Lucas Goncalves, a minor, by and through his Guardian Ad Litem, Tony Goncalves, Plaintiff-Appellee,
Rady Children's Hospital San Diego; Does, 1 through 30, Inclusive, Defendants, and Blue Cross & Blue Shield of Massachusetts; Anthem Blue Cross Blue Shield of New Hampshire; Blue Cross of California, Movants-Appellants.
and Submitted November 7, 2016 Pasadena, California
from the United States District Court for the Southern
District of California Gonzalo P. Curiel, District Judge,
Presiding D.C. No. 3:14-cv-01774-GPC-BGS
Anthony F. Shelley (argued) and Dawn E. Murphy-Johnson,
Miller & Chevalier Chartered, Washington, D.C., for
Victoria E. Fuller (argued) and David Niddrie, Niddrie Addams
Fuller LLP, San Diego, California; Amy R. Martel and Cynthia
R. Chihak, Cynthia Chihak & Associates, San Diego,
California; for Plaintiff-Appellee.
M. Bronson, The Bronson Firm APC, San Diego, California;
David M. Arbogast, Arbogast Law, Playa Del Rey, California;
for Amicus Curiae Consumer Attorneys of California.
Before: Kim McLane Wardlaw and Jay S. Bybee, Circuit Judges,
and Robert Holmes Bell, [*] Senior District Judge.
panel reversed the district court's order remanding to
state court an action that had been removed to federal court
under the federal officer removal statute.
companies asserted a lien against the plaintiff's
putative future settlement proceeds in an ongoing California
state court medical negligence action. The plaintiff moved to
expunge the lien, which was asserted pursuant to a
subrogation clause in a Federal Employee Health Benefit Act
health insurance plan that the insurance companies
panel held that the insurance companies properly removed the
action to federal court under the federal officer removal
statute, 28 U.S.C. § 1442(a)(1). The panel concluded
that the insurance companies were a "person" within
the meaning of the statute. Agreeing with the Eighth Circuit,
the panel held that the insurance companies' actions
seeking subrogation from the plaintiff by pursuing a lien
were "actions under" a federal officer because the
insurance companies administered the FEHBA health insurance
plan on behalf of the Office of Personnel Management. The
insurance companies' actions were causally connected to
the dispute over the validity of the lien. In addition, the
insurance companies had a colorable federal defense to the
plaintiff's motion to expunge their lien-the defense that
California law is preempted by FEHBA's express preemption
provision. Finally, the insurance companies' motion to
expunge the lien was a "civil action" within the
meaning of the statute.
panel held that the probate exception to federal jurisdiction
did not apply. Agreeing with other circuits, the panel held
that following Marshall v. Marshall, 547 U.S. 293
(2006), the probate exception does not apply unless a federal
court is endeavoring to probate or annul a will, administer a
decedent's estate, or assume in rem jurisdiction over
property that is in the custody of a probate court.
panel held that the prior exclusive jurisdiction doctrine,
prohibiting federal and state courts from concurrently
exercising jurisdiction over the same res, also did not
Judge Wardlaw wrote that she would affirm the district
court's remand order on the ground that the prior
exclusive jurisdiction doctrine barred the exercise of
federal jurisdiction. She wrote that both the state and the
federal actions were at least quasi in rem because the
plaintiff's settlement funds formed the basis of both
SENIOR DISTRICT JUDGE
Cross Blue Shield of Massachusetts, Anthem Blue Cross Blue
Shield of New Hampshire, and Blue Cross of California
(collectively, "the Blues") asserted a lien against
Lucas Goncalves's putative future settlement proceeds in
an ongoing medical negligence action in California Superior
Court to satisfy a subrogation clause in a Federal Employee
Health Benefit Act ("FEHBA") health insurance plan
that the Blues administer. When Goncalves asked the Superior
Court to expunge the lien, the Blues removed the action to
federal court under the federal officer removal statute.
