction over the

case, since the Complaint contained two state law causes of

action for wrongful death and fraud and since an anticipated

defense, even one of federal preemption, does not create removal

jurisdiction. Respondent also argued that the DBA does not

provide for “complete preemption,” which might otherwise

create federal removal jurisdiction based on an anticipated

defense.

In a well-reasoned decision, Chief United States District

Court Judge Louise W. Flannigan granted the motion for remand.

The District Court noted that under the “well-pleaded complaint”

rule, a federal question must arise out of the plaintiff's own

claims and not from an anticipated defense. [Pet. App. 40a]

Following a detailed analysis, the District Court found that the

DBA does not provide for “complete preemption,” for the

purpose of the exception to the well-pleaded complaint rule.

[Pet. App. 41a-50a]

Finding a lack of subject matter jurisdiction, the District

Court followed the mandate of 28 U.S.C. § 1447(c), which

requires remand. Having no subject matter jurisdiction over the

case. the District Court denied Blackwater’s motions to dismiss,

as moot. [Pet. App. 56a]

Blackwater sought appellate review of the remand order to

the Fourth Circuit Court of Appeals, by filing an appeal and a

7

petition for writ of mandamus. Respondent filed a motion to

dismiss for lack of appellate jurisdiction, in that 28 U.S.C.

§ 1447(d) expressly prohibits appellate review of a remand order

based on lack of subject matter jurisdiction. Blackwater opposed

the motion to dismiss by arguing that the District Court made a

substantive ruling that was “severable” from the remand order

itself, which would remove it from the bar of Section 1447(d).

Blackwater also argued (for the first tume on appeal) that the

matter was removable under the federal officer and agency

provision of 28 U.S.C. § 1442, despite not having actually

removed the case on that ground, nor having argued for removal

jurisdiction under Section 1442 at the District Court.

The Fourth Circuit found the “severable order” exception

to Section 1447(d) did not apply, because the District Court

made no rulings as to the substantive rights of Blackwater, but

instead only analyzed the issue of its own jurisdiction, and after

finding it lacked jurisdiction, remanded the case. The Fourth

Circuit also found that the District Court did not err in remanding

the case instead of dismissing it, since the very issue that

Blackwater argued as the ground for dismissal (coverage under

the DBA) was never actually decided. [Pet. App. 24a]

Determining that it was without appellate jurisdiction pursuant

to 28 U.S.C. § 1447(d), the Fourth Circuit dismissed

Blackwater’s appeal and denied its petition for writ of

mandamus.

Blackwater subsequently filed petitions for rehearing and

rehearing en banc. Both were denied. [Pet. App. 60a] Blackwater

then filed a motion to stay the issuance of the mandate pending

its petition for certiorari to this Court. The Fourth Circuit denied

said motion to stay. Finally, Blackwater filed an application to

this Court for a stay of the trial court proceedings pending

determination of its Petition. The Chief Justice denied the

application.

Despite the two-year delay caused by Blackwater’s

improper removal and appeal, the case is now beginning to move

forward. Respondent is in the process of conducting discovery

8

and Blackwater has filed its motion to dismiss based on the

Defense Base Act.

REASONS FOR DENYING THE PETITION

While Blackwater presented the issue of the applicability

of Section 1447(d) as the second Question, it should be the

primary and threshold issue. If the Fourth Circuit did not err in

finding it lacked appellate jurisdiction to hear the case, there is

nothing for this Court to consider. Put another way, if Section

1447(d) prohibits review of a remand order based on lack of

subject matter jurisdiction, even if erroneously decided, it is

‘mmaterial that the District Court remanded the case instead of

dismissing, because the issue is not reviewable. It is only after

appellate jurisdiction is established that the propriety of the

remand order could be considered.

This is not to say that either the Fourth Circuit or the District

Court erred, but instead simply a suggestion as to the proper

order in which the issues should be considered. Therefore, the

Respondent will address Blackwater’s Questions Presented in

reverse order.

I. The Petition Rests Exclusively on Non-Existent Factual

Findings and an Undetermined Question of Law.

As a preliminary matter, it should be noted that both

Questions Presented by Blackwater are premised on (1) a fact

that has not been decided, and (2) a legal coverage decision that

has not been made. More specifically, all of the legal and policy

arguments made by Blackwater are built on the alleged fact

that Blackwater was working for the U.S. military at the time

of the subject incident and on the alleged claim that the deaths

are covered by the Defense Base Act. Both the Fourth Circuit

and the District Court below expressly stated that these issues

have not been resolved:

The district court made no DBA coverage decision that

might form the basis of our review. ** * The fact that

the district court’s order made no determination of DBA

coverage has significance beyond serving to distinguish

9

the facts before us from those in Shives. * * * Here,

the district court made no determination with respect

to whether the DBA covered Nordan’s claims.

[Pet. App. 20a-21a]

Despite the determination of coverage under the DBA

remaining an open and highly contested issue (which weighs in

favor of no coverage), both Questions Presented are strictly

based on an assumption that the DBA applies. First,

Blackwater’s request that this Court create a new “constitutional

question” exception to the bar against appellate review

prescribed Section 1447(d) is expressly premised on the

assumption that the DBA applies, which would be the

“constitutional question” at issue. If the DBA does not apply,

there is no constitutional question at issue and no need for the

Court to chip away at Section 1447(d).

Second, Blackwater’s argument that the derivative

jurisdiction doctrine should be revived (despite is abolition by

Congress) is premised on the assumption that the DBA applies,

from which Blackwater argues that the state court has no

jurisdiction over the case, and the District Court should have

dismissed it, instead of remanding. In any event, it is critical to

note that each of Blackwater’s Questions Presented are strictly

premised on the assumption that there exits coverage under the

DBA—a finding that both of the lower courts expressly stated

does not exist. Therefore, if this Court does not make, in the

first instance, the factual finding that Blackwater was working

for the U.S. military at the time of the subject incident and the

legal coverage decision under the DBA, Blackwater’s arguments

fail and there is not a single ground upon which to grant the

Petition. .

