Clover v. Camp Pendleton & Quantico Hous. LLC

525 F.Supp.3d 1140

Jason CLOVER, et al., Plaintiffs,

v.CAMP PENDLETON & QUANTICO HOUSING LLC, et al., Defendants.

Case No.: 20cv567-LAB (WVG)

United States District Court, S.D. California.

Signed March 12, 2021

Brooke B. Nevels, Christian Ballmer Clark, Lenden Franklin Webb, Webb Law Group, APC, Fresno, CA, Eric Dean Norvell, Eric D. Norvell, Attorney, P.A., Carlsbad, CA, for Plaintiffs.

Kristin Nell Reyna, Matthew Paul Nugent, Gordon & Rees LLP, San Diego, CA, for Defendant Camp Pendleton & Quantico Housing LLC.

Kristin Nell Reyna, Gordon & Rees LLP, San Diego, CA, for Defendant LPC Pendleton Quantico PM LP.

ORDER DENYING MOTION TO DISMISS

[DOCKET NUMBER 26]

Larry Alan Burns, United States District Judge Plaintiffs, residents of military housing, brought this action against Camp Pendleton & Quantico Housing, LLC; LPC Pendleton Quantico PM, LP; and Lincoln Military Property Management, LP in California state court. They alleged that Defendants failed to maintain the plumbing, resulting in the property's becoming contaminated with mold, and that they were injured as a result. Defendants removed this action, citing federal enclave jurisdiction, federal agency jurisdiction, and federal officer jurisdiction.

Defendants filed a motion to dismiss for lack of jurisdiction, under Fed. R. Civ. P. 12(b)(1). (Docket no. 26.) They argue that, as government contractors acting within the scope of Congressionally-delegated authority, they are entitled to derivative immunity under Yearsley v. W.A. Ross Constr. Co. , 309 U.S. 18, 60 S.Ct. 413, 84 L.Ed. 554 (1940) and its progeny. They also argue that they are entitled to the benefit of the "discretionary function" exception to the Federal Tort Claims Act (FTCA), as provided in 28 U.S.C. § 2860(a). Plaintiffs opposed the motion.

The United States, though not a party, filed a statement of interest pursuant to 28 U.S.C. § 517, in the form of a brief with attached evidence. (Docket no. 43.) The government takes the position that Defendants are not entitled to immunity. Defendants filed a reply to the government's statement.

The motion is now fully briefed and ready for decision.

Legal Standards

Defendants have challenged jurisdiction, arguing that as government contractors they are entitled to derivative sovereign immunity, and that such immunity is jurisdictional. It is questionable whether the type of immunity Defendants rely on is truly jurisdictional. Compare Adkisson v. Jacobs Eng'g Group, Inc. , 790 F.3d 641, 646–47 (6th Cir. 2015) (discussing circuit split on the issue of whether Yearsley derivative immunity is jurisdictional). The parties have not identified any authority binding on this Court saying clearly whether it is.

Assuming that immunity under Yearsley is not jurisdictional, Defendants’ motion is properly considered as one brought under Fed. R. Civ. P. 12(b)(6), and the Court's review would be limited to the face of the Complaint. Unless the Court converted the motion into a motion for summary judgment, it could not consider any of the proffered evidence or other matters outside the pleading. See Thompson v. Campbell Crossing, LLC , 2017 WL 157885, at *1–2 (W.D. Ky., Jan. 13, 2017) (analyzing whether motion to dismiss based on Yearsley immunity was properly treated as a 12(b)(1) or 12(b)(6) motion). If Yearsley is not jurisdictional, the motion raises matters not properly considered under the 12(b)(6) standard, and would be denied for that reason. See id. at *2 (construing motion as properly brought under Rule 12(b)(6), and denying it).

When a defendant raises a factual challenge to the Court's jurisdiction, the Court may consider matters outside the pleading, without converting the motion to a motion for summary judgment. See Kingman Reef Atoll Investments, LLC v. United States , 541 F.3d 1189, 1195 (9th Cir. 2008) (citing Roberts v. Corrothers , 812 F.2d 1173, 1177 (9th Cir. 1987) ). Assuming, arguendo , that Yearsley immunity is jurisdictional, the Court would deny the motion as well, as discussed below.

Sovereign Immunity

The United States enjoys sovereign immunity from suit, unless it has expressly waived that immunity. See United States v. Mitchell , 463 U.S. 206, 212, 103 S.Ct. 2961, 77 L.Ed.2d 580 (1983). The FTCA provides such a waiver. See FDIC v. Meyer , 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). Yearsley recognizes, within limitations, that acts of the United States’ agents are also the acts of the United States itself.