See 28 U.S.C. § 1442(a)(1). The district court
held that the probate exception precluded federal court
jurisdiction and remanded the action back to state court.
sole issue on appeal is whether Goncalves's motion to
expunge the Blues' subrogation lien is properly in state
or federal court. We have jurisdiction to review the remand
order under 28 U.S.C. § 1447(d), see Cabalce v.
Thomas E. Blanchard & Assocs., Inc., 797 F.3d 720,
727 n.1 (9th Cir. 2015), and, holding that the action was
properly in federal court, we reverse.
after he was born in October 2007, Lucas Goncalves was
transferred to Rady Children's Hospital of San Diego.
While receiving treatment at Rady Children's Hospital,
Goncalves suffered internal injuries from alleged medical
was covered by his father's FEHBA health insurance plan
administered by the Blues on behalf of the U.S. Office of
Personnel Management ("OPM"). Pursuant to the
plan's coverage, the Blues paid $459, 483.57 for
Goncalves's medical treatment in connection with his
alleged negligently afflicted injuries from Rady
Children's Hospital. The plan has a subrogation clause,
allowing the Blues to recover from Goncalves any monies he
receives to reimburse the Blues for any benefits paid under
the plan. In relevant part, the plan states:
(a) The [Blues'] subrogation rights, procedures and
policies, including recovery rights, shall be in accordance
with the provisions of the agreed upon brochure text . . . .
[The Blues], in [their] discretion, shall have the right to
file suit in federal court to enforce those rights.
. . . .
(c). . . The obligation of the [Blues] to recover amounts
through subrogation is limited to making a reasonable effort
to seek recovery of amounts to which it is entitled to
recover in cases which are brought to [their] attention. . .
(d)The [Blues] may also recover directly from [Goncalves] all
amounts received by [Goncalves] by suit, settlement, or
otherwise from any third party or its insurer . . . for
benefits which have been paid under this contract.
(e) [Goncalves] shall take such action, furnish such
information and assistance, and execute such papers as the
[Blues] or [their] representatives believe are necessary to
facilitate enforcement of [their] rights, and shall take no
action which would prejudice the interests of the [Blues] to
(f) . . . [A]ll Participating Plans shall subrogate under a
single, nation-wide policy to ensure equitable and consistent
treatment for all Members under the contract.
February 2011, Goncalves, through a guardien ad litem, filed
a state-court action alleging medical malpractice against
Rady Children's Hospital and other defendants. In
November 2013, the Blues placed a lien of $459, 483.57 on any
funds Goncalves receives from the suit to recover earlier
benefits paid by the Blues under the plan. In April 2014, the
California Superior Court approved a settlement between
Goncalves and the non-Rady Children's Hospital
defendants, leaving Rady Children's Hospital as the sole
defendant. Sometime in June 2014, Goncalves and Rady
Children's Hospital entered into a settlement agreement;
because Goncalves is a minor, the California Probate Code
requires the Superior Court's approval of any settlement.
See, e.g., Cal. Prob. Code §§
3500(b), 3600; Schultz v. Harney, 33 Cal.Rptr.2d
276, 278 (Ct. App. 1994).
2014, Goncalves filed a motion in state court to expunge the
Blues' lien on the ground that the Blues'
"claims of lien are subject to the anti-subrogation
provision . . . and are therefore unenforceable" because
"FEBHA [sic] does not preempt state anti-subrogation
laws." The Blues removed this action under the federal
officer removal statute, 28 U.S.C. § 1442(a)(1), to the
U.S. District Court for the Southern District of California.
Goncalves asked the district court to remand the case to
state court on, inter alia, two grounds: (1) the
Blues could not remove the case under § 1442(a)(1) and
(2), even if removal was otherwise proper, the probate
exception barred federal jurisdiction. The district court
held that the Blues had acted pursuant to a federal
officer's direction and could remove the case pursuant to
§ 1442(a)(1). The district court, however, agreed with
Goncalves that any exercise of federal jurisdiction would
interfere with the probate proceedings in California. The
district court remanded the case back to state court.
