Today the Supreme Court granted certiorari in one case of interest to the business community:

• Removal to Federal Court--Complete Preemption Doctrine--Federal Officer Removal Statute

Removal to Federal Court—Complete Preemption Doctrine—Federal Officer Removal Statute

Under Beneficial National Bank v. Andersen, 539 U.S. 1 (2003), the test for determining whether a state law is “completely preempted” by federal law, and thus whether lawsuits brought under that state law are removable to federal court under 28 U.S.C. § 1441, is whether the federal law “provide[s] the exclusive cause of action for the claim asserted.”539 U.S. at 8. Under Watson v. Philip Morris Cos., 551 U.S. 142 (2007), the test for determining whether a government contractor can remove a case to federal court pursuant to the federal officer removal statute, 28 U.S.C. § 1442(a), is whether, “in the absence of a contract with a private firm, the government itself would have had to perform.” 551 U.S. at 154. 

Today, the Supreme Court granted certiorari in Health Care Service Corporation v. Pollitt, No. 09-38, to decide two questions relating to the availability of removal: first, whether the Federal Employees Health Benefits Act (“FEHBA”), 5 U.S.C. §§ 8901–8914, completely preempts—and therefore makes removable to federal court—a state-law suit challenging benefit determinations that are subject to the FEHBA; and second, whether the federal officer removal statute encompasses a suit against a government contractor administering a FEHBA plan, where the contractor is sued for actions taken pursuant to the government contract.

Pollitt is of considerable importance to all businesses that contract with the federal government. How the Court resolves the questions presented may substantially affect the ability of government contractors to remove to federal court lawsuits that arise from their performance under such contracts.

In the decision below, the Seventh Circuit held that the FEHBA does not completely preempt state-law claims because, in its view, “that federal law does not completely occupy the field of health-insurance coverage for federal workers.” 558 F.3d 615, 616. In holding the complete preemption doctrine applicable only when federal law completely occupies the relevant field, the Seventh Circuit created an implicit conflict with other federal appellate courts, which have held the complete preemption doctrine applicable when federal law provides the exclusive cause of action for the claim asserted.

The Seventh Circuit also held that a government contractor may remove a case under the federal officer removal statute if but only if the contractor’s allegedly wrongful conduct was at the “directive” of the federal agency with which it contracted.  558 F.3d at 617. That conclusion was in implicit conflict with a holding of the Second Circuit, which had previously held that removal under 28 U.S.C. § 1442(a) is available whenever the contractor’s allegedly wrongful conduct arose from the performance of its contract, whether or not the government specifically directed that conduct. 

Absent extensions, amicus briefs in support of the petitioner will be due on December 4, 2009, and amicus briefs in support of the respondents will be due on January 4, 2010. Any questions about this case should be directed to Marcia Madsen (+1 202 263 3274) in Mayer Brown’s Washington, D.C. office.

Last week, the Supreme Court also invited the Solicitor General to file briefs expressing the views of the United States in four other cases of interest to the business community:

Williamson v. Mazda Motor of America, Inc., No. 08-1314. The questions presented involve the implied preemption of state-law tort claims. Mayer Brown represented the Alliance of Automobile Manufacturers as an amicus in the case below.

Costco Wholesale Corp. v. Omega, S.A., No. 08-1423. The question presented is whether the first-sale doctrine recognized under the Copyright Act applies to imported goods manufactured abroad.

Missouri Gas Energy v. Schmidt, No. 08-1458. The questions presented involve the constitutionality of state taxes imposed on natural gas shipped in interstate pipelines.