Monday, June 11, 2007

More on Watson

Today the Supreme Court unanimously reversed and remanded (as expected), holding that Philip Morris improperly removed under the Federal Officer Removal Act, 28 U.S.C. s1442(a)(1).

Plaintiffs sued Philip Morris in Arkansas state court, alleging that Philip Morris manipulated cigarette testing in violation of Arkansas business laws.  How did a state-law suit against a cigarette manufacturer end up before the Supreme Court pursuant to the Federal Officer Removal Act?   Philip Morris tested cigarettes like the rest of cigarette manufacturers--pursuant to a testing method developed by the FTC, known as the Cambridge Filter method.   Plaintiffs alleged that Philip Morris manipulated this test so that the cigarettes could register low on the Cambridge test, be labeled as light, but then deliver a higher level of tar and nicotine.  Philip Morris removed under the Act, arguing that it was "acting under" a federal officer or agency primarily because it was using the FTC-designed testing method and was subject to intense regulation by the FTC.

The issue was one of statutory construction.  Under the Act, a defendant can remove if the defendant is the United States, a federal agency, a federal officer, or any person acting under a federal officer or agency.  The issue here was the meaning of the words "acting under."  The Act obviously contemplates some private persons within its scope.  Writing for the Court, Justice Breyer clarifies what "triggering relationship" is needed to authorize a private person to remove under the acting-under language.

The Court started with the Act's history and purpose, tracing its variations from the War of 1812 to the present.  The Act's basic purposes are to protect the Federal Government from undue interference with its operations, to avoid state-court bias against enforcement of unpopular federal laws, and to give federal officers a federal forum in which to litigate immunity defenses.  The Court  provided several examples for when these purposes are served by allowing private individuals to use the Act.  For example, in one case, a group of prohibition agents hired a private driver.  That driver was prosecuted in state court for acts taken during a distillery raid.  The Court noted that allowing a private person to remove furthers these basic purposes "when a private person acts as an assistant to federal officials in helping that official enforce federal law."

Consistent with the purpose and history, the Court determined that a private person acts under a federal officer or agency only when he engages in an "effort to assist, or help carry out, the federal tasks.  Mere compliance with law does not constitute assistance or help.  Thus,

A highly regulated firm cannot find a statutory basis for removal in the fact of federal regulation alone.   A private firm's compliance (or noncompliance) with federal laws, rules, or regulations does not by itself fall within the scope of the statutory phrase "acting under" a federal official.  And that is so even if the regulation is highly detailed and even if the private firm's activities are highly supervised and monitored.  A contrary determination would expand the scope of the statute considerably, potentially bringing within its scope state-court actions filed against private firms in many highly regulated industries.

The Court then rejected two of Philip Morris's arguments.  First, Philip Morris analogized this case to the cases involving government contractors that have been allowed to remove when there is a close monitoring and supervisory relationship between the contractor and the government.  The Court rejected this argument via the compliance-versus-assistance distinction, noting that the contractors were helping the government perform a function and produce an item that it needs, rather than just complying with detailed regulations.  And second, based on a lack of record evidence, the Court rejected Philip Morris's argument that the FTC had "delegated" testing responsibilities.

This reversal was as unsurprising as the Eighth Circuit's unanimous ruling below was surprising.  What's important?  The case is important because it clarifies the "triggering relationship" needed before a private person can remove under the "acting under" language.   A link to the full decision is here. --RR

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