Since this Court does not generally make such factual

findings and legal determinations of worker’s compensation

coverage in the first instance (especially as here where the record

is devoid of any evidence and only contains the factual

allegations contained in the Complaint), the fact that coverage

under the DBA has not been established should alone be a

10

sufficient ground to reject Blackwater’s Petition. Nonetheless,

Respondent will address each of Blackwater’s arguments in its

Petition, despite the fact that they all fail from a fundamental

standpoint, since they are premised on the assumption of

coverage under the DBA, which is a determination that has

undisputably not been made. [Pet. App. 20a-21a]

Il. Fourth Circuit’s Application of 28 U.S.C. § 1447(d) Was

Proper.

A. A Remand Order Based on Lack of Subject Matter

Jurisdiction is not Reviewable.

Since 1887, Congress has forbidden appellate review of

orders remanding a case to state court. The modern version of

this statute is embodied in 28 U.S.C. § 1447(d), which provides,

in relevant part: “An order remanding a case to State court

from which it was removed is not reviewable on appeal or

otherwise ....” 28 U.S.C. § 1447(d).

The seminal case concerning the interpretation of Section

1447(d) is the Supreme Court’s decision in Thermtron Products

vy. Hermansdorfer, 423 U.S. 336 (1976). In Thermtron, the Court

analyzed the extent of the appellate bar of Section 1447(d). It

found that if a district court remands a case to state court for

any of the grounds set forth in 28 U.S.C. § 1447(c), the remand

order is not reviewable “by appeal, mandamus, or otherwise.”

Thermtron, 423 U.S. at 343.

The Court also found that a remand order based on lack of

jurisdiction is immune from appellate review, even if erroneously

decided:

It is unquestioned in this case and conceded by

Petitioners that this section prohibits review of all

remand orders issued pursuant to § 1447(c) whether

erroneous or not and whether review is sought by

appeal or by extraordinary writ. This has been the

established rule under § 1447(d) and its predecessors

stretching back to 1887. /d.

11

The import of Thermtron is that all remand orders based

on the grounds set forth in Section 1447(c) are immune from

appellate review. See Id. at 346. Following the decision in

Thermtron, the Supreme Court elaborated on the concept that,

regardless of whether the remand order was wrongly decided,

it is still not reviewable on appeal:

[While the District Court may have been wrong in its

analysis, it clearly stated, citing to §1447(c), that it

considered itself without jurisdiction. The District

Court therefore thought it was acting in accordance

with §1447(c), which allows a remand where an action

is “removed improvidently and without jurisdiction.”

Review of this order, therefore, is presumptively barred

by the operation of 28 U.S.C. § 1447(d). Volvo of

America v. Schwarzer, 429 U.S. 1331, 1332 (1976).

Over the years the Supreme Court consistently applied the

bar articulated by Congress in Section 1447(d). In Things

Remembered vy. Petrarca, 516 U.S. 124 (1995), the Court

recognized,

Congress has placed broad restrictions on the power

of federal appellate courts to review District Court

orders remanding removed cases to state court. ** *

As long as a District Court’s remand is based on a

timely raised defect in removal procedure or on lack

of subject-matter jurisdiction — the grounds for

remand recognized by § 1447(c) — a Court of Appeals

lacks jurisdiction to entertain an appeal of the remand

order under § 1447(d). /d. at 127-28: See also Briscoe

v. Bell, 432 U.S. 404 (1977); Gravitt v. Southwestern

Bell Telephone Co., 430 U.S. 723 (1977); and

Quackenbush y. Allstate Insurance Company, 517 U.S.

706 (1996).

The Supreme Court has articulated the intent of Congress

in prohibiting appellate review of a remand order: ‘Congress’

purpose in enacting § 1447(d) was to ‘prevent delay in the tnal

of remanded cases by protracted litigation of jurisdictional

i2

issues.’” Sheet Metal Workers’ International Association v.

Carter, 450 U.S. 949, 952 (1981).

The instant case falls squarely within the express language

of 28 U.S.C. $1447(d), as well as the long line of Supreme

Court decisions. The District Court issued an order remanding

the case back to state court upon a finding that it lacked subject

matter jurisdiction over the action. The language of the remand

order leaves no doubt that the case was remanded based on the

lack of jurisdiction ground articulated in Section 1447(c):

Consequently, this court lacks subject matter

jurisdiction to consider plaintiff's claim, however much

they involve coverage issues under the DBA. [App: 47a|

In summary, under the circumstances of this case, this

court lacks subject matter jurisdiction over this cause

of action, whether asserted on the basis of complete

preemption or “unique federal interests.” [App: 54a]

Having found no basis for subject matter jurisdiction

the court turns to the remaining question of the ultimate

disposition of this case. [App: 54a]

Accordingly, where the court finds no basis for subject

matter jurisdiction, § 1447(c) compels the court to

remand this action to state court. [App: 54a-55a]

Based upon the foregoing, the court GRANTS

plaintiff's motion to remand, pursuant to 28 U.S.C.

§ 1447(c). [App: 56a]

Since the remand order was based on one of the grounds

enumerated in Section 1447(c), appellate review of that order,

by way of appeal, mandamus or otherwise, is strictly prohibited

by Section 1447(d). The Fourth Circuit properly analyzed and

applied Section 1447(d), and dismissed Blackwater’s appeal

for lack of appellate jurisdiction.

B. Blackwater’s Reliance on this Court’s Pending

Review of Osborn v. Haley is Not Compelling.

