Argument Preview: Osborn v. Haley on Monday, 10/30

The following argument preview was written by Gia Kim, an attorney in Akin Gump’s appellate group.

Osborn v. Haley, No. 05-593 (briefs here), the first case to be argued Monday, concerns procedural and jurisdictional issues related to the portion of the Federal Tort Claims Act (FTCA) known as the Westfall Act. The Westfall Act authorizes the Attorney General, in any action brought against a federal employee in state court, to remove the case to federal court and substitute the United States as defendant by certifying that the employee was acting within the scope of his employment at the time of the incident out of which the claim arose. This case asks whether the Attorney General may issue a scope-of-employment certification premised on a denial that the alleged incident occurred at all, whether the Westfall Act prohibits the district court from remanding an action to state court if it concludes that such a certification was not authorized by the Act, and whether the court of appeals had jurisdiction to review the remand order.

Eric Grant will argue on behalf of petitioner Pat Osborn, and Douglas Hallward-Driemeier, an Assistant to the Solicitor General, will argue on behalf of respondent United States.

Petitioner Pat Osborn was an employee of the Land Between the Lakes Association (LBLA), a private contractor for the United States Forest Service at the Land Between the Lakes National Recreation Area in Kentucky. Osborn was fired by LBLA after she publicly confronted Barry Haley, a Forest Service manager, and then – despite a request by Gaye Luber Verdi, LBLA’s executive director – refused to apologize to him. Osborn subsequently filed suit in Kentucky state court, alleging that Verdi and LBLA had terminated her in violation of public policy, and that Haley had wrongfully interfered with her employment relationship with LBLA.

After the Attorney General certified that Haley was acting within the scope of his employment at the time of the conduct alleged in Osborn’s complaint, the United States removed the action to federal district court, where it moved to substitute itself as defendant and to dismiss the case based on Osborn’s failure to exhaust her administrative remedies. Osborn’s response sought a reversal of the Attorney General’s certification and resubstitution of Haley as defendant. Citing policies providing that Forest Service employees were not to participate in LBLA’s personnel decisions, Osborn argued that Haley’s conduct was outside the scope of his employment as a matter of law.

Based on its understanding that the United States did not deny Osborn’s factual allegations, the district court held that under state law, which governs scope-of-employment determinations under the FTCA, the Attorney General’s certification had to be overturned because Haley’s actions fell outside the scope of his employment. The district court further concluded that because the U.S. could not be substituted for Haley, it lacked jurisdiction over the non-diverse parties and therefore was required to remand the action to state court.

The United States filed a Motion for Reconsideration. It argued that the district court had mistakenly construed its submissions as conceding Osborn’s factual allegations, and it requested an evidentiary hearing on the disputed facts. In support of the motion, the U.S. submitted a declaration from Haley, who stated that he had not influenced Verdi and LBLA to fire Osborn. The government also observed that even if that Osborn’s factual allegations were true, discovery might demonstrate that Haley’s action were nevertheless within the scope of his employment under Kentucky law. In the district court’s view, the government’s new submissions required it to determine whether the incident had occurred at all. Relying on the reasoning of the First Circuit’s 1993 en banc decision in Wood v. United States, an opinion authored by then-Chief Judge Breyer, the district court determined that the Westfall Act did not permit the Attorney General to issue such “incident-denying” certifications and concluded that it, in turn, lacked authority to resolve the underlying factual dispute. The district court thus denied both the government’s Motion for Reconsideration and its motion to stay the remand.

The Sixth Circuit reversed. In doing so, it noted that the circuits were split with respect to both questions presented: (1) whether district courts, faced with an incident-denying certification under the Westfall Act, must accept the plaintiff’s allegations as true; and (2) whether the Westfall Act permits a federal court to remand a case if it denies substitution. The Sixth Circuit sided with the majority of circuits on both issues. First, it directed the district court to resolve the factual dispute underlying the scope-of-employment certification because it concluded that nothing in the Westfall Act required the Attorney General or district court to accept the plaintiff’s version of events, and that Congress intended to spare federal employees the burden of defending suits related to their official duties. Second, the Sixth Circuit held that the clear language of the Westfall Act, which provides that the Attorney General’s certification “shall conclusively establish scope of office or employment for purposes of removal,” precludes a district court from remanding the case even if it overturns the Attorney General’s certification.

