Trial News

Vacating a district court ruling, the Fifth Circuit has held that a defendant shipbuilder and refurbisher can remove a negligence case involving a Navy machinist’s asbestos exposure to federal court. The en banc court wrote that its decision should “strip away the confusion” that previously existed regarding the circuit’s standard for removal under the Federal Officer Removal Statute. (Latiolais v. Huntington Ingalls, Inc., 2020 WL 878930 (5th Cir. Feb. 24, 2020).)

During the 1960s and 1970s, the defendant—referred to in the decision as “Avondale,” another name for the company—contracted with the United States Navy to build and refurbish ships. During this time, most of the contracts required using asbestos as thermal insulation. According to a defense expert, Avondale’s contract would have required it to comply with all government specifications, and the federal government would have supervised Avondale’s work to ensure that compliance.

James Latiolais, a Navy machinist, was exposed to asbestos when the defendant refurbished his ship. He was diagnosed with mesothelioma in 2017 and died that October. Before his death, Latiolais sued Avondale in Louisiana state court, asserting that it negligently failed to warn him about asbestos hazards and failed to provide adequate safety equipment.

The defendant removed the case under the Federal Officer Removal Statute (28 U.S.C. §1442), but the district court granted Latiolais’s motion for remand, concluding the defendant’s argument failed because the federal government did not control the defendant’s safety practices. Avondale appealed.

Under Winters v. Diamond Shamrock Chemical Co. (149 F.3d 387 (5th Cir. 1998)), a defendant seeking removal under §1442(a)(1) must show it is a “person” under the statute, it acted “pursuant to a federal officer’s directions,” and it asserts a “colorable federal defense.” Fifth Circuit precedent also required defendants to show a “causal nexus” between the “defendants’ actions under color of federal office and the plaintiff’s claims.” For example, in Winters, this causal nexus existed because the defendant formulated and delivered Agent Orange—actions that were the basis of the plaintiff’s claims for strict products liability—under direct government supervision.

Notably, in 2011, Congress amended the Federal Officer Removal Statute, adding the words “or relating to” so that removal would be permitted in cases “for or relating to any act under color of such [federal] office” (emphasis added). Despite this change, a line of Fifth Circuit cases, beginning with Bartel v. Alcoa Steamship Co. (805 F.3d 169 (5th Cir. 2015)), continued to apply the causal nexus test.

On appeal, the parties disputed whether Avondale had met the colorable federal defense and causal nexus factors. The Fifth Circuit first reviewed the causal nexus requirement and ultimately agreed with the defendant that the amendment expanded federal officer removal: “By the [amendment], Congress broadened federal officer removal to actions not just causally connected, but alternatively connected or associated with acts under color of federal office.” As a result, the court overruled Bartel and its progeny to the extent they relied on a causal nexus test, stating that courts should instead analyze whether the “charged conduct is connected or associated with an act pursuant to a federal officer’s directions.” Applying this new standard, the court found that Avondale had properly pleaded a “connection” between its alleged failure to warn Latiolais of asbestos dangers and the refurbishment that it completed, allegedly pursuant to directions from the U.S. Navy.

The Fifth Circuit also ruled that Avondale’s assertion of a federal contractor defense under Boyle v. United Technologies Corp. (487 U.S. 500 (1988)) was colorable because it was not “wholly insubstantial and frivolous.” The court pointed to two affidavits submitted by Avondale experts stating that the Navy required installation of asbestos on Latiolais’s ship and generally required the company to comply with asbestos-related safety practices. These documents, the court wrote, “make colorable that the government approved reasonably precise specifications about the installation of asbestos” and that Avondale had no duty to warn about asbestos-related dangers because the federal government knew more about them than Avondale did.

New Orleans attorney Neil Nazareth, who has handled asbestos cases against Avondale, emphasized that Latiolais is a unique plaintiff, which could help distinguish the decision. “The case doesn’t involve an Avondale employee or an employee’s family member—which is far and away the most common type of asbestos-exposure case we see against Avondale. That means that the repair contract for Latiolais’s ship should be the key to this decision—but from this opinion, we don’t know what was in that contract or what the actual government specifications were.”

“There’s only one paragraph in the entire opinion about Latiolais’s actual claims, which involve failure to warn, not strict products liability,” Nazareth continued. “That’s significant because the Federal Officer Removal Statute requires that Avondale have acted pursuant to the federal government, in this case the Navy. For argument’s sake, even if we assume that Avondale was building ships pursuant to the Navy’s specifications, there’s not going to be a specification saying do not warn about asbestos. So Avondale simply could not have acted pursuant to the direction of the federal government. The Fifth Circuit completely glossed over this important distinction, merely concluding that the failure to warn related to the defendant’s activity of installing asbestos and satisfied the connection test.”

Nazareth concluded by noting that “these cases involving plaintiffs injured by asbestos through Avondale’s action or inaction raise state law issues and belong in state court—but being in federal court certainly won’t stop them from being litigated.”

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