Yearsley involved a claim against a federal contractor who carried out the terms of its federal directive to improve navigation on the Missouri River. The contractor's liability stemmed from the fact that it had carried out the government's directions, which resulted in damage to the plaintiffs’ land, for which the plaintiffs sought compensation. It was undisputed that the contractor's work done in the river bed "was all authorized and directed by the Government of the United States," and that the work was performed pursuant to an act of Congress. 309 U.S. at 20, 60 S.Ct. 413. Because the contractor was carrying out Congress’ directive pursuant to validly-conferred authority, the contractor could not be liable. Id. at 21, 60 S.Ct. 413. The opinion noted, however, that agents of the government could be held liable where the "ground of liability [was] either that he exceeded his authority or that it was not validly conferred." Id. at 20–21, 60 S.Ct. 413 (collecting cases). In other words, contractors can be liable to the extent they fail to act according to government specifications.

The Ninth Circuit has also explained that this derivative immunity is limited to cases where the contractor had no discretion, and was following government specifications completely. Cabalce v. Thomas E. Blanchard & Assocs., Inc. , 797 F.3d 720, 732 (9th Cir. 2015) (citing In re Hanford Nuclear Reservation Litig. , 534 F.3d 986, 1001 (9th Cir. 2008) ). In other words, a contractor is derivatively immune only to the extent it is correctly carrying out its validly-conferred authority and is following government specifications. Yearsley , 309 U.S. at 20–21, 60 S.Ct. 413 ; Cabalce , 797 F.3d at 732. To the extent the contractor exercises discretion, it is not immune. Id. (because defendants designed a plan "without government control or supervision," they were not entitled to derivative immunity).

Not all circuits apply such a broad standard. See Adkisson 790 F.3d at 646–47. In particular, the Fourth Circuit, whose decisions Defendants cite, construes Yearsley immunity more broadly. See Butters v. Vance Int'l, Inc. , 225 F.3d 462, 466 (4th Cir. 2000) (recognizing derivative immunity for contractors who perform a discretionary function within the scope of a valid government contract). But the Court is bound to apply Ninth Circuit precedent.

Cabalce is particularly instructive and apt here. In that case, the defendants had contracted with the United States to store and dispose of seized property. Seized fireworks they had been storing and intended to destroy accidentally exploded, killing several employees. The decedents’ representatives sued, alleging that the defendants had acted negligently. The government did not supervise defendants or direct their day-to-day actions, but instead relied on their expertise. Because it was clear they exercised discretion, derivative sovereign immunity under Yearsley was unavailable. 797 F.3d at 732.

Defendants contend that Cabalce ’s holding has been vitiated by Campbell-Ewald Co. v. Gomez , 577 U.S. 153, 136 S.Ct. 663, 193 L.Ed.2d 571 (2016), which they believe expanded immunity to any government contractor acting within its validly-conferred contractual authority. The purpose of granting certiorari, however, was to resolve a question concerning mootness. Id. at 160, 136 S.Ct. 663. The holding reiterated Yearsley ’s holding that a contractor "who simply performed as the Government directed" was entitled to derivative immunity. Id. at 167, 136 S.Ct. 663. But because the contractor unquestionably disobeyed government instructions, it was clear derivative immunity was unavailable. Id. at 168, 136 S.Ct. 663. Other courts in this Circuit also treat Cabalce as still vital, even after Campbell-Ewald . See, e.g. , WhatsApp Inc. v. NSO Group Technologies Ltd. , 491 F.Supp.3d 584, 591-592 n.5 (N.D. Cal. 2020) (citing both Cabalce and Campbell-Ewald , and treating both decisions as authoritative).

For the first time, Defendants raise qualified immunity, which they appear to conflate with derivative sovereign immunity. (See Docket no. 44 at 3:5–13.) Campbell-Ewald at 167–68, 136 S.Ct. 663 (distinguishing between qualified and derivative immunity). Defendants have not shown why qualified immunity would apply here, even if they had adequately raised it. See Carter v. City of Carlsbad , 799 F. Supp. 2d 1147, 1164 (S.D. Cal., 2011) (holding that qualified immunity did not protect officers from state law negligence claims).

While Defendants in this case were following a general plan approved by the Navy in how they maintained the housing, they were given discretion in responding to most service requests. (See Mot. to Dismiss (Docket no. 26-1) at 5:13–26, 22:4–16.) Defendants’ own detailed description of how they handled Plaintiffs’ service calls shows they were responding to the situation in the manner they thought best.

Defendants’ motion contends that they are entitled to immunity if they acted under validly-conferred authority and their actions were authorized by contract and consistent with the contract. It is undisputed that Defendants were acting according to validly-conferred authority. Defendants, in effect, are asking the Court to apply out-of-circuit precedent as affording immunity because their actions are performed pursuant to and consistently with a government contract — that is, where their actions are permitted by the government. Under the Ninth Circuit's holding, however, derivative immunity is available only when contractors...