In its Petition, Blackwater relies on the fact that this Court

is now reviewing the case of Osborn v. Haley, No. 05-593. There,

13

upon granting the petition for certiorari, the Court stated:

“In addition to the Questions presented by the petition, the parties

are directed to brief and argue the following Question: Whether

the court of appeals had jurisdiction to review the district court’s

remand order, notwithstanding 28 U.S.C. § 1447(d).” Osborn

v. Haley, 127 S.Ct. 2017 (2006). Blackwater suggests that the

Court may be considering additional exceptions to the appellate

bar of Section 1447(d)—a bandwagon Blackwater hopes to jump

on.

However, the Respondent interprets the Osborn order

granting certiorari much differently. In the underlying decision,

Osborn v. Haley, 422 F.3d 359 (6 Cir. 2006), the Sixth Circuit

reviewed the jurisdictional effect of the Attorney General’s

certification that a federal employee’s conduct was in the course

and scope of employment under the Westfall Act, where the

court subsequently found that the employee’s conduct falls

outside the scope-of employment, as a matter of law. The issue

of whether the remand order was reviewable in light of Section

1447(d) was never addressed by the Sixth Circuit.

Thus, the request by this Court for the parties to brief the

issue of the applicability of Section 1447(d) suggests to the

Respondent that the Court is concerned that the Sixth Circuit

may have put the cart before the horse by deciding the merits of

the case without first satisfying itself that it had appellate

jurisdiction over the matter in light of Section 1447(d). If this

interpretation of the Court’s request for briefing is correct, it

cuts against Blackwater’s position and supports the

Respondent’s contention that the Fourth Circuit did not err in

finding it lacked appellate jurisdiction to review the remand

order based on a finding of lack of-subject matter jurisdiction.

Therefore, although the fact that this Court is reviewing Osborn

v. Haley is Blackwater’s lead argument against the application

of Section 1447(d), it is not compelling.

14

C. Congress Expressly Intended to Prohibit Appellate

Review of Remand Orders.

The focus of Blackwater’s argument that Section 1447(d)

should not bar appellate review of the remand order in this case

is that “Nothing in the text or legislative history of Section

1447(d) suggests that Congress intended to preclude appellate

review of a remand order that relegates to a state court the

resolutions of respondents’ constitutionally-suspect tort claims.”

(Pet. 20] Essentially, Blackwater argues that since Congress did

not specifically say that Section 1447(d) bars appellate review

of the remand of a case where the defendant asserts a federal

defense under the DBA, it should not apply here.

It is true that Congress did not laboriously list every possible

case (and potential defenses) to which Section 1447(d) might

apply (which would be nearly impossible). Instead, it crafted a

blanket prohibition against appellate review in every case that

is remanded for want of subject matter jurisdiction. Therefore,

the fact that Congress did not mention in the statute or its

legislative history that the appellate bar applies to cases where

the defendant is asserting a defense under the DBA is not

persuasive. Instead, the general rule of Section 1447(d) applies

to all cases that are remanded for lack of subject matter

jurisdiction (irrespective of the individual defenses to the merits

the defendant may be alleging). The only exception thereto is

the severable order exception articulated by this Court in City

of Waco vy. U.S. Fidelity and Guarantee Co., 293 U.S. 140

(1934).

D. The Severable Order Exception to Section 1447(d)

Does Not Apply in this Case.

At the Fourth Circuit, Blackwater argued that the “‘severable

order” exception to Section 1447(d), set forth by this Court in

City of Waco and applied by the Fourth Circuit in Borneman vy.

United States, 213 F.3d 819 (4 Cir. 2000), applies in taking the

subject remand order out from under the appellate bar of Section

1447(d). While this argument does not seem to appear in

15

Blackwater’s instant Petition, the Fourth Circuit correctly found

that the District Court’s remand order does not involve a

severable order which would bring it within the exception under

City of Waco. [Pet. App. 19a-21a] In determining that it lacked

jurisdiction and therefore must remand the case, the District

Court did not make any orders that affected the substantive rights

of Blackwater. Even the District Court’s finding that the DBA

does not provide for complete preemption for removal purposes

is ““inseverable from its determination that it lacked jurisdiction.”

Nutter v. Monongahela Power Company, 4 F.3d 319, 321 (4"

Cir. 1993).

The District Court’s remand order was based on a finding

of lack of subject matter jurisdiction and does not fall within

the City of Waco severable order exception. Therefore, based

on the express language of Section 1447(d) and a century of

American jurisprudence, the remand order is not reviewable

“by appeal, mandamus, or otherwise.” Thermtron, 423 U.S. at

343. Thus, the Fourth Circuit did not err in dismissing the appeal

for lack of appellate jurisdiction.

E. There is No Justification for Creating a New

Exception to Section 1447(d).

In that the Fourth Circuit’s decision is entrenched in long-

standing, well-settled legal precedent, Blackwater asks this

Court to create a new exception to Section 1447(d)}—which the

Fourth Circuit refused to do. More specifically, Blackwater

requests that this Court create a “constitutional-questions

exception” to Section 1447(d). [Pet. 23]

Even if this Court was so inclined to nibble away at

Congress’s prohibition against appellate review of remand

orders, there is a fundamental reason why this is not the case to

do it. Blackwater cites decisions from eight different Circuits

for its contention that “‘a statutory bar to review does not preclude

a federal court from addressing a constitutional claim, absent

2. “For these reasons, we decline to graft a new exception onto

the already significantly burdened text of § 1447(d).” [Pet. App. 27a]

16

clear statement of Congressional intent.” [Pet. 23] As a

preliminary matter, it must be noted that none of the eight Circuit

cases cited by Blackwater analyze or even mention Section

1447(d)—except for one which applied the severable order

exception, but did not suggest that a new constitutional question

exception be created.’