The Sixth Circuit did not explicitly raise the issue of its own jurisdiction to review the district court’s remand order, notwithstanding 28 U.S.C. § 1447(d), which provides that a remand order is generally “not reviewable on appeal or otherwise.” However, in granting certiorari, the Supreme Court directed the parties to brief and argue the issue of the Sixth Circuit’s jurisdiction.

Osborn argues that the Sixth Circuit lacked jurisdiction because § 1447(d), by its terms, precludes review of the district court’s remand order, and no exception to § 1447(d) applies. Section 1447(d) bars review of remands based on lack of subject matter jurisdiction or any other “defect,” and Osborn contends that the district court’s remand order, which was based on its rejection of the Attorney General’s certification and substitution, implicates one or both of these grounds. Osborn claims that the exception set forth by the Supreme Court in 1934 in Waco v. United States Fidelity & Guaranty Co. does not allow respondents to appeal because Waco applies only to orders that can be disaggregated from an unreviewable remand order – not the remand order itself – and because, in any event, the order rejecting the Attorney General’s certification is inseparable from the remand order.

On the merits, Osborn contends that the Westfall Act does not authorize “incident-denying” certifications, and that the Supreme Court’s official immunity doctrine emphasizes that the question of immunity is a legal issue separate from the merits of the plaintiff’s claim. In Osborn’s view, incident-denying certifications also create Article III problems because they turn solely on questions of fact. Thus, in cases such as this, where diversity jurisdiction is lacking, there is no federal question to support the district court’s subject-matter jurisdiction. Finally, Osborn contends that the Westfall Act’s plain language does not foreclose remand because an incident-denying certification is not the sort of “certification” contemplated by the Act as “conclusively” establishing scope of employment for the purpose of removal. Osborn argues that a district court must remand the action if it overturns the certification; otherwise, it will lack Article III jurisdiction over a tort suit between citizens of Kentucky, brought under Kentucky law. Four states filed a brief as amici curiae supporting Osborn; their brief emphasizes that interpreting the Westfall Act to prohibit remand would violate Article III by depriving state courts of jurisdiction over “garden-variety” tort actions between non-diverse litigants.

In separate briefs, the United States (for respondent Haley) and respondents Verdi and LBLA counter that the Sixth Circuit had jurisdiction to review the district court’s order denying substitution and remanding the case to state court, either as an appealable collateral order that constitutes a denial of absolute immunity or by mandamus. Respondents also claim that in enacting the Westfall Act’s “conclusively” language, Congress intended to override § 1447(d)’s general bar on appellate review of remand orders. Even if § 1447(d) prohibits appellate review of the remand order, they contend, the district court’s order rejecting certification is reviewable under Waco because it is separate from and logically anterior to the district court’s remand order.

Respondents’ arguments on the merits rely on analogies to federal officer immunity under 28 U.S.C. § 1442(a). They argue that Supreme Court cases construing § 1442(a) support an officer’s right to deny factual allegations against him and to have disputed facts resolved in a federal forum. To preserve this right for other federal employees, respondents reason, the Court should likewise require federal district courts to resolve factual disputes underlying Westfall Act certifications. Respondents Verdi and LBLA also argue that the Act does not explicitly prohibit incident-denying certifications, and that the Court’s creation of such a requirement would undermine Congress’s intent of protecting falsely accused federal employees. On the remand question, respondents contend that in Gutierrez de Martinez v. Lamagno (1995), all nine justices agreed that the Westfall Act’s “conclusively” language clearly precludes remand. Respondents further argue that a four-justice plurality in Lamagno explained in dicta that the district court’s retention of jurisdiction when substitution is denied does not violate Article III because the scope-of-employment issue raises a substantive question “arising under” federal law at the outset of the case, and this subject matter jurisdiction cannot be destroyed by subsequent events.

Notwithstanding the questions on which the Court granted certiorari, which apparently depend on the “incident-denying” nature of the Attorney General’s characterization, respondents also dispute the lower courts’ characterization of the certification as solely “incident-denying,” or fact-based, as distinguished from a scope-of-employment certification premised on legal grounds.