Blues filed this appeal, arguing that the district court
erred because the probate exception did not bar federal
jurisdiction. In response, Goncalves continues to argue that
the probate exception bars federal jurisdiction, but argues
alternatively that even if it does not, the action was not
properly removed under § 1442(a)(1). We ordered
supplemental briefing as to whether the prior exclusive
jurisdiction doctrine barred federal court jurisdiction; the
Blues contend that it does not, and Goncalves contends that
address first whether the Blues properly removed the action
to federal court under 28 U.S.C. § 1442(a)(1). We then
address whether either the probate exception or the prior
exclusive jurisdiction doctrine bars the exercise of federal
The Action Is Removable Under the Federal Officer Removal
federal officer removal statute provides, in relevant part:
(a) A civil action . . . that is commenced in a State court
and that is against or directed to [the following] may be
removed by them to the district court of the United States
for the district and division embracing the place wherein it
(1) The 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, in an official or
individual capacity, for or relating to any act under color
of such office . . . .
28 U.S.C. § 1442 (emphasis added). The statute defines a
"civil action" to "include any proceeding
(whether or not ancillary to another proceeding) to the
extent that in such proceeding a judicial order . . . is
sought or issued." Id. § 1442(d)(1).
purpose of the federal officer removal statute is "to
ensure a federal forum in any case where a federal official
is entitled to raise a defense arising out of his
duties." Arizona v. Manypenny, 451 U.S. 232,
241 (1981). The right of removal is "absolute for
conduct performed under color of federal office, " and
the "policy favoring removal 'should not be
frustrated by a narrow, grudging interpretation of §
1442(a)(1).'" Id. at 242 (quoting
Willingham v. Morgan, 395 U.S. 402, 407 (1969)).
entity seeking removal under § 1442(a)(1) bears the
burden of showing "that (a) it is a 'person'
within the meaning of the statute; (b) there is a causal
nexus between its actions, taken pursuant to a federal
officer's directions, and plaintiff's claims; and (c)
it can assert a 'colorable federal defense.'"
Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1251
(9th Cir. 2006) (quoting Jefferson Cty. v. Acker,
527 U.S. 423, 431 (1999)). We address each of these three
prongs in turn, followed by another consideration raised by
the rare procedural posture of this action. Throughout our
analysis, we pay heed to our duty to "interpret Section
1442 broadly in favor of removal." Id. at 1252.
"Person" under § 1442(a)(1)
Blues and Goncalves do not dispute that the Blues are a
"person" within the meaning of § 1442(a)(1).
Nonetheless, we must assure ourselves of our own
jurisdiction. The courts of appeals have uniformly held that
corporations are "person[s]" under §
1442(a)(1). See In re Commonwealth's Motion to
Appoint Counsel Against or Directed to Def. Ass'n of
Phila., 790 F.3d 457, 467-68 (3d Cir. 2015) (holding
that § 1442(a)(1)'s use of the term
"person" includes corporations); Bennett v. MIS
Corp., 607 F.3d 1076, 1085 (6th Cir. 2010) (same);
Isaacson v. Dow Chem. Co., 517 F.3d 129, 135-36 (2d
Cir. 2008) (same). We agree and, therefore, the Blues have
satisfied the first requirement for removal under §
1442(a)(1). See 1 U.S.C. § 1 (defining
"person" to include, unless the context indicates
otherwise, "corporations, companies, associations,
firms, partnerships, societies, and joint stock companies, as
well as individuals"); see also Watson v. Phillip
Morris Cos., 551 U.S. 142, 152-54, 157 (2007) (using the
term "private person" and "company"
interchangeably in the context of § 1442(a)(1), but
holding that the defendant-company could not remove the