More fundamentally, each of the eight Circuit cases cited

by Blackwater concern the reviewability of a constitutional

“claim.” The problem with applying the logic of those cases to

the instant one is that this case does not involve a constitutional

“claim.” Instead, it involves an anticipated federal “defense”

under the DBA. Courts have historically not given the same

level of federal protection to anticipated “defenses,” as compared

to federal or constitutional “claims.” The most predominant

example of this is the century-old body of law prohibiting an

anticipated federal defense, even one of federal preemption, from

serving as the basis of federal jurisdiction. See Franchise Tax

Board of California v. Construction Laborers Vacation Trust

for Southern California, 43 U.S. 1,7 (1983); Taylor v. Anderson,

234 U.S. 74, 75 (1914); Gully v. First National Bank, 299 U.S.

109, 113 (1936); Metropolitan Life Insurance Co. v. Taylor, 481

U.S. 58, 63 (1987); Caterpillar Inc. v. Williams, 482 U.S. 386,

392-93 (1987); City of Chicago v. International College of

Surgeons, 522 U.S. 156, 163 (1997); Rivet v. Regions Bank of

Louisiana, 522 U.S. 470, 472 (1998); and Beneficial National

Bank v. Anderson, 539 U.S. 1, 6 (2003).

The problem with basing federal jurisdiction, or in this

instance a new exception to Section 1447(d), on an anticipated

federal defense is that the defense may simply not pan out in

the end. If federal removal jurisdiction could be based on the

mere assertion of a federal defense, and the defendant could

not eventually prove the defense, the entire basis for the federal

jurisdiction would crumble. “Federal courts are courts of limited

jurisdiction.” Kokkonen v. Guardian Life Insurance Company

of America, 511 U.S. 375, 376 (1994). As such, jurisdiction is

3. Aliota v. Graham, 984 F.2d 1350 (3% Cir. 1993).

17

only “authorized by the Constitution and statute, which is not

to be expanded by judicial decree,” nor the defensive allegations

of a defendant. /d.

The same principle holds true with respect to Blackwater’s

request that this Court create a new exception to Section 1447(d)

based on its anticipated defense under the DBA. If the Court

did create a new “constitutional question” exception to Section

1447(d), Blackwater might be able to have the Fourth Circuit

review the propriety of the District Court’s remand order.

Assuming arguendo that the Fourth Circuit reversed the District

Court’s remand and instructed the case be litigated in federal

court, if Blackwater ultimately failed in its defense under the

DBA, procedural chaos would immediately ensue. At that point

in time, the Fourth Circuit would have reviewed an order that

should have been barred from review, and the District Court

would have litigated a case over which it never had

jurisdiction—all because the appellate review and federal

jurisdiction was premised on an anticipated defense which

ultimately failed.

It is this procedural nightmare that the Court has sought to

avoid for the past century by finding that federal jurisdiction

cannot be premised upon an anticipated defense For these

reasons, the Court should not now deviate from this principle

by creating a “constitutional question” exception to Section

1447(d) based on Blackwater’s anticipated “defense” of the

exclusive remedy provision of the DBA.

The corollary to not permitting an anticipated federal

defense to create federal jurisdiction is the principle that state

courts are competent to decide federal defenses. Blackwater

takes the “sky is falling” approach in contending that a state

court should not determine coverage under the DBA. In fact,

Blackwater will have this Court believe that if this case is

permitted to proceed as it currently stands, the North Carolina

State court would actually be controlling the war in Iraq by

4. The only exception ts the complete preemption doctrine, which

the District Court found does not apply to the DBA. [Pet. App. 50a]

18

=

“regulat[ing] the manner in which the United States armed forces

supply lines are kept open under enemy fire in a foreign theater

of war.” [Pet. 7-8]

Why Blackwater strenuously argues that state courts are So

incompetent to decide the issue of coverage under the DBA is

unclear. However, this Court has already rejected the notion

that state courts are unable to apply federal law. See

Amalgamated Clothing Workers of America v. Richmond

Brothers Co., 348 U.S. 511, 518 (1955). “[W]hen a state

proceeding presents a federal issue, even a pre-emption issue,

the proper course is to seek resolution of that issue by the state

court.” Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 149-50

(1988). Moreover, Circuit courts have continually held that,

absent “complete preemption,” the affirmative defense of

ordinary federal preemption is properly determined by the state

courts: “State courts are competent to determine whether state

law has been preempted by federal law and they must be

permitted to perform that function in cases brought before them,

absent a Congressional intent to the contrary.” Railway Labor

Executives Assoc. v. Pittsburgh & L.E.R. Co., 858 F.2d 936,

942 (3d Cir. 1988); See also Geddes v. American Airlines, Inc.,

321 F.3d 1349, 1357 (11th Cir. 2003); and Roddy v. Grand Truck

Western Railroad, Inc., 395 F.3d 318 (6" Cir. 2005).

“(T]he fact that a federal statute creates a defense to a state

law claim does not necessarily mean that Congress has, by

statute, taken the subject away from state tribunals and given it

to federal courts.” Vorhees v. Naper Aero Club, Inc., 272 F.3d

398, 403 (7th Cir. 2001); See also Romney v. Lin, 105 F.3d 806,

813 (2d Cir. 1997) (“There are thus some cases in which a state

law cause of action is preempted, but only a state court has

jurisdiction to so rule.”). “If the federal court rules that the claim

is not ‘completely preempted’ then the federal court has no

jurisdiction to rule on a substantive defense and remand is

required. The substantive defense of preemption is then a matter

for the state court to determine as part of the trial proceedings.”

Whitman vy. Raley's Inc., 886 F.2d 1177, 1181 (9 Cir. 1989).

19

In addition to Blackwater’s anticipated federal defense not

providing justification for the creation of a new “constitutional

question” exception to Section 1447(d), Blackwater’s policy

arguments are equally unconvincing. Blackwater asks this Court

to abandon the long-standing basic principles of federal

jurisdiction to create a new exception to contour to the current

President’s Administration’s “Total Force” policy. While

Respondent disputes that Blackwater was a federal contractor

or a part of this new concept of “Total Force,” American

jurisprudence and the fundamental principles of federal

jurisdiction should not blow with the wind and change dependent

upon how the country decides to fight one war from another.

Blackwater further argues that the effect of the District

Court’s remand is that a state court in North Carolina will

handcuff the President’s ability to wage war and change the

nation’s foreign policy. This is simply an overstatement of the

case. Blackwater has wrapped itself in the American flag and

declared it part of United States military, in an effort to acquire

governmental immunities and escape liability for its wrongful

conduct which caused the deaths of four Americans. However,

this case is not about interfering with the U.S. Armed Forces

operations in Iraq, but instead is about holding a private North

Carolina company accountable for its wrongful conduct.

Moreover, this case is not one that involves a political

question, as evidenced by the fact that the political question

doctrine was never argued at the District Court or Fourth Circuit,

but instead only surfaced in Blackwater’s Petition, in an effort

to achieve Supreme Court review. The North Carolina state court

is the proper forum to adjudicate the two | ate law claims for

wrongful death and fraud against a privat. North Carolina

company (Blackwater).

In al., there is no justification, in law or policy, to create a

new exception to the “already significantly burdened text of

Section § 1447(d)* in favor of Blackwater’s anticipated defense

under the DBA. There being no new exception to the appellate

5. Pet. App. 27a.

20

bar of Section 1447(d), the Fourth Circuit correctly determined

that it was without appellate jurisdiction to review the District

Court’s remand order based on lack of subject matter

jurisdiction. The Fourth Circuit having committed no error, there

is no compelling reason to grant the instant Petition.

III. There Is No Relevant Unsettled Question Concerning

the Abolished Derivative Jurisdiction Doctrine.

Since the Disirict Court found that it was without subject

matter jurisdiction, it followed the mandatory language of

Section 1447(c) by remanding the case back to state court. See

28 U.S.C. § 1447(c). Blackwater now argues that the derivative

jurisdiction doctrine should apply to this case, which would

arguably require the District Court to dismiss, instead of

remanding. Blackwater’s argument on the issue of the derivative

jurisdiction doctrine rests on two 94 year-old cases, which do

not take into account the last century of American jurisprudence,

nor the 1986 Congressional amendment which specifically

abolished the derivative jurisdiction doctrine. [Pet. 9-10}?

A. The Derivative Jurisdiction Doctrine was Abolished

by Congress and Every Circuit Recognizes the

Abolition.

With respect to the derivative jurisdiction doctrine,

Blackwater claims that the federal courts are in “disarray”

concerning its application. However, the derivative jurisdiction

doctrine was expressly abolished by Congress when it added

Subsection (e) to 28 U.S.C. § 1441 in 1986.’ See Judicial

Improvements Act of 1985, Pub L. No. 99-336, § 3, 100 Stat.

633 (1986); 28 U.S.C. § 1441(e). In a footnote, Blackwater

states: “Some courts have mistakenly stated that §1441(f)

‘abolishes the derivative jurisdiction doctrine[.]’” [Pet. 12, fn2]

6. Relying on Lambert Run Coal Co. v. Baltimore & Ohio R.R.,

258 U.S. 377 (1922), and General Investment Co. v. Lake Shore &

Michigan So. Railway Co., 260 U.S. 261 (1922).

=

7. Subsection (e) was later re-labeled as Subsection (f) by Congress

in 2002.

21

s

Thereby, Blackwater suggests that there may be a couple of

rogue courts throughout the country who “mistakenly” found

that Congress’s amendment to Section 1441 abolished the

derivative jurisdiction doctrine, and thus the issue should be

settled by this Court accepting review of this case. This

characterization is misleading.

Not only has Congress expressly abolished the derivative

jurisdiction doctrine through its amendment to Section 1441,

but every single Circuit throughout the country has recognized

that the derivative jurisdiction doctrine has been abolished, and

there is no “disarray” of the Circuits for this Court to resolve.

See Lloyd v. FDIC, 22 F.3d 335 (1* Cir. 1994); Nordlicht v.

New York Telephone Co., 799 F.2d 859 (2"¢ Cir. 1986); Bradshaw

v. General Motors Corp., 805 F.2d 110 (3% Cir. 1986);

Rosciszewski v. Arete Assocs., 1 F.3d 225 (4" Cir. 1993); Foval

v. First Nat’l Bank of Commerce, 841 F.2d 126 (5" Cir. 1988);

Carpenter v. Dalrymple, 894 F.2d 407 (6® Cir. 1990); United

States v. Brandt Construction Co., 826 F.2d 643 (7" Cir. 1987);

North Dakota v. Fredericks, 940 F.2d 333 (8* Cir. 1991); Emrich

v. Touche Ross & Co., 846 F.2d 1190 (9% Cir. 1988); State of

Oklahoma v. Jan Graham and Chickasaw Nation, 846 F.2d 1258

(10° Cir. 1988); and Hollis v. Florida State Univ., 259 F.3d 1295

(11 Cir. 2001).

Although Blackwater asserts as its first and primary

argument supporting its Petition that there is a split in the Circuits

conceming the application of the derivative jurisdiction doctrine,

Congress expressly abolished it and every Circuit court has

recognized the abolition. This alone constitutes grounds for

denial of the Petition. However, to the extent that this Court

considers Blackwater’s requested revival of the abolished

derivative jurisdiction doctrine, its argument is inherently

flawed.

Blackwater suggests that this Court should hear the instant

case to determine “whether the Derivative-Jurisdiction Doctrine

continues to apply where both the federal court and the state

court lack jurisdiction over a removed case.” [Pet. 13.] However,

i ae

there is nothing in the record to suggest that the state court lacks

jurisdiction over this case. The Complaint consists of two North

Carolina state law claims for wrongful death and fraud. These

are claims over which the state court clearly has jurisdiction.

Nonetheless, Blackwater’s argument is premised upon its

assertion that the DBA applies and thus provides the exclusive

remedy to the survivors of the Decedents (which remedy -lies in

the Department of Labor and not in the state court).

However, as stated by both the District Court and the Fourth

Circuit, the issue of coverage under the DBA has not been

decided in this case. [Pet. App. 20a-21a] Moreover, the facts

contained in the record before the Court reveal that the Defense

Base Act does not cover the subject deaths.

B. The Defense Base Act Does Not Apply.

The DBA is comprised of a detailed statutory scheme by

which compensation may be paid to certain “employees,”

engaged in very particularized scopes of work, for injury or

death resulting from negligent conduct. An analysis of these

three key elements that trigger coverage under the DBA shows

that the defense will be unsuccessful.

First, the DBA specifically only applies to “employees.”

The DBA provides that “the provisions of the Longshoremen’s

and Harbor Workers’ Compensation Act ... shall apply in

respect to the injury or death of any employee engaged in any

employment” in six specific categories of work. [Emphasis]

42 US.C. § 1651(a). Here, the only facts in the record are those

contained in the Complaint. The Complaint specifically states

that the four Decedents were not employees, but instead were

independent contractors: “Helvenston, Teague. Zovko and

Batalona. and each of them, were hired by BLACKWATER as

independent contractors, and were at no relevant time employees

of BLACKWATER.” [Compl: 931]. Moreover, the Complaint

alleges and the record reflects that these four men signed

“Independent Contractor Service Agreements.” (Pet. App. 35a]

These agreements expressly state: “Contractor acknowledges

23

that it is solely an independent contractor.”* Therefore,

Blackwater’s defense under the DBA will fail because the

Decedents were independent contractors, not employees which

might otherwise be covered under the DBA.

Second, the DBA only applies to individuals working within

a limited scope of six different categories of employment.

See 42 U.S.C. § 1651(a)(1)-(6). Blackwater claims that

42 U.S.C. § 1651(a)(4) applies because it was a subcontractor

to the United States government through a series of contracts

running from Blackwater to Regency to ESS to Kellogg Brown

and Root (“KBR”) to the U.S. government.? However,

Blackwater has never been able to prove this contractual chain.

Moreover, within the last few months, the United States

Army, at the direction of former Secretary of Defense Donald

Rumsfeld, has stated that KBR has never directly hired a private

security contractor, including Blackwater, in support of the

Army’s Logistics Civil Augmentation Program (“LOGCAP”).

[Resp App. la] Moreover, Haliburton, the parent company to

KBR, has also disclaimed a contractual relationship between

Blackwater and the U.S. government, when it stated on

December 7, 2006, that “all information available to KBR

confirms that Blackwater’s work for ESS was not in support of

KBR and not under a KBR contract.” [Resp. App. 4a] In

addition, Haliburton stated that Blackwater services were “not

directly billed to any government contract.” [Resp. App. 4a]

Therefore, Blackwater will be unable to prove that the Decedents

were working within any of the six limited scopes of

employment to which the DBA applies. Thus, coverage under

the DBA is doubtful.

8. The agreements also state: “Nothing contained in thisAgreement

shall be deemed to constitute either BSC [Blackwater], the Contractor

or Customer as an agent, representative, partner, or joint venturer or

employee of the other party for any purpose.” (4" Cir. Appellants’ App.:

q 20.15, pgs. 387, 402, 420, 438 |

9. See Blackwater’s Notice of Removal: 4° Cir. Appellants’ App.:

38, 45-6]

24

Third, as with most worker’s compensation statutes, the

DBA applies to injury or death resulting from negligent or

reckless conduct—not intentional conduct. See Fisher v.

Halliburton, 390 F.Supp.2d 610 (S.D. Tx. 2005)'° This issue

caught the attention of the Fourth Circuit, who asked during

oral argument whether the DBA would provide the exclusive

remedy for an employer who intentionally shot and killed one

of its employees. Despite Blackwater’s statement that it would,

the case law developed in the proceedings below indicates that

the exclusivity provision provided by the DBA does not apply

to intentional conduct. Here, the only two causes of action

involved are the intentional torts of wrongful death and fraud.

Therefore, such intentional conduct falls outside the purview

of the worker’s compensation law under the DBA.

It is unlikely that the DBA will apply in this case. However,

in any event, the record is clearly not developed to the point

where the Court could assume coverage under the DBA

(especially in light of both lower courts stating that ne such

determination has been made). If no assumption of coverage

under the DBA can be made, then there is no reason to assume

that the state court lacks jurisdiction over the case. If the state

court does not lack jurisdiction over the case, there is no reason

to consider the resurrection of the derivative jurisdiction

doctrine, and the District Court did not err in remanding the

case instead of dismissing it.

10. In Fisher. the court denied a motion to dismiss based on the DBA,

finding it does not apply to intentional torts: “A very narrow exception to

the DBA’s exclusive liability provision applies where the employer

acted with specific intent to injure the employee. . ..Ona Motion to Dismiss,

the Court must accept Plaintiffs’ allegations as truc. Plainuffs have

alleged facts that fall within the exception to the exclusivity provision

of the DBA for intended harm. Accordingly, Defendants’ motion to

dismiss based on the DBA must be denied.” /d. at *9.

25

C. Upon a Finding of Lack of Jurisdiction, the District

Court Must Remand.

“If at any time before judgment it appears that the district

court lacks subject matter jurisdiction, the case shall be

remanded.” 28 U.S.C. § 1447(c). The mandatory language of

Section 1447(c) has been interpreted to mean that once the

District Court determines it is without jurisdiction, it must do

nothing other than remand. “The plain language of § 1447(c)

gives ‘no discretion to dismiss rather than remand an action’

removed from state court over which the court lacks subject-

matter jurisdiction.” Roach v. West Virginia Regional Jail and

Correctional Facility Authority, 74 F.3d 46, 49 (4'" Cir. 1996),

citing International Primate Protection- League vy.

Administrators of Tulane Ed. Fund, 500 U.S. 72, 89 (1991).

Here, the District Court had no discretion to dismiss, in that

Section 1447(c) mandates only remand upon a finding of lack

of subject matter jurisdiction.

D. The Futility Exception to Section 1447(c) Does not

Apply.

Similar to the unsuccessful defendant in /nternational

Primate, Blackwater argues that, notwithstanding the clear

requirements of Section 1447(c), the District Court should have

dismissed the case instead of remanding it, pursuant to a

“futility” exception. In support thereof, Blackwater relies on

the only federal decision which has recognized and applied a

futility exception: the Ninth Circuit’s decision in Bell v. City of

Kellogg, 922 F.2d 1418 (9 Cir. 1991).

In Bell, the court recognized the requirement of Section

1447(c) that upon a finding of lack of subject matter jurisdiction

“the case shall be remanded.’7d. at 1424. However, the Ninth

Circuit then determined that there should be a “futility”

exception to that rule, claiming that “[w]e do not believe

Congress intended to ignore the interest of efficient use of

judicial resources.” /d. at 1425-26. In its concer of not running

afoul of any comity issues, the Ninth Circuit analyzed the

26

decision in M.A.L.N. v. Commissioner Main Dept. Of Human

Servs., 876 F.2d 1051, 1054 (1* Cir. 1989).

In M.A.LN., the defendants similarly argued that despite

the District Court finding a lack of subject matter jurisdiction,

it should have dismissed the case instead of remanding it to

state court. The First Circuit was careful to not carelessly apply

a “futility” exception to the general rule that, unless there is an

“absolute certainty” that remanding the case would be futile,

courts should not digress from the mandate prescribed by

Congress in 28 U.S.C. § 1447(c):

We think, however, that the District Court erred in

departing from the literal words of § 1447(c), which,

on their face, give it no discretion to dismiss rather

than remand an action. And, we are unwilling to read

such discretion into the statute, here, because we cannot

say with absolute certainty that remand would prove

futile. It is conceivable, though unlikely, that M.A.LN.

will succeed in finding a state forum for its claims. /d.

at 1054.

The First Circuit completed its analysis with the caveat:

“But the fact that we believe a certain legal result unlikely, as a

matter of state law, it is not sufficient grounds for reading an

exception into the absolute statutory words ‘shall be remanded.”

Id. at 1055.

In light of these cautionary words by the First Circuit, the

Ninth Circuit in Bell analyzed the issue and determined that it

was “absolutely certain” that the remand there would be futile.

As such, it applied the futility exception and dismissed the case

instead of remanding it, despite its finding of lack of removal

jurisdiction. Bell, 922 F.2d at 1425.

However, nothing even close to an “absolute certainty”

exists in the instant case. Here, Blackwater contends that the

District Court should have dismissed the case after finding a

lack of subject matter jurisdiction, instead of remanding it,

because the state court is without jurisdiction due to its defense

under the DBA. However, this argument that the DBA applies

27

and thus there exists no state jurisdiction because of its

exclusivity provisions is just that—Blackwater’s “argument.”

There has been no legal determination of coverage under the

DBA, as expressly noted by both of the courts below. [Pet. App.

20a-2 1a]

In all, there is a substantial likelihood that Blackwater will

not prevail on its federal defense under the DBA, in that the

Decedents were independent contractors (not employees), were

not working within any of the six limited scopes of employment

to which the DBA applies, and were killed as the result of

intentional conduct. In any event, there is clearly not an “absolute

certainty” that Blackwater’s defense under the DBA will prevail.

Thus, there can be no finding that the state court lacks

jurisdiction and remand would be futile. To the extent that there

exists a viable “futility” exception to the express prescription

by Congress that upon a finding of lack of subject matter

jurisdiction the case “shall” be remanded, said futility exception

does not apply in this case because there is no “absolute

certainty” that the DBA will apply and the state court will lack

jurisdiction.

E. The Claim of Differential Treatment of the

Abolished Derivative Jurisdiction Doctrine is a Red

Herring.

In another effort to create an issue which might fall within

the category of cases this Court accepts to review, Blackwater

contends that the derivative jurisdiction doctrine (now abolished)

has been given different application to cases removed under

28 U.S.C. § 1441 than those removed under 28 U.S.C. § 1442.

This is an irrelevant issue in the case. First, the derivative

jurisdiction doctrine was abolished by Congress in 1986.

See 28 U.S.C. § 1441(D.

Second, Blackwater did not remove the case to federal court

under Section 1442, nor argue removal under this section at the

District Court. [Pet. App. 23a, fn8] Instead, removal was based

exclusively on Section 1441. Although Blackwater attempts to

skirt this important’fact by stating, “this is neither here nor

28

there,” the legal basis for removal is absolutely critical to the

jurisdictional analysis. It was not until the appeal at the Fourth

Circuit that Blackwater abandoned its efforts to justify removal

jurisdiction under Section 1441 on the basis of complete

preemption under the DBA, and ran a new theory up the flag

pole which consisted of an argument that, although the case

was not removed under Section 1442, there should exist removal

jurisdiction because Blackwater was acting at the direction of a

federal officer or agency.

While the record below contains a thorough analysis as to

why Blackwater is not entitled to removal under Section 1442,!?

the issue was properly not considered by the Fourth Circuit,

since the case was not removed under Section 1442, nor argued

as such at the District Court. [App.23a, fn8] Therefore,

Blackwater’s current attempt to achieve Supreme Court review

by arguing that this Court should resolve the “differential

treatment” of the abolished derivative jurisdiction doctrine

between removals under Section 1441 and Section 1442—where

Blackwater failed to remove under the latter statute—is an

irrelevant issue and one which does not necessitate this Court’s

review in this case.

In all, Blackwater’s various attempts to achieve review of

this case based on the abolished derivative jurisdiction doctrine

fail and certainly do not provide a compelling reason to grant

the Petition.

11. Pet. 17.

12. Appellees’ 4th Circuit Answer Brief: pgs. 34-42.

29

CONCLUSION

Based on the foregoing, as well as the well-reasoned

decisions by the Fourth Circuit and the District Court, the

Respondent respectfully requests that the Court deny

Blackwater’s Petition.

Respectfully submitted,

Davip F. Kirsy DANIEL J. CALLAHAN

WILLIAM B. BysrtryNsKI Counsel of Record

Kirpy & Hot, LLP BRIAN J. McCorMACK

P.O. Box 31665 Marc P. MiLes

RALEIGH, NC 27622 CALLAHAN & BLAINE, APLC

(919) 881-2111 3 Hutton Centre Drive

Ninth Floor

Santa Ana, CA 92707

(714) 241-4444

Counsel for Respondent

Richard P. Nordan

APPENDIX

la

RESPONDENTS APPENDIX

SECRETARY OF THE ARMY

WASHINGTON

JUL 14 2006

The Honorable Christopher Shays

Chairman

Subcommittee on National Security, Emerging

Threats and International Relations

Committee on Government Reform

United States House of Representatives

Washington, DC 20515

Dear Mr. Chairman:

Thank you for your letter to the Secretary of Defense

requesting information from then Brigadier, now Major General

Jerome Johnson, Commander U.S. Army Field Support

Command, regarding the cost of third-tier subcontractors for

security contracts under the Army’s Logistics Civil Augmentation

Program (LOGCAP). Secretary Rumsfeld has asked me to

respond on his behalf.

Based on information provided to the Army by Kellogg,

Brown and Root (KBR), KBR has never directly hired a private

security contractor in support of the execution of a statement of

work under any LOGCAP III Task Order. Additionally, KBR

has queried ESS and they are unaware of any services under the

LOGCAP contract that were provided by Blackwater USA.

KBR is continuing to look into whether any private security firm

may have been hired by ESS or any other subcontractor (including

Regency Hotel) in support of LOGCAP III.

2a

Appendix

Under the provisions of the LOGCAP contract, the U.S.

military provides all armed force protection for KBR unless

otherwise directed. Additionally, the LOGCAP contract states

that KBR personnel cannot carry weapons without the explicit

approval of the theater commander. To date, KBR has not

pursued any requests under the LOGCAP contract for personnel

to carry weapons nor has the theater commander directed or

authorized KBR or any LOGCAP subcontractor to carry

weapons. KBR has stated they have no knowledge of any

subcontractor utilizing private armed security under the LOGCAP

contract.

In regards to your request for reports analyzing the cost of

paying contractors for security services or logistical support, we

are unaware of any Department of Defense reports in these areas.

The Congressional Budget Office (CBO) has produced a report

titled “Logistics Support for Deployed Military Forces,” dated

October 2005 which compares the cost of paying contractors

to provide security services or logistical support under the

LOGCAP contract with the cost to the Army of providing the

services or support itself. A copy of that report is enclosed.

With respect to withholding payments, the Office of the

Secretary of Defense approved a deviation to Federal Acquisition

Regulation clause 52.216.26, “Payments of Allowable Costs

Before Definitization.” on February 2, 2005, for task orders issued

under the LOGCAP contract (DAAA09-02-D-0007). The

deviation authorizes the Department of the Army to reimburse

and make payment to the LOGCAP prime contractor on

undefinitized task orders at rates up to 100 percent of allowable

costs until June 30, 2005 or until the contract actions are

definitized, whichever occurs first. The deviation has been

extended to June 30, 2007. Given the volatility in requirements

under contingency contracting, it is foreseeable there may be

additional undefinitized task orders under LOGCAP. However,

3a

Appendix

since March 2005, the use of Undefinitized Contract Actions

has been minimized to the maximum extent possible and all such

actions issued under the LOGCAP contract have been definitized

within the 180 day regulatory requirement.

A process has been developed in conjunction with the

Defense Contracts Audit Agency, Army pricing specialists, and

the contracting officer to evaluate unsupported costs. KBR is

required to provide supporting documentation to the satisfaction

of the contracting officer prior to the cost being accepted. I have

asked the Office of the Chief of Legislative Liaison (OCLL) fo

work directly with your staff to address any specific issues

surrounding unsupported costs, or other issues needing additional

clarification.

Finally, regarding the request for copies of KBR’s

subcontract with ESS and Regency Hotel, as well as any consent

package for the KBR-ESS subcontract, this information has been

requested from KBR, and will be forwarded to Committee staff

upon receipt.

I trust this information will resolve the matter to your

satisfaction. I am providing a courtesy copy of this letter to

Representative Waxman.

Sincerely,

s/ Francis J. Harvey

Francis J. Harvey

4a

Appendix

Haliburton Statement

12/07/2006

All information available to KBR confirms that Blackwater’s work

for ESS was not in support of KBR and not under a KBR

subcontract.

Blackwater provided services for the Middle East Regional Office

of KBR. This office is not associated with any government

contract and not associated with LOGCAP III. These services

were provided outside of the Green Zone and were not directly

billed to any government contract.

Melissa Norcross

Public Relations

